The U.S. Bureau of Ocean Energy Management (BOEM) has held its second auction of renewable energy in U.S. federal waters, targeting offshore wind energy in about 112,000 acres off the Virginia coast. The winner: Dominion Virginia Power (Virginia Electric and Power Co.), which came out on top after six rounds of bids and $1.6 million.
The area in question is about 23 nautical miles from the Virginia Beach coastline in roughly 30-meter depths, with potential wind generation exceeding 2 GW. The area comprises 19 full blocks and 13 sub-blocks on the Outer Continental Shelf, identified to avoid various areas of concern including ecological habitats and shoals, military training areas, marine vessel traffic, and a dredge disposal site.
Apparently only two bidders, Dominion and reportedly Apex Clean Energy, participated in yesterday’s auction even though eight companies had been deemed “legally, technically and financially qualified” by the Department of Interior (DOI): Apex, Energy Management, EDF Renewable Development, Fisherman’s Energy, Iberdrola Renewables, Sea Breeze Energy and Orisol Energy. Apex’s offshore wind plans for the Virginia coast, its Hampton Roads project, eyes up to 2 GW of capacity.
In the inaugural auction of renewable energy in U.S. federal waters, held July 31, Deepwater Wind New England paid out about $3.8 million after 11 rounds of bidding, winning rights to develop on two parcels spanning 164,000 acres off the Rhode Island and Massachusetts coasts with combined potential of nearly 3.4 GW of wind power.
Dominion envisions an offshore wind project size in line with the BOEM’s 2-GW site capability estimate, likely built in phases, explained Jim Norvelle, director of media relations for Dominion, in an e-mail exchange. The clock now starts for Dominion on a number of deadlines: six months to submit a site assessment plan, a year to submit a constructions and operations survey plan, three years to do geophysical surveys, and five years to submit the full construction & operations plan, with a 33-year operational lifetime.
The BOEM’s approval of that final plan has no official timeline but it could take two years, and initial turbine installation might not happen for 10 years, Norvelle suggested, citing challenges in offshore wind including no domestic infrastructure and “the things that we don’t know yet but may discover.” (Note that Deepwind is planning to install turbines as early as 2017 with operations by 2018.) Dominion also will pay annual rental of $3/acre (roughly $338,000) up to the commercial operation date.
The company is already developing one of a handful of U.S. offshore wind demonstration projects competing for Department of Energy (DOE) funding: the Virginia Offshore Wind Technology Advancement Project (VOWTAP), which will evaluate different technologies and techniques for foundations, installation, and transmission. VOWTAP is adjacent to this new offshore wind lease site but they are two separate projects, Norvelle noted, although the company likely will apply some of the information it gets from the VOWTAP project such as weather data.
Norvelle also pointed out that the company’s existing transmission system in the Hampton Roads area could accommodate any capacity coming from the offshore project, utilizing ocean substations and perhaps using floating substations to pipe the power ashore. “Virginia has a robust onshore transmission grid capable of integration up to 4,500 MW of offshore wind generation,” he said. “We believe the added cost of a line to export power north is unnecessary and our customers are better served bringing the offshore generation to land via direct transmission to our onshore grid.” Dominion has been a vocal opponent to the proposed Atlantic Wind Connection offshore transmission efforts.
Dominion isn’t done with offshore wind in the MidAtlantic region. The company is among several groups that have formally expressed their interest to the BOEM for identified offshore wind lease sites in North Carolina, and auctioning is expected to take place by the end of 2013, or early 2014. Dominion, which has 120,000 customers in that state, is targeting areas off the Outer Banks near its existing onshore transmission system, though Norvelle said it would probably connect to the company’s Virginia transmission system.
