Tariffs could add $500 million in costs to Virginia offshore wind project
Tariffs could add nearly half a billion dollars in costs to Dominion Energy’s Coastal Virginia Offshore Wind project, the public utilities provider told investors during an earnings call Thursday.
Bob Blue, president and CEO of Dominion Energy, said it has been “difficult to fully assess” how tariffs could affect the project, since tariff requirements and rates could change, but the company has put together numbers on potential exposure. Through the end of the first quarter, Blue said the project had incurred actual tariff costs of $4 million. If current tariff policy continues through the end of the second quarter of this year, that number would increase to about $120 million.
If current tariff policy remains in place through the end of 2026, when the project is expected to be fully online, cumulative tariff impact would be approximately $500 million, Blue said. Dominion will cover about $130 million of the increases, and for residential customers, their bills could increase by an average of $0.04 a month over the life of the project.
“Let me be clear, (Coastal Virginia Offshore Wind) remains one of the most affordable sources of energy for our customers,” Blue said.
The 2.6-gigawatt wind farm, which began construction last year about 29 miles off the coast of Virginia Beach, is expected to provide enough energy to power up to 660,000 homes once complete. As of May 1, Blue said monopile installation has begun again on the project, which is required to stop during much of the winter when whales migrate in the mid-Atlantic.
The project overall is on schedule — now about 55% complete — to provide electricity to customers in early 2026 and full completion at the end of next year. More than 80% of the project’s 176 monopiles have been completed and successfully delivered to Virginia, Blue said. The company expects deliveries of the final 32 monopiles to continue steadily in the coming weeks. Last year, the team was installing about 25 monopiles each month, and Blue said that rate is likely to continue this year.
This is not the first time the project’s cost increased from initial estimates. In February, Dominion said the projected cost had increased from $9.8 billion to $10.7 billion. The cost increase was due to higher network upgrade costs assigned by PJM, the regional electric grid operator, as well as higher onshore electrical interconnection costs. That 9% increase came with the announcement of a 43-cent increase on an average monthly residential power bill.
Excluding tariffs, costs have remained “in line” with the most recent estimate.
“As we think about tariffs across our business, the impacts we’re seeing are manageable,” Blue said. “We’ve worked on our supply chain for some time. The vast majority of the materials that we procure are directly from U.S. suppliers.”
In April, President Donald Trump raised steel and aluminum tariffs by 25% and ended all country exemptions, affecting companies across the clean power industry. Steel and aluminum are widely used in power grid projects, wind farms and solar farms. Affected components include cables, wires, conductors, generators, substations, transformers, energy storage systems, wind and transmission towers, solar racking, and infrastructure. Diane Leopold, chief operating officer for Dominion Energy, told investors during last week’s call that all of the raw materials for the CVOW project have been purchased and are currently in fabrication.
Last week, Virginia Beach hosted the International Partnering Forum, a gathering of offshore wind professionals from across the world. One conference session featured legal professionals unpacking Trump’s recent directives toward the industry. Space in the room for the panel quickly filled, with some attendees sitting on the floor and others pooling in the hallway.
On his first day in office, Trump signed an executive order pausing approvals, permits and loans for all wind energy projects both onshore and offshore. Currently, directives have not affected work on the Coastal Virginia Offshore Wind project, but other projects have been put on pause. The administration also ordered the Norwegian company Equinor to halt construction on Empire Wind, a fully permitted project located southeast of Long Island, New York, that is about 30% complete. The administration claims the permitting process was rushed, but panelists at the Virginia Beach conference said the directives are still ambiguous and do not have a timeline.
A coalition of 17 states announced Monday that they would be suing over the executive order. Virginia was not among them. The states’ attorneys general allege that the directive harms efforts to secure reliable and affordable sources of energy to meet their increasing demand for electricity.
Eliza Noe, eliza.noe@virginiamedia.com