Virginia regulators approve Dominion Energy’s 2.6-GW, $9.8B offshore wind farm

Source: By Larry Pearl, Utility Dive • Posted: Monday, August 8, 2022

The project will be the largest wind farm in the U.S. and the first with diversity hiring requirements, the Sierra Club noted.

A beautifully lit scene with sunbeams on an offshore wind farm turbine.glegorly via Getty Images

The Virginia State Corporation Commission, or SCC, on Friday approved Dominion Energy Virginia’s plans to build its proposed Coastal Virginia Offshore Wind Project.

The 2.6-GW project has an expected capital cost of $9.8 billion and will include 176 wind turbines located about 27 miles off the coast of Virginia Beach.

“Our customers expect reliable, affordable energy, and offshore wind is key for delivering on that mission. We are very pleased that the commission has approved this important project that will benefit our customers. We are reviewing the specifics of the order, particularly the performance requirement,” Dominion Energy Chair, President and CEO Robert Blue said in a statement.

“As part of its order, the SCC granted approval for approximately 17 miles of new transmission lines and other onshore infrastructure needed to deliver the clean, renewable energy offshore to homes and businesses across Virginia,” the Dominion statement added.

According to the SCC, “over the projected 35-year lifetime of the project, for a residential customer using 1,000 kilowatt-hours of electricity per month [the cost recovery rider] is projected to result in an average monthly bill increase of $4.72 and a peak monthly bill increase of $14.22 in 2027.”

Dominion Energy plans to complete construction in 2026.

“The project is expected to save Virginia customers more than $3 billion during its first 10 years in operation. However, if these ongoing commodity market pressure trends continue, those savings could total up to nearly $6 billion – almost double the savings,” the company said.

The SCC noted that significant concerns “were raised throughout the proceeding regarding the affordability of the project and the financial risk to ratepayers.” It ordered a number of consumer protections, including a requirement that Dominion notify the SCC within 30 calendar days if it finds “that the total project costs are expected to exceed the current estimate, or if the final turbine installation is expected to be delayed beyond February 4, 2027.”

The SCC also ordered that “beginning with commercial operation and extending for the life of the Project, customers shall be held harmless for any shortfall in energy production below an annual net capacity factor of 42%, as measured on a three-year rolling average.”

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This requirement will protect customers who are paying for the facility “from also having to pay for replacement energy if the Project does not generate the amount of electricity upon which Dominion bases its request and its cost estimates,” the order said.

The order goes on to warn that the performance standard, however, will not protect customers from cost overruns, or if the project is abandoned, the AP reported.

Dominion’s project “represents a number of firsts,” the Sierra Club said in a statement.

“It will be the largest wind farm in the U.S., it will be the first utility-owned facility in the nation, and most importantly, it will be the first project with diversity hiring requirements,” it continued.

The 2020 Virginia Clean Economy Act mandated full decarbonization of Dominion’s generation fleet by 2045.

Editor’s Note: This story has been updated with additional details about the SCC’s performance requirement for the project.