Op-Ed by Ross Tyler
Those who follow the offshore wind industry know that we love to talk about “scale” — the importance of bigger wind farms containing larger wind turbines, which can lead to more electricity produced and lower prices.
That’s why it may be surprising to learn that a small, two-turbine wind farm 27 miles off the coast of Virginia called the Coastal Virginia Offshore Wind (CVOW) demonstration project can also offer good value to the offshore industry and energy consumers.
The key lies in understanding what CVOW is designed to do for Virginia and the much larger potential wind farm that is located right next to this initial project.
As is true of the currently operating Block Island (Rhode Island) 5-turbine wind farm, the proposed LEEDCo Icebreaker Wind 6-turbine project in Lake Erie, and the proposed Nautilus Offshore Wind 3-turbine project three miles off of Atlantic City, New Jersey, CVOW is not designed to generate least-cost or most cost-effective electricity.
It is a 12 megawatt (MW) project focused on fine-tuning U.S. offshore construction techniques and finding cost efficiencies, all to be applied for the benefit of the 2000 MW wind farm that is expected to come right behind it.
Comparing CVOW’s price per kilowatt hour (kWh) to existing utility rates, or even to a larger 800 MW offshore wind farm such as Vineyard Wind in Massachusetts, fails to recognize the underlying purpose of the project; it is an apples to oranges comparison.
Dominion Energy teamed up with the world’s most experienced offshore wind developer, a Danish company called Ørsted, because it recognized the complexity of setting the foundations into the seabed, building 500-foot turbine towers with 250-foot blades in 80 or 90 feet of open ocean waters, and dealing with the possibility of hurricane-type extreme weather at some point during the 25 years the turbines will be operating.
CVOW gives the Virginia business community an opportunity to develop the local ports; find the specialized vessels; align with environmental, maritime, military, and commercial fishing interests; and build the local supply chain along with a skilled labor force and figure out the best place to connect to the existing grid — all at a project size that is manageable and easier to monitor and control.
The supervising agency, the Virginia State Corporation Commission (SCC) has added another level of security by placing a cost cap on the project, so that if Dominion incurs costs above the approved amount, it must receive a separate approval from the SCC to recover these costs.
That’s why a smaller project at a higher per-kWh cost (but much lower overall capital expenditure) could in fact lead to faster development of the larger wind farm at a lower price than would have been the case in the absence of CVOW.
And speaking of costs, the overall trend of U.S. offshore wind costs is way down, dropping 75 percent since 2014 according to a recent article in the Utility Dive newsletter.
This has been caused by the rapid expansion of the European offshore wind industry (scale) and by improvements in the management of project development at the design phase.
One key benefit is that offshore wind turbines eliminate the cost of fuels. Because the turbines use no oil or gas, we no longer have to fear the wild swings of the fossil fuel marketplace — electricity costs are set in 20- and 30-year contracts.
So, what appears to be a high cost for the CVOW project actually paves the way for stable, lower costs as the much larger wind farms come online over the long haul.
Last, let’s not forget the important benefits of economic development and thousands of high-skilled local jobs, and the mitigation of sea level rise and coastal storm surges, a critical issue for Norfolk and other oceanfront communities.
The CVOW project is the best solution for Virginia now and will reap significant benefits for future offshore wind development in the state and for the industry throughout the country.
Ross Tyler is the executive vice president of Business Network for Offshore Wind. Contact him at Ross@OffshoreWindUS.org.