Dominion is putting the brakes on a plan to erect two test wind turbines off the coast of Virginia Beach because the project, as it stands now, is too expensive, according to the company.
The move slows the timeline of the effort to bring offshore wind power to Virginia and throws into question whether it's affordable in the near future.
Environmentalists accused Dominion of dragging its feet on wind power; others said the delay reflects the complexity - and reality - of an industry in its infancy.
There are no offshore wind farms in the U.S., but about a dozen, including the Virginia Beach site, are in various stages of development.
Dominion had estimated that building the two 500-foot turbines would cost about $230 million, but the only complete bid for the work came back at between $375 million and $400 million, said David Botkins, a company spokesman.
The two-turbine pilot project had been scheduled to be running by 2017. That timeline will be pushed back to 2018, said Bob Matthias, chairman of the Virginia Offshore Wind Development Authority, a group helping to organize the pilot project.
Dominion and the authority are forming a task force to explore ways to get the cost down.
"It's disappointing, but it's reality," said Matthias, who is also an assistant to the city manager in Virginia Beach. "But we'll go through this process and have a much better idea of what the real cost of wind will be."
The Virginia Beach project was one of three selected by the U.S. Department of Energy last year to receive federal money - $47 million - to help jump-start a wind-power industry.
Matthias said the new group will work with federal officials to figure out how the delay might affect funding.
A U.S. Department of Energy spokesperson could not be reached Thursday.
Last month, Gov. Terry McAuliffe announced at a Norfolk luncheon that the U.S. Bureau of Ocean Energy Management awarded the project a 30-year lease in federal waters.
McAuliffe has been briefed by Dominion and supports a task force to "fully examine the project and investigate the best and most cost-effective way to move forward," a spokesman said in a statement.
A bureau spokeswoman said the delay will not affect the lease.
The pilot project is designed as a test run for a possible wind farm of up to 200 turbines off Virginia Beach.
In 2013, Dominion won an auction to lease 113,000 acres of federal waters off Virginia Beach to build a project. The company has until 2018 to come up with a plan for a wind farm that officials have said could power up to 700,000 homes.
Environmental groups criticized Dominion for not moving faster on wind power.
"It's unfortunate that Dominion Power is dragging its feet on this vital project in a time when Gov. Terry McAuliffe and his administration are seeking to build a 'New Virginia Economy' that focuses on clean energy and job creation," said Michael Town, executive director for the Virginia League of Conservation Voters.
Dominion's Botkins said the company is still committed to the project but will not seek approval for it from the State Corporation Commission in July as planned.
The two turbines would produce 11 to 12 megawatts, enough to power about 3,000 homes.
Botkins said, "We'd be hard pressed to justify that level of cost for so little output."