The U.S. Department of Energy is withdrawing $40 million in funding for Dominion Virginia Power’s proposed offshore wind demonstration project, which would install two 6 MW turbines in federal waters about 24 miles off the coast of Virginia Beach.
Dominion plans to consult with other members of the project team, known as the Virginia Offshore Wind Technology Advancement Project (VOWTAP), as well as participants in a stakeholder group of government, research and community representatives, on how to proceed from here.
“Naturally, we are disappointed in the DOE’s decision because we still believe that offshore wind has a great potential to deliver clean, renewable energy to Virginia,” states Mary C. Doswell, senior vice president of Dominion Energy Solutions. “However, we also recognize the unique regulatory and cost challenges involved in our project and appreciate the DOE’s desire to support other projects that may have an earlier opportunity for fruition.”
At peak production, says Dominion, the project would generate enough electricity to power up to 3,000 homes. Current bids for constructing the project range from about $300 million to $380 million, compared with an initial estimate of about $230 million.
Doswell says the DOE made its decision after Dominion could not guarantee an in-service date for the project earlier than 2020. Though Dominion has been working toward an earlier date, there are too many uncertainties to meet the DOE’s request, the company says.
According to Dominion, these include the high cost of the project, the inability to get firm construction contracts, and the increasing complexities of gaining regulatory approval for energy infrastructure projects.
“This project is a first in many ways,” Doswell adds. “As such, you need to account for many variables when attempting to lock in on a date with any degree of certainty.”
VOWTAP was one of three offshore wind projects chosen by the DOE in May 2014 to receive a second round of funding.
VOWTAP’s other partners are Alstom Power Inc. (recently acquired by General Electric), which supplying the turbines; KBR, an engineering, construction and services firm with experience in offshore wind; Keystone Engineering, the designer of the substructure; the DOE’s National Renewable Energy Laboratory; Newport News Shipbuilding, a division of Huntington Ingalls Industries; and the Virginia Tech Advanced Research Institute, representing the Virginia Coastal Energy Research Consortium.