LCOE for Coastal Virginia Offshore Wind Project Expected to Be Lower; Dominion in Talks with Potential Project Partner

Business & Finance

November 8, 2023, by Adrijana Buljan

Dominion Energy has submitted a filing with Virginia’s State Corporation Commission (SCC) with an updated levelised cost of energy (LCOE) calculation for the 2.6 GW Coastal Virginia Offshore Wind (CVOW) project. The updated LCOE is USD 77/MWh (approximately EUR 72.20/MWh), decreasing from the previous range of USD 80–90/MWh (approx. EUR 74.99–84.36/MWh).

The updated LCOE of USD 77/MWh is in 2027 dollars and includes the 30 per cent production tax credit. Without accounting for the value of the Renewable Energy Credits (RECs), the LCOE is USD 86/MWh (approx. EUR 80.63/MWh), according to the filing.

In September this year, when Dominion announced it sold three natural gas distribution companies to Enbridge as part of its business review, the company’s CEO said the commercial CVOW offshore wind farm was estimated to deliver electricity at a levelised cost “that competes very favourably with the nation’s unregulated offshore wind projects while creating hundreds of jobs and millions of dollars of local economic benefit”.

Dominion also revealed in September that the company planned to bring in a noncontrolling equity financing partner on the 2.6 GW offshore wind project, which would de-risk the project and is part of Dominion Energy’s ongoing business review. According to the latest information from the company, Dominion is nearing a decision on this matter.

In its report for the third quarter of the year, released on 3 November, Dominion Energy said the company is in “advanced stages of a robust process to transact with a partner” and that there is “considerable interest from attractive and high-quality potential counterparties.”

The decision on a project partner for the 2.6 GW offshore wind farm is the final strategic step of the company’s business review and will be made by the end of this year or in early 2024.

“It is in the long-term best interest of our customers and shareholders that we make the right, not just the expedient, decision on a CVOW partnership,” Dominion Energy said.

The offshore wind farm has just received the US Department of Interior’s approval of the construction and operations plan (COP), with the Bureau of Ocean Energy Management (BOEM) issuing a Record of Decision (ROD) that documents the decision to approve the construction of 176 and three offshore substations within the lease area.

The Coastal Virginia Offshore Wind (CVOW) project will comprise 176 Siemens Gamesa 14 MW wind turbines and three offshore substations in the 112,800-acre commercial lease area located 27 miles (about 43 kilometres) off the Virginia Beach coast.

Construction and fabrication activities are already underway, with the monopile foundations arriving at the Portsmouth Marine Terminal in Virginia. The installation of foundations and wind turbines is scheduled to begin in 2024.

Once fully constructed in 2026, the 2.6 GW offshore wind farm will be able to generate enough electricity to power up to 660,000 households.