Dominion Sees Cheaper Wind Power at Massive Offshore Project - SupplyChainBrain
Dominion Sees Cheaper Wind Power at Massive Offshore Project | SupplyChainBrain
Dominion Energy Inc. expects to deliver power at a cheaper price than originally expected from the largest approved offshore wind project in the U.S., a rare win for a wider wind sector recently beleaguered by bad news. The shares soared the most in almost a year.
The company anticipates producing electricity at the Coastal Virginia wind farm for $77 a megawatt hour, down from earlier forecasts of between $80 and $90, the company said November 3. The $9.8 billion project remains on track to begin offshore construction in 2024 and is eventually expected to supply enough power for 660,000 homes.
The 2.6-gigawatt wind farm won final regulatory approval during the week of November 3 and is moving forward even as much of the U.S. industry is facing significant hurdles. Other developers including Orsted A/S are canceling or delaying projects and taking write-downs. Those companies were locked into long-term contracts to deliver power at specific prices, and those deals became unviable after development costs surged.
Read more: Dominion Wins Approval for Biggest-Yet U.S. Offshore Wind Farm
Dominion is pursuing a different business model that the company says provides more flexibility and will help attract potential partners.
“It’s no surprise to me that the process generated strong interest,” Dominion chief executive officer Bob Blue said during a conference call. “Their interest is driven by the attractive characteristics of the project.”
Dominion shares surged as much as 4.5%, the most intraday since December 2022.
The company has invested $2.3 billion to date on the project and that figure should increase to $3 billion by the end of 2023. Dominion is also developing a specialized ship that will be necessary to install the massive turbines at sea. The $650 million vessel, called Charybdis, is now 77% complete and is expected to be finished by early 2025, Blue said.
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Related Knowledge Center: ENERGY BASICS: wind
Decades of government support for the development of wind energy has resulted in lower costs and a rapidly growing share of electricity generated by wind turbines. Wind in 2019 accounted for 7.3 percent of electrical generation, surpassing for the first time hydropower at 7.0 percent.