Dominion offshore wind farm cost climbs to $ 9.8 billion
CEO cites inflation among factors causing roughly 25% increase
November 5, 2021
Dominion Energy Inc.’s offshore wind farm will cost about $ 2 billion more than expected, Richmond Fortune 500 utility chairman and CEO Bob Blue said on a third quarter earnings conference call on Friday. .
Instead of the previously estimated $ 7.8 billion, the 2.6 gigawatt Virginia Coastal Wind Commercial (CVOW) project will cost around $ 9.8 billion, Blue said, attributing the increased costs to about 25% to rising raw material spending and general cost pressures in a number of industries. right now in the midst of rising inflation. Additionally, Blue cited the costs associated with the need to construct approximately 17 miles of new transmission lines and other land infrastructure associated with the project.
Dominion plans to build the 180 wind farm 27 miles off the coast of Virginia Beach, with construction beginning in 2024. When completed in 2026, the wind farm is expected to power 660,000 homes. The wind farm will cost residential customers about $ 4 per month over the estimated 30-year life of the wind farm, a Dominion spokesperson said.
Dominion submitted its bid for the wind farm project to the Virginia State Corporation Commission on Friday. As part of the case, Dominion is also seeking CSC approval to build the 17 miles of new transmission lines and other land-based infrastructure needed to deliver power generated by wind turbines to homes and businesses in Virginia. The route chosen was the shortest of the potential routes and would have the least impact on private property, argues the utility, with 92% of the route in the former Southeastern Parkway and Greenbelt corridor, owned primarily by the City of Virginia Beach and / or co-located with existing Dominion Energy transmission line corridors.
Blue also described the deals in the competitive bidding process. Five major deals are worth around $ 6.9 billion, he said, and the remaining project costs are $ 1.4 billion for terrestrial transmission facilities and planned system upgrades and 1, An additional $ 5 billion for other project costs, including emergency onshore transmission facilities required to interconnect offshore production components reliably and to maintain the structural integrity and reliability of the transmission system in accordance with standards required by the North American Electric Reliability Cooperation (NERC).
“We believe that the decisions we make regarding onshore engineering configurations will result in the best value for customers,” he said.
Last month, Dominion announced that Siemens Gamesa Renewable Energy SA, a Spanish wind turbine company, will invest $ 200 million to build the first offshore wind turbine blade manufacturing plant in the United States at the Portsmouth Marine Terminal in the port of Virginia. Siemens Gamesa will manufacture 176 14.7 megawatt turbines that will be installed in the 112,800 acre commercial lease area.
Dominion also announced other contractors on the project on Friday.
“We are moving the CVOW project forward by working with industry leaders as we bring large-scale offshore wind generation to our Virginia customers,” said Joshua Bennett, Dominion Energy vice president of offshore wind in a press release. “These contracts will allow us to manage costs for the benefit of our customers and leverage national supply chain development to deliver on our promise to bring clean energy jobs to Hampton Roads. “
Germany-based EEW SPC will produce steel pipe and corresponding pipe components to fabricate 176 steel monopile foundations, the largest of which will be 268 feet long and weigh 1,175 tons. EEW SPC will process over 200,000 tonnes of steel and production is expected to begin in 2023.
Danish company Bladt Industries will manufacture 176 transition parts, which weigh up to 800 tonnes and tie together the monopile foundation and turbine while providing physical access to the turbines.
Semco Maritime, based in Bladt and Denmark, will manufacture components for the three offshore substations, which are multistage units weighing 4,000 tonnes each, an upper platform with a helicopter landing strip at 157 feet above water and supporting structures installed in the seabed.
DEME Offshore US LLC, based in Belgium and Boston, and Prysmian Group, based in Italy, as a consortium, will provide balance of plant services, including transportation and installation of foundation components and of the substation, and will install the submarine cables. DEME Offshore US LLC said in a press release that the contract is worth $ 1.9 billion.
Prysmian Group will also supply all inter-grid and export submarine cables that will carry power to land. The cables will be produced in Arco Felice, Italy, and Pikkala, Finland, while the inter-network cables will be manufactured in Nordenham, Germany, Prysmian said in a press release.
The monopile foundations, transition parts and turbine components will be installed on 72 acres that Dominion will lease at the Portsmouth Marine Terminal, under a 10-year agreement with the Virginia Port Authority. The lease is valued at $ 4.4 million annually and includes an option for two five-year renewals.
CVOW Wind Farm will help Virginia meet its Virginia Clean Economy Act-mandated goal of 100% carbon-free power generation by 2045, and Dominion Energy’s goal of net zero carbon emissions and methane by 2050. President Joe Biden’s administration has set itself a 2030 target of installing 30,000 megawatts of offshore wind capacity in the United States.
The offshore wind project is expected to create 900 jobs and generate $ 5 million per year in local and state tax revenues and $ 143 million in economic benefits per year during construction, according to Dominion. While in operation, it will create 1,100 jobs, generating $ 11 million per year in local and state tax revenues and nearly $ 210 million in ancillary economic benefits per year.
In July, the Federal Office of Ocean Energy Management began its two-year environmental and licensing review of the project.
Dominion reported third quarter earnings of $ 654 million and 79 cents per share, compared with net income of $ 356 million and 41 cents per share for the same period in 2020. Operating income for the three months was ending September 30 was $ 918 million, compared to $ 916 million for the same period in 2020.