VA - Halted Virginia Offshore Wind Plant is New Blow, But Sector Resets
Spanish-German wind engineering company Siemens Gamesa has pulled the plug on its planned $200-million plant to finish offshore wind turbine blade manufacturing, citing inability to meet unspecified “development milestones.”
The plant in the Portsmouth, Va., Marine Terminal was set to initially support a 2.6-GW offshore wind project proposed by power company Dominion Energy. It also could possibly have spurred a regional hub.
The decision was made due to “development challenges” that were unanticipated in 2021 when the facility was first announced, according to company sources, with uncertainty in the US offshore wind market propelled by unforeseen increases in construction material costs and inflation.
A Siemens Gamesa spokesman said the manufacturer “will continue to meet our obligations” for the Dominion's $9.8 billion Coastal Virginia Offshore Wind project, which will involve manufacture of blades, nacelles and hubs for about 176 turbines in Europe.
Dominion says its project is “on schedule” to begin construction 27 miles offshore Virginia Beach in 2024.
“We have confidence in Siemens Gamesa, a turbine vendor with decades of experience as the global leader in wind turbine technology,” said a Dominion spokesman. He said components it made for a smaller pilot plant operating since 2020 off Virginia Beach “are exceeding expectations.” Production was contracted before inflation and supply chain cost impacts began.
'Full Steam Ahead'
“The offshore wind supply chain in the U.S. is in the development stages,” the Dominion spokesman noted. “We have that tangible evidence that offshore wind is happening in Virginia, and we are moving forward full steam ahead" to start offshore construction next May for its larger project.
The Siemens Gamesa spokesman did not confirm status of procurements for engineering or construction services for the canceled facility, nor media reports that the firm will exit its contract under a termination agreement.
Announced in October 2001, the plant was to be located on more than 80 acres at the Portsmouth Marine Terminal leased from the Virginia Port Authority. The site was adjacent to 72 acres leased by Dominion for staging and preassembly of foundations and turbines for its project. Skanska USA was awarded a $223-million contract to redevelop that site for the Dominion project and others, which included improving 1,500 ft of an existing 3,540-ft wharf.
Port Authority spokesperson Joe Harris told ENR it learned of the Siemens Gamesa cancellation in late September. As for reuse of the project site, he said the agency is “considering our options for the future.”
A private development consortium led by The Miller Group of Virginia Beach broke ground in June on a $100-million project to transform a nearby 111-are site into a maritime operations and logistics center to support offshore wind projects, as well as regional defense and transportation industries. Located along the Elizabeth River across from the Portsmouth terminal, the project will include a 7.5-acre wind energy monitoring and coordination center that is expected to be ready in 2025.
Miller Group CEO Jerry Miller told ENR that he did not expect the Siemens Gamesa cancellation to have any effect on the development, which recently received a $39.2-million U.S. Maritime Administration grant to assist in renovating site waterfront infrastructure.
Stabilizing Cash Flow
But the Siemens Gamesa cancellation comes amid reports of financial and technical issues at the company, which was formed in 2016. In June, parent company Siemens Energy announced that an increase in onshore wind turbine component failures had spurred a technical review of the unit's installed fleet and product designs. Facing losses ranging into the billions of euros, Siemens Energy was reportedly “looking at all options” to stabilize the financial drain.
