Virginia Electric and Power d/b/a Dominion Virginia Power sees issues with both onshore and offshore wind development in Virginia, said a company official in Oct. 9 rebuttal testimony filed at the Virginia State Corporation Commission.
The commission is reviewing the latest integrated resource plan for this Dominion Resources (NYSE: D) subsidiary. The Oct. 9 testimony responds to criticisms of the plan lodged by various parties to the case.
Mark D. Mitchell, Vice President, Generation Construction for Dominion Resources Services, said that assertions regarding the amount of onshore wind resources which can be developed in the state must be clarified. To begin, an outside witness relies on the PJM Interconnection queue to assert that there are 1,575.6 MW of wind energy under study in Virginia and states bordering Virginia. Another witness quotes a report from the American Wind Energy Association on the U.S. Energy Information Administration’s (EIA) analysis of the U.S. EPA’s Clean Power Plan (CPP), which provides a projection of approximately 4,900 MW of onshore wind being built in Virginia and the Carolinas by 2025. Notably, EIA’s Annual Energy Outlook for 2015 shows only 981 MW of wind capacity in the same region, Mitchell wrote.
He pointed out that quoting nameplate capacities for wind projects does not account for the expected capacity factors or firm capacity, which can have a significantly lower range. Historically, PJM has valued wind capacity at only 13% of its nameplate capacity. To put this in perspective, using the quoted 1576.6 MW of wind capacity, this would represent approximately 205 MW of firm capacity. Additionally, with the recent PJM Capacity Performance (CP) market, an increased emphasis has been placed on a capacity resource being available during peak hours. Generally speaking, Dominion Virginia Power has been “summer peaking,” during hours where wind energy production tends to be very low. It is likely that under the PJM CP rules, “excessive penalties” could be incurred by wind resources that cannot perform during PJM’s summer peak hours, Mitchell pointed out.
Also, the PJM queue is not an accurate measure of the number of projects that ultimately get constructed. Historically, only a small portion of projects that enter the PJM queue are actually developed, Mitchell noted. As of Oct. 7, 2015, there are approximately 368 MWs of active wind projects located in Virginia filed in the PJM queue. Currently, there are no utility scale on shore wind projects which are in operation in Virginia, according to Virginia Department of Mines, Minerals, and Energy information.
Another criticism is that the utility’s estimates of offshore wind project costs may be too high. Mitchell responded: “The Company’s current cost estimates for offshore wind are based on the continued development of the Virginia Offshore Wind Technology Advancement Project (‘VOWTAP’), which is partially funded by a grant from the Department of Energy (‘DOE’). The goal for VOWTAP is to research, develop, and construct two wind turbines located approximately 27 nautical miles offshore from Virginia Beach. The nameplate output from these two turbines would be approximately 12 MW. Using the knowledge gained from the potential construction of VOWTAP, the Company would then be in a better position to develop a utility scale offshore wind facility located on 112,800 acres of leased blocks adjacent to the VOWTAP site.
“Recently, based on construction proposals received from potential vendors, the estimated VOWTAP costs have increased significantly. As a result, the Company has temporarily slowed the development timeline for this project and is in the process of conducting several open stakeholder forums to research and study how to further reduce construction costs. Thus, there is a possibility for reducing the offshore wind construction estimates using the recommendations from the ongoing stakeholder process. The Company continues to evaluate offshore wind capital costs and will update estimates in future Plans as warranted based on the latest applicable data available.”
An opposing witness referenced offshore wind projects at Block Island, Cape Wind, and Blue Water as examples for why the company’s cost estimates may be high. Mitchell responded that only the Block Island project is currently in construction with a levelized cost of $347.50 per MWh over a 20-year life, according to this outside witness testimony. “The Company continues to follow the Block Island project very closely as it uses similar technology as does our potential VOWTAP,” he added. “The Company has also looked at public cost data for this project and noted that projected cost are comparable to the VOWTAP estimate when the VOWTAP project is scaled to Block Island size (five turbines of same design on Block Island verse two at VOWTAP). Adjustments included the near shore construction, transmission cable provided by others, and other factors related to the Block Island project. The Company continues to monitor offshore wind development, industry lessons learned, and its own development efforts to inform the latest information for use in planning.”