Virginia Electric and Power Company is the winner of the second offshore wind auction in the US with its bid of $1.6 million.
Better known as Dominion Virginia Power, the utility is one of the biggest users of coal and recently built a 600 megawatt (MW) coal plant in the state. Bidding for the offshore lease started at $225,600 and after six rounds, Dominion won over Virginia based Apex Clean Energy.
Winning gives the company the right to develop offshore wind in federal waters across 112,799 acres on Virginia’s Outer Continental Shelf. The area can support 2 gigawatts (GW) of wind, enough to power 700,000 homes.
Areas to be leased have been extensively evaluated under the Interior Department’s "Smart from the Start" program, which brings stakeholders together to: avoid existing uses of the area including sensitive ecological habitat, military training areas, marine vessel traffic, a dredge disposal site, and other issues of concern.
Virginia legislature created the Virginia Offshore Wind Development Authority to oversee data gathering, research and planning for offshore wind development.
"Virginia’s coast is ideal for wind development. The gradual slope of the Outer Continental Shelf and consistent offshore wind speeds make this a natural geographic location for the commercial utilization of offshore wind resources. At the same time, Virginia enjoys a robust commercial ship building industry poised to become the center of construction for the component parts needed to build the specialized ships, turbines and towers necessary for these upcoming leases, and potentially for additional future wind leases on the east coast. This will result in millions of dollars in industrial activity and the creation of many new high-skilled jobs in our state," says Virginia Governor Bob McDonnell.
During the first six months of the lease, the company has to submit a Site Assessment Plan to the Bureau of Ocean Energy Management, describing how it will assess the wind resources and ocean conditions. Once that’s approved, it has 4.5 years to develop a Construction and Operations Plan, which details the proposed offshore wind project. If that’s approved, the lessee is allowed to operate the wind farm for 33 years.
Dominion is currently developing two 6 MW pilot turbines next door to the lease area funded through a grant from the Department of Energy, reports Huffington Post. Those turbines should be operating by 2017, but it could be as long as 10 years before it starts on a wind project in the lease area. This will be the utility’s first wind project.
One has to wonder why it would take so long to move on this lease, but Rob Sargent of Environment America told Huffington Post, "The interest we’re seeing now from even companies like Dominion is a very good sign."
"It’s just too big of a resource, We’ve got to look at this," Dominion spokesman Jim Norvelle told Huffington Post. Its goal for the project is to cut the cost of wind power, he says. "Right now, it is expensive to do," which is why they are involved. "We think it could be beneficial to customers if the price is right."
In July, the Department of Interior held its first auction for 164,750 acres off the coast of Rhode Island and Massachusetts. Deepwater Wind New England won that auction, bidding $3.8 billion for the two leases.
More offshore wind auctions are planned for Maryland, New Jersey, and Massachusetts later this year and next.
Unfortunately, NJ rejected even a small 25 megawatt offshore wind farm this summer because of financing concerns.
In President Obama’s Climate Action Plan, he challenges Interior to approve 10 GW of renewable energy on public lands by 2020, in addition to the 13.3 GW already approved since 2009 – 47 wind, solar and geothermal utility-scale projects on public lands as well as required transmission infrastructure. The 13.3 GW of projects will bring renewable energy to more than 4.6 million homes, while creating over 19,000 jobs.
Read Obama’s Climate Action Plan: