Virginia approves largest US offshore wind array despite final cost concerns
State utilities regulator approves Dominion Energy's 2.6GW plan following suspension last summer over 'unfeasible' performance guarantees
The US’ largest offshore wind project, a 2.6GW behemoth off the coast of Virginia, was greenlighted by the state utilities regulator following a dispute over performance guarantees and despite concerns regarding final costs.
The State Corporation Commission (SCC) approved utility Dominion Energy’s $9.8bn Coastal Virginia Offshore Wind (CVOW) project despite forecasts that it is “likely the costliest project being undertaken by any regulated utility in the US”.
It also noted that electricity the project will generate “will be among the most expensive sources of power”.
In its final order, SCC estimated total projects costs, including financing, less investment tax credits, could balloon to $21.5bn.
Virginia’s tightly regulated market enables Dominion to develop CVOW as if it were a conventional power project, which includes guaranteed returns on investment contingent on SCC approval.
SCC and stakeholders including Walmart, consumer advocacy group Appalachian Voices, and Sierra Club, raised concerns regarding possible cost overruns and sought performance guarantees to ensure that consumers would not be paying for an underperforming asset.
Dominion rejected these performance guarantees as “unfeasible” and sought their elimination, resulting in initial suspension of final SCC approval.
The utility later tabled a compromise that would see it take 50% of responsibility for overruns on the original capital investment (capex) from $10.3bn-$11.3bn and accept the full share should costs reach $11.3bn-$13.7bn.
“All parties at the hearing either assert that the Second Stipulation [Dominion’s compromise] adequately protects the interests of consumers or have no opposition to the Commission's approval thereof,” the SCC said. “Accordingly, it is so ordered, the Final Order is no longer suspended.”
With the state approval in hand, the project now only has to gain consent of the federal government.
CVOW is the only offshore wind array owned exclusively by a US utility.