Offshore

Dominion Energy considers selling piece of Virginia offshore wind project

Dominion Energy considers selling piece of Virginia offshore wind project
A vessel aids in the construction of a wind turbine offshore Virginia (courtesy: Dominion Energy)

Dominion Energy could sell an equity stake in its Virginia offshore wind project as part of an effort to reduce risk, the utility announced.

As part of a review of its regulated businesses, Dominion Energy CEO Robert Blue said adding a noncontrolling equity financing partner to the Coastal Virginia Offshore Wind project would, in part, help minimize the company’s external equity financing needs and support long-term stability.

Blue said the 2.6 GW project, located about 27 miles off the coast of Virginia Beach, is on budget and on schedule. The company already has a two-turbine pilot project up and running with the full 176-turbine wind farm expected to be placed in service in late 2026 or early 2027.

Dominion Energy’s business review also included the sale of its three gas distribution companies to Enbridge pending regulatory approval.

Dominion Energy, by its account, appears to have weathered the macroeconomic headwinds that have plagued some of the first offshore wind projects in the U.S. The offshore wind industry is facing cost challenges across the board, as utilities and developers alike pay the price to pull out of agreements.

The developers of SouthCoast Wind recently agreed to pay $60 million to scrap its power purchase agreement. Avangrid, the developer of the Commonwealth Wind offshore farm, also recently requested to terminate the PPA signed with utilities in 2022, Commonwealth Magazine reports.

Avangrid will pay $48 million in penalties to the three utilities for backing out of the PPA, which had been under review since spring 2022. Rhode Island Energy has pulled out of its PPA with Ørsted and Eversource for the offshore wind farm Revolution Wind 2, citing higher interest rates, increased expenses, and questionable federal tax credits.

Danish energy company Orsted, meanwhile, saw its share price fall 20% last week after the company announced it faces a $2.3 billion loss in value in its US operations due to supply chain issues, high interest rates, and a lack of tax credits, Reuters reports.

Orsted said its Ocean Wind 1, Sunrise Wind, and Revolution Wind projects have been affected by supplier delays that could cause more than $727 million (5 billion Danish crowns) in impairments. High interest rates affecting onshore and offshore wind projects could cause another $727 million in impairments, the company said, and the lack of tax credits could result in more than $870 million in impairments.