Offshore

Dominion agrees to buy Kitty Hawk North Wind offshore wind lease area from Avangrid

Dominion agrees to buy Kitty Hawk North Wind offshore wind lease area from Avangrid
Kitty Hawk South offshore wind farm (courtesy: Iberdrola Group)

Virginia Electric and Power Company, a wholly-owned subsidiary of Dominion Energy, has agreed to acquire the Kitty Hawk North Wind offshore wind lease and associated developments from Avangrid for approximately $160 million, including a payment of roughly $3,000 per acre for the nearly 40,000-acre lease. The sale price consists of a lease acquisition payment of $117 million and associated development cost reimbursement to Avangrid.

If approved by regulators and constructed, the former Kitty Hawk North Wind site, which will be known as CVOW-South, would connect to the company’s transmission grid and have a capacity of 800 MW.

“With electric demand in our Virginia territory projected to double in the next 13 years, Dominion Energy is securing access to power generation resources that ensure we continue to provide the reliable, affordable, and increasingly clean energy that powers our customers every day,” said Dominion Energy president and CEO Robert M. Blue. “This transaction gives our company another potential option to meet that growing demand in a size and on a timeframe that is consistent with the regulated business mix, credit, and risk profile objectives of the recently concluded business review.”

“It also allows us to leverage the unique expertise we’ve gained during the very successful development and construction to date of the Coastal Virginia Offshore Wind (CVOW) commercial project, which reduces project risk to the benefit of customers and shareholders.  The Virginia model for regulated offshore wind development is proving to be an enabler of on-time and on-budget wind generation at exceptional relative value for our customers and is the model we would intend to pursue for any future offshore wind development.”

Virginia Electric and Power Company is constructing the 2.6-GW CVOW, located about 25 miles north of the CVOW-South lease. CVOW continues to be on-time and on-budget with in-service expected by the end of 2026, per the company. To date, 25 monopiles have been installed since the installation campaign began on May 22, 2024, consistent with the company’s target of 70-100 monopiles during the first of two installation seasons that run through the end of October.

The company is aware of the community concerns regarding the proposed landing site in Sandbridge, Va., and is committed to working closely with the community, the Commonwealth of Virginia, and the City of Virginia Beach as it considers this project. 

Avangrid retains the ownership and associated rights to Kitty Hawk South, and says it will continue the development of the area, which can potentially deliver up to 2.4 GW to North Carolina, Virginia, or other states or private companies.

“As Avangrid continues the construction of our nation-leading Vineyard Wind 1 project and the development of our diverse portfolio of offshore and onshore renewable projects, this transaction advances our strategic priorities by providing significant capital infusion for reinvestment,” stated Avangrid CEO Pedro Azagra. “Executing this agreement allows us to move forward with our long-term plans for the development of Kitty Hawk South, further demonstrating our commitment to accelerating the clean energy transition in the United States.”

Vineyard Wind 1 is currently under construction 15 miles south of Martha’s Vineyard. Last month, Avangrid announced it had placed 10 turbines into production for the project, making the site the largest operating offshore wind farm in the U.S. Avangrid is also developing the New England Wind lease area, which received a favorable Record of Decision from the Department of the Interior in April, followed by the approval of its Construction and Operations Plan earlier this month.

After receipt of necessary approvals from the Bureau of Ocean Energy Management and the City of Virginia Beach, Dominion Energy and Avangrid expect to close the transaction in the fourth quarter of 2024.

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