RD304 - Virginia Offshore Wind Development Authority Annual Report - October 15, 2015


Executive Summary:
In 2010, the Virginia General Assembly created the Virginia Offshore Wind Development Authority (“VOWDA” or “the Authority”) for the purposes of facilitating, coordinating, and supporting the development of the offshore wind energy industry, offshore wind energy projects, and associated supply chain vendors in the Commonwealth. The Authority oversees data gathering, research and planning to support offshore wind development off Virginia’s coast, tracks issues as they arise, and makes recommendations for promoting Virginia offshore wind development and associated economic development opportunities for supply chain businesses and Virginia’s ports. This report constitutes the fifth annual report of the Authority’s activities and accomplishments.

2015 was a critical year for offshore wind in the Commonwealth of Virginia. Virginia is at the threshold of moving forward to develop offshore wind and the support of all interested stakeholders is essential to ensure that Virginia continues to develop this source of renewable energy and build a reliable supply chain to support high-tech and high-paying jobs in the energy sector. Development of offshore wind can also be a key component of Virginia’s compliance with the new EPA Clean Power Plan.

• Two research leases were offered to the Virginia Department of Mines, Minerals and Energy (DMME) for the purpose of collecting metocean data and demonstrating advanced technologies and innovation to reduce the cost of offshore wind.

• The Bureau of Ocean Management (BOEM) executed its first wind energy research lease with the DMME. Under Research Lease 2, DMME proposes, through a Designated Operator, to design, develop and demonstrate the Virginia Offshore Wind Technology Advancement Project (VOWTAP), a grid-connected, 12-megawatt (MW) offshore wind test facility on the Outer Continental Shelf (OCS) off the coast of Virginia immediately adjacent to the commercial Wind Energy Area (WEA). BOEM granted DMME’s request to designate Virginia Electric and Power (also known as Dominion Power) as the lease operator to implement the VOWTAP.

• This year also saw significant developments affecting the implementation of the VOWTAP project. An unexpectedly high bid in response to a Dominion RFP led Dominion, supported by VOWDA and DMME, to enter into a stakeholder review process to determine how costs can be reduced to keep the project on track as the first step towards commercial development of offshore wind in Virginia. Based on the successful stakeholder process, Dominion developed a timeline to issue a new RFP in Quarter 4 of 2015 and other steps potentially leading to a State Corporation Commission (SCC) filing by June 30, 2016 and turbine operations by 2018. The stakeholder process and outcomes are described in detail in Chapter III.

• DMME issued a contract to study Virginia’s port readiness for offshore wind development. The U.K.’s BVG Associates was chosen to lead an experienced team to undertake this study, which supports the 2014 Virginia Energy Plan’s recommendation to “Establish Virginia as the ideal manufacturing, operational and supply chain hub for offshore wind development in the Mid-Atlantic region and provide support and resources to accelerate development of Virginia’s offshore wind resources.”

• DMME and BOEM entered into two cost share agreements for research.

* Fugro Consultants Inc. to mine existing seismic reflection data (collected by Fugro under contract to DMME and BOEM in 2013) across the offshore Virginia WEA to supplement and expand the value of the prior interpretation. The additional processing and interpretation of the 2013 seismic reflection data will provide valuable additional detailed definition of the subsurface conditions beneath the WEA.

* Virginia Coastal Zone Management Program at the Department of Environmental Quality to develop fine-scale maps of important commercial and recreational fishing areas in and around the Virginia WEA. These maps will be used in collaboration with the fishing industry to create best management practices regarding communication, design, operation, and environmental monitoring of a commercial wind facility offshore Virginia.

The Authority continued work on its four main goals established by the 2010 legislation, which are summarized as follows:

1. Virginia Offshore Industry Data: Facilitate the definition, collection, and dissemination of relevant metocean data, environmental data, and other information needed by Virginia offshore wind stakeholders, using existing, planned, or projected sources of data collection or activities.

2. Offshore Leasing, Permitting, Financing, and Regulation: Identify existing federal and state barriers to the development of the offshore wind industry in Virginia.

3. Virginia Offshore Job Creation and Supply Chain Development: Work in cooperation with relevant local, state, and federal agencies to accommodate the manufacturing, assembly, and maintenance of offshore wind energy project components and vessels.

4. Offshore Wind Project Siting and Development: Communicate and coordinate with stakeholders, including the Department of the Interior Bureau of Ocean Energy Management, Regulation, and Enforcement (DOI BOEMRE, subsequently renamed BOEM) Task Force to ensure the development of offshore wind projects is compatible with other ocean uses and avian and marine resources, including both the possible interference with and positive effects on naval facilities and operations, NASA-Wallops Flight Facility operations, shipping lanes, recreational and commercial fisheries, and avian and marine species and habitats.

To accomplish its goals, the Authority worked with and supported efforts by the DMME, BOEM, and other stakeholders to help accelerate offshore wind development projects in Virginia and address financial and environmental issues. The Authority heard presentations throughout the year from various stakeholders and experts and analyzed this and other information to determine the appropriate next steps to facilitate development of the offshore wind energy resource, to provide reasonably priced renewable energy, and to develop an offshore wind industry and supply chain that will create economic opportunity for businesses and good jobs for Virginians.

As a result of its activities and accomplishments in 2014-15, the Authority makes the following recommendations to advance offshore wind development and related supply chain activities in Virginia. The recommendations are ranked in order of priority.

RECOMMENDATION 1: Leverage state funding with additional private and federal funding to give Virginia a competitive advantage over other Mid-Atlantic States in attracting the offshore wind industry.

• Publicize the findings and recommendations from the Virginia Offshore Wind Port Readiness Study to help establish Virginia as the ideal manufacturing, operational and supply chain hub for offshore wind development in the Mid-Atlantic region.

• Gather data to demonstrate the economic benefits that would result if the Commonwealth of Virginia became home to a vibrant Mid-Atlantic offshore wind industry and supply chain, and work with Dominion Power, as the commercial lease holder, and others to strategically engage potential supply chain and workforce development opportunities.

• Act on the findings of the Virginia Offshore Wind Port Readiness Evaluation and match specific activities with specific port facilities. Determine what barriers and shortfalls exist and work with key stakeholders to overcome these barriers and shortfalls to streamline site selection, thus reducing cost and risk for investments by supply chain companies and manufacturers.

• Support the stakeholder process recommended by Dominion in April 2015 to work with DMME, the VOWTAP project team, industry and other stakeholders to explore ways to reduce or share the costs and risks of the VOWTAP project to help to ensure its viability for Virginia consumers and businesses that use renewable energy.

• Work with the Governor’s office, the Virginia General Assembly and the Virginia Congressional delegation to promote the VOWTAP project as needed and consider new legislation and financial assistance.

RECOMMENDATION 2: Support successful completion of the VOWTAP by working with state and federal agencies and private stakeholders to ensure advancement of the project with minimal delays in the permitting and approval process.

• Work with interested stakeholders to address any concerns they may have in the Environmental Assessment (EA) related to the demonstration.

• Work with the VOWTAP team to remove any impediments to project permitting and approvals, and offer environmental and regulatory support.

• Work with the VOWTAP and stakeholder team to identify other regulatory measures to reduce costs and promote advancement of the VOWTAP project as the precursor to commercial offshore wind development in Virginia.

RECOMMENDATION 3: Support and expedite the federal process for development of the commercial wind energy area off of the coast of Virginia and ensure compatibility with other ocean uses and avian and marine species and habitat.

• Support the extension of federal Investment Tax Credits and Production Tax Credits in forms that would assist offshore wind development in Virginia.

• Support and work with BOEM and other federal resource and regulatory agencies to expedite permitting and other approvals needed for offshore wind commercial development.