Dominion Sees Cheaper Wind Power at Massive Offshore Project - Yahoo Finance

Dominion Sees Cheaper Wind Power at Massive Offshore Project

(Bloomberg) -- Dominion Energy Inc. expects to deliver power at a cheaper price than originally expected from the largest approved offshore wind project in the US, a rare win for a wider wind sector recently beleaguered by bad news. The shares soared the most in almost a year.

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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 Friday. The $9.8 billion project remains on track to begin offshore construction next year and is eventually expected to supply enough power for 660,000 homes.

The 2.6-gigawatt wind farm won final regulatory approval this week and is moving forward even as much of the US industry is facing significant hurdles. Other developers including Orsted A/S are canceling or delaying projects and taking writedowns. Those companies were locked into long-term contracts to deliver power at specific prices, and those deals became unviable after development costs surged.

Dominion is pursuing a different business model that the company says provides more flexibility and will help attract potential partners.

Read More: US Offshore Wind Crisis Escalates With $5 Billion in Writedowns

“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 the year. 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.

(Updates with share price)

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