Dominion sees regional US offshore wind ties as 'difficult'

Getting states along the US east coast to collaborate on a regional basis to develop an offshore wind industry is hampered by their desire to land supply chains and different regulatory frameworks, says a senior Dominion Resources executive.

“It’s very difficult,” says Mary Doswell, senior vice president of retail and alternative energy solutions. The holding company’s electric utility subsidiary, Dominion Virginia Power (DVP), wants to develop both a 12MW pilot and a potential 300-turbine project in federal waters off the state’s Atlantic coast.

“We actually started some regional talks very early in the offshore wind discussions. It got very difficult because each state we spoke to wanted to have a supply chain as well. Which is the whole economic development benefit of why a state would want to pursue offshore wind,” she told a recent American Wind Energy Association (AWEA) conference.

Electric industry regulators in Massachusetts, New Jersey and Rhode Island have emphasized the potential economic development benefits to their states as a necessary element for offshore wind developers to receive ratepayer subsidy support.

On 29 May, a New Jersey appeals court sided with the Board of Public Utilities there in its decision to reject Fishermen’s Energy’s 25MW demonstration project, partly on grounds that it failed to show “positive economic net benefits” to the state.

Until now, those states, Maine and Maryland have sought to go their own way, hoping to gain a first-mover advantage, create jobs and lure investment. Not all those states have a funding mechanism for offshore wind. Further behind are Georgia, New York, North Carolina and South Carolina, which in varying degrees have expressed interest in offshore wind.

Collaboration would enable states to spread industry development costs more easily and make ratepayer support more politically tenable given the large populations in the Northeast, mid-Atlantic and Southeast regions.

For the DVP projects, Dominion hopes to partly leverage the world class port and shipbuilding facilities at Newport News and its own in-house engineering and operating capabilities.

Different regulatory frameworks also complicate a collaborative approach. Doswell notes that some states such as Maryland have deregulated electric industries, while neighboring Virginia does not. Some states belong to regional transmission organizations (RTOs), which manage bulk electric power systems across much of North America, but states in the Southeast do not.

“Anyone we would pull into a regional collaboration would not necessarily want to send the power into an RTO,” notes Doswell, referring to the Carolinas, Georgia and Florida.

She adds that each state regulatory authority has different requirements for utility operations and procurement, how to recover costs and reporting of those costs.

“Then add a RTO, and the rules we have to comply with for sending power into the RTO, it just gets to be very complicated,” she says. Virginia is part of the PJM Interconnection, a RTO in all or parts of 13 states and the District of Columbia.

To the west of PJM is Midwest ISO and to the north is New York ISO.

Doswell says she still thinks regional collaboration is “great in concept” for offshore wind, but it will remain complicated to achieve in the foreseeable future.

That means the US industry will remain dependent on policies of competing individual states, a balkanized approach that will complicate efforts to bring down costs.