Wind Power Is Beautiful But Expensive

by James A. Bacon

Offshore wind turbines are works of engineering beauty. Soaring as high as the Washington Monument, they are a magnificent sight to behold, as I saw for myself on an excursion Wednesday to view Dominion Energy’s two experimental wind turbines up close. The towers are also very expensive — not just the two pilot turbines, which no one pretended at $300 million for the pair would produce economical electricity, but the fully built-out wind farm with 180 turbines at a cost currently estimated at $7.8 billion.

If the only cost you consider is the expense of erecting a turbine itself, offshore wind can look competitive with solar and combined-cycle natural gas. Dominion officials estimate their wind turbines will generate electricity at a cost of 8 cents to 9 cents per kilowatt hour. That’s less than the average rate of $10.83 cents per kilowatt hour Dominion charges its customers.

But the turbines don’t generate electricity in a vacuum. They are part of an electrical-generating system. And you can’t build a system around turbines that generate electricity only when the wind blows. Dominion must build a major transmission line to plug into the grid and maintain backup power sources to kick in when the winds fall still.

I was reminded Wednesday that complying with the Virginia Clean Energy Act (VCEA) — being 100% carbon free by 2045 in Dominion’s service territory — will cost ratepayers billions of dollars. Dominion officials estimate that Virginia will see 3% year-over-year increases in their electricity bills over 10 years just to meet the intermediate 2030 goals. That could amount to more than $800 per year more than the status-quo scenario, according to State Corporation Commission findings, although environmentalists say that calculation doesn’t take into account the cost savings from energy-efficiency measures included in the legislation.

That $800 is just a best guess by the SCC staff. There are many uncertainties. On the potentially positive side, the estimated $7.8 billion cost of developing Dominion’s wind farm may come down substantially. The performance of the two experimental turbines is so much better than expected that Dominion is expecting to require only 180 wind turbines to meet its legislatively mandated wind goals, not 220. That could save hundreds of millions of dollars.

On the other hand, Dominion needs to plug all that offshore electricity into its grid on the mainland. Building a transmission line offshore will be easy. The windmills will be arrayed in groups of 60, each with its own offshore substation for converting the electricity into a form that customers can use. An underground cable will travel under the seabed for some 27 miles and come ashore at Camp Pendleton. Once it hits land is when the regulatory trouble will begin. The line will have to cross numerous residential subdivisions, and if there is one thing guarantee to mobilize homeowner opposition it’s the prospect of staring at a giant transmission line out the back window.

At present Dominion expects part of the transmission line to run above ground and part to run underground. Predictably, there will be calls to bury the line underground anywhere it might intrude upon homeowners’ viewsheds. Trouble is, the cost of burying transmission lines is five times that of stringing it overhead.

Reliability and resilience are another issue. The wind farm will be designed to have a total capacity of 2,640 megawatts. That’s huge — it’s 50% bigger than the capacity of the two nuclear power units at the Surry Power Station. Unlike Surry, wind farms generate electricity when the wind feels like blowing, not necessarily when consumers demand it. Dominion must maintain backup power sources — gas-fired turbines that can rapidly dial output up and down, pumped storage capacity, electric batteries (still very expensive), or hydrogen fuel cells (still experimental). Whatever the method chosen, that backup capacity will wind up sitting idle much of the time at great expense.

The only other alternative would be to import electricity from outside Dominion’s service territory. But that would entail building more electric transmission lines, a sure-fire way of making enemies and alienating people.


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41 responses to “Wind Power Is Beautiful But Expensive”

  1. dick dyas Avatar
    dick dyas

    So, is nuclear energy totally out of the conversation?

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      No. Dominion just got its license for Surry renewed for another 20 years.

    2. LarrytheG Avatar
      LarrytheG

      In my mind , 60-year old Nuke designs sitting on an active earthquake fault is nuts. Why are we limited to 60 year-old Nuke designs anyhow?

      Why can’t modernized nukes be part of the effort along with batteries and hydrogen anyhow?

      1. Thomas Hadwin Avatar
        Thomas Hadwin

        Small Modular Reactors are still far too expensive to compete. Several utilities just bailed out of the pilot project because of excessive cost overruns.

    3. Thomas Hadwin Avatar
      Thomas Hadwin

      It is a topic that deserves a thorough review. Nuclear generation is 20% of Dominion’s capacity but provides about 30% of its energy. It is an important component of our present energy system. It is not a zero carbon source, but a low-carbon one compared to fossil units. A good deal of greenhouse gases are released in the mining and fabrication of nuclear fuel rods. But no carbon is released when the fuel is used in the power plant.

      Dominion wants to spend billions extending the life of its nuclear units from 60-80 years. This is twice the life span that the units were designed for.

      Nuclear units throughout the nation cannot compete in price with newer forms of generation. Subsidies are required to keep old units operating. In a sense, Dominion would receive a subsidy from its ratepayers by receiving a repayment of perhaps $18 billion for just 20 years of operation, including billions in guaranteed profits. Operating expenses are rising for nuclear units.

      Much of the wind energy production occurs at night when the nuclear units must operate. The zero marginal cost of the wind facility could displace the nuclear units from operating, making them even more expensive. We need to discuss all of these issues and make good choices.

      1. Thomas Hadwin Avatar
        Thomas Hadwin

        Correction – I assumed $8 billion for the project costs of the nuclear refurbishments rather than the $4 billion Dominion projected – making the repayment over $9 billion instead of $18.

        As one who has years of experience developing nuclear plants, my guess is the $8 billion will be closer to the final number than the current estimate.

      2. Thomas Hadwin Avatar
        Thomas Hadwin

        Correction – I assumed $8 billion for the project costs of the nuclear refurbishments rather than the $4 billion Dominion projected – making the repayment over $9 billion instead of $18.

        As one who has years of experience developing nuclear plants, my guess is the $8 billion will be closer to the final number than the current estimate.

  2. LarrytheG Avatar
    LarrytheG

    Sone of the offshore wind costs are one-time start-up costs. Others are not unlike when Dominion wanted put power lines across the James near Jamestown or build a new pipeline across hundreds of miles.

    It’s funny , we don’t make the NIMBY power line argument when GAS or NUKES are advocated to provide more electricity so why do we do that ONLY with wind and solar?

    And we keep thinking in terms of about how wind can’t be 24/7 instead of when wind IS available it can be used INSTEAD of other fuels – more expensive and more polluting.

    For right now, there is nothing wrong with relying on gas to backup wind/solar when need be. And if you have enough wind/solar, less and less gas backup will be needed and it will buy time for more development of batteries and hydrogen – as well as energy efficiency.

    It’s the half-glass thing. No fuel is without it’s disadvantages, but over and over we point out ONLY the ones associated with renewables.

    I still don’t understand why, if the turbines are more efficient, why we not take MORE wind power instead of cutting the number of turbines back.

    Why NOT MORE wind and solar as long as we have gas that can come online when needed? It’s not a binary choice.

    1. energyNOW_Fan Avatar
      energyNOW_Fan

      So Larry you favor excluding some major costs from the Off-Shore wind cost estimate if they can brushed off as one-time or new infrastructure requirement?

  3. Troublemaker Avatar
    Troublemaker

    Wind turbines kill birds!

  4. DJRippert Avatar
    DJRippert

    “At present Dominion expects part of the transmission line to run above ground and part to run underground. Predictably, there will be calls to bury the line underground anywhere it might intrude upon homeowners’ viewsheds. Trouble is, the cost of burying transmission lines is five times that of stringing it overhead.”

    And what of the maintenance costs? I’ve been told that buried cable is far more likely to be unaffected by storms, freezes, etc than overhead equipment.

    Meanwhile, if you dig a trench … lay several conduits – one for electricity, one for network, others for other things.

    1. Matt Adams Avatar
      Matt Adams

      “And what of the maintenance costs? I’ve been told that buried cable is far more likely to be unaffected by storms, freezes, etc than overhead equipment.”

      That’s where buired line will always be superior. Yes, the up-front cost is greater but the reliability can’t be beat.

    2. Ask the SCC about the maintenance costs of buried cable. Dominion made that very same argument a few years ago when it asked to bury tap lines that had the highest incidence of outages. The idea was to reduce outages and improve service restoration times. The SCC said only a fraction (maybe half?) were economically justifiable and denied a big portion of Dominion’s request.

    3. Ask the SCC about the maintenance costs of buried cable. Dominion made that very same argument a few years ago when it asked to bury tap lines that had the highest incidence of outages. The idea was to reduce outages and improve service restoration times. The SCC said only a fraction (maybe half?) were economically justifiable and denied a big portion of Dominion’s request.

  5. Stephen Haner Avatar
    Stephen Haner

    Jim, you keep talking about the Phase One part of all this and $8 billion when there are going to be two phases and at double the cost, more like $16 billion in initial capital. Did you use the 3% compounded annual bill increase anywhere in these three love notes? Need to read them now. You grow residential rates 3% annually compounded over 20 years that’s starting to get noticeable….And I assure that is in constant dollars, say 2018 or something.

    1. “Love notes?” I expect insults from LarryG, not you.

      How does building a story around the under-publicized fact that the VCEA will drive up Dominion’s electric rates by more than 30% over 10 years constitute a love note?

      1. Stephen Haner Avatar
        Stephen Haner

        https://www.baconsrebellion.com/dominion-green-energy-costs-continue-to-grow/

        See above. An extra $800 per year is more like a 60% increase in less than a decade. That 3% might be OSW only. Puff piece. Whitewash. Company jive. I thought “love note” was being kind.

        But you had mentioned the 3% ,which compounded is NOT 30% in ten years. It will be WAAAAAY more than that unless VCEA is derailed.

        1. Tell me what is inaccurate about this statement: “Virginia will see 3% year-over-year increases in their electricity bills over 10 years just to meet the intermediate 2030 goals.”

          1. Stephen Haner Avatar
            Stephen Haner

            It does not match up with the $800 ($67 per month) prediction in the SCC data from last year. That is closer to 60% over the decade or so….You are a reporter, and if Dom is lying to you, you are just printing what you were told.

    2. “Love notes?” I expect insults from LarryG, not you.

      How does building a story around the under-publicized fact that the VCEA will drive up Dominion’s electric rates by more than 30% over 10 years constitute a love note?

  6. Nancy Naive Avatar
    Nancy Naive

    Can one truly put a price on beauty? Other than Elliot Spitzer or Senator Vitter, that is.

    Van Gogh couldn’t sell his painting. Today he’s the most copied artist ever. Time will tell.

    1. DJRippert Avatar
      DJRippert

      Did you ever wonder if 16th century Dutch NINBY’s complained about the building of those windmills in Holland?

      1. Nancy Naive Avatar
        Nancy Naive

        No, they didn’t. Those windmills meant they could have a backyard that wasn’t 6′ deep. Otherwise they’d have to live in Belgium.

  7. energyNOW_Fan Avatar
    energyNOW_Fan

    Jim-
    Yes Off-Shore wind is extremely expensive, especially the way Virginia elected officials are collaborating with Dominion to give Virginia the ultimate most costly version of this energy source. I can already hear potential future Gov McAuliffe, saying the same thing he said before on other Dominion requests: he met with the CEO and they said they MUST have these profits or else they will die, and McAuliffe will say: he had no choice but to give Dominion everything they asked for.

    (1) Wind power does not run 100% so what % stream factor of the 2640 MW is expected? And that is probably optimistic.

    (2) Compare the OFF-shore wind cost (which is probably extreme optimistic and leaves out a lot of expenses such as power lines from the sea to land) to the last big nat gas plant by Dominion, to see real cost of nat gas versus super optimistic projected cost of offshore wind.

    I actually have some interest in offshore wind, but there is no need to rush it in Virginia. I’d be looking for a smart second or third place (let them get the bugs out) and much better cost effectiveness. I’d hedge with some much cheaper on-shore wind in the Appalachians (Pa, Md, WV). Mandate Virginia union trades, if you want to, for the on-shore wind.

    New Jersey is working on new legislation to say no towns or counties in NJ are allowed to block the power lines under the beach and above ground through the beach towns. Towns can negotiate but Orsted gets the final say if approved by NJ BPU.

  8. energyNOW_Fan Avatar
    energyNOW_Fan

    Jim- Your title is wrong…should say OFFshore Wind is expensive.

    On shore wind been cost 0ffective since about mid-1990’s…USA was late to the onshore wind party due to Democrats favoring coal so darn much (over my dead body – but that’s another story).

  9. energyNOW_Fan Avatar
    energyNOW_Fan

    One thing happening in New Jersey and New England, although Orsted won the bid proposal, now the local utilities are forming joint ventures with Orsted for the projects. I don’t why, or if that makes it more like the Virginia approach.

  10. Thomas Hadwin Avatar
    Thomas Hadwin

    “Dominion officials estimate their wind turbines will generate electricity at a cost of 8 cents to 9 cents per kilowatt hour.”

    Projections for the fixed-price bids for offshore wind, built by independent developers in other states on the East Coast, is 5-6 cents per kWh. This indicates that allowing Dominion to receive a guaranteed profit for constructing the project would roughly double its cost.

    The 2020 version of Lazard’s Levelized Cost of Energy Comparison shows that utility-scale solar is 3-3.8 cents per kWh.

    Combined cycle gas turbine units produce electricity at 4.4-7.3 cents per kWh. But fossil-fired units are vulnerable to price increases that don’t affect renewables. Dominion expects natural gas prices to increase by 78% by the end of 2035. Prices are already 50% higher than what they were the past 2-3 years. Higher prices are necessary for US gas producers to remain solvent. The cost of RGGI compliance or a PJM or nationwide carbon tax will also increase the price of gas-fired generation.

    Renewable generation, without guaranteed utility profits, is competitive with just the operating cost of nuclear and fossil-fired units.

    It is not the addition of renewables that is increasing energy costs in Virginia. It is the legislative directive engineered by Dominion that allows Dominion to earn a guaranteed profit on facilities that can be developed and operated by independent developers at a lower cost. Dominion ownership of renewable facilities adds no value to its customers, only added costs. Other states have figured this out and still maintain financially healthy utilities.

    1. “It is not the addition of renewables that is increasing energy costs in Virginia….”

      Tom, I’ll believe that when the residential rate of electricity in New Jersey, New York, and Connecticut is lower than in Virginia.

      No question, Dominion has cut a sweet deal for itself — a crazy high allowable rate of return on capital — in the realm of 10%, as I recall — when long-term interest rates are about 2%. But Dominion loves the renewable revolution. It will get to invest tens of billions of dollars in new stuff. How did that happen? Dominion struck a deal with the environmental lobby. Why didn’t the enviros hold out for competitive energy prices? Could it be they don’t care two hoots how much the green energy costs as long as Virginia gets to net zero?

      1. Thomas Hadwin Avatar
        Thomas Hadwin

        Sorry Jim, I missed seeing this earlier. There are a lot of reasons why electric rates are higher in the Northeast than here. Historically, their peak to average use is higher than here – requiring many more power plants to be built that sit idle much of the time. Labor costs are much higher, as are property costs, taxes, etc. There is a reason that many industries have migrated from north to south over the past several decades.

        Although the rates are higher, the electric utility bills are much lower than in Virginia. This has a lot to do with better energy efficiency standards, and especially because homes are typically heated with gas or fuel oil. The heat pumps that we use don’t work well in the extreme cold of the northeast.

        I raised the cost issue with several sponsors of the bill, but it was late in the process. My impression was that the VCEA was intended to accelerate the sluggish pace that Dominion was transitioning to renewables.

        When Dominion was able to shape the bill into 40-years of windfall profits, they have since touted their premier role as a renewable energy provider.

        Where were the consumer advocates? The commercial and industrial customers tried only to get an exemption from some of the measures, leaving residential customers to bear more of the burden. There was some protection for low-income residents in the bill, but that just spread more costs over the remaining ratepayers.

        To me it is an example of why we should not enact major energy legislation in a whirlwind session without in-depth expert evaluation. The bills are shaped by big money and lobbyists as a result, to the detriment of all but a few special interests.

  11. Thomas Hadwin Avatar
    Thomas Hadwin

    I have not seen any details, but the transmission line from the wind farm is likely to be a high-voltage direct-current line. Water presents problems for alternating current transmission lines. To attach to our existing transmission network, the DC current would have to be converted to be compatible with the existing AC lines. High-voltage DC can be easily buried so that could relieve some of the above-ground issues.

  12. Thomas Hadwin Avatar
    Thomas Hadwin

    No extra backup sources are needed for the wind generation. Based on the past ten years of actual weather-normalized demand, all of Dominion’s customer sectors, except for data centers, have been stable or declining in demand – even with increased population and greater economic activity. Dominion expects that EVs in its territory will require only 160 MW of generation by 2035.

    The offshore wind facility is expected to have a 47% capacity factor, maybe more with better data. The three newest combined cycle units had the following average capacity factors in the period 2017-2019: Warren 72.7%, Brunswick 69.1%, Greensville 52.8% (partial year in 2018).

    Dominion has sufficient dispatchable capacity now to meet the load. If the demand remains stable, that will still be the case. If the wind doesn’t blow or the sun does not shine, Dominion will operate the necessary units it has now to fulfill demand. The rhetoric about needing more gas-fired generation to backup renewables is an attempt to get more revenues by building new units that will soon become stranded costs. Increased energy
    efficiency, demand response, and storage will decrease the need to use many of the expensive, dirty peaking units that we have now.

    Storage is competitive in many applications now, and is decreasing in cost. At present prices, battery storage is a fraction of the cost of the Southwest Virginia pumped storage project. That project will extract billions in higher energy costs from Virginians to provide SW Virginia with $12 million per year in tax revenues. Our state legislators should be ashamed of that approval. There are much better and cheaper ways of aiding our neighbors in Southwest Virginia than by diverting billions into Dominion’s pocket.

    Importing backup power from outside of Dominion’s service territory is not a good solution. It increases everyone’s electricity bill (for the added transmission). It creates unnecessary environmental disruption and potential delay. It also adds vulnerability to the few choke points that we have for exchanging electricity with our neighbors. This old habit reduces
    reliability rather than improving it.

    Adding distributed self-generation and storage within the distribution system would reduce customer costs and improve reliability and resiliency. But Dominion is obstructing this. There is a way for them to benefit, as well as their customers, from modern approaches to developing our energy system.

    1. Tom, how long do you think Dominion will be allowed to maintain its natural gas plants? We’re talking net zero. Dominion can’t plant enough trees to offset the CO2 emissions.

      1. energyNOW_Fan Avatar
        energyNOW_Fan

        Gimme the cost and size comparison of Dominion last big nat gas power plant, and let me decide if it will be banned or more expensive. Coal was always more expensive than nat gas but the planners always assumed big future cost increase for nat gas, thus killing nat gas until nat gas price fell to the floor.

      2. energyNOW_Fan Avatar
        energyNOW_Fan

        Gimme the cost and size comparison of Dominion last big nat gas power plant, and let me decide if it will be banned or more expensive. Coal was always more expensive than nat gas but the planners always assumed big future cost increase for nat gas, thus killing nat gas until nat gas price fell to the floor.

      3. Thomas Hadwin Avatar
        Thomas Hadwin

        They have until 2045 according to the VCEA. There is a loophole that
        some can remain if needed for reliability. They will get paid in full
        for any that have to retire early.

    2. Tom, how long do you think Dominion will be allowed to maintain its natural gas plants? We’re talking net zero. Dominion can’t plant enough trees to offset the CO2 emissions.

  13. energyNOW_Fan Avatar
    energyNOW_Fan

    Looks like South Jersey is now getting two(2) state-funded(?) wind tower assembly plants on the Delaware River. The first, Paulsboro is north of the Delaware Memorial Bridge, so there needs to be another assembly area, below the bridge to allow the 400-ft tall towers to be towed out to sea. These “plants” seem to be fairly simple assembly areas, costing about $250 Million each.

    It could be hard to compete with South Jersey, they have many union workers for refineries, nuke plants, and former Philadelphia Navy Yard workers. And they have political Union leaders in top spots in the state government, who apparently had to fight hard with the powers-that-be to get assembly sites built as originally promised. You can see Paulsboro site is not ideal location, but was fought for by requesting cancellation of the Ocean Wind project if they did not get the assembly plant.

    The one apparent question would be, if Dominion’s Jones Act ship is heading up to New England in 2023 to install those wind turbines, who is installing New Jersey’s Ocean Wind turbines?

  14. Jane Twitmyer Avatar
    Jane Twitmyer

    As someone who has been enamored of the potential of our East Coast Offshore Wind for 10+ years, it seem the discussion is missing the big picture of a resource that is now only beginning to become reality.

    Here is some info from …AWEA. U.S. OFFSHORE WIND POWER ECONOMIC IMPACTASSESSMENT
    The United States has vast offshore wind energy resources. The areas off our coasts possess an offshore wind potential of more than 2,000 gigawatts (GW)3, or nearly double the nation’s current electricity use.

    This potential presents an enormous opportunity to deliver large amounts of clean, reliable electricity to the country’s largest population centers along the coasts. Harnessing America’s offshore wind resources will also create thousands of jobs, draw new investment to the U.S., revitalize ports and coastal communities, and create opportunities for American manufacturing.

    States along the East Coast are driving demand for offshore wind. Connecticut, Maryland, Massachusetts, New Jersey, New York, and Virginia have established targets to procure a total of 25,400 MW of offshore wind by at least 2035 and have selected over 6,000 MW of projects as of February 2020 to help meet these goals.

    The growth of the U.S. offshore wind industry is expected to deliver significant economic benefits over the next decade and beyond. In a high scenario with 3,000 MW installed per year and 60% domestic content, these benefits could reach $25 billion per year and support over 83,000 jobs by 2030. These benefits do not account for additional value offshore wind projects will deliver through tax revenues to local, state,
    and federal jurisdictions, emissions reductions and associated health savings, and direct payments supporting workforce development or host communities.

    Finally, OSW on the East Coast delivers the most energy to the millions people who live near the coast during the time frame with the most demand. Kempton at the U of DE says … “The offshore wind resource of the US Eastern continental shelf is insanely large” and “Could run all Eastern coastal states — electricity, light vehicles & building heat!”

    Regarding Price …” US Policy developments, plus technology have brought price to or below market for power” … Kempton quotes the proposed “ 2nd traunch of a RI wind Farm’s LCOE or cents per MW/h at 7.7 cents per in 2021.”

    What’s not to like?

    1. Thomas Hadwin Avatar
      Thomas Hadwin

      Jane,

      My comments have not been about the size of the potential wind resource, but about the fact that by allowing Dominion to own the facilities instead of an independent producer, the cost of the electricity produced by the wind farm will be two times higher than it needs to be.

      1. Jane Twitmyer Avatar
        Jane Twitmyer

        I remember your comments and they are well said. I was talking about the fact that the comments in general did not share, or mention, any enthusiasm for the huge potential, economically and environmentally, that offshore wind is bringing. It will be so much more than even many policy makers have grasped

        1. Jane Twitmyer Avatar
          Jane Twitmyer

          And let me add another clean energy money saver. EPA has just published their list of the top 45 metro areas that were home to the most ENERGY STAR buildings certified in the previous year … cutting American energy bills and pollution through energy efficiency.

          The list is divided into 3 areas; Top, Mid-sized and Small cities. And Guess what …there in not one Virginia city listed. Not one! Southern cities, Atlanta, Houston, Dallas are in the Top 10, followed by Tampa, Austin, Charlotte, Miami and Raleigh. Mid-sized cities include
          Nashville, Greenville, and Columbia. And
          finally, the small cities of Bowling Green, Elizabethtown and even the WVA town
          of Wheeling all made the cut. Savings last year ranged from between $465,000 in
          Wheeling to $64 million in Atlanta.

          Energy standards have turned out to be the biggest energy saver of all. Last year, 6,500 bldgs earned the #ENERGYSTAR. They saved $1.7 billion and more than 5 million metric tons of GHGs! Since 1999 nearly 38,000 diverse buildings have earned the ENERGY STAR, ranging from the Empire State Building to an elementary school in the mountains of Alaska.

          California continues to lead the nation and the world in energy efficiency standards, standards that are transparently debated and updated every three years. CalGreen includes “mandatory measures that are required on all new homes and residences … and to additions and alterations which increase the building’s conditioned area, interior volume, or size.” One result; Los Angeles and San Francisco are numbers 1 and 3. Our neighbor, DC is number 2. The only VA city to have made the list in 21 years, is Virginia Beach, which it did
          3 times awhile back.

          So, where is our Legislature with their ability to create policy that will drive building efficiency? It can save all Virginia rate-payers money, and will dramatically reduce the state’s total energy demand and our Green House Gas emissions.

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