When Dominion Virginia Power won the right to lease land offshore for a wind farm, proponents of green energy cheered.
But when Dominion put that job out for bids, just one firm submitted a qualified offer, and it was well over what the utility wanted to spend. Executives put the project on hold, but the company insists it’s not giving up on offshore wind.
Dominion, like other American utilities, has never built an offshore wind farm. The company figured on spending about $230 million to install a couple of turbines and put the project out for bids. The only qualified offer was for $375-$400 million.
Surprised and dismayed, the company invited about 50 suppliers, academics, environmentalists and experts from other states -- to weigh-in on why the costs were so high.
Gary Oakley, with the global engineering and construction firm KBR, said the problem starts with the massive turbines you plan to install. It takes a crane nearly 400 feet tall to do the job, and a specialized boat.
“There are only a few vessels in the world that have that height of crane, and you need a very steady platform, so you can’t use any old vessel. You have to use what we describe as a jack up vessel. A jack up vessel sits its legs onto the sea bed, so it’s a steady, stable platform.”
And since all those boats are in Europe, you have to budget for travel time and bad weather.
“That takes 12-14 days to sail across the Atlantic, and if there’s any severe storms, they have to go into a safe haven, so that’s a risk.”
Rudy Hall, with Keystone Engineering, adds that the companies qualified to do this job are also in Europe, and they’re plenty busy building wind farms of their own.
“They all have work. They’re bidding on multiple projects. It’s difficult for them to commit to a project over here.”
Other aspects of construction and maintenance could be done by America’s offshore industry, but Hall says most of those companies and their equipment are a thousand miles away by sea.
“The problem that we have in this country is that our supply chain is not located close to the best wind sites. In the United States we’ve developed an offshore industry, but it’s been in the Gulf of Mexico.”
What’s more the Dominion job is small – just two turbines, so there are no economies of scale to drive costs down, and there’s one more problem for Dominion, which usually hires a single contractor to oversee whole projects and assume much of the risk. When building offshore, it’s cheaper and customary for clients like Dominion to assume the risk and to hire several specialized contractors for different parts of the job. That’s what New Jersey’s offshore wind company – Fishermen’s Energy – plans to do, according to Managing Director Aviv Goldsmith.
“The more moving parts, the more things can go wrong, but at the end this is not a risk-free world, and our company is interested in moving forward and making this happen.”
It’s not so easy for Dominion – a regulated monopoly. The state doesn’t want the company taking risks that might cause consumers’ rates to spike. Nor do shareholders want to gamble on a relatively new and expensive technology like offshore wind, but Governor Terry McAuliffe is passionate about economic development in Virginia, and Dominion’s Senior Vice President Mary Doswell is hoping there might be more state assistance with this project.
“There are state benefits with our ports, economic development, supply chain coming here, it won’t happen overnight, but is that an investment the state wants to make? I think it’s something we want to have a conversation about.”
She also thinks the industry will benefit from what is learned through demonstration projects planned here, in New Jersey and Oregon. So might companies put more money up? Could the federal government be persuaded to make a larger contribution? Dominion hopes so and will continue to brainstorm with others who’d like to see wind farms off Virginia Beach.
