PHOTO: Offshore wind turbines

This June 12, 2017 file photo shows five wind turbines of the Block Island, Rhode Island Wind Farm, the first offshore wind farm in the U.S., which was built and operated by Orsted.

 

In the past, Virginians have largely taken their relatively cheapand reliable electricity for granted. As of August, residents of the commonwealth paid an average of 12.36 cents per kilowatt hour, which is below the national average of 13.3 cents/kwh, and far below the 31.16 cents/kwh Hawaiians paid for their electricity.

Virginia currently ranks 22nd in the nation for the cost of electricity. But even before last week’s legislative elections that put “carbon free” Democrats in total control of state government, there were signs that power bills in Virginia will be going up—a lot.

The latest, but surely not the last, is the recent admission by Orsted—the Danish wind power company tapped by Dominion Energy to build its 12-megawatt Coastal Virginia Offshore Wind Project 27 miles off the coast of Virginia Beach—that it had overestimated the amount of electricity its wind turbines can produce. The company says it didn’t adequately account for the wind slowing down as it approaches the turbines.



“Our findings point to a higher negative effect on production than earlier models had predicted,” Orsted Chief Financial Officer Marianne Wiinholt told financial reporters late last month, noting that such overestimations were “an industry-wide issue.”

Last year, when the State Corporation Commission approved Dominion’s $300 million, no-bid wind power pilot project with Orsted, state regulators pointed out that the electricity produced would cost 9.3 times more than a similar wind project in Massachusetts, and 13.8 times more than the same amount of electricity produced by new solar power plants.

At the time, SCC members admitted that the offshore wind project “would not be deemed prudent [under this Commission’s] long history of utility regulation or under any common application of the term.” They also “determined that the company’s proposal puts ‘essentially all’ of the risk of the project, including cost overruns, production and performance failures, on Dominion’s customers,” according to a Nov. 2, 2018, SCC press release.

“The economic benefits specific [to the project] are speculative, whereas the risks and excessive costs are definite and will be borne by Dominion’s customers,” the SCC acknowledged in its 20-page final order, blaming its decision on the Republican-led General Assembly. Dominion’s own analysis acknowledged that “it appears unlikely that the cost of offshore wind facilities will become competitive with solar or onshore wind options in the foreseeable future”—and in any event, won’t be competitive “under the next 25 years under any scenario.”

And that was before the latest admission by Orsted that its wind turbines will produce even less electricity than advertised. Therefore, the wind project’s “excessive costs” will be even more excessive.

In other words, the offshore wind project will be all pain and no gain for Dominion’s captive ratepayers, who will get even less power than they were originally promised while paying much more for it than for any other available power source.

Households struggling to make ends meet should expect many more rate hikes to come as Gov. Ralph Northam and his fellow Democrats go full-steam ahead with their plans to join the Regional Greenhouse Gas Initiative ($6 billion) and build out a full-scale offshore wind farm with 330 turbines ($1.8 billion-plus) to meet their carbon-free-by-2050 goals.

But like Orsted’s belated miscalculations, those higher electricity bills will arrive after it’s too late to do anything about them.

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