Dominion Virginia Power won a lease for 112,800 acres of federal land off the state's coast with a $1.6 million bid. The company said it plans to develop an offshore wind farm capable of generating as much as 2,000 megawatts of electricity at peak capacity.
"Offshore wind has the potential to provide the largest, scalable renewable resource for Virginia if it can be achieved at reasonable cost to customers," Mary Doswell, the company's senior vice president for alternative energy, said in a statement Wednesday.
The Interior Department leased the area about 23.5 nautical miles off Virginia Beach. The acreage was secured during this year's second offshore wind lease sale.
Interior Secretary Sally Jewell said the Virginia auction marked a "milestone" in national efforts to add more renewable resources to the grid.
A July auction generated $3.8 million in high bids for 164,750 acres offshore Rhode Island and Massachusetts. Auction winner Deepwater Wind said it would be able to produce as much as 1,000 MW of energy from a wind farm set for construction in 2017.
"Dominion expects the first turbine to be installed in about 10 years pending project approval by state regulators," the company said in a statement.