Answers from Across the Atlantic: Why Virginia’s Largest Utility Is Slow To Develop Offshore Wind

Jun 8, 2015

This year, the federal government said it would give nearly $47 million to each of three states hoping to develop offshore wind power – Virginia, New Jersey and Oregon. 

Virginia said it would partner with Dominion Power to build a demonstration project, but the utility now says it can’t get started, because installing a couple of turbines is too expensive.  Meanwhile, Denmark reports it’s getting nearly 40% of its power from wind.  How did such a tiny country do that, and what could we learn from the Danes? 

Denmark is known as the birthplace of Hans Christian Anderson who wrote many of Europe’s favorite fairy tales.

“It was a glorious day like today, out in countryside just like this.” 

The Ugly Duckling, The Princess and the Pea, The Emperor’s New Clothes and other childhood favorites all sprang from Anderson’s pen.  The country is also known for the statue of a mermaid that graces Copenhagen’s harbor, for the profound thoughts of the philosopher Soren Kierkegaard and for strong, modern design.  In short, Denmark is a land of imagination.  Add to that its location – near the windiest parts of the North Sea – and you begin to understand why a country of just 5.6 million people has moved boldly into the business of wind power. Jan Hylleberg is CEO of the Danish Wind Association.

“The story about wind in Denmark is driven for sure by pioneers, but also by politics.  We, back in the 70s during the oil crisis, decided that we won’t be dependent on fossil fuels in the future, so therefore we have been developing wind for more than 30 years.”

Just beyond Copenhagen’s harbor, twenty turbines spin in the wind, supplying power to city residents, creating no pollution and costing nothing for fuel.  That’s an important point for Europe, where it costs more than three dollars a day for every man, woman and child to buy and import coal, oil and gas. 

When the Middelgrunden Wind Farm was built in 2000, it was the largest in the world.  Today, just 15 years later, wind energy companies are building turbines three or four times bigger – more than 650 feet tall.

“Have a look toward the blades.  The rotor has a diameter of 164 meters, that’s more than the length of one and half football fields.”

At this year’s meeting of the European Wind Energy Association, visitors had the chance to stand on one of them through a virtual reality display created by Danish wind company MHI Vestas.  Special goggles and headphones allowed convention goers to look out on a vast expanse of ocean and on the wind farm the company plans to build in British waters.

“Have a look to your right.  That’s Liverpool, about 10 kilometers away.  The 32 turbines that we’ll install here are able to power more than 180,000 homes.  I hope you had a great experience – and have a nice flight back.” 

Like the UK and Denmark, Virginia has great potential for offshore wind – a point stressed during a 2013 interview with Saifur Rahman, director of the Virginia Tech Advanced Research Institute.

“Virginia is one of the few states in the country which has very high quality offshore wind.  Our continental shelf is quite shallow, unlike California and the west coast.”

Dominion Virginia Power has leased land for an offshore wind farm with as many as 600 turbines, and the state can get $47 million in federal funding to help construct a small demonstration project.  That was supposed to be up and running by 2017, but Dominion is now  pushing the date back – saying the project could cost over $400 million – far more than it wants to spend.  Could we, perhaps, do without this early research?  Maybe consult the Danes?  What challenges have they faced and conquered? That’s the subject of our next report.

Energinet Control Center

Part Two: No Promises for Virginia's Coast

Dominion Virginia Power has leased land offshore for a wind park, but it’s not clear when construction might begin. The company says a demonstration project is needed to guide future development, but the cost to build a couple of turbines offshore is too high. 

In Denmark – which has more than 30 years of experience – experts say driving costs down is the name of the game, and they’re happy to share their secrets with Virginia. 

Denmark has been building wind farms since the early 90s, figuring out which turbines work best offshore, what impact their construction might have on marine life and how to weather storms in the North Sea.  Engineers have also mastered the art of managing a grid using fluctuating sources of power – wind and solar – also known as photovoltaic or PV.

“If it gets out of balance too much, you’ll have a blackout.”

That’s Peter Jorgenson, Vice President of Energinet – the company that transmits power to Denmark and three other countries. 

“It was easy to run big power plants fired with coal, oil or natural gas.  You could adjust the generation so that it balanced with demand, but today you have a large share of wind power, PV and you still have to keep the system balanced.”  

He gazes through glass into a large, quiet control room where five people sit at computer screens and watch an entire wall showing the grid they oversee in collaboration with their neighbors.

“You have a map of the whole of Denmark with the interconnectors to Norway in the north, Sweden to the east and Germany to the south.”

Key to the success of Energinet are sophisticated computer programs that manage the grid, minute by minute.  Also essential is cooperation with a country that can generate hydro-electric power when the wind isn’t blowing.  Rune Birk Nielsen is a spokesman for Denmark’s main energy company.

“Norway has a huge capacity for hydro power, which they can relatively easy turn up and down.“ 

And it turns out Virginia could be in a similar situation.  Based on remarks made in 2013 by Saifur Rahman, director of the Virginia Tech Advanced Research Institute,  our Norway is in Bath County.

“Dominion has what is called pumped storage hydro facility.  That means they can pump the water at night or during low demand period, hold the water in an upper reservoir, and when the peak shows up the next day, they will let the water come down and run hydro turbines.  In fact, Dominion has the biggest pumped storage plant in the world.”

So if we had offshore turbines, excess power produced on windy days could be used to pump waterup, and when offshore wind left a gap in our grid, the facility in Bath could fill it.

But Dominion, which is heavily invested in nuclear, coal and gas-burning power plants, is moving slowly toward building offshore wind facilities.  At an international conference on wind power, we spoke with Henri Schumann , vice president of a Danish company that builds offshore wind farms. He recently visited Virginia as part of a delegation hoping to land new business.

“Well in Richmond we learned that power production is dominated by Dominion, so everything hinges on what will happen with Dominion, and of course Dominion being in a monopolized situation, has maybe not the right incentives to move ahead to the speed the market would like to see.”   

He thinks a wind farm could be up and running off Virginia’s coast by 2020, but  Dominion isn’t making any promises.  In fact, despite the exchange of more than a dozen e-mails, the utility’s chief spokesman would not agree to speak with us.  In our next report, we’ll talk with others about what it would take to speed-up development of offshore wind in Virginia. 

Energinet's Anhold Wind Farm

Part Three: New Technologies

A poll by the National Resources Defense Council shows 88% of Virginians want the state to use more wind and solar power, and the federal government has offered the state $47 million to build a couple of turbines offshore, but Dominion Power is hesitant. 

Virginia is blessed with 112 miles of coastline. Twenty-seven miles out, the water is still relatively shallow, making it ideal for construction of wind turbines, and there’s usually a steady ocean breeze.

“Offshore wind blows about 70% of the time, whereas in the central part of the country, 30-40% of the time.”That’s Jon Wellinghoff, former chairman of the Federal Energy Regulatory Commission.  He was appointed by President George W. Bush, continued to serve during the Obama years, and is now a lobbyist for green energy companies. 

He doesn’t see Virginia moving forward with development of offshore wind, because it’s expensive, and by law, one company – Dominion Virginia Power -- controls most of the market.

“If we’re going to take advantage of the new technologies that are out there, not just wind and solar but also technologies that can help the grid operate more effectively, can help consumers control their costs, then I think we have to restructure the system.”

It’s hard to imagine Virginia’s legislature opening the energy production market to competition.  If you disregard donations from political parties, Dominion is the state’s largest campaign contributor.

And restructuring the market for electric power is no guarantee.  Many coastal  states have done so, but only one – Rhode Island – is building offshore turbines.

From Charlottesville, Elisa Wood edits MicroGrid Knowledge.com.  She says offshore wind is expensive to build, and investors are hesitant after seeing what happened to Cape Wind.  Supporters of that $2.6 billion project in Nantucket Sound applied for their first permit in 2001, but opponents said it would spoil their view, could harm commercial fishing and pose a navigational hazard.

“A very small number of very wealthy people have blocked that project now for many, many years – spending tens of millions of dollars themselves, and costing the developer the same amount of money.  It’s very difficult to get investor interest because of the chill created by Cape Wind.”

Here in Virginia, the turbines would be so far from shore that the view would not be an issue, and the European experience suggests no harm to fish, birds or marine mammals, but there’s another impediment. Rates for electricity in New England are relatively high. Again, energy expert Elisa Wood.

“Where pricing is high, we  see more innovation, because they are looking for the solutions.”

But Dominion offers fairly inexpensive power thanks to nuclear plants paid off long ago and cheap supplies of coal and natural gas.  By law, if Dominion wants to bill its customers for offshore wind turbines, it must get approval from state regulators, and they must consider cost.  Jason Lehmann is an industry editor at SNL Financial.

“They would have a very tough time justifying to state regulators recouping investment in offshore wind when there are other, cheaper sources of generation available at the moment.”

The cost of building offshore wind farms would likely come down if this country were to do more of it, but because Rhode Island is the only builder, there are few companies with the expertise and equipment to do the job.

That might explain why, when Dominion asked for bids to build a couple of turbines off Virginia Beach, only one firm submitted a qualified bid, and it was at least $145 million more than the utility was prepared to spend. 

No word yet on when, but the company has said it will meet with members of the Virginia Offshore Wind Development Authority to discuss how to lower costs.

Sandy Hausman reported from Europe with the support of an Energy and Climate Media Fellowship from the Heinrich Böll Foundation.