Dominion Energy, Inc. today announced an agreement to sell a 50 percent noncontrolling interest in the Coastal Virginia Offshore Wind commercial project (CVOW) to Stonepeak through the formation of an offshore wind partnership.
Under the terms of the agreement, Dominion Energy will retain full operational control of the construction and operations of the 2.6-gigawatt CVOW, the largest offshore wind farm in the United States. CVOW is on schedule to generate enough clean, renewable energy to power up to 660,000 homes once fully constructed in late 2026. CVOW will consist of 176 turbines and three offshore substations in a nearly 113,000-acre lease area off the coast of Virginia Beach.
“The Coastal Virginia Offshore Wind project continues to proceed on-time and on-budget and consistent with our previously communicated timing and cost expectations. A competitive partnership process attracted high-quality interest resulting in a compelling partner for CVOW. Stonepeak is one of the world’s largest infrastructure investors with more than $61 billion in assets under management and an extensive track record of investment in large and complex energy infrastructure projects including offshore wind. Their significant financial participation will benefit both our project and our customers, Dominion Energy chair, president and CEO Robert M. Blue said.
The transition structure involves Stonepeak investing in a newly formed subsidiary of Dominion Energy Virginia. If approved by the State Corporation Commission of Virginia (SCC), the subsidiary will be a public utility in Virginia entitled to recover its prudently incurred costs of constructing and operating the project under the existing Virginia offshore wind rider program. Cost-recovery will utilize the capital structure of and cost of capital at Dominion Energy Virginia.
Dominion Energy will retain full operational control of the construction and operations of CVOW. Dominion Energy expects to consolidate the partnership for accounting purposes. Stonepeak will own a 50 percent noncontrolling equity interest and will have customary minority interest rights.
The transaction requires approvals from the SCC and the North Carolina Utilities Commission, as well as certain consents from the Bureau of Ocean Energy Management and other regulatory agencies regarding the assignment of certain contracts and permits needed for the partnership post-closing.
The transaction is expected to close by the end of 2024 after all required approvals and consents have been received.
“This transaction achieves several key objectives including: (1) adding an attractive, well-capitalized, and high-quality partner; (2) establishing robust cost-sharing that provides meaningful protection from any unforeseen project cost increases; and (3) improving our quantitative and qualitative business risk profile through the creation of a highly credit-positive partnership. We have reviewed the transaction with our credit-rating agencies and expect the transaction to be viewed as a significant credit-positive, which will ultimately benefit our customers. A financially healthy Dominion Energy with a strong credit profile and balance sheet is optimally positioned to attract the capital we need to provide an exceptional customer experience and support the Commonwealth of Virginia’s economic and environmental goals,” Blue said.
Following closing, Dominion Energy and Stonepeak will each contribute 50 percent of the remaining capital necessary to fund construction of CVOW, provided the total project cost, excluding financing costs, is less than $11.3 billion (mandatory capital contributions). This represents 50/50 cost-sharing up to 15 percent, or nearly $1.5 billion, higher than the project’s current project budget ($9.8 billion) and up to 20 percent or nearly $2.0 billion, higher than the project’s current pre-contingency budget ($9.45 billion).
Approximately 7 million customers in 15 states energize their homes and businesses with electricity or natural gas from Dominion Energy, headquartered in Richmond. The company is committed to providing reliable, affordable and increasingly clean energy every day and to achieving Net Zero emissions by 2050.
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Rebecca Barnabi
