Coastal Virginia Offshore Wind Project Stays on Track with Cost Update

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

CVOW continues to achieve construction milestones, including successfully installing the first 16 transition pieces, which connect the foundation and tower for each of the 176 wind turbines. Delivery of the first of three 4,300-ton offshore substations to the Portsmouth Marine Terminal in Virginia Beach occurred at the end of January. Fully fabricated monopiles, transition pieces, undersea cables, and other major components continue to be delivered in preparation for on-schedule installation. Wind turbine tower and blade fabrication is underway, with nacelle fabrication beginning later this quarter. SiemensGamesa, the project’s wind turbine supplier, is manufacturing the same model for CVOW, which has been successfully fabricated and installed and is now operating at the Moray West offshore wind project. Charybdis, the American-built, flagged, and crewed wind turbine installation vessel (WTIG), is now 96% complete and has commenced sea trials in Brownsville, Texas.

• Project cost updated

Estimated total project costs, including contingency and excluding financing, have increased ~9 percent, from $9.8 billion to $10.7 billion. This is the first and only increase since the original project budget was submitted to the Virginia State Corporation Commission (SCC) in November 2021, approximately 39 months ago. Relative to the original budget of $9.8 billion, the cost increase is attributable to higher network upgrade costs assigned by PJM, the regional electric grid operator, to CVOW as part of the generator interconnect process and higher onshore electrical interconnection costs. New electric generation resources constructed within PJM, like CVOW, are assigned costs by PJM that are deemed necessary to effectively integrate these resources and ensure the reliability and stability of the electric grid. Higher network upgrade cost estimates by PJM reflect the significant increase in demand growth that requires incremental generation and transmission resources across the system. Network upgrades do not impact project construction or timeline and represent the largest unfixed cost input for the project. Aside from changes to onshore costs, aggregate costs for other project costs, including offshore, have remained in line with the original budget. The unused contingency of $222 million, up ~$100 million from the last update, now represents ~5% of the remaining project costs.

Dominion Energy completed a non-controlling equity financing with Stonepeak as part of the comprehensive business review. Under the terms of that agreement, Stonepeak agreed to fund 50% of project costs up to $11.3 billion, with additional sharing of costs in excess of $11.3 billion. As a result, Stonepeak will fund half, or ~$450 million, of the ~$900 million increase in total project costs. Further, Stonepeak and Dominion Energy will each absorb 50% of increased total project costs not expected to be recovered from customers under the December 2022 settlement order. As a result, Dominion Energy expects its Q4 2024 results will include a ~$100 million charge, which will be excluded from operating earnings (non-GAAP) for such an amount.