Dominion says new offshore wind deal won't impact ratepayers - Virginia Mercury
Dominion says new offshore wind deal won't impact ratepayers - Virginia Mercury
Dominion says new offshore wind deal won’t impact ratepayers
Legislation in 2023 allowed utility to seek a partner for Coastal Virginia Offshore Wind project
One of two wind turbines off the coast of Virginia Beach that comprise Dominion Energy’s Coastal Virginia Offshore Wind pilot project. The Virginia Attorney General’s Office is criticizing the massive cost estimates of a larger planned wind development in the same area. (Sarah Vogelsong/ Virginia Mercury)
Dominion Energy Virginia says the deal it announced Thursday to sell half of its interest in its Coastal Virginia Offshore Wind project to investment firm Stonepeak is not expected to have any impact on ratepayers.
Dominion spokesperson Aaron Ruby said the deal will have no “impacts to the cost, customer bill impact, construction or operation of CVOW and no change to the consumer protections approved by” Virginia’s State Corporation Commission, which regulates utilities in the commonwealth.
The deal must be approved by the SCC, which is expected to make a decision on it by the end of 2024.
Under the agreement, Dominion will retain control of the project, a 2.6 gigawatt wind farm off the coast of Virginia Beach that will cost an estimated $9.8 billion.
The deal follows the conclusion of a top-down business review Dominion began last year to improve its financial standing and is seen as a move to reduce the utility’s debt levels.
“If we have a healthy balance sheet, we’re going to provide the best customer experience. We’re going to be able to invest to meet the state’s goals,” said Dominion Chair, President and CEO Bob Blue. “That is a very compelling reason for regulators to approve this transaction, and I’m highly confident that they’ll see the benefits and approve it.”
If approved by regulators, Stonepeak, a firm with $61 billion in investments in infrastructure and real assets, will pay Dominion $3 billion, minus a $145 million payment from the utility. Dominion and Stonepeak will then split the capital costs needed to complete the project up to a $11.3 billion amount, excluding financing costs. Stonepeak will have the option to provide extra funding.
The two companies will split the profits of the project proportional to the amount of funding Dominion receives from Stonepeak.
Rob Kupchak, senior managing director at Stonepeak, said in a statement that the investment is “a fitting addition to our global renewables strategy.”
“Dominion Energy’s impressive track record building and operating large-scale infrastructure projects paired with Stonepeak’s experience successfully constructing offshore wind assets gives us confidence in CVOW’s path forward, and we are excited to partner with Dominion in delivering this critical renewable energy generation resource to its customers,” Kupchak said.
Legislation from former Sen. Lynwood Lewis, D-Accomack, in 2023 allowed Dominion to pursue a partner for the project.
“Any sale would have to be approved by the SCC,” Lewis told lawmakers in February 2023. “There is no thumb on the scale language in here, no in the public interest language either. The SCC can decide it’s a good deal or it’s a bad deal. And if there is any profit realized from the sale of this interest, that is to be returned to the consumers, the customers, the ratepayers.”
Katharine Bond, a lobbyist for Dominion, pitched the bill as a way “to lower costs of offshore wind.” And Lewis argued that bringing a noncontrolling partner into the project “would obviously dramatically reduce the borrowing they would have to do to complete the project.”
Dominion said during an investor call Thursday that CVOW remains “on time and on budget,” with a projected completion date at the end of 2026.
Jackson Morris of the Natural Resources Defense Council, an environmental nonprofit, said the deal didn’t raise any red flags for him because Dominion will retain control of the project, and the SCC will be required to approve the agreement.
“If the SCC does a good job on doing due diligence on the deal, it shouldn’t have any negative impact on timing or cost of the project,” Morris said.
GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.