Dominion Virginia Power Wins Offshore Lease Auction

September 5, 2013

The federal Bureau of Ocean Energy Management (BOEM) announced on Sept. 4, 2013, that Dominion Virginia Power was the “provisional winner” of its online auction for the lease of nearly 113,000 acres offshore Virginia for the potential development of a wind power generation project. Dominion’s winning bid in the online auction was $1.6 million. Only one other bidder participated in the auction, Apex Virginia Offshore Wind, LLC, of Charlottesville, VA.

The U.S. Department of Justice and the Federal Trade Commission have 30 days to conduct an antitrust review of the auction, after which the official winner will be declared.

The lease area is 23.5 nautical miles off the Virginia Beach coastline and consists of a single lease containing 19 whole Outer Continental Shelf blocks and 13 sub-blocks. It is estimated that a wind farm could produce approximately 2,000 megawatts of power, with the transmission line coming ashore and possibly tying in to Dominion’s Landstown Substation in Virginia Beach.

The Commonwealth of Virginia has worked cooperatively with BOEM and other federal agencies for more than five years to conduct economic, environmental, energy and other studies to determine the feasibility of constructing a large-scale wind farm in federal waters off Virginia’s coast.

Dominion Virginia Power, upon being officially declared the winner, will have certain regulatory milestones to meet over the next five years, including submitting site assessment and construction and operations plans. Numerous federal environmental and energy agencies will have permitting and regulatory authority roles. Planning, permitting and construction could take up to a decade before a wind farm would become operational. After plans for construction and operation are approved, Dominion Virginia Power will have a 33-year operations term under the lease.

This Virginia offshore lease sale is BOEM’s second, following the auction earlier this summer of nearly 165,000 acres off Massachusetts and Rhode Island. Future BOEM auctions for wind power generation projects are likely to be held for acreage off the coasts of New Jersey, Maryland and North Carolina.