Oops. Wind Farm to Cost $2 Billion More

by James A. Bacon

Dominion Energy’s CEO Bob Blue acknowledged yesterday that the cost of the power company’s Coastal Virginia Offshore Wind project will cost $9.8 billion — $2 billion more than previously stated.

During an investor conference call, Blue blamed the 25% jump on “commodity and general cost pressures” as well as completion of design plans for transmitting electricity from the wind farm through populated areas in Virginia Beach to a substation where it can plug into the grid.

Blue said the impact on ratepayers — an extra $4 per month for an average residential customer — has not changed because the company is projecting that the wind farm will be more productive than originally thought, reports the Virginia Mercury

Where have Virginians heard this before? Oh, I remember, this sounds reminiscent of the Silver Line extension of the Washington Metro to Dulles International Airport, which has encountered revised cost estimate after revised cost estimate. We can only hope that Dominion won’t encounter the same delays as the Northern Virginia commuter rail project, the second phase of which is now running about two years behind schedule.

Blue told the financial analysts on the call that $1 billion in federal tax credits will dampen the cost to rate payers. Also, once built, there are no fuel costs. Fuel savings could amount to $3 billion over the wind farm’s first 10 years. The price of natural gas, the main fossil fuel alternative to wind, has surged in the past year.

The wind farm is a critical piece of Dominion’s strategy to reach a zero-carbon electric grid by 2045, as mandated by the Virginia Clean Energy At. State Corporation Commission staff has estimated that the VCEA, which includes a large solar energy component, could increase electricity costs by $800 per household annually. That’s because backup and redundancy needs to be built into the grid to pick up the slack when the wind isn’t blowing and the sun isn’t shining.

Bacon’s bottom line: Is this the end of the cost increases, or could there be more coming? When Blue referred to “commodity and general cost pressures,” that sounds a lot like inflation. What commodity prices was he referring to? Steel accounts for between 70% and 80% of wind turbine mass, Fiberglas, resin or plastic (derived from petroleum) another 11% to 16%. Magnets in the generating unit contain rare earth elements, primarily neodynium and dysprosium. As the manufacture of offshore wind turbines accelerates globally, so will demand for and the price of components, especially the rare earth elements.

For all the happy talk from the Federal Reserve Bank that the current bout of inflation is due to temporary supply side disruptions, cost increases show no sign of subsiding. What inflation expectations are built into Dominion’s cost projections, and how sensitive is the latest estimate to continued rises in commodity prices?

It’s funny the way mega-projects work. Advocates have an incentive to lowball the costs to get political buy-in. Once the mega-project gets locked in politically, the price tag invariably ratchets higher. As long as the cost can be passed on to taxpayers, commuters or rate payers, the advocates don’t care.

Whatever the alleged environmental drawbacks of Dominion’s gas-fired power plants, you could say one thing about them — they were built on budget and on time. I don’t expect we’ve seen the last unpleasant surprise from the offshore wind farm.

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54 responses to “Oops. Wind Farm to Cost $2 Billion More”

  1. tmtfairfax Avatar

    A strong argument can be made that, based on the facts proffered by Mr. Blue, inclusion of the project’s investments in the rate base and the associated costs as recoverable expenses is unreasonable because the total investments and recoverable expenses push up electric bills by an estimated $800 per household, per year. That should end the matter right there.

    Mr. Blue should be cross-examined by the SSCC staff as to every cost estimate made by Dominion in the last 5 years comparing the estimate to the actual costs.

    The new federal infrastructure bill that passed with bi-partisan support will be more of the same. Overly expensive projects, with money skimmed from the top and delay and after delay. Other people’s money.

    On our recent trip to Alaska, we stopped to see the Pipeline. It was built in three years. These should be issues upon which both Republicans and Democrats can agree — protecting the public interest. But campaign contributions and sound bites tend to win out. Maybe Youngkin and Saslaw could try to fix some of this.

    1. LarrytheG Avatar

      so we’re doing with electricity what we did with fuel mileage standards for car – mandated by the govt – with the usual suspects opposed – vociferously and even to the point where Trump rolled them back!

      Were govt-mandated fuel mileage standards ultimately in the bests interests of the country and consumers?

      Do many/most of us check the EPA mpg on the sticker of the car? Do we check our gas mileage when the price of gasoline steadily goes higher? Do we think about more fuel-efficient cars for our next purchase?

      We do, right?

      I don’t think the naysayers lead. They basically oppose and have to be overcome in order to make progress. IMHO of course! 😉

      1. tmtfairfax Avatar

        Larry, there is a huge difference between the federal government setting performance standards and stating how those standards should be met. From statutes to agency regulations to contracts, the feds set performance standards.

        But even before that, the requirement needs to be Reasonable, Understandable, Measurable, Believable and Achievable — the old Rumba standard. If any goal or standard is to have a chance at being obtained or set and followed, it has to fit these standards. Kennedy set a goal of going to the moon within a decade. Obviously, that goal passed the test. But JFK, LBJ and RMN had nothing to do with the technical work needed to put people on the Moon.

        The FCC is setting requirements for voice service providers to reduce and work to eliminate robocalls, most especially fraudulent and illegal ones. The Industry is doing this through a number of technical standards and processes known as STIR/SHAKEN. STIR/SHAKEN requirements, which require quality level call authentication through databases and token, are in the Commission’s rules.

        But the FCC has not designed the standards and processes. The industry did that.

        Assuming arguendo that it’s possible for Virginia’s electric power to be 50% carbon free by 2030 or 2040, RUMBA, how we get there should not be determined by the GA or any other legislative body. Mandating off-shore wind, X number of thousands of solar farm acres, or fusion-based nuclear power is beyond the capacity of any and all legislators. And when it’s done, it simply allocates someone else’s money to rent seekers.

        1. LarrytheG Avatar

          TMT – do you not think we got cleaner air and water through Govt standards?

          Or safer food and drugs from govt standards?

          One of the major distinguishing characteristics between modern industrialized countries and 3rd world countries is govt standards, no?

        2. PeterTx52 Avatar

          federal standards such as CAFE are not based upon science but rather by politicians who don’t understand automobiles. To achieve the unreasonable CAFE standards all cars look alike, aluminum rather than steel is used making passengers are more vulnerable. 8 cylinder engines are scarce and 6 cylinders are becoming scarce too. soon all vehicles will be powered by 4 cylinder engines thus we will have energy-anemic vehicles but they’ll get 40 mpg

  2. LarrytheG Avatar

    Of course, there are more than one way to look at this.

    For instance, if we ALREADY have gas plants to meet current electricity needs, why would we need additional plants for “backup” if we build solar?

    wouldn’t we still be using the same gas plants but less so when solar is producing?

    Second, if the price of gas is increasing, and solar ends up less expensive than gas – we’d SAVE money if we could use solar instead of gas when solar was available.

    Used to be that “Conservatives” would think more so in such terms than to just be ideological naysayers to newer technologies that offered advantages over current!

    Finally, it’s a proven fact that if the price of electricity goes up, people will use less of it by employing conservation and technology – which is an inherently “conservative” approach to ANY commodity that increases in price – like gasoline or natural gas!

    1. Kathleen Smith Avatar
      Kathleen Smith

      Your comment about conservation is mute when it comes to hospital use, school use, factory use, etc.

      1. LarrytheG Avatar

        Explain more! How so? Hospitals that work efficiently do better than hospitals that don’t. Manufacturers that are more efficient , out compete their competitors and sell better products for less money, no?

        Our school system put very expensive metal roofs on the schools after a study showed they’d be less costly in the long run.

        They replaced all their fluorescentswith LEDs and were able to pay for all the LEDs with the savings in one year!

        I think arguments can be made for efficiency and productivity in any industry but I admit there are plenty of counter-examples…

  3. LarrytheG Avatar

    I see where the $4 a month comes from. where does the $800 a year come from?

  4. dick dyas Avatar

    I wonder what we do with all the windmills when fusion energy generates the nation’s electric supply?

    1. LarrytheG Avatar

      That’s quite likely what could happen but until it does we have to proceed with what we know that works.

      So we could get a breakthrough in battery technology that would supercharge renewables and essentially put gas out of business.

      We might get a breakthrough in Hydrogen so that solar could be used to produce hydrogen and we store it and use it when the sun don’t shine.

      Or we may get a breakthrough in Fusion or in more conventional small modular nukes…

      And my bet is this is going to happen, and all this to and fro over this issue will just recede as an issue.

      But also to point out – how we got to here.

      We decided that coal was much too dirty and would be phased out – even though we really did not have a clear of the future and costs of other fuels – and that sparked efforts to look into frack gas – and it turned out there was a lot more of it than we thought.

      We’re now at the next phase and we continue to move forward – even though we do not yet have exact answers.

      To me, this is and has been one of the most powerful aspects of the United States. We lead the world on some of these issues, and we have benefited quite handsomely from our technological advances. We need to continue this leadership.

  5. Wahoo'74 Avatar

    This Dominion Green wind $2B is a 25.6% cost overrun. Dominion is a publicly held, private sector company but is more akin to a government entity since these cost estimate screw ups are simply passed onto the consumers due to utility legal regulations.

    “Real” private sector companies can’t do that. If the cost of a new product increases 25.6% the company cannot blithely pass that on and increase the price to the consumer without considering the company’s competitors. Companies that cannot control expenses eventually go bankrupt.

    The $1.2T infrastructure bill the House passed is analogous to the Dominion Energy wind power disaster. Government run contracts are ALWAYS run inefficiently. This $1.2T monstrosity will optimistically accomplish perhaps 40-50% more of the stated project goals. Then Congress will come back begging for more. The Federal government is an insatiable beast.

    All this money is borrowed. Federal debt is already 129% of GDP before this bill. It has not been that high since WWII. In simple terms we have more Federal debt than the entire US economy creates in revenues for an entire year. Keep in mind that figure doesn’t included state, county, city, and towns local/regional municipal bond debt.

    This won’t work. Dominion Power is a small harbinger of things to come if the Senate passes this bill.

    1. LarrytheG Avatar

      I’m pretty sure Medicare administrative expenses are lower than private insurance. no?

      And Medicare actually establishes benchmarks for all procedures – and it’s the lowest cost reimbursement.

      But I don’t disagree that many govt functions – like DOD are not interested in cost-effective operations with the proviso that they do have a budget process and funds are not unlimited and even DOD has to make tough choices about how many ships or aircraft they can afford.

      And I don’t think private sector competition always delivers the best product for the least money.

      They deliver products that make them money and we know that many products are purposely designed to not last as long as they could but sell for lower prices that consumers will buy more of that higher priced-longer lasting products… or products higher priced that same money over the longer run which is totally true of more efficient HVAC and other similar equipment.

      And I’m willing to be you that you have electronic “stuff” stored away in your house that will likely never be used again but you hate to throw it away! You paid good money for it and it still works BUT it’s been “replaced” by newer technology!

      Bottom line: I don’t think the private sector delivers the longest lasting, lowest price things.. They SELL things and the goal is to sell MORE stuff, not less – they just compete with others to see who can do it more efficiently and make MORE profit!

      Dominion, like all monopolies, is in a separate realm of it’s own. We attempted to de-regulate electricity in Virginia and what happened?

      1. how_it_works Avatar

        I have a 13″ Trinitron TV set from 1987 with AV inputs I hope to sell for an inflated price to a gaming nerd.

        1. LarrytheG Avatar

          good luck! I’d wager most electronics that age is found in landfills….

          1. how_it_works Avatar

            Which is exactly why it’s a “collectible” to the sort of people who want to play their SNES on a tube TV, and not just any tube TV, but a Sony Trinitron!

          2. LarrytheG Avatar

            I would think electronic “collectables” might be risky for operational ones…. but I guess there are folks out there that could fix an electronic collectable… I see them on Pawn Stars from time to time.

          3. how_it_works Avatar

            There’s a guy on Youtube who can fix a tube TV set from the 50s that has been sitting exposed to the elements for decades in an abandoned mining site.

          4. LarrytheG Avatar

            Oh I’m sure just as a lot of other electronic equipment could be – for a price – and that price being more than what a new version would cost!

          5. energyNOW_Fan Avatar

            Geez I threw my Dad’s 200-lb Trinitron out a year ago.

  6. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    I am not condoning the cost increases posited by Dominion. But, there seems to be a double standard going on here. Cost increases by Dominion for environmental projects and by Metro for mass transportation get slammed, probably justifiably, but not a peep about cost increases for all those ships being built down in Newport News. https://www.stripes.com/branches/navy/2021-06-07/US-aircraft-carrier-costs-are-rising-again-Navy-budget-shows-1652936.html

    1. LarrytheG Avatar

      You noticed that also? And some highway projects? And some Boeing airplanes and NOW – chip shortages and supply chain problems – … Biden’s fault they say…


      this is a stubborn problem with some Conservatives… It’s built into their mindset that govt is bad…. and the private sector is always good 😉

    2. Matt Adams Avatar
      Matt Adams

      All of the cost increases are tied tot he F35 boondoggle. I’d be all for auditing the Fed, considering our current SecDef went from Gen to MIC back to Civilian head of the Military (w/ a wavier). There is bound to be waste, fraud and abuse.

      Heck the soldiers don’t want half the sh*t ex O6’s and ups new companies are selling, yet we are buying.

    3. Stephen Haner Avatar
      Stephen Haner

      Sold my stock. Not my job to respond. 🙂 I can however assure you little or none of that goes overseas! US content is mandated. The same will not be true of turbine project….Having watched the ship projects, I have long expected the turbine price to rise steeply.

    4. Nancy Naive Avatar
      Nancy Naive

      Was that tongue-in-cheek? NNSB builds useful products. I await delivery of my next boat, an SSBN. “Sure Coastie. You can board my boat and search for dope. Hold yer breath.”

      Whatever use is there for electricity and transportation?

      It’s all good. Even boondoggles drive the economy. Remember how Steve went apoplectic over the loss of his incandescent lightbulbs?

      1. LarrytheG Avatar

        they tax the hell out of us for transportation and they build all this “stuff” and we STILL have congestion …. what a waste!

        but seriously – at what point does natural gas have to get cost-wise before even higher priced wind than original predicted is still 1/2 the cost of gas and a clear no-brainer?

        And when wind is not blowing and we have to use gas, it will cost us twice as much per killowatt and conservatives would still want to burn gas instead of wind?

        Conservatives are very confusing on this.

        they’d still oppose wind because it’s not reliable or dispatchable even if it costs 1/2 what gas costs?

        How much less costly does wind have to get before Conservatives will support it?

        ” Natural gas prices have doubled since last year, sitting at $5.77 per BTU in the United States. A 100% growth is nothing to sneeze at, but in some parts of Europe, it’s 500% year over year; they’re paying four and five times what it costs here.” Oct 6 2021


        At some point if natural gas prices keep going up, the investment in wind is going to look like a wise investment.

        1. Nancy Naive Avatar
          Nancy Naive

          Whatever puts KWHrs on the wire and whatever stores and releases it.

          1. LarrytheG Avatar

            The conventional wisdom in BR and with opponents of wind and renewables in general has often been to treat the cost of gas and fossil fuels as “fixed” while costs for winds is ‘low-balled’ and/or higher than actual.

            The idea that the price of gas and other fossil fuels, could go up, even double or triple in price has apparently not entered the minds of opponents of wind who say it is not financially viable.

            At some point if gas goes up in price, wind will be clearly less expensive so the dollar argument will have to change and opponents may have to admit that wind – even wind that has increased in price itself is still less expensive than gas and that in the end – if we take the partisans arguments out of the equation – wind will produce more kilowatts than gas for the same money.

            The more demand for fossil fuels – the higher the price – and the less competitive it will be to wind.

          2. Nancy Naive Avatar
            Nancy Naive

            All or nothing mentality. “Sun doesn’t shine 1/2 the day, so we can’t rely on it. Wind doesn’t blow all of the time so we can’t rely on it. Droughts drain lakes so we can’t rely on it. But fossils and nukes are endless…” until they’re not. They rule out such obviously silly things as “peak oil”. There’s always more. Always. Why, it’s just off the coast. All we have to do is drill.

            To people who have never had to manage power consumption beyond trying to shrink a utility bill, it’s all too simple, just unplug the coffee maker and turn down the thermostat.

  7. Life is a math problem and we’ve seen how the left handles it [Biden’s econ-crushing proposal will cost $0.0].

    So DE just figured out this math problem: ‘completion of design plans for transmitting
    electricity from the wind farm through populated areas in Virginia Beach
    to a substation’. It hadn’t thought about HOW to get the power from the windmill to the people? UNTIL NOW?

    And for a ‘whataboutism’ — how do the tax breaks support the Left’s/Dem’s mantra: ‘Everyone must pay their fair share’?

    1. LarrytheG Avatar

      so – all of Trumps tax cuts were not paid for and funded by debt, right?

      and here’s a question for you – do you know how the Medicaid expansion is funded? by deficit spending or…???

      The thing about the Wind Turbines is if natural gas keeps going up in price – why don’t we see that also in the commentary about costs to consumers?

      If natural gas goes up in price and stays high – will the economics of wind be better in comparison?

  8. William O'Keefe Avatar
    William O’Keefe

    The only way to control the costs of this boondoggle is change the incentives by having them come out of profits instead of essentially have a cost plus arrangement. As for Larry’s wandering commentary, the more he talks the more he demonstrates how little he knows.

    1. Stephen Haner Avatar
      Stephen Haner

      I’d have a very different attitude if the developer Gamesa was building with its own money and a firm fixed price power purchase agreement. That is the case with some of the other proposals. Is it too late to change to that approach?

      1. Matt Adams Avatar
        Matt Adams

        From my experience obviously not as vast as Bill’s once a task order is running. The changing from Cost + to FFP isn’t happening unless they halt and advertise.

    2. You are absolutely right, Bill — the root problem here is Dom’s years-long push to place all its new generation projects in its regulated “rate base” and charging operating costs to retail customers through rates (including with all those fancy rate adjustment clauses to make sure there’s instant recovery of every penny) — rather than building and operating this generation through its unregulated, competitive subsidiary as “merchant” units — so that shareholders get 100% of the profits but also shoulder 100% of the capital cost and the risk of obsolescence. It’s both the SCC and the GA that have allowed this. And it runs contrary to how most electric utility investment in new generation is being treated these days. But, of course, not a peep out of the AG’s Office of Consumer Counsel about this.

      1. LarrytheG Avatar

        I think the Northam/Herring ship has sailed as well as the prior GAs.

        Youngkin and the new GA has an opportunity to change direction. I’m all for it.

        I KNOW and EXPECT things to be done I don’t agree with and I will hear “elections have consequences” no doubt, way more than necessary but at the end of the day, I really DO wish Youngkin success and especially so on things that will gain him widespread support and appreciation. REALLY!

    3. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      I agree with you on the need to change the incentives.

  9. Nancy Naive Avatar
    Nancy Naive

    So, say you wanted to end a project that is supported by roughly, oh say, 40% of your customers and would result in bad press internationally, how would you do it?

    Would you come out and say, “At this time, we feel that going forward is not prudent,” or would you greatly exaggerate future costs with an incoming administration that is hostile even at half the cost and just wait?

    As Flip Wilson used to say, “Da Devil made me do it!” And that may not be wrong.

  10. energyNOW_Fan Avatar

    It’s true some renewable wind projects suddenly now have higher costs, lower returns.

    Keyword: Copper- prices going up due to renewable wind projects, with some wondering if there is enough copper for all the hopes and dreams of the liberal electrification push. If lucky some new copper mines will fill the gap. Good review article:


    1. Once China conquers Afghanistan all those rare earth minerals will be provided to the world’s industries at a reasonable price.

      1. LarrytheG Avatar

        except that’s not where they all come from.

        ” Rare-earth ore deposits are found all over the world. The major ores are in China, the United States, Australia, and Russia, while other viable ore bodies are found in Canada, India, South Africa, and southeast Asia.”


        gotta use reliable sources…. not FOX or similar…

        1. energyNOW_Fan Avatar

          Copper/cobalt are not rare earths but also important for the proposed massive shift to electrification of our society. When I think of the word “sustainable” I think that means all resources.

          1. LarrytheG Avatar

            I do too but there is reality and there is boogeyman thinking.

      2. Nancy Naive Avatar
        Nancy Naive

        China tried to conquer Afghanistan. So too did Russia, England, and the US. Greece did, but they wisely impregnated the women and left. India holds the record on occupation at something like 900 years.

        But wait?! Are you suggesting 9-11 was an excuse not a reason?

    2. Matt Adams Avatar
      Matt Adams

      Maybe there will be a resurgence from the 60’s and aluminum wire will make a giant comeback.

      1. how_it_works Avatar

        One of the electricians forums I read they talked about wiring tesla charging stations with aluminum instead of copper due to the cost. Apparently the tesla charging station has to be wired with copper so they go aluminum from the breaker to a disconnect (probably exactly the same as what would be used for an AC condensing unit, they are very common and cheap) near the charging station and then copper from the disconnect to the charging station.

        In most homes in this area, you’ll find that any circuit over 30 amps is wired with aluminum: air conditioner, heat pump air handler, electric oven/range, and so on.

        1. energyNOW_Fan Avatar

          we had copper-clad aluminum house wiring in South Jersey when copper was expensive in late 70’s. Did not have too much problem with it, I wonder how it is holding up?

          1. how_it_works Avatar

            I saw some discussion of copper-clad aluminum wiring on that electrician’s forum. One of the wire manufacturers had an article in one of the trade journals about it within the last couple of years saying that they were going to start manufacturing it. But apparently it’s still not available yet. (This type of wire has been out of production for quite a few years).

  11. LarrytheG Avatar

    Basically, this is done. Youngkin and company need to go forward and stop looking back, affixing blame and trying to “undo”.

    Go forward. If you want to “fix’ things, do it as something going forward not going back to repeatedly sniff the bad smells… make faces and spend your time looking for more bad smells… ya’ll know what I mean here..


    Be what Northam was not, listen to people and steer a moderate course that gains support across the spectrum.

    And if the deal with Dominion is wrong – do something about it even if you can’t fix it all right now – lay out what you think needs to be done – get support for it – from citizens and from the elected.

    Do what the Dems AND the GOP could not or would not do before – do that , rather than blame the ones who failed to do it.

    THAT’s what leadership AND accountability are…

  12. Nancy Naive Avatar
    Nancy Naive

    US defense spending as %GDP 2021, 3.3
    US renewable energy spending as %GDP, 0.2

    1. energyNOW_Fan Avatar

      Are you sure? just all the $7500 tax credits on California electric vehicles alone must be big dollars. That’s been 10 years now of tax rebates, not working so Dems want to near double the subsidy until 50% US cars are all-electric per Dem mandates. Nice free market.

    2. energyNOW_Fan Avatar

      Are you sure? just all the $7500 tax credits on California electric vehicles alone must be big dollars. That’s been 10 years now of tax rebates, not working so Dems want to near double the subsidy until 50% US cars are all-electric per Dem mandates. Nice free market.

      1. Nancy Naive Avatar
        Nancy Naive

        Defense is HUGE. We spend more on defense than the next twenty countries combined. Yes. I’m sure.

        Solyndra is spit in a bucket compared to the F-35 Super Boondoggle. The Navy spent more money with MacDAC on the A-12 than all of the money spent on EVs.

  13. James Wyatt Whitehead Avatar
    James Wyatt Whitehead

    Billion here Zhmillion there… Who’s counting?

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