As progress continues on Coastal Virginia Offshore Wind, the largest offshore wind project in development in the U.S., the estimated cost of the project has increased to $10 billion.
Dominion Energy CEO Bob Blue told investors last week that the projected levelized cost of energy for the project is now $87 per megawatt-hour, within the $80-90 range that was initially outlined for the project but still resulting in an overall cost increase of $2 billion. Blue added that additional tax credits being considered as part of the Biden administration’s Build Back Better agenda could lower the project’s cost to $80/MWh.
“The cost increase can be attributed to, among other things, commodity and general cost pressures, which seems to be the case across a number of industries right now,” Blue said. “But as we mentioned, the production expectation, the capacity factor out of this has also gone up as we’ve gotten more data, which means that the customer bill impact is the same.”
Once completed in 2026, Coastal Virginia Offshore Wind will generate enough clean energy to power 660,000 homes. Last week, Dominion Energy submitted construction plans for the 2.6 gigawatt project with the Virginia State Corporation Commission for approval.
The step builds on recent announcements that Siemens Gamesa will build the U.S.’s first blade manufacturing facility at the Port of Virginia to support the Coastal Virginia Offshore Wind project, as well as other projects along the east coast, and that Dominion Energy has invested in the first and only U.S. flagged offshore wind turbine installation vessel.
DEME Offshore US, meanwhile, announced Friday that the company has secured a $1.1 billion balance of plant contract from Dominion Energy for construction of the Coastal Virginia Offshore Wind project in consortium with Prysmian. The total contract is valued at, at least, $1.9 billion.
The Coastal Virginia Offshore Wind project is currently operating as a two-turbine test pilot 27 miles off the coast of Virginia Beach. Coastal Virginia Offshore Wind is the largest offshore wind project in development in the U.S.
The Biden administration set a goal of deploying 30 gigawatts of offshore wind by 2030, a goal industry experts will be difficult to achieve given supply chain challenges and the immaturity of the U.S. offshore wind market. Last year, Virginia Gov. Ralph Northam signed into law the Virginia Clean Economy Act, which sets a goal of producing at least 5,200 megawatts of offshore wind energy by 2034. The law set a target of 2045 for the commonwealth to achieve 100% carbon-free energy production.