The news for windmill projects off the east coast of the United States has been mostly bad in recent months. As detailed in the cover story in the latest Barron’s on the declining fortunes of green energy investing:
Offshore wind is in perhaps the worst position of all. That industry is just getting started in the U.S., with turbines now going up near Martha’s Vineyard, Mass., set to provide the country’s first commercial-scale power… But several projects have already been delayed or canceled due to increasing costs, including a recent decision by offshore wind market leader Orsted (DNNGY) to walk away from two projects in New Jersey that were expected to provide enough power for about a million homes.
Off of Virginia, the windmill project is called Coastal Virginia Offshore Wind (CVOW), to be built by Dominion Energy, the nation’s sixth-largest electric utility. The Virginia project differs from others in that the capital costs are not being provided by private investors, but by Dominion ratepayers, who are already seeing a surcharge on their bills.
CVOW is now not only threatened by the increasingly challenging economics for wind, but also by a whale species that most people have never heard of. According to the National Oceanographic and Atmospheric Association, the North American Right Whale is “one of the world’s most endangered large whale species,” and that there may be fewer than 350 left.
On November 10, two groups — Committee for a Constructive Tomorrow (CFACT) and the Heartland Institute — notified by letter two federal agencies that they may sue to stop the project in the wake of the issuance of something called a Biological Opinion, a necessary step for wind developers to comply with the Endangered Species Act.
The Opinion asserted that the project would not cause a single North American Right Whale death in its 30-year projected lifetime, which is at odds with the experience so far with wind development off the east coast. More than two dozen dead whales, representing several species, have washed up on shore following activities by wind contractors.
National Legal and Policy Center, a Dominion shareholder, believes that CVOW will not enhance shareholder value, and in fact will create angry customers who object to paying for wind-generated power that they may never see. The danger to the company is that it will sour the public on all rate increases, regardless of the source of the electricity. In Virginia, rate increases must be approved by the State Corporation Commission.
According to Collister Johnson, a CFACT senior policy advisor:
There is a reason why Dominion Energy’s stock price has declined by 50 percent over the past year. Investors know that Dominion’s wind project is a costly, risky gamble that has already driven most other East Coast wind developers to either renegotiate their utility contracts or abandon their projects altogether. If Dominion decided tomorrow to abandon this project, as it should, its stock price would improve dramatically, and a huge financial cloud hanging over its future would be removed.”