Wanted: partner for America's largest offshore wind farm amid industry storm
Potential equity stake sale in Coastal Virginia Offshore Wind project part of ongoing business review to bolster balance sheet long-term and credit position
Dominion Energy confirmed that it is looking to sell a stake in its mammoth 2.6GW Coastal Virginia Offshore Wind (CVOW) project, the US’ largest, despite optimism the array has skirted the worst of inflation and remains on time and on budget.
The sale would be part of the regulated utility’s ongoing business review aimed at solidifying its balance sheet and credit position.
CEO Bob Blue said that additional capital sourcing would be partly driven by “de-risking of our regulated offshore wind project through the assumption of a noncontrolling equity financing partner as provided for in recent Virginia legislation.”
Last year, the Virginia legislature passed a law allowing Dominion to establish an affiliate to secure a financing partner for the project, subject to approval by utility regulator State Corporation Commission (SCC).
Blue made the remarks in a Dominion announcement on its $14bn sale of natural gas distribution entities to Canadian energy firm Enbridge.
He said certainty provided by the state’s regulatory framework enabled Dominion to secure “agreements early with offshore wind suppliers for material and services while giving them confidence in our project's completion.”
The company has reached agreements for some 90% of its supply chain needs, with some $7bn in contracts signed prior to escalating inflation in 2022.
“Despite trends we see elsewhere in the offshore wind market, we do not see anything that changes our confidence in delivering the project on time and on budget,” Blue said during last month’s second quarter earnings call.
Dominion has invested around $1.7bn to date, which it expects to grow to some $3bn by year-end.
CVOW is “estimated to deliver electricity at a levelised cost that competes very favourably with the nation's unregulated offshore wind projects,” Blue added.
The regulator estimated total projects costs, including financing, less investment tax credits, could balloon to $21.5bn.
Sector headwinds
The sunshine in CVOW’s business case stands in contrast to storm clouds looming over most of the US sector.