Siemens-Gamesa Bags Deal for Mammoth 2.64-GW Virginia Offshore Wind Project

Dominion Energy’s proposed 2.64-GW Virginia Offshore Wind project—the world’s largest single offshore wind project proposed to date—will likely feature turbines supplied by Siemens Gamesa Renewable Energy (SGRE).

A Jan. 7-announced preferred supplier agreement signed by the two companies could give the wind turbine maker a stronghold in the burgeoning offshore wind U.S. market. While the final number of units and the turbine model for the project are yet undetermined, SGRE suggested the project will likely use turbines from its direct-drive (DD) offshore wind turbine platform, which have widely been installed in Europe. SGRE also said that if Dominion Energy makes a final investment decision on the project, and the project achieves necessary permits and other required approvals, “all installations are expected to complete by 2026.”

Dominion announced plans to build the mammoth project in September 2019, shortly after Virginia Gov. Ralph Northam issued an executive order calling for 2.5 GW of offshore wind by 2026. The proposed Dominion Virginia Offshore Wind project will expand on knowledge gained from Dominion’s 12-MW Coastal Virginia Offshore Wind (CVOW) project, which will feature two SGRE 6-MW SWT-6.0-154 wind turbines when it comes online by the end of this year, SGRE said.

Scaling Up from 12 MW to 2.6 GW

The CVOW project, which will become the first offshore wind project to be built in federal waters, is sited 27 miles off the coast of Virginia Beach in a 2,135-acre research lease area near the proposed 2.6-GW project site. According to Dominion Energy, construction on the CVOW began in the July 2019, and it is speeding along, spearheaded by Danish offshore giant Ørsted Energy, and L.E. Meyers, which is performing onshore electrical design and construction. The CVOW project, in turn, stems from Virginia’s Offshore Wind Technology Assessment Project (VOWTAP), which kicked off in 2014, as part of an effort to advance the U.S. offshore wind industry.

Dominion has an agreement with the Virginia Department of Mines Minerals and Energy (DMME) to build and operate the two CVOW turbines. In November 2018, it got the Virginia State Corporation Commission’s approval for the project, and it has since also garnered a certificate of public convenience and necessity to build and operate associated interconnect facilities. Installation of the two turbines and a 1,000-meter undersea power cable will likely begin this summer, it said. “Along with clean energy, the CVOW project will provide Dominion Energy valuable experience in managing offshore wind resources,” the company notes. “Specifically, it will provide critical permitting, design, installation, and operational experience as it is the first project to be installed in federal waters under the Bureau of Ocean Energy Management (BOEM) process.”

The preferred supplier agreement with SGRE for the bigger 2.64-GW Virginia Offshore Wind project is a giant step. The project could be built on the adjacent Virginia Wind Energy Area, for which Dominion Energy won a lease for $1.6 million from BOEM in 2013. Dominion, which has to still make a final investment decision on the project—and it is unclear when it will do so—has so far filed an interconnection request with PJM Interconnection for the project. 

On its website, however, Dominion says it expects the project will be installed in three phases of about 880 MW each. “Pending regulatory approval, the first phase is expected to begin delivery of renewable energy in 2024, with additional phases coming online in 2025 and 2026,” it said. “Each 880-MW phase is expected to bring more than 70 turbines, all of which will be located more than 27 miles off Virginia Beach.”

According to SGRE, the preferred supplier agreement for the Virginia Offshore Wind project allows the company to begin “early works” to support project development. That includes turbine layouts, which will be used in the Construction and Operations Plan (COP) that Dominion plans to submit to BOEM in late 2020.

Another Major Deal for Siemens-Gamesa

The agreement is remarkable, even for SGRE, a Spain-headquartered business that says it has the world’s largest installed offshore base and the largest order book, with more than a 70% share of the lucrative offshore wind market. Among world-class projects that feature SGRE turbines is the 1.2-GW Hornsea 1 located off the UK coast. Completed in October 2019, that 174-turbine project is currently the world’s largest offshore wind project. It is nearly double the capacity of the world’s second-largest offshore wind farm, Walney Extension, a 659-MW project that Ørsted completed in June 2018 in the Irish Sea that features 40 MHI Vestas 8.25-MW turbines and 47 Siemens Gamesa 7-MW turbines.

“The offshore wind market is growing strongly, delivering a long-term cumulative market growth of 13% globally up to 2025, led by installations in Europe, followed by China, Taiwan, and the U.S.,” said SGRE, which is majority owned by German technology giant Siemens (but is slated to be merged with its Gas and Power business and spun off in April 2020 under a new name, “Siemens Energy”).

Before the 2.64-GW project agreement, SGRE had already bagged three lucrative agreements in the U.S. for 1.7 GW of offshore wind capacity for three East Coast projects that are slated to come online between 2022 and 2024. Last summer, Ørsted and Eversource granted the company conditional orders for supply, delivery, and installation of 8-MW SG 8.0-167 DD turbines for the 880-MW Sunrise Wind project, which is proposed to be built by 2024 in federal waters about 30 miles offshore New York State; the 704-MW Revolution Wind offshore project, which will be located 15 miles off the coast of Rhode Island when completed in 2022; and the 130-MW South Fork offshore wind power project, which could be operational by the end of 2022 about 35 miles offshore Long Island, New York.

SGRE is vying for U.S. offshore wind market share mainly with MHI Vestas and GE Renewable Energy. MHI Vestas in late 2018 snagged a preferred supplier contract with Vineyard Wind for its 9.5-MW V164-9.5 MW turbines for the 800-MW project off the coast of Martha’s Vineyard in Massachusetts. That project was set for completion in 2022 but was delayed when federal officials said they wanted to conduct more environmental studies. In December, Vineyard Wind CEO Lars Thaaning Pedersen told reporters that BOEM could finish those studies “during the first half of 2020,” which could mean the project would be operational by 2025.

Meanwhile, last September, Ørsted selected GE Renewable Energy as the preferred supplier for two of its U.S. offshore wind farms: the 120-MW Skipjack project off the coast of Maryland, which could come online by 2022; and the 1.1-GW Ocean Wind project off the coast of New Jersey, which could come online in 2024. The two wind farms will mark the world’s first commercial deployment of GE’s massive 12-MW Haliade-X. This is especially notable because GE pioneered a 6-MW Haliade turbine at the 30-MW Block Island Wind Farm (a 2017 POWER Top Plant), which came online in 2016 as the U.S.’s first offshore wind farm.

Optimism Abounds for U.S. Offshore Wind

SGRE estimates the U.S. offshore wind industry pipeline is as large as 25 GW, though industry analysts suggest it could be smaller. Wood Mackenzie, for example, says the U.S. is on track to install 19 GW of offshore capacity by 2028.

Meanwhile, according to the American Wind Energy Association (AWEA), as of December 2019, the nation had a total offshore wind pipeline of more than 26 GW in federal lease areas. “Out of this pipeline, project developers expect 14 offshore wind projects totaling 9,112 MW to be operational by 2026.”

While only one offshore wind farm is currently operational in the U.S.—the five-turbine installation that was put online in December 2016 three miles off the coast of Block Island, Rhode Island—the U.S.’s offshore potential is vast. The Department of Energy, for example, suggests the U.S. could develop a total of 86 GW of offshore wind projects by 2050. However, development of offshore wind will require “stable policies,” AWEA said.

Today, states are driving strong demand for offshore wind energy had have established 25.5 GW of offshore procurement targets to date, said AWEA.

“As of December 2019, six states had selected nearly 6,300 MW of offshore wind through state-issued solicitations. Additional solicitations are planned for the coming years to help states meet their offshore wind energy goals,” it said. BOEM, meanwhile, is now planning new lease auctions for areas off of California, Hawaii, New York, and South Carolina. It expects to hold lease auctions for new California and New York Bight lease areas in 2020.

Sonal Patel is a POWER senior associate editor (@sonalcpatel, @POWERmagazine)

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