RD596 - Virginia Offshore Wind Development Authority Annual Report - December 6, 2018
Development of the U.S. offshore wind energy resource moved significantly closer to a near-certainty during 2018 when multiple projects along the East Coast took concrete steps to put steel in the water, including a key approval of Virginia’s demonstration project, lending credence to this fast emerging new U.S. industry. It has become clearer than ever that, with a potential build-out of at least 20,000 megawatts (MW) of installed capacity (or 2,000-3,000 wind turbines) along the East Coast over the next two decades, Virginia is well positioned to become a prime location for the offshore wind supply chain and service industry. As the demand for wind energy increases, experts predict that 37,000 FTE years will be created annually during peak construction years, between 2024 and 2028, assuming a conservative 8 GW East Coast market forecast.(*1)
Virginia has many assets and attributes that make it attractive to the offshore wind industry. The Authority continues to work with and support the efforts by the Virginia Department of Mines, Minerals and Energy (DMME), the federal Bureau of Ocean Energy Management (BOEM), Dominion Energy, Ørsted and other stakeholders to help accelerate offshore wind development projects in Virginia, address environmental and financial issues, and create port and supply chain economic opportunities.
A number of recent significant developments have increased momentum and Virginia’s potential as a location of choice for investments by the rapidly emerging industry.
• The Grid Transformation and Security Act became law in July 2018 declaring offshore wind and the Coastal Virginia Offshore Wind (CVOW) project to be in the public interest. It ensures that Dominion Energy can fund the CVOW project using existing base rates with no added cost to ratepayers.
• In November 2018, the State Corporation Commission (SCC) approved Dominion Energy’s application, filed August 3, 2018, for approval to proceed with the construction of CVOW based on the above law. The demonstration CVOW project will provide critical information to the industry and stakeholders, and help to position Virginia as a leader committed to developing the offshore resource and making the Commonwealth an attractive location to the offshore wind supply chain and service industries.
• Governor Ralph Northam released the 2018 Virginia Energy Plan in October 2018. The Plan provides a strategic vision over the next ten years for Virginia's energy policy and sets goals for renewable energy generation, energy efficiency, and electric vehicles. The recommendations for offshore wind focus on supporting the development of the offshore wind resource itself as well as growing the offshore wind supply chain. The Energy Plan includes both support for the 12 MW offshore wind demonstration project (CVOW) and the recommendation to establish a goal that the full 2,000 MW of offshore wind potential in Virginia’s wind energy area be developed by 2028.
• BVG Associates was hired in July 2018 as Virginia’s international energy consultant to develop a plan to position the state as the East Coast offshore wind supply chain and service industry location of choice. [The Virginia Advantage, The Roadmap for the Offshore Wind Supply Chain in Virginia will be available at https://www.vaoffshorewind.org.
• Virginia supported BOEM’s efforts to evaluate additional Wind Energy Areas (WEA). DMME submitted comments to BOEM’s Request for Feedback on the Proposed Path Forward for Future Offshore Renewable Energy Leasing on the Atlantic Outer Continental Shelf (OCS) to help assess which geographic areas along the Atlantic, in addition to about a dozen already designated for development, are the most likely to have the highest potential for successful offshore wind development.
• The Port of Virginia, along with DMME, the Virginia Economic Development Authority and the Virginia Maritime Association, hosted terminal site tours for companies interested to learn about Virginia’s advantages as a mid-Atlantic hub for the industry. These included globally recognized offshore wind developers, procurement and logistics specialists, European foundation fabricators, and other potential supply chain businesses. Virginia’s port advantages – unlimited air clearance to sea, uncongested and deep channels, and land space for staging large components -- make it possible to ship very tall structures from shore-side fabrication and assembly facilities in an upright position to offshore installation sites. These logistics reduce costs and lower risks for developers.
• DMME staff met with stakeholders from the Eastern Shore to discuss Cape Charles and the role it could play in offshore wind development. DMME provided support documentation related to dredging and improving access from the deep channel to the Cape Charles Harbor shoreline to parties interested in further development of the Cape Charles Harbor.
As a result of activities and accomplishments in 2018, the Authority makes the following recommendations in 2019 and beyond to further advance offshore wind development and related supply chain activities in Virginia. The recommendations are ranked in order of priority.
RECOMMENDATION 1: Encourage and advocate for resources, supportive state and federal regulatory actions and changes, as well as legislative proposals, such as the establishment of a mandatory renewable energy standard with a specific goal for offshore wind and for extension and preservation of the federal tax credits.
RECOMMENDATION 2: Collaborate with stakeholders, including Dominion Energy, Ørsted, Virginia Economic Development Partnership, the Port of Virginia, Virginia and European manufacturers, and others to promote Virginia companies as part of the supply chain for offshore wind. Review and implement recommendations in The Virginia Advantage, The Roadmap for the Offshore Wind Supply Chain in Virginia [ https://www.vaoffshorewind.org.
RECOMMENDATION 3: Work towards a multi-state regional supply chain cluster in Mid- and South Atlantic coastal states, offering the industry a wide network and the best of what each state has to offer.
RECOMMENDATION 4: Work to identify possible power off takers in the Commonwealth and elsewhere, such as large data companies with clean energy commitments and Amazon’s Eastern Headquarters2 scheduled to be constructed in Northern Virginia at National Landing, for offshore wind energy from CVOW and the commercial Wind Energy Area. This will help obviate the need for SCC approval of the commercial site by defraying its costs to the ratepayers either partly or fully.
RECOMMENDATION 5: Actively solicit research and development opportunities and activities to reduce the cost and risk of developing the wind resource and supply chain, including leveraging the DMME Research Lease in conformance with existing agreements.
RECOMMENDATION 6: Work with Virginia universities and colleges to establish wind training programs.
As required by § 67-1209 of the Code of Virginia, the Authority submits this eighth annual report to the Governor and the Chairpersons of the House Appropriations Committee, the Senate Finance Committee and the House and Senate Commerce and Labor Committees.