Virginia approves Dominion $300M offshore wind pilot, despite ratepayer concerns
- Virginia regulators approved on Friday the state's first offshore wind pilot despite concerns that "essentially all" of the project's risk, including cost overruns, production and performance failures, falls on Dominion Energy's customers.
- Dominion teamed up with Denmark's Ørsted Energy (formerly DONG Energy) to develop two 6 MW offshore wind turbines. The $300 million project will be funded through existing base rates, according to Dominion, authorized by the Grid Transformation & Security Act (GTSA) of 2018.
- While the Virginia State Corporation Commission (SCC) approved the project, a product of the state's 10-year energy plan, regulators concluded the wind pilot "would not be deemed prudent" under the commission's typical review because of concerns over how ratepayers would be affected.
Dominion says it is "moving swiftly" toward its renewable energy goals, which include development of 3,000 MW of solar and wind energy by 2022 and significant offshore wind resources a few years after that.
But regulators said without new legislation directing the state's energy future, the offshore project would not have been approved. In a statement, the SCC pointed out that the offshore project "was not the result of a competitive bidding process." And in its order, the commission said any "economic benefits specific to [the project] are speculative, whereas the risks and excessive costs are definite and will be borne by Dominion’s customers."
Virginia's 10-year energy plan, released in October, calls for 2 GW of offshore wind by 2028, building on the GTSA.
"Dominion's customers bear essentially all of the risk of the proposed project, including cost overruns and lack of performance," the commission said. And it pointed out that the offshore pilot "has the highest cost of any resource" modeled in Dominion's integrated resource plan.
In a conference call last week with analysts and journalists, Dominion Chairman, President and CEO Thomas Farrell said the pilot "has the support of government" and "will provide an important early learning that we believe will lay the foundation for commercial scale offshore wind for Virginia's clean energy future."
According to the company, a recent request for proposals for up to 500 MW of solar and onshore wind is "the first of an anticipated annual procurement process each fall for larger scale projects," of at least 5 MW. Dominion said an initial RFP for smaller scale solar is planned for spring 2019, seeking 50 MW of projects.
By 2022, Dominion said it expects the annual RFP will be issued in January for up to 150 MW.
Separate from the offshore wind pilot, Virginia regulators last week also approved an agreement for Dominion to purchase solar power from an independent developer of an 80 MW solar facility to be located in Halifax County.
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