One of these bad boys costs $100,000 to $200,000 per day, and it has to come all the way for Europe -- a big expense for just two experimental turbines.
One of these bad boys costs $100,000 to $200,000 per day, and it has to come all the way from Europe — a big expense for just two experimental turbines.

Dominion thinks $400 million is too much to pay for two experimental offshore wind turbines. The utility is exploring ways to drive the cost down.

by James A. Bacon

When Dominion issued a request for bids this spring to erect experimental wind turbines off Virginia Beach, senior executives knew the project would be expensive. Offshore wind farms are built most economically on a scale of dozens or hundreds of turbines. But this project would have only two, and both would incorporate untested technologies. Moreover, there was no supporting maritime infrastructure on the East Coast of the United States. Key components and construction vessels would have to be imported from Europe.

Internal estimates put the cost around $230 million. The cost per kilowatt of power generated would be so expensive that Dominion executives expected the project to be a tough sell to the State Corporation Commission. But they figured they could make the case that the company would learn enough from the turbines that it could bring down costs for large-scale wind development — some 300 turbines — down the road.

So it was an unpleasant surprise when only two companies bid to build the project, and only one of them in full compliance with the contract specifications. And it was even more discouraging when the sole compliant bid came in at more than $375 million.

“We thought we’d have a challenging [approval] process at $230 million,” said Thomas Wohlfarth, vice president for regulatory affairs at a stakeholders meeting Friday to discuss the future of offshore wind in Virginia. “When the cost went to $375 million, we went, “Whoah!’ We like to show a positive net present value to customers. This would be very challenging.”

Until that point Dominion had moved steadily, if ploddingly, ahead with plans to exploit Virginia’s offshore wind resources as a source of renewable carbon-free energy. The company had conducted a cost-reduction study in 2011, completed two internal transmission studies — finding that it could bring in up to 45 megawatts of offshore electricity to its Virginia Beach power grid without significant cost — spent $1.6 million in a blind auction to acquire offshore wind rights, and successfully solicited Department of Energy grants to help underwrite preliminary engineering and design on the two experimental turbines.

The disappointing $375 million bid threw a monkey wrench into Dominion’s rotor. Putting wind development on hold, the company convened in Richmond a gathering of dozens of stakeholders — from business vendors and partners to government officials and environmentalists — to deconstruct what went wrong and to plot a more cost-effective path to full-scale development.

“Dominion really wants to see his project move forward ,” said Mary Doswell,  senior vice president of energy solutions, told the stakeholders. “We need to push our way through, and we need your help to do that.” While she did not say development of the larger offshore wind project would be stymied if the experimental turbines weren’t built, she didn’t deny it either.  It’s not something she had thought about, she responded to a question. “We’ve been so laser-focused on this project that we haven’t considered what might happen.”

The experimental turbines would incorporate state-of-the-art technologies, never tested before anywhere else, that would affect the cost efficiency of a subsequent, large-scale wind development off the Virginia coast. The most feature important would be a hurricane-resilient design affecting the interaction of rotors and blades in high winds. While wind turbines operate in harsh weather conditions in the North Sea, where winds have been known to reach 90 miles per hour, turbines off the Atlantic Coast would be at risk of exposure to Category 3 hurricanes which generate wind speeds of up to 129 miles per hour. “It’s a very robust design,” said Mark Mitchell, the project construction manager.

The experimental turbines also would incorporate a new Alstom design for the drive train, and a twisted jacket foundation for the turbine. The turbines would be placed in a configuration that would enable Dominion to measure what kind of wind wake one turbine creates for another another — critical for determining layout in a wind field of 300 turbines. Additionally, Dominion would test remote monitoring technologies that would allow for predictive maintenance, such as replacing fatigued parts before they wore out.

Dominion expects to learn much else that would help it advance the 300-turbine project. For example, what are the seabed conditions? “You can’t just run a cable out there,” Mitchell explained. Hampton Roads is a major naval base. Is there unexploded ordinance on the sea floor? How hard is the seabed? What are the sand migration patterns? Ideally, the cable is buried a couple of meters underground. Dominion doesn’t want the sand to drift away and leave it uncovered. In a related matter, Dominion needs to know how deep to drive the steel piles underground to provide the needed stability for the turbine. More steel translates directly into higher costs.

Most of the feedback came from Dominion’s contractors and suppliers who helped put the bid together. Several main themes arose from the conversation.

Supply chain. Building cost-effective wind farms requires a large supply chain of companies providing engineering expertise, components, specialized construction vessels and other critical capabilities. That supply chain does not exist on the East Coast of the United States. In Europe, the offshore wind industry grew out of the North Sea oil & gas industry’s experience in working offshore, said Rudolph A. Hall, managing principle of Keystone Engineering in Louisiana. With many years of experience in offshore wind, the Europeans have developed specialized capabilities that drive down the cost. “It’s much cheaper to build in Europe for that very reason.”

The underground cable would come from Europe. So would the turbine — and so would the ship-crane that would install the massive rotors with a nearly 500-foot diameter. “Literally only five or six ships in the world can do that work,” said Gary Oakley, a senior project manager with engineering firm KPR. “You need a crane 120 meters high” set on a jack-up vessel that can sprout legs down to the seabed. It takes 12 to 14 days to cross the Atlantic Ocean, a couple of days to install the rotor, and more time to head back to Europe — and that doesn’t count down time during bad weather. Ship and crew can cost between $100,000 to $200,000 per day.

Another complication is the Jones Act, which restricts non-American vessels from moving cargo from one port to another within American waters. Work on a wind turbine would count as a “port.” That creates the necessity of devising expensive work-arounds.

Hampton Roads, which has a significant shipbuilding and ship repair industry, potentially could become the center of an East Coast offshore wind industry. But it will take more than a couple of experimental turbines to lure leading European firms to Virginia. The prospect of a large, assured offshore wind market is critical. “Predictability would be the most important thing,” said one Alstom executive. To expedite the process, he added, Dominion executives could start cultivating personal relationships with high-ranking industry players.

It is highly unlikely that such a supply chain could be built in time, however, to bring down the cost of the experimental turbines.

Cost versus innovation. In theory Dominion could shave some costs from the project by foregoing some state-of-the-art technology. “How much do we give up on the innovation?” asked Doswell in a rhetorical question. The company could rely upon computerized models and simulations for the engineering of its 300-turbine wind farm. Then, answering the first question with another: “Do we want to take that risk? This is R&D. You’re not going to get this to a cost-competitive level.”

Cost versus risk. Another way to drive down the cost would be to take on more risk. “Bad weather can cost hundreds of thousands of dollars a day when you’re leasing an expensive ship,” said Mitchell, the contract manager. In ten-day job, how many days of downtime do you factor in? How much uncertainty can you stand?”

Actually, the more relevant question is how much risk can the SCC stand? “We must provide certainty of outcome — cost, service and performance,” said Mitchell. “When [the SCC makes] a decision to go through with a project, we have to deliver on time and at cost.” Credibility with the SCC is not an asset Dominion can squander lightly.

Restructure the contract. Another idea is to restructure the contract to divide it into more discrete components allowing companies performing performing specific tasks to assume the risks associated with those tasks. As Mitchell put it: “The person who can best control the risk should hold the risk.” But even that approach has a potential downside. “As you divide the project, you create seams,” he says. That creates the potential for risks to fall between the cracks.

Doswell made the case that other stakeholders could consider sharing the cost. The Department of Energy contributed $4 million for engineering analysis of the test turbine, and has pledged to cost-share $47 million for more detailed work over three phases. But that’s it. Is it fair, she asked, to insist that Virginia ratepayers to pay for the cost of Research & Development that will widely shared, benefiting the larger wind power industry as well as other states along the Atlantic Coast?

If stakeholders aren’t willing to pony up money, maybe they can contribute their ideas. Dominion is openly soliciting analysis and advice from the project stakeholders. Participants will convene in discrete groups and present their thinking in October. The fate of offshore wind power in Virginia could well depend upon what they come up with.

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  1. LarrytheG Avatar

    I think DOminion bought up all the leases early on so that essentially no other company can proposed their own project -.. no?

    It sorta looks like Dominion gathered up the leases and now is going to sit on them.

    I’d be the first to admit – that turbines in a salt water environment don’t sound sustainable.. but then again – you’ve got the CBBT and it seems to have found a way to sustain itself in such a corrosive environment.

    Why would the bids be a surprise? Aren’t there are projects ongoing with a financial track record?

    is this one different from the others already built?

  2. “Why would the bids be a surprise? Aren’t there are projects ongoing with a financial track record?” Well, yes, but they are expensive for the energy you get, not a good bargain unless you’ve got very sustained winds to amortize the cost, and maintenance over water is an additional problem, and and the environmental impact (cabling, pedestal, visual) is significant, and a big chunk of the public hates them, which is not what a company like Dominion wants to be known for (a set of wind turbines near Martha’s Vineyard is a case on point). So solar is the easy choice if you have to pick just one renewables generating station.

  3. LarrytheG Avatar

    ya .. I get that.. why grab the offshore leases and not leave them to others if they are such a bad deal?

    Dominion is not going to be an innovator or early adopter… so other actors in the market.. will pursue that.. but if the prime areas for exploiting are locked up and not accessible… why would Dominion do that ?

    It comes across as Dominion taking steps to protect themselves from others innovating… disruptive technology…

    I can see that if they are not a regulated monopoly and as they say all’s fair in love and war.. but when they are a regulated monopoly it appears they’re using their power inappropriately.

    If Dominion does not want to try to be an early adopter to exploit wind and solar, fine.. but to have them interfere with and obfuscate others strikes me as not in the best public interest.

    Virginians should be entitled to innovation and disruptive technologies.

    this sorta sounds like the Taxi companies putting sticks in Uber’s spokes..

    tell me how I’m wrong on this.. seriously. I may well on a bias…

    1. If someone else was prepared to grab the offshore leases and do something with them, why didn’t they? It was a blind auction. What stopped them?

    2. TooManyTaxes Avatar

      One remedy would be for the VSCC to forbid Dominion to earn on, and amortized the value of, the offshore leases until they are producing commercial power.

  4. LarrytheG Avatar

    why did Dominion bid at all if they were not going to do anything more than a pilot program at best?

    and why doesn’t Dominion divest itself of them if it has decided not to use them?

    Dominion says it’s not feasible to do wind power in the western part of the state also but there are other companies that are planning on doing it …

    can you explain how the “blind” auction worked? how was it any different that a high-bidder wins auction? It looks like Dominion bid up the price and really had no real plans to develop.

  5. Peter Galuszka Avatar
    Peter Galuszka

    A few points:

    (1) One still can’t avoid the idea here that Dominion may not be that keen on moving forward. Of course, new forms of energy will cost — no one ever mentions how much nuclear power plants cost. They started out small, too.

    (2) I didn’t see in this blog post what I saw in the Richmond Times-Dispatch’s coverage of the same event:

    “The state’s largest utility is also holding out hope that financial support from federal, state pr industry groups will save the stalled project.”

    If this isn’t mentioned, one might presume that government support of anything is verboten by the author. But it could exactly be the point.

    (3). The cutline under the picture is loaded:

    “One of these bad boys costs $100,000 to $200,000 per day, and it has to come all the way from Europe — a big expense for just two experimental turbines”

    It sounds like you are dismissing the wind project out of hand. OK, maybe the ship has to come from Europe and is expensive. So are nukes. Our we supposed to just delay wind forever because of this? Conservatives said the same thing about solar. The price points have become very favorable.

    (4) Lastly, your post fails to mention any other American off shore wind project. This omission makes it seem as if Dominion is a true pioneer in this effort., Not exactly so.

    To help fill in the blanks, here’s a piece I wrote for Slate a couple of years ago:

    1. No mention of government support? How about this?

      “Doswell made the case that other stakeholders could consider sharing the cost. The Department of Energy contributed $4 million for engineering analysis of the test turbine, and has pledged to cost-share $47 million for more detailed work over three phases. But that’s it. Is it fair, she asked, to insist that Virginia ratepayers to pay for the cost of Research & Development that will widely shared, benefiting the larger wind power industry as well as other states along the Atlantic Coast?”

    2. Peter said, “It sounds like you are dismissing the wind project out of hand.”

      Not at all — I’m explaining how why the bid was so high. Nobody expects to justify construction of two experimental, state-of-the-art turbines on the basis of cost. The justification is to test new technologies and move up the learning curve in order to reduce the unit costs of building 300 wind turbines in the future. Anyone building off the Virginia coast has to deal with pesky little problems like hurricanes. Failure to anticipate hurricanes in the design and construction of wind turbines would be wildly irresponsible.

      While the R&D aspect can justify some higher cost, Dominion believes that there is a limit to how much the SCC would be willing to spend on experimental turbines. $400 million for two wind turbines would be some of the most expensive energy in the world! What you totally fail to appreciate in your Dominion-bashing commentary is that Dominion must continually ask itself, “What can we get through the SCC?”

      Do I think Dominion is doing the right thing? I don’t know. My first goal is to explain the real-world constraints Dominion has to consider and then to explain its logic in doing what it does. Once we understand those things, we can have an intelligent conversation. Knowing those things, perhaps one still could argue that Dominion is being too timid. Fine, let’s have that debate. But let’s have a debate based on reality, not figments and suspicions.

  6. Steve Haner Avatar
    Steve Haner

    1) There is an old saying about crawling first and then trying to run, and I think a stable on shore turbine industry could make it easier to venture out into the water. The development of that Iberdrola field in North Carolina might start justifying development of some of the needed infrastructure in the region.

    2) You may remember that until a few years ago the first Virginia turbine was going to be built by Gamesa on the southern tip of the Eastern Shore. It was a test turbine of technology to be used offshore, but in order to do the test it would be built right on the coast. Internal politics in Spain dictated that the investment would not be made in the U.S. and it went to the Canary Islands instead. I’m curious however if Dominion has considered a similar scenario, building the turbines right on the coast as their test. Or very close in.

    3) Now it is becoming a bit clearer what is going on with this Dominion sponsorship of my favorite blog. Here we have them using Jim to break a little news, get their point of view across without too much hostile cross examination. A press release masquerading as journalism. Whoever made the point that Jim did not bring up the issue of subsidization was dead on. Its absence is conspicuous. I see logic to a stronger federal investment in testing this technology off the US coast, but if done it should not benefit one particular utility. The ratepayers of one or two companies, or taxpayers of one state, should not foot the bill.

    1. No mention of subsidization? How about this?

      “Doswell made the case that other stakeholders could consider sharing the cost. The Department of Energy contributed $4 million for engineering analysis of the test turbine, and has pledged to cost-share $47 million for more detailed work over three phases. But that’s it. Is it fair, she asked, to insist that Virginia ratepayers to pay for the cost of Research & Development that will widely shared, benefiting the larger wind power industry as well as other states along the Atlantic Coast?”

      Also, let me say that there were a half dozen ancillary angles I could have mentioned in the story. Sorry I couldn’t get to them all in the depth that would satisfy all Dominion critics. But the story was already too long, and I have plenty of opportunity to explore other angles in future posts. My goal in writing this article was to focus on the experimental wind turbines and illuminate the major economic issues — which I haven’t seen anyone else write about — that must be grappled with in order to build a wind power industry off the Virginia coast. I think we can have a much more intelligent debate about wind–power economics than before these issues were brought to light.

      Now, some people may not care a hoot about economics — not you, Steve, but you know whom I’m talking about. But if we have finite resources to use in reducing CO2 emissions, it is incumbent upon us to understand the costs associated with different strategies and to channel those finite resources into projects that return the highest return on investment.

  7. LarrytheG Avatar

    I’m tentatively okay with the sponsorship but I do feel that some posts seem to be oriented to Dominions views..

    that’s fine – as long as folks can ask the hard questions – like now.

    I still think it “feels like” Dominion is exercising it’s monopoly power to fence off wind resources from would-be competitors and the idea that they are themselves “waiting” for govt grants – I guess that’s Dominions way of needling folks about govt programs like Solyndra, eh?

    The fact that Dominion put it’s project out for bid – makes me wonder also how much in-hour expertise they are intending to develop.

    Finally – the idea that the SCC in tandem with the GA is involved is disturbing to me. I think it’s in appropriate and I question their philosophical bearing on electricity generation..

    and I guess folks saw this in WaPo: Dominion workers give big to sponsor of company-backed bill

    Campaign finance records filed Wednesday show that 21 workers at the Richmond-based energy conglomerate gave Virginia Beach Republican Sen. Frank Wagner $23,000 for his re-election campaign on June 30

    Donations by Dominion employees also play an important — if less documented — role in funding Virginia politics. Dominion employees have given more than $1.3 million to state political campaigns since 2005, according to VPAP records. Wagner, who hasn’t faced serious competition for his seat in several cycles, has not reported a donation from a Dominion employee prior to this year, according to VPAP records.

    1. Perhaps one of those 21 employees would be so kind to explain to us why this bill was needed. Still a mystery to me. Gov McAulliffe said he signed the bill because it was clear to him Dominion execs would have been devastated without it. But we never really heard an explanation about why Dominion execs needed the bill so badly.

  8. Peter Galuszka Avatar
    Peter Galuszka

    I am the one who raised the point that Dominion wants government or industry subsidies. Jim should have noted that in his piece.

    Unfortunately, I tend to agree with your suspicions about this “sponsorship.” Jim needs to think this through a little better. He can’t accept Dominion’s money and write stories that favor Dominion’s positions. That’s simply wrong and unethical.

    Jim is a terrific journalist and an honest guy, but he might not realize how close he’s coming the the edge here.

    I few years ago, the Piedmont Environmental Council sponsored the blog. There was enough money for Jim to write deeply reported issues about land use planning. Another writer and I shared in this and were paid for similar stories.

    The catch is that we were never required to write specifically about PEC. We never tailored an entire piece to their point of view and their interests. As I have said before, it would have been far better if Jim had tried to get an environmental group along with Dominion. Instead, he got trapped in a deal in which Dominion gets to vet any other sponsor and if it doesn’t like them, either they or Dominion leaves.

    If you note my piece on offshore wind in Slate, you may see a logo at the top from Statoil, a big Norwegian oil firm that sponsored a series of stories on energy issues. I wrote maybe three of them and none involved Statoil.

    I know that some commenters on this blog think I am harping on the Dominion thing, but I have every right to do so. I spend hours on this blog at my own expense and have for years. My reputation is caught up in how Jim’s deal with Dominionl plays out.

    Another problem is that since Dominion’s money goes exclusively to Jim, he has an advantage to research and report stories that tend to be favorable to Dominion. Others on this blog who write pieces critical about the utility have to do their work for free. This isn’t fair.

    It is very serious business and needs to be resolved. Jim just can’t expect everyone to go along with this.

  9. Steve Haner Avatar
    Steve Haner

    Larry, the role of the SCC is vital. I’m disturbed that you still are not grasping this. Dominion and similar companies are monopolies and free of market competition. The SCC rate review process is a substitute for competition, and ideally it’s job is to make sure that the company is operated in a reasonable and prudent manner and the ratepayers are not fleeced. If a utility makes unreasonable or imprudent expenses or investments, the SCC is there to make sure that the risk and cost is borne by the stockholders and not the ratepayers. The stockholders are volunteers and the ratepayers are not.

    Dominion understandably planned/plans to ask the ratepayers to cover the cost of this demonstration project since it will produce actual electricity. So the SCC has a role. You don’t like the idea of a certificate of need process for medical facilities, but the same process exists for generation facilities. Dominion has to, and it should have to, demonstrate that the project is really needed and the cost-benefit ration will be positive. At that price, those two turbines were going to have a hard time jumping that hurdle.

    That said, I’m signing off. Given my own professional conflicts, it is probably best if I just avoid commenting at all on energy issues. Here, anyway.

    1. LarrytheG Avatar

      @Steve – I would URGE YOU to CONTINUE … you’re providing an important perspective that I for one, do value highly.

      THe problem I have with the SCC is several.

      First – they do not take pollution into account when they are doing money. They did to distill everything down to dollars and cents while we clearly have some issues with that line of reasoning. They castigate the EPA for not doing cost-benefit – where is the SCC cost-benefit when they make decisions?

      Next – how do Govt bureaucrats have the business acumen to decide if Dominion is making good business decisions and that includes decisions ostensibly made in the best interests of rate payers – who will pick up the tab for bad strategic decisions … so when I hear Dominion say “if the SCC will let us” , I’m twice concerned. It sounds a little two much like a relationship that is not healthy for consumers.

      Finally, I see things going on that seem to be penalizing other actors getting involved in electricity generation in Va – both legislation and the SCC actions.

      I may be wrong on some of these things .. that why I like the other side represented…

      so continue…please.

      1. Steve Haner Avatar
        Steve Haner

        You are correct that environmental concerns are not the highest priority with the SCC. The SCC is created in the state constitution but the ratemaking rules and other parts of their job are set by statute. It is not right to say they don’t take pollution into account, but it is fair to say that others make those decisions (including EPA) and the SCC works with what it is given. It will give as much or as little consideration to environmental concerns as the law dictates. But it is directed to place great emphasis on keeping costs down.

        You are very wrong not to recognize that a regulatory agency like the SCC has some extremely qualified people, and it’s in an area like this where the oft-attacked “revolving door” provides some benefit. Many have worked for utilities or for other business entities, and certainly they have some of the same technical training. Then they can hire their own experts.

        The SCC is a court. When Dominion or APCO or a gas company file petitions, other interested parties are allowed to participate, to intervene. Those companies also have business expertise, their own hired experts, and their own interests to protect. There is discovery and testimony is taken under oath. Darn little testimony at the General Assembly is taken under oath, nor can somebody file interrogatories over a piece of legislation. The SCC staff doesn’t make any decisions and the judges have the benefit of everybody’s expertise before they make a decision. I really respect the process. I think if you understood it better you might too.

        If I hear Dominion worry, “if the SCC will let us,” that is kind of a weak excuse. Their problem, which they admit, is that the costs are astronomical and the cost-benefit ratio will fail. Don’t blame the SCC for the numbers.

        It is that intersection with the SCC and the utility and the Assembly that puts me in a difficult spot. Dominion, as I said, goes to the SCC as a petitioner. I have a client that also participates in those cases. It is just best if I back off on energy issues, especially on Bacon’s Rebellion, which I now have to view as just another part of the Dominion PR machine. I might as well be posting comments on

        1. You might as well be posting comments on Really truly?

          Does post stories from PeterG and Steve Haner? Does open itself to criticism from readers? C’mon.

          I’ve heard people criticize Dominion for its actions. I’ve heard people criticize me for accepting a sponsorship from Dominion. What I’m waiting for is substantive criticism demonstrating that my reporting is biased.

          1. Reed Fawell 3rd Avatar
            Reed Fawell 3rd

            Jim – perhaps Peter intensely fears an issue with more sides than his.

        2. Reed Fawell 3rd Avatar
          Reed Fawell 3rd

          Steve Haner –

          Thank you for these important comments concerning the role of SCC.

          I stated earlier that:

          “Electric power, its cost, efficiency, and reliability, are critical to the growth of our nation’s economy and its security, as well as to the overall security of our nation against those who wish to do us harm.

          The free interplay of legitimate free market forces and market driven decisions by private industries based on their assessment of those free market forces, are essential for the cost effective development of ever cleaner, more affordable, more flexible and reliable energy.”


          Here, I deem it important that Dominion (a public utility with both locked in rate payer customers and shareholders seeking profits on their investment) be required to operate within a regime that recognizes and enforces the “free interplay of legitimate free market forces. ”

          This includes that Dominion’s pricing to customers and its cost decisions to acquire and distribute product are made to the fullest extent possible like a private company operating in a open market so as to drive Dominion to make and competently execute cost effective solutions.

          That means solutions that achieve its mission in ways that serve both its customers and shareholders, while also balancing the public need “for ever cleaner, more affordable, more flexible and reliable energy.”

          For only this (to my mind) will avoid or best dilute the current Federal / State government and NGO induced destruction of free and effective markets under the frenzied onslaught of highly politicized, costly, and ill advised subsidies, tax inducements, and mandates that thwart free markets, inflate prices, and destroy the efficient and productive allocation of investment capital in the energy section, such as we see in California. For today’s WSJ example SEE

          As best I can tell, SCC is doing an admirable job in this regard. And it appears to be doing so under increasingly difficult circumstances, many now being imposed more and more by the Federal government.

          In any cases however, constant vigilance and improvement in the existing regulatory and energy market scheme within which Dominion and others operate seem to be ever more important and necessary, to protect all interests.

  10. Peter Galuszka Avatar
    Peter Galuszka

    One last point on the substance of this blog. Jim complains that a special construction ship would need to come “all the way from Europe” and might run to $200,000 a day.

    Well, if there were any American ship of this type, it would probably in the Gulf Coast where there is a maritime fleet of ships capable of working on erecting oil rigs in far deeper water than 24 miles of Virginia Beach. Getting such a ship here would probably take only maybe three or four days less than sailing “all the way from Europe.” It might have to come “all the way from Galveston.”

    What’s more, costs for doing deep water oil rigs can top $600,000 a day. American-flagged vessels go all over the world for such work all the time.

    It would have been a lot better if Jim reported the $200,000 a day figure as sourced by Dominion and then did some independent reporting on what offshore construction costs other firms. It would also have been helpful if he could have estimated how many days it would take to erect two wind turbines in less than 100 feet of water. I am a scuba diver and can say that 100-feet is no big deal and have been to that depth many times.

    As far as the problems of laying electric cable, they would strike me as rather minor. As I note in my Slate piece, Hampton Roads has redundant electrical grids because of the Navy’s need to keep going after an air attack. ANother issue is that there are no bridges in Hampton Roads to prevent a tall construction vessel from docking. Bridges would restrict them at a number of other seaports. And Hampton Roads has a very well trained labor force of maritime repair specialists.

    Regarding “ordnance” lurking in the muck, that’s nonsense. Those shallow waters have ben fished and trawled for years.

    So, when you add up all of these excuses and compare them against the advantages of Hampton Roads (which don’t seem to get mentioned) , they seem rather bogus. They are the product of Dominion running for cover while it seeks out subsidies, which, of course,is the real story here.

    1. Peter said, “It would have been a lot better if Jim reported the $200,000 a day figure as sourced by Dominion and then did some independent reporting on what offshore construction costs other firms.”

      I, in fact, sourced that information from Gary Oakley, a senior project manager with engineering firm KPR, who attended the stakeholder meeting — not Dominion.

  11. Without seeking to address the substance of the off shore wind issue, I can only say how much we should appreciate the dialogue that Jim’s great blog offers, that’s typified by Peter’s critique. I happen to agree with the points Peter offers; large donations of money have, at best, insidious influence. Think about what it does in our political arena — from local government on up. Jim, of course, was open about all of this when he announced the support coming from Dominion, and that too we should appreciate.

  12. In general I support pilot projects. But I never thought about the hurricane potential impact on off-shore wind on the East Coast. The high cost of the pilot program does seem to suggest a need to review approach. Possibly smaller turbines are needed. Let’s face it, the attractiveness of a major off-shore wind project in Virginia is mostly political: the hope for job creation and money in-flow to Hampton Roads. But it’s starting to look like a non-starter due to extreme costs. If the larger project is to succeed, it probably needs to be a joint effort with the Northeast states and federal government with lots of shared funding and consensus on the design approach. Now that we hear the details of the pilot project, it sounds more like a speculative R&D project rather than demonstration of a known turbine design currently used in off-shore Europe for example.

  13. On the substance, as TBill notes, Denmark, for example, has hundreds of off shore wind turbines. Some 10,000 off shore wind turbines are planned in the turbulent North Sea over the next ten years, led by Denmark. Why must Dominion spend so much for a tiny pilot program given the obvious success of Denmark’s (no doubt subsidized) program in a Sea that is surely at least as, and probably more difficult, to engage as is the Middle Atlantic.

    Our commitment to offshore wind is, at this point, puny.

    1. Malcolm, The big difference between the U.S. and Europe at this point is that Europe has a fully developed offshore wind energy industry, and the U.S. does not. If the U.S. could develop an East Coast wind energy industry and infrastructure, the costs of building wind turbines will come way down. The trick is how do you get from Point A to Point B.

      As Rudy Hall with Keystone Engineering explained, Europe built its wind energy industry on the foundation of a pre-existing North Sea oil & gas industry. While not all of the equipment and skill sets are identical, there is considerable overlap. The logical place to develop a wind industry in the U.S. would be the Gulf Coast. But, as Hall, who is based in Louisiana explained, there is no wind potential in the Gulf, so it hasn’t happened.

      Consider this irony — by this logic, one thing that could jump-start an East Coast wind industry is exploiting the oil & gas resources off the coast. The more money people can make on offshore energy, the quicker we can build up the infrastructure and expertise that would support both wind and oil & gas.

      1. LarrytheG Avatar

        well you DON’T get from A to B – doing it the way that Dominion and the SCC are doing it!

        and do not agree that we do not have good sites.

        “Botetourt County supervisors OK wind turbine regulations

        County supervisors unanimously approved an ordinance Tuesday night that will regulate the power-producing windmills, placing limits on how high they can stand and how much noise they can make.
        Since learning in February of a Charlottesville wind energy company’s interest in building as many as 25 turbines on North Mountain, about five miles northeast of Eagle Rock”

        where is Dominion?

        they buy up the leases so that no one else can pursue it then they pull out.

        they’ve done this on the mountains and the shore…

        If Dominion and the SCC are risk adverse or whatever – fine – let others pursue it but don’t erect barriers to others..

        ” It had begun to look like no one would ever build a wind farm on land in Virginia. Appalachian Power Company (APCo) hasn’t shown interest since the State Corporation Commission bounced its proposal for West Virginia wind farms several years ago. Just this past November, Dominion Resources let it be known the company saw no future in land-based wind. One after the other, wind development companies put their Virginia plans on hold, citing permitting issues, anti-wind local ordinances, and—especially—a challenging policy environment.

        But interest in Virginia wind never went away, and now Charlottesville-based Apex Clean Energy is pushing ahead with plans for up to 25 turbines on a tract of private land in Botetourt County, 30 miles north of Roanoke. Although development is still in the early stages, the company expects construction to take place in 2017, with electricity flowing that same year.”

        I do notice that Dominion is in a legal battle with Tazwell over wind sites… would like to know Dominion’s side of it.

  14. LarrytheG Avatar

    on the blog .. and DOminion…

    It’s too easy for someone to believe (rightly or wrongly) that Jim is functioning as a de-facto mouthpiece for Dominion – especially when he seem to be agreeing with their point of view…

    Perhaps Jim should not be the one who writes blog posts that involved Dominion … and I’d be fine with Dominion doing it either overtly or anonymously through an blog ID…

    I DO very much believe that Dominion and the industry perspective should be well represented – as well as the ability of others to make points and comments – to have a civil and reasonable dialogue so that both sides better understand the other.

    I do not view Dominion as big, bad evil, personified.. at all. They are however what they are… a powerful entity that is well able to look out for their interests.. and I believe – need feedback… because in the long run – our fates are tied to Dominion’s wagon.. in terms of stranded costs, reliability, and all the issues that revolve around electricity.

    I’ve often said the two biggies are transportation and education.

    I’ve been wrong to not acknowledge the fundamental importance of electricity. It’s one of the foundations of advanced economies.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      “I’ve often said the two biggies are transportation and education. I’ve been wrong to not acknowledge the fundamental importance of electricity. It’s one of the foundations of advanced economies.”

      For a single additional soul to be able to imagine what happens to his civilization after the lights go out, him reduced to campfire life, this alone is great progress! And it is well worth Dominion’s sponsorship of this blog.

  15. Peter Galuszka Avatar
    Peter Galuszka

    Coupleore things. Europe has a big offshore industry dueto government subsidies. It is also the reason china gas high speed rail. Also, the northwestern coast of europe has rough weather sll the time–far more frequent that hurricanesin the mid atlantic.
    As far as ethics, why tag pro-dominion pusts as advertising. Sorry but it us an old habit i picked up at businessweek which had very strict ethucs rules.

    1. By your definition, then, if a post isn’t overtly anti-Dominion, it’s advertising. Unless I’m criticizing Dominion, I’m selling my soul.

      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        I find Peter’s extreme sensitivities to the ethical need for fair and balanced, and impartial and probative, reporting by all professional journalists who report to the masses on important issues of public interest, to be quite remarkable.

        I, for one, fervently hope that Peter’s reputation for high professional ethics and deep professional probity can survive his continued association with Bacon’s Rebellion.

  16. LarrytheG Avatar

    In terms of the SCC – “looking out for ratepayers”………….

    I’d argue this also –

    can a decision made for the short term be a fatally flawed one for the long term?

    Are we making decisions now that are committing us to 40-50 years of ratepayers paying for capital investment – that could end up stranded and a shrinking number of ratepayers have to take on a bigger share as people shift to disruptive technologies that produce lower cost energy?

    And what evidence is there that SCC Staff have the expertise to look 50 years ahead for capital investment strategies to determine what Dominion should do or not?

    I’m going to be the first one to admit – that if Wind and Solar were truly ready for prime time – we’d see islands like Hawaii stop importing fossil fuels to generate electricity at 50 cents a KWH.

    It’s not happened yet – in part because fossil fuels pollute but we don’t make that part of the – at the source of generation – calculation.

    But given the same scenario – can we truly say that Nukes are any more ready than wind/solar when there are precious few on the worlds islands and an island called Japan had a very bad day with their Nukes.

  17. LarrytheG Avatar

    ” Dominion considers altering offshore wind turbine plan”

    ” Dominion Resources may install offshore wind turbines that are less technologically advanced than originally envisioned as part of its plan to cut costs.

    The Richmond Times-Dispatch reports the move comes after the bid for a test project off the Virginia coast came in at nearly double the company’s $230 million estimate.

    Dominion had planned to install two turbines in federal waters about 24 miles off Virginia Beach. But the newspaper reports that the only bid it received for the work had a $375 million to $400 million price tag.”

    so here’s another question.

    if Dominion is willing to put out for bid …

    why are they also not willing to enter into a power agreement with a 3rd party turbine generator on Dominion leased-land?

  18. I certainly agree with Jim that just because a comment is favorable to Dominion doesn’t mean that he’s been bought. So, ideally, the blog should indeed have sponsorship from a PEC along with Dominion to reduce or diminish the barrier of perceived bias. But frankly, given the nature of his blogs, and the comments, the bias issue doesn’t trouble me greatly, however much I’d like to see more balanced donations.

    As for substance, it’s true that Denmark in particular has an extraordinary industrial capability to support off shore wind. And the North Sea experience of Britain and Norway is relevant. My wife and I wrote a book in the early 1970s on Scotland’s onshore impacts of off shore oil, in hopes it might be relevant to what we did in the Mid Atlantic. But then it never became clear that there is much oil and gas out there to exploit.

    To exploit our off shore wind, which is a far more sure energy source than Mid Atlantic oil and gas, we’ll need government help to develop the infrastructure and the environmental planning for on and off shore activities, in cooperation with utilities. It should by no means be a nationalized enterprise!

    1. Very interesting. Was the impact of off-shore oil positive or negative in your book? I am a little surprised by your comment of lack of potential for off shore oil and gas in the Mid Atlantic. Given the advances oil and gas technology, I would place the lack of potential more on public policy against it, rather than lack of actual resource. Of course, there is some merit to the public policy. Interesting that public opinion favors off-shore wind versus off-shore oil, as both activities likely have a potential eco-impact. Implication of this thread is that off-shore wind and oil possibly go hand-in-hand.

      1. You have anticipated a future blog post.

      2. LarrytheG Avatar

        I had considered the same thing .. and it may be a way to try to hoist the greenies on their own petard…

        but comparing mostly scenic aesthetics to the potential of a oil spill the likes of which – we have seen.. is in my mind just going to roil the issue – for no good real purpose other than to just further churn the divisive politics of those who would put energy first ahead of the environment – and those who would put the environment ahead of energy.

        we ought to be seeking the middle – some sweet spot where we can find some path forward.

        So I have less and less admiration for the warriors who really don’t want solutions – just more wars…

        sooner or later , more and more voters are going to get sick of that approach.

  19. Peter Galuszka Avatar
    Peter Galuszka

    Why not tag…damn cellphone

  20. Cville Resident Avatar
    Cville Resident


    Good piece. I suppose what I don’t understand about those who harp on Dominion’s sponsorship… You think reading the RTD or Daily Progress…that they’re not affected by their advertisers?

    I read all of your energy pieces with your sponsorship in mind. I try to separate the wheat from the chaff. But it’s not as if I don’t get some good information, even if it comes with a sympathetic ear to Dominion. So long as you let readers know you’re sponsored by Dominion, I don’t think there’s anything wrong.

    1. LarrytheG Avatar

      I’m not far from Cville Resident view…

  21. Peter Galuszka Avatar
    Peter Galuszka

    Reed, you don’t know enough about me to question my professional ethics. I’d take care on the otherwise you might end up in litigation. As a lawyer probably understand this.

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