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Harnessing the sun and wind

How big a role will renewable energy sources play in Virginia?

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Print this page by Robert Burke

Who would have guessed that the first commercial wind-power project in Virginia would be built by a retired turkey farmer? That’s what is happening on a ridge called Red Oak Knob in Highland County near the West Virginia line.

The wind blows hard there year-round. On the most intense days, gusts can top 100 mph. About 12 years ago, Mac McBride and his son Tal began looking into whether they could make money by putting huge wind turbines on the open mountaintop pastures where their family has farmed for more than 50 years. The elder McBride, now 84, got the idea in 1998 after reading about a Minnesota farmer who built a wind farm and asked Tal what he thought of the plan. His reaction: “I said, ‘That’s a great idea, and I wish I had thought of it.’”

So they created Highland New Wind Development LLC, got the required permits and fought off opposition from some of the neighbors. Site construction began last year. When the weather allows, Tal McBride says work will resume this spring, with the placement of a total of 19 three-blade turbines, each nearly 400 feet tall, on Red Oak Knob and nearby Tamarack Ridge.

He expects the turbines to be spinning sometime later this year. Total power output will be 38 megawatts — enough to power about 10,000 homes. However, the power generated might instead be going to a large commercial user that would buy it directly from Highland, instead of from a utility. “There are ongoing negotiations with two entities for power from our project,” Tal says, declining to name the possible customers.

NewsSo far the McBrides have invested more than $5 million in the project. Tal is confident that the wind farm’s long-term financing will take shape after they sign a contract with a buyer. “All the work that we’ve done already, that stuff doesn’t happen if it’s not going to be built,” he says. “I’m really proud of my dad. He had a great idea, and we’re the first people in Virginia to do this.”

The Highland project captures the uncertain nature of what role renewable energy will play in Virginia. The Old Dominion is not a leader in alternative energy. Currently, less than 3 percent of the state’s energy output comes from renewables such as solar and biomass-powered energy, compared with 8 percent for the country as a whole. There are some modest new projects here in those sectors, and the potential for developing wind farms off the Virginia coast is looking stronger, thanks to more support from the federal government and a new, streamlined application process in Virginia.

Yet traditional energy sources such as coal, nuclear power and natural gas still rule.  Those three accounted for 69 percent of the fuel sources in 2010 for the state’s major electric utility, Dominion Virginia Power, according to the company. And those fuels are where Dominion continues to put most of its money. Its newest plant is the $619 million, 580 megawatt, natural gas-powered Bear Garden power station in Buckingham County, about 60 miles west of Richmond. It will start running this summer. Plus, the company will be seeking approval from the State Corporation Commission (SCC) later this year for another natural gas-fired power station, this one in Warren County near Front Royal. If approved, the plant could be operating in four to five years. It also wants to reopen a power station in Altavista, inactive since last fall, and convert it from a coal-burning plant to one that would be fueled by waste wood. 

At this juncture, Virginia’s best prospects for large-scale renewable energy generation are off the coast. The U.S. Department of Energy rates the Eastern Seaboard from South Carolina to Maine as having excellent potential for offshore wind farms, which exist now mostly in northern Europe and Asia.  Plus, the wind-power sector got a boost in February when Energy Secretary Steven Chu and Secretary of the Interior Ken Salazar announced in Norfolk that the federal government would spend $50.5 million over five years to pay for research and development of offshore wind energy. The feds also are trying to speed up private-sector investment in wind farms and identified sites in several states, including 165 square nautical miles off the Virginia coast.

A couple of Virginia companies have applied to lease space off the Virginia Beach shoreline for wind farms. One of them — Seawind Renewable Energy Corp., based near Richmond and a subsidiary of Iowa-based RPM Access — also is looking at wind-farm locations off Maryland’s Eastern Shore. So far, only one offshore wind farm in the entire U.S. has been approved,  the 468-megawatt Cape Wind project, which, when constructed, will be a few miles off Cape Cod in Massachusetts.

Theo DeWolff, an executive for Seawind, says prospects for land-based wind energy are very limited in Virginia. There aren’t a lot of good sites and there is a lot of conflicting land uses. “If Virginia wants to see big wind development projects, the opportunity is offshore,” he says. “That’s why Seawind was set up.” But even with the federal effort to speed up the development of offshore wind farms, “it will take awhile. You have to go through a very complex federal [permitting] process that takes years.”

A big hurdle for wind generation, though, is that it generally costs more per kilowatt-hour than power from traditional sources. There’s some movement on that front in Virginia.  Northrop Grumman Corp. and Gamesa Technology Corp., a Spanish firm that makes wind turbines, are sharing R&D efforts at the new Offshore Wind Technology Center, located in a Chesapeake office park. About 40 to 50 people work there now, says Chris Vitarelli, program manager for Northrop Grumman.

The companies want to have two prototype turbines ready by late 2012. The joint venture came about because Gamesa doesn’t have experience in building ocean-based turbines, and Northrop Grumman has expertise “in a marine environment,” Vitarelli says. Plus, the arrangement gives Gamesa a foothold in the U.S. market at a major port. For Northrop Grumman, it could mean a new market niche — the chance to build the specially designed ships necessary to put these giant turbines in place. “We’re in discussions with [Gamesa] on that, but … our focus now is on the design of engineering” of the turbines.

Even though the center is located here, Vitarelli says the two prototypes could wind up anywhere along the East Coast. “There are a lot of things to consider — the wind patterns, the local permitting requirements … It’s a challenge.”

NewsProspects for offshore wind generation could be more attractive if Dominion becomes involved. Dominion Resources Inc., the parent company of Virginia’s largest utility, already has a stake in land-based wind farms: for example, it owns half of a 264-megawatt wind farm, the Mount Storm facility, which started operating in 2008 in Grant County, W.Va. It also co-owns, along with BP, a wind farm in Indiana. But the cost of offshore wind generation is a barrier, says Mark Webb, Dominion Resource’s director of policy and business evaluation for alternative energy solutions.

Asked what it would take for Dominion to get involved in offshore wind development, Webb named three points: first, “substantial” federal grants or subsidies. Second, some technological advances that would lower the cost. “And the third one would just be that the state … decided that the economic development benefits are substantial enough to justify increased electric costs.”

Whether the state is willing to approve higher rates in the name of using alternative energy sources is an open question. Last June, the SCC rejected a request from Appalachian Power, a subsidiary of American Electric Power, Virginia’s other major energy supplier, to buy electricity generated by two wind farms, in West Virginia and Illinois. The SCC said the proposal would be too costly for Appalachian customers, who already had seen substantial price hikes.

Todd Burns, spokesman for Appalachian Power, says the SCC rejection “did leave us trying to figure what we were going to do next.” He blamed much of Appalachian’s recent rate increases on the cost associated with installing emission control equipment on the company’s coal-fired power plants. Since 2005 it has spent $2.5 billion on those improvements. “The good news is that it has substantially reduced those emissions,” he says. “But it comes at a higher cost.”

Cost, and the technological barriers for getting into the market, are the main issues, says Dominion Virginia Power spokesman Jim Norvelle. He says the market price right now in the U.S. is about 11 cents per kilowatt-hour, and that the Cape Wind project could end up pricing kilowatts at around 20 cents to 24 cents per hour, in part because of the higher cost of building an offshore wind facility. That’s too expensive for the current market, he says. “One of the reasons that Dominion Virginia Power believes it’s been successful is we have a mixed base of generation,” Norvelle says. “That’s one reason our rates have been stable for years.”

Norvelle says Dominion wants to be in the alternative energy business, and the company has several projects under way or in the planning stages around Virginia. It’s looking at property in Tazewell County as a possible site for a wind farm, provided it can persuade the county to revamp a local height ordinance. It’s also moving forward with plans for a $27.9 million “integrated solar and battery storage demonstration project” in Halifax County. In addition, it’s building the $1.6 billion, 585-megawatt Virginia City Hybrid Energy Center in Wise County. That facility, expected to be finished in mid-2012, will burn mostly coal but also up to 20 percent biomass materials, which will be mostly wood waste trucked in from the region.

While Dominion is hoping that the investment costs of renewables will drop, others argue that there are better ways to increase the percentage of electric power that comes from those sources. Glen Besa, president of the Virginia chapter of the Sierra Club, a big supporter of renewable energy projects, says Virginia could do a lot more. The state is one of five nationwide that has a voluntary goal for the use of renewable energy sources, instead of a mandate that would force utilities to commit more money toward such projects. Besa is skeptical of Dominion’s arguments about cost. “Their number one priority is their shareholders, and that’s fine,” he says. “But they’re going to make money whether it’s a new wind plant or a new gas plant.”

The Sierra Club lobbies hard to push state policymakers toward renewable energy projects. It’s happy with Gov. Bob McDonnell’s support for the research center in Chesapeake, but disappointed with his overall free-market approach to renewable energy projects. And, Besa says, Dominion’s influence in state policy is huge. The most recent ranking from the Virginia Public Access Project puts Dominion fifth in lobbying, spending $241,959 from May 2009 through April 2010. “They have the ability to make things happen. If Dominion doesn’t like it, it doesn’t pass. If Dominion does like it, it does pass,” he says. “We want to encourage Dominion to make this investment” in renewable energy projects.
Webb of Dominion says Virginia is right to take a voluntary approach toward renewable energy use. Mandatory standards in other states “don’t do anything to affect the issue of cost,” he says. “The key is to get the cost of renewable energy down so it’s competitive with all other sources.”

The state’s voluntary program says that by 2025, 15 percent of the energy that utilities supply to customers should come from renewable energy sources.  “We believe we’re going to be able to do it [and that] the market is going to respond to it,” Norvelle says. (See interview on page 32 for more information on Dominion’s alternative energy programs.) 

That’s a long way off. In some ways the modest Highland project shows how far Virginia has to go. The McBrides are fortunate in a lot of ways — they have hundreds of acres of land in one of the few parts of Virginia where a wind farm is suitable, and there is a major power line running through the property. “That’s our highway for getting the power out,” Tal McBride says. In hindsight, he thinks it would have been a lot easier to let somebody else go first and face the challenge of getting a wind farm approved and operating. “This is not a venture for the light of pocketbook or weak of stomach,” he says. 

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