State regulators on Friday approved an order by Dominion Energy Virginia to build a massive offshore wind farm off the coast of Virginia Beach and recoup the cost from taxpayers.
Neither party to the months-long process opposed approval of the project, which will help the utility increase the proportion of its generation from renewable resources. But many raised concerns about accessibility and potential risks to the concessionaire’s captive taxpayers.
In its Friday filing, the State Corporation Commission noted that the 176-turbine Offshore Coastal Virginia Wind Project is likely to be the largest project in Dominion’s history and said that because of its size, complexity and location, it faces a number of challenges. . The commission included three “consumer protections” in its order, including a performance standard.
The commission’s order also approved facilities that will connect the wind farm to the existing transmission system.
Robert Blue, president and CEO of Dominion Energy, said in a statement that the company was pleased with the approval but was reviewing the details of the order, “particularly the performance requirement”.
The project, which will be located about 44 kilometers off the coast, has an expected capital cost of $9.8 billion and has received broad support from local officials, policymakers, business groups and unions, who say it will help combat climate change and create jobs. . Supporters were quick to cheer the commission’s decision.
“We applaud SCC for giving the green light to new offshore wind in Virginia. As the largest offshore wind project in the country, this project is a critical piece of our clean energy transition because it complements solar energy by generating energy at night when the sun is not shining,” Will Cleveland, senior attorney at the Southern Environmental Law Center, said. in a statement.
Regarding costs, the SCC dispatch said that over the 35-year projected lifespan of the wind farm, including construction and its 30-year projected lifespan, a typical residential customer is expected to see an average monthly increase of $4.72, with a peak monthly bill increase of $14.22 in 2027.
“To be clear, total project costs, including financing costs, less investment tax credits, are estimated to be approximately $21.5 billion on a Virginia jurisdictional basis, assuming these costs are reasonable and prudent. And all those costs…will find their way into taxpayers’ electric bills somehow,” the order read.
Dominion said in a press release that because offshore wind turbines have no fuel costs, the project is expected to save Virginia customers more than $3 billion during its first 10 years of operation.
Consumer protections in the commission’s order include a requirement that Dominion file a notice within 30 calendar days if it thinks total project costs are likely to exceed the current estimate or if final turbine installation is delayed beyond February 4th. 2027. Annual filings will also have to address “any material changes” to the project and explain any cost overruns.
The SCC also mandated that, starting with commercial operation and extending over the life of the project, customers be “compensated” for any shortfall in energy production below a certain threshold.
This performance standard will protect customers who are paying for the project “from also paying for replacement power if the project does not generate the amount of electricity on which Dominion bases its request and cost estimates,” the order read.
The order goes on to warn that the performance standard, however, will not protect customers from cost overruns or if the project is abandoned.
Commissioner Judith Jagdmann emphasized in a concurring opinion that the bill was “legislatively favored”.
The Virginia Clean Economy Act of 2020, a sweeping overhaul of the state’s energy policy enacted by Democrats, included several renewable energy mandates intended to help address the threats of climate change and paved the way for the project.
The General Assembly, wrote Jagdmann, could consider implementing additional consumer protections.
Friday’s ruling came after months of voluminous filings in the case and a multi-day evidence hearing in May.
The company already has a pilot project of two turbines in progress. The 2.6 gigawatt utility-scale project schedule calls for construction to be completed in 2026. Dominion expects the project to generate enough clean energy to power up to 660,000 homes.