Grid fuels first ever cost rise for largest US offshore wind farm
The regulated utility entered supplier contracts in 2021 that allowed it to skirt surging inflation that drove US sector costs up 50% over the past few years
Dominion Energy’s 2.6GW Coastal Virginia Offshore Wind (CVOW) saw costs spike 9% in the project’s first and so far only increase since it was submitted to state regulators in November 2021, the company said today.
Costs for the mammoth array have now risen to $10.7bn compared to the $9.8bn estimate due to “higher network upgrade costs” that were assigned by regional electric grid operator PJM “as part of the generator interconnect process, and higher onshore electrical interconnection costs,” Dominion said.
“Network upgrades do not impact project construction or timeline and represented the largest unfixed cost input for the project,” the utility clarified.
Otherwise, “aggregate costs for other project costs, including offshore, have remained in-line with the original budget,” Dominion said.
CVOW stands apart for being on-time and until today, on-budget, and even this hike pales in comparison to spiralling costs for other projects. National Renewable Energy Laboratory estimates costs skyrocketed as much as 50% between 2021 and last year, forcing three-quarters of US offtake to be cancelled or renegotiated.
The current price tag brings the project to $4.1m per MW. By comparison, Equinor's 810MW Empire Wind array to New York reached final investment decision for around $5bn, over $6m/MW.
While offshore wind is contracted in most states via competitive auction, with developers fully shouldering the risks, in Virginia's tightly regulated market CVOW is being developed as a conventional power plant with guaranteed returns on investment.
Confidence in the process enabled Dominion to enter most supplier contracts before inflation started rising in 2022, allowing it to contain costs.
CVOW offshore installation began last May, and contractor Deme has already driven 78 monopiles and constructed 15 transition pieces. The utility expects to complete construction of all 176 Siemens Gamesa 14MW turbines by the end of 2026.
Trump impact
Dominion's progress remains a beacon of hope for US offshore wind now in the crosshairs of Donald Trump.
The President started his administration with an executive order banning offshore wind leasing and halting project permitting, along with reviews of existing projects with a goal of "terminating" them.
Yet CVOW's installation remains ongoing, and it recently had the first of its 880MW offshore substations delivered to the Portsmouth Marine Terminal marshaling port.