The U.S. Department of Energy (DOE) has withdrawn $40 million in funding from the Virginia Offshore Wind Technology Advancement Project (VOWTAP), dealing a major blow to plans to build two experiment wind turbines off the Virginia coast and jeopardizing the prospect of major offshore wind development in the foreseeable future.
Dominion Virginia Power had hoped to build turbines incorporating features capable of withstanding Category 3 hurricane winds, considerably stronger than those faced by wind farms in Europe. Demonstrating the viability of the technology would reduce a major element of risk and, hence, the cost of financing construction of a large-scale wind farm capable of supplying hundreds of thousands of homes.
Dominion’s early estimate to build the two turbines was $230 million, which would generate enough power to supply 3,000 homes. The first solicitation yielded a bid of $375 million. Subsequent efforts to squeeze costs out of the project resulted in bids ranging from about $300 million to $380 million. Dominion has said that even a cost as low as $230 million would be a challenge to win approval from the State Corporation Commission. The cost per kilowatt hour for electricity would be astronomically high compared to other energy sources, and the project was justifiable only as a proof-of-concept opening the way for cheaper, large-scale wind development.
The loss of DOE’s $40 million project puts the VOWTAP project that much further out of reach.
“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,” said Mary C. Doswell, senior vice president‒Dominion Energy Solutions in a press release. “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.”
DOE made its decision after Dominion could not guarantee an in-service date for the project earlier than 2020, according to Doswell. The inability to get firm construction contracts and the increasing complexities of gaining regulatory approval for energy infrastructure projects have made it impossible for Dominion to guarantee an earlier date.
“This project is a first in many ways,” Doswell said. “As such, you need to account for many variables when attempting to lock in on a date with any degree of certainty.”
Dominion said it would consult with other VOWTAP stakeholders on how to proceed.There are currently no comments highlighted.