In the same day that Dominion Resources (NYSE:D) acquired Tennessee's two largest solar projects, the Virginia-based utility received $47 million in government funding to help construct its first offshore wind pilot project. With giants like Dominion and General Electric Company (NYSE:GE) stepping up their wind investments, it may finally be time to make your own wind energy portfolio pick. Here's what you need to know.
No more drawing boards
The Department of Energy has awarded Dominion Resources $47 million to build two 6 MW offshore wind turbines that, when complete, should provide enough electricity to power 3,000 homes.
"This was a highly competitive process, and we thank DOE for recognizing this demonstration project is using innovative designs that will both lower the cost and lower the risk of future commercial scale offshore wind projects located in hurricane prone regions," said Mary Doswell, senior vice president of Dominion's retail and alternative energy solutions.
The project will be located around 24 miles off the coast of Virginia Beach and, if state approvals go as planned, will be up and running by 2018. Dominion Resources plans to take lessons learned from this pilot project and apply them to its own offshore commercial investments.
Dominion Resources and General Electric Company are constantly evolving and reinventing themselves. Dominion has recently shifted away from nuclear as it ramps up its natural gas investments, and offshore wind could be its next major move. The company's natural gas assets provide it with steady income, as well as major growth opportunity from its liquefied natural gas (LNG) export opportunities.
But wind is an entirely different ball game. The U.S. Department of Energy estimates that offshore wind could eventually produce more electricity than every single power plant currently churns out. The massive untapped potential has essentially made its prophecy self-fulfilling -- for first movers like Dominion Resources, there's no way to not forge ahead into uncharted waters.
Partners in profit
But luckily for Dominion, it's not alone. In addition to strong government support (The U.S. Department of Energy has set itself a goal of cutting offshore wind costs 63% by 2020), the utility has industrial stalwart General Electric Company developing technology alongside it. General Electric has major stakes in almost every industrial group possible -- from household appliances to health care equipment. But lately, its power and water division (which includes wind) has been one of its top performers. GE already has a 4.1 MW turbine "specifically designed for the offshore environment," and has been investing heavily in overall wind technology improvements over the past few years.
After the wind production tax credit was extended, General Electric was inundated with new orders, allowing the company more opportunity than ever before to improve wind energy efficiency.
Reduced risk, major profit potential
Dominion Resources and General Electric Company are two of the most established corporations around. Their combined market capitalization clocks in above $300 billion, and they have proven track records of steady revenue and strong profit. Offshore wind is still in its infancy, but an investment in either of these companies dramatically reduces risk, while paving the way for major profit potential.
Justin Loiseau owns shares of General Electric Company. The Motley Fool recommends Dominion Resources. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.