Dominion snatches up lease off Va.

Source: Phil Taylor, E&E reporter • Posted: Thursday, September 5, 2013

Dominion Virginia Power today was declared the preliminary winner of the Interior Department’s second competitive lease sale for offshore wind after outbidding one other company for the right to develop a 113,000-acre area off the coast of Virginia Beach.

The Richmond, Va.-based company bid $1.6 million for a single lease tract about 25 miles off the Virginia shore that could generate up to 2,000 megawatts of wind power, roughly equal to a large nuclear power plant.

It took the company six rounds to outbid its only other competitor, Apex Virginia Offshore Wind LLC.

A Dominion spokesman could not immediately be reached for comment.

“This year’s second offshore wind lease sale is another major milestone in the president’s all-of-the-above energy strategy and demonstrates continued momentum behind a robust renewable energy portfolio that will help to keep our nation competitive and expand domestic energy production while cutting carbon pollution,” Interior Secretary Sally Jewell said in a statement. “Today’s sale is the result of a great deal of collaboration and planning with the Commonwealth of Virginia, which has been a leader in advancing offshore renewable energy for the Atlantic coast and an enthusiastic partner in this effort.

Six other companies had qualified to bid in today’s sale: Energy Management Inc., EDF Renewable Development Inc., Fisherman’s Energy LLC, Iberdrola Renewables Inc., Sea Breeze Energy LLC and Orisol Energy US Inc.

Although only two of them participated in the auction, Bureau of Ocean Energy Management Director Tommy Beaudreau said he was “very pleased with the sale and the vigor of the competition.”

“I won’t say if that met or exceeded my expectations,” he said this afternoon.

Today’s sale comes just more than a month after Interior’s first competitive offshore lease sale drew a winning bid of $3.8 million from Deepwater Wind New England LLC for rights to develop waters off the coasts of Rhode Island and Massachusetts (Greenwire, Aug. 1).

Dominion now has up to six months to submit a site assessment plan that includes activities such as the installation of meteorological towers and buoys to measure the wind resource. It will then have four and a half years to submit a construction plan, which would trigger a separate National Environmental Policy Act review.

Like all offshore wind developers, Dominion will face unique challenges obtaining environmental permits, financing the project, identifying a supply chain for turbine parts and installing them in the water.

But Beaudreau said steps have been taken to ensure the wind energy area does not conflict with other ocean users. For example, the agency identified sensitive ecological habitats and shoals at the mouth of the Chesapeake Bay, consulted early and often with the Department of Defense to ensure activities did not conflict with naval exercises, and ensured traffic to and from the Port of Virginia was not blocked.

A map of the lease areas can be foundĀ here.

BOEM said it expects to announce additional auctions for wind energy areas off the shores of Maryland, New Jersey and Massachusetts later this year and in 2014.

Virginia business officials are hoping to woo the nascent offshore wind industry to their coastlines, touting a steady but powerful ocean breeze in waters that are shallow but far enough from shore to protect the coastal scenery (Greenwire, Oct. 25, 2012).

Offshore wind could generate more than $400 million in economic growth in Virginia alone, ranging from the fabrication of turbine foundations to the outfitting of electric service platforms, charter vessels, leasing of large port landings and transmission upgrades, according to J.J. Keever, senior deputy executive director for the Virginia Port Authority.

Offshore wind development has occurred almost exclusively in Europe — where more than 50 projects and nearly 4,000 megawatts have been installed in the past decade, according to the Department of Energy. The United States could see up to 54,000 MW of projects in the Atlantic Ocean by 2030, DOE said.

The Virginia State Corporation Commission would have to approve any Dominion offshore wind power generation project, as is the case with other power plants, the company has said.

Today’s sale drew praise from several environmental groups.

“Today is further proof that the Obama administration is committed to building a strong offshore wind industry in the United States,” said Jacqueline Savitz, vice president for U.S. oceans for Oceana. “We hope the company that ultimately wins this lease sale will be committed to the responsible, but expeditious, development of offshore wind farms in the area.”

Savitz urged Congress to extend the investment tax credit, which industry officials have said is crucial to the future expansion of offshore wind.