Dominion looks to define its role in offshore wind

By Michael Schwartz | Inside Business

The dream held by many to establish a viable locally based wind energy-generation industry utilizing massive windmill farms off the coast of Hampton Roads could be realized in six to 11 years.

That's an achievable time line if all the pieces come together, according a Dominion Resources executive.

But in the meantime, as the region begins to position itself for its share of the riches that many expect to come with the development of an offshore wind industry, Dominion is carefully analyzing its role as perhaps the most vital piece in the puzzle.

With the recent formation of the Virginia Beach-based Virginia Offshore Wind Coalition or VOW, a bigger push is being made to bring together the economic, industrial and political facets involved in developing the industry locally. Those involved are looking to Dominion, as the region's monopoly power provider, for direction about what step needs to be taken next.

Mary Doswell, an executive in Dominion's Alternative Energy Solutions division, said in an interview last week Dominion has definite interest in being a big part of wind generation off the coast of Hampton Roads and could take the lead in the next major hurdle.

"Wind is the largest renewable resource available to Virginia and it could end up being the cheapest one of scale," Doswell said.

Dominion has joined on as a member of the VOW Coalition, Doswell said, and has been an active participant in studies conducted to measure the feasibility of utilizing the winds off local shores to capture energy.

VOW, along with local politicians, has pushed for bills in the General Assembly that call for the creation of a state offshore wind authority with the power to help secure the issuing of bonds and government guarantees for loans, and to facilitate ways that might persuade the state's electricity monopoly to get on board.

If the mid-Atlantic is to derive some of its electricity from offshore wind, there are a number of ways in which Dominion might get involved, Doswell said.

Most noticeably, of course, are the windmills themselves. Doswell said Dominion is well-suited to be involved in wind farms.

"We would be interested in participating in the wind farms," she said.

Dominion already has land-based wind farms and relationships with the right parties to help make offshore wind a possibility.

"We're into onshore in quite a big way," she said.

Once the mills catch the breeze and generate electricity, that power needs to be transmitted over the ocean to the shore. Dominion would likely have a part in that as well.

The plan to get transmission lines that would connect offshore farms to the mainline grid could go one of two ways. Say, for example, six private developers are building the farms without Dominion's involvement. Each one would have to build its own transmission line.

"I can't imagine six large transmission lines underwater coming onto the coast," Doswell said.

Those lines would eventually connect to Dominion, which is the region's state-approved monopoly electricity provider. So why not have those farms all connect on one transmission line running to shore and have the owners of the farms pay some sort of toll or royalty to use the lines?

But before any of the huge and expensive meteorological towers would be built and put in place off the coast, concrete data to ultimately prove the concept to government and the financing world would be necessary.

Doswell said the next step in the process could include Dominion taking the lead on erecting the towers, with the assistance of certain parties. The proposed offshore wind authority would likely help facilitate the funding and construction of the towers, possibly through public/private partnerships.

For those who look to Europe's many functioning wind farms and wonder why the U.S. wouldn't be able to pull off something similar for perhaps another decade - well that's complicated.

For one, the costs still need to come down for wind energy to be viable both in terms of making it a profitable endeavor for the companies involved and to make it affordable for the end-user energy consumer, Doswell said.

The technology still needs tweaks for Atlantic coast wind farms, Doswell said, to take into account factors such as hurricanes. And technology for storing excess power generated by wind is still under development.

"If any kind of storage technology comes along then you have it made," Doswell said.

The next big hurdle is jumping through the many government hoops. In Europe, Doswell said, "Germany can just say this is what we're going to do with a wind farm. It's more fragmented in the utility industry here."

Taking into account separate state and federal regulations, as it stands today, the permitting process to build a wind farm offshore would take eight years to get through, Doswell said. That needs to change.

The government will also likely be involved in moving the price scales in a favorable direction.

Using their proven coal-fired power plants, power companies presently can produce electricity cheaper than using wind. But demand for electricity is ever increasing and were the government to make it more expensive to use carbon-heavy methods, power companies would then be persuaded to look to alternative sources to meet rising demand.

"If you are adding any costs to coal, any of that would make the renewable more attractive," Doswell said.

The industry would also then look to government to make wind cheaper via the contentious method of tax incentives.

"If Dominion is investing in a wind farm it would definitely help the economics for us to have any type of incentives," Doswell said.

Such incentives for now appear to be a necessary evil - "otherwise the burden is on the rate-payer," Doswell said.

That explains the time line.