Virginia proposes $8 billion ratepayer-backed offshore wind farm

Offshore wind farm
Offshore wind farm Image by A_Different_Perspective from Pixabay

By Christopher Martin and David R. Baker, Bloomberg

Dominion Energy Inc.’s customers have been pressing the Virginia utility giant for years to source more clean energy. On Thursday, the company heeded their call — with a $7.8 billion, ratepayer-backed plan to build the largest offshore wind farm in America.

The proposal is unprecedented. Never has a utility pitched an offshore wind project of this size — big enough to power 650,000 homes — and in such a way that would have its customers shouldering the costs. It still needs the approval of state regulators, and the blessing of others including the region’s grid operator. But the Richmond-based company is already promoting the plan as a major means of curbing its global-warming emissions 55% by 2030.

In proposing the wind project, Dominion Vice President Mark Mitchell said, the utility is “giving our customers what they have asked for — more renewable energy.”

Already, though, some of its big ratepayers are choosing to take another route. Customers including Costco Wholesale Corp. and Kroger Co. applied for the right to bypass Dominion and negotiate directly with independent electricity suppliers for renewable energy. On Wednesday, less than 24 hours before Dominion announced is massive wind project, the Virginia State Corporation Commission gave them what they wanted, ruling that the utility must allow them to seek other options.

The timing of Dominion’s wind project announcement and the decision by the commission was purely coincidental, Dominion spokesman Jeremy Slayton said in an interview. But they both speak to a broader struggle playing out nationally between utilities and their customers, who increasingly want access to cheaper and cleaner power. From California to Florida, people are trying to ditch their electric companies and source their own energy.

San Diego decided earlier this week to buy its own renewable power as opposed to relying on the local utility.

In Virginia, it’s unlikely Dominion’s wind plan was aimed at talking customers like Costco and Kroger out of doing the same, said Kit Konolige, a utility analyst with Bloomberg Intelligence. “I doubt there’s a particular customer they’re specifically thinking of now with that proposal,” he said. “There’s several years before it could even be approved.”

100% Clean Power

Dominion referenced Virginia Governor Ralph Northam in its statement Thursday, saying he’s made it clear that the state should lead a wind power boom off the U.S. East Coast. Earlier last week, Northam set a goal of getting 100% of Virginia’s power from zero-emissions resources by 2050. New York, Massachusetts and New Jersey are among the other states looking to spur offshore wind projects by signing long-term contracts for their power.

Dominion’s plan is already drawing words of caution from environmentalists and consumer advocates.

“Whenever a project is paid for by Virginians, it is imperative — regardless of fuel source — that we carefully scrutinize the project to ensure that unnecessary costs are not imposed,” said Will Cleveland, an attorney at the Southern Environmental Law Center. “We can’t determine whether this project is the right size or cost for Virginia, until we know Dominion’s plans” for transitioning away from fossil fuels, he said.

Dominion said it would build its wind project in three phases, each totaling 880 megawatts. The first would start producing by 2024 and the other two would come online in 2025 and 2026. They would have a combined capacity of more than 2,600 MW (2.6 GW) and be built in an area that Dominion has already leased from the U.S. Bureau of Ocean Energy Management off the coast of Virginia Beach.

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