Dominion Energy Updates on Coastal Virginia Offshore Wind Project

Dominion Energy, Inc. (NYSE: D) recently provided updates on the progress of the 2.6 GW Coastal Virginia Offshore Wind (CVOW) project. The project, which is fully permitted, is now approximately 50% complete and is on track for on-time completion by the end of 2026.

Construction Milestones

The CVOW project continues to achieve significant construction milestones. The installation of the first 16 transition pieces, which connect the foundation and tower for each of the 176 wind turbines, has been successfully completed. In addition, the delivery of the first offshore substation to the Portsmouth Marine Terminal in Virginia Beach took place at the end of January. Major components such as monopiles, transition pieces, undersea cables, and more are being delivered in preparation for installation. Wind turbine tower and blade fabrication is underway, with nacelle fabrication set to begin later this quarter. SiemensGamesa, the project’s wind turbine supplier, is manufacturing the same model for CVOW, which has already been successfully installed and is operational at the Moray West offshore wind project. The American-built, flagged, and crewed wind turbine installation vessel, Charybdis, is now 96% complete and has started sea trials in Brownsville, Texas.

Cost Updates

The estimated total project costs, including contingency and excluding financing, have increased by approximately 9%, from $9.8 billion to $10.7 billion. This is the first and only increase since the original budget was submitted to the Virginia State Corporation Commission (SCC) about 39 months ago. The cost increase is primarily due to higher network upgrade costs assigned by PJM, the regional electric grid operator, and higher onshore electrical interconnection costs. These costs are necessary to effectively integrate new electric generation resources like CVOW into the grid and ensure its reliability and stability. The increase in network upgrade costs reflects the significant demand growth that requires additional generation and transmission resources. However, the project’s construction and timeline remain unaffected by these cost changes.

Equity Financing and Cost Sharing

Dominion Energy completed a non-controlling equity financing with Stonepeak as part of a comprehensive business review. Under the agreement, Stonepeak will fund 50% of project costs up to $11.3 billion, with additional cost sharing for amounts exceeding $11.3 billion. Stonepeak will fund approximately $450 million of the $900 million increase in total project costs. Dominion Energy and Stonepeak will each absorb 50% of the increased total project costs not expected to be recovered from customers under the December 2022 settlement order. As a result, Dominion Energy anticipates a charge of around $100 million in its Q4 2024 results, which will be excluded from operating earnings.

Overall, the CVOW project is progressing well, with construction milestones being met and cost updates being managed effectively. Dominion Energy remains committed to delivering clean and reliable energy through this offshore wind project.