Dominion Virginia Power signs offshore wind lease

October 12, 2013 by  
Filed under Green Energy News

Dominion Virginia Power signed a federal lease agreement for nearly 113,000 offshore acres for wind power development Friday and returned the paperwork to the federal Bureau of Ocean Energy Management.

“It’s the next step for making offshore wind energy a reality,” said Mary C. Doswell, the company’s senior vice president for alternative energy solutions. “It will be a great opportunity for Dominion.”

After first saying it was not processing leases during the federal government’s partial shutdown, the bureau told the power company Thursday night that it wanted the lease, the lease payment and a surety bond in hand by Monday.

The bureau assured the Richmond-based utility that someone will be on hand to receive the lease documents Monday, company officials said.

Dominion Virginia Power had to sign the agreement and return it within 10 working days of receiving the lease from the bureau Sept. 30, officials said.

“We knew we were under the clock,” Doswell said. “Fortunately, we were all ready to go.”

Virginia Secretary of Natural Resources Doug Domenech joined Doswell for the signing.

“Dominion’s leaning forward and putting their money on the line,” Domenech said.

With a bid of $1.6 million, Dominion Virginia Power won the right to develop the first wind energy farm off the Virginia coast in a federal lease auction Sept. 4.

The utility wired the lease payment to the federal government, company officials said Friday.

However, the bureau’s website said Friday that renewable energy activities, including management of lease programs, ceased with the shutdown: “BOEM will be unable to process any applications or regulatory submittals for the renewable energy program.”

“Renewable energy and alternate use projects may include wind, wave energy and ocean current projects,” the website said.

In the next step for the wind area’s development, Dominion Virginia Power has six months to present its site assessment plan to the bureau.

The power company also is in the running for a federal grant of up to $47 million to help install two 6-megawatt test turbines in the Atlantic Ocean.

The U.S. Department of Energy has already awarded $4 million for the engineering, design and permitting phase of the offshore wind generation test turbines in a project led by Dominion Virginia Power.

In the Sept. 4 offshore wind area auction, Dominion Virginia Power beat out one other bidder to win the nation’s second lease of ocean floor dedicated to the development of the commercial wind turbines.

Fully developed, the 112,799-acre lease could generate 2,000 megawatts.

The federal government says that would be enough energy to power more than 700,000 homes, but Dominion Virginia Power puts the number at about 500,000.

The power company has said it expects the first wind turbine to be installed in about 10 years, assuming the project gains necessary federal and state approvals.

The allure of wind is that the energy itself is free, though building offshore wind farms is expensive compared with other forms of energy. Dominion Virginia Power hopes to bring the cost down.

The U.S. Energy Information Administration estimates the cost to build a commercial-scale offshore wind farm at $6,230 per kilowatt of generating capacity, while the installed cost for a modern natural gas power plant is about $1,000 per kilowatt.

Capital costs for onshore wind have decreased by about 13 percent since 2010, the EIA said, mostly because of lower wind turbine prices.

The wind energy area is in the Atlantic about 27 miles from the Virginia Beach shoreline.

Dominion Virginia Power, the state’s largest electric utility, serves more than 2.3 million customers in the state.

September’s commercial lease auction was the second competitive lease sale for renewable energy on the U.S. outer continental shelf.

On July 31, the bureau auctioned 164,750 acres off Rhode Island and Massachusetts, generating $3.8 million in high bids. Deepwater Wind New England LLC was the provisional winner of that auction.

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