Offshore wind project climbs to $11.2B in cost due to tariffs

PORTSMOUTH, Va. (WAVY) — The United States’ largest offshore wind energy project to date is two-thirds complete, however developer Dominion Energy said tariffs and issues with its new ship are challenging their “on-time and on-budget” mission statement.

In an earnings call with the publicly traded utilities investors on Halloween, Bob Blue, Dominion’s chairman, president and CEO, explained that steel tariffs have led to another increase to the overall cost of the Coastal Virginia Offshore Wind project.

It’s now estimated the cost to install the 176-turbine wind farm 27 miles off the coast of Virginia Beach will be $11.9 billion, a more than 21% increase from the initial budget.

The on-time delivery of the new power source is also now in jeopardy, with Blue revealing the new $715 million turbine installation vessel the company purchased, Charybdis,, is still not ready to go to work.

Blue remains hopeful the 2.6 gigawatts of energy the farm is to produce will be flowing the grid by late next year. But he is frustrated.

“I’m extremely disappointed that Charybdis has again not met expectations,” Blue told investors. “I recognize the importance of executing consistently against any commitment, and we failed to deliver regarding Charybdis.”

The mammoth ship, built by Seatrium AmFELS of Brownsville, Texas, arrived to the Portsmouth Marine Terminal in September.

It is the first Jones Act-compliant wind turbine installation vessel, meaning it was built in America, flagged in America, crewed by Americans and owned by an American-based company. The Jones Act, among other things, makes it so only U.S.-flagged vessels can transport merchandise between U.S. points.

While the Belgium-based heavy-lift vessel Orion has been able to legally place the 176 25-story tall cylindrical bases into the ocean floor, Charybdis will need to carry and install the turbines.

While all major systems are operating well, Blue said there are still a “variety of quality assurance level items” that need to be addressed. He did not go into specifics.

“It’s become clear that while the ship’s design and construction methods are consistent with global best practices, we didn’t properly account in our timing estimate for the risk inherent in being the first Jones Act-compliant wind turbine installation vessel to be built and regulated in the United States,” Blue said.

He is hopeful the issues can be fixed this month. The goal is for project to deliver its first power to the grid by this spring. When complete, the 113,000-acre farm is estimated to produce 2.6 gigawatts of energy, enough to power up to 660,000 homes and avoid the carbon emissions equivalent to the removal of one million cars off the road each year.

Under an agreement struck with Attorney General Jason Miyares, ratepayers will not be on the hook for all the costs overruns.

Instead, Dominion Energy, as well as Stonepeak, their alternative investment firm financier, will also be on the hook for 50%.

The current charge to the average ratepayer for the Coastal Virginia Offshore Wind project remains between $11 to $12 per month, according to a spokesperson.