Dominion Vitality has offered a 50% noncontrolling curiosity in its 2.6-GW Coastal Coastal Virginia Offshore Wind (CVOW) business undertaking to infrastructure funding group Stonepeak. The Richmond, Virginia–headquartered utility in an Oct. 25 monetary submitting stated it obtained proceeds of $2.6 billion for the sale. The quantity represents “reimbursement of roughly 50% of project-to-date capital funding.” Stonepeak is anticipated to fund “50% of remaining undertaking prices as they’re incurred, topic to sure situations as beforehand disclosed,” it stated.
Dominion stated the much-watched offshore wind undertaking—which is able to comprise 176 Siemens Gamesa SG 14-222 Direct Drive offshore wind turbine generators and related monopile foundations, every with a capability of 14.7 MW—stays on time and on funds to start operation in late 2026. Development kicked off in February 2024 and is progressing. In Could, the undertaking put in the primary six monopiles within the Northwest nook of the undertaking lease space.
The sale of half its curiosity in CVOW completes a enterprise overview initiative to scale back debt by $21 billion and handle “foundational issues which have eroded investor confidence” within the firm over a number of years. Dominion CEO Robert Blue earlier this yr stated debt discount is a crucial pillar within the firm’s now full transformation to a “pure-play” state-regulated utility that serves greater than 4 million clients within the Southeast. The corporate is bracing for substantial development as a utility to serve sturdy regional financial development, together with from the world’s largest information middle market (by far), which is clustered in Northern Virginia.
“Dominion Vitality has now achieved 100% of the enterprise overview goal. These actions have improved the corporate’s stability sheet, diminished its threat profile, and established a renewed focus as a pure-play, state-regulated electrical utility enterprise,” the corporate stated final week.
The CVOW transaction follows the September 2023 sale of its 50% curiosity in Cove Level LNG, a liquefied pure gasoline import/export and storage facility on the Chesapeake Bay in Lusby, Maryland, for $3.3 billion to Berkshire Hathaway Vitality. In March 2024, the corporate offered its Ohio pure gasoline utility—The East Ohio Gasoline Firm—to Enbridge for $6.6 billion. Earlier this yr, it additionally closed on the sale of its Salt Lake Metropolis, Utah-based pure gasoline utility Questar Gasoline Firm, and its cost-of-service gasoline provide firm, Wexpro Co., additionally to Enbridge for $4.3 billion. And on Oct. 1, it closed on the sale of its Gastonia, North Carolina–primarily based pure gasoline utility, Public Service Co. of North Carolina, to Enbridge for $3.2 billion.
The CVOW transaction, which stems from a February 2024 settlement, establishes a restricted legal responsibility firm (LLC), OSW Undertaking, with 100% of OSW’s Class A models allotted to Dominion subsidiary Virginia Energy and 100% of its Class B models offered to Stonepeak for $2.6 billion.
Underneath the LLC settlement signed on Oct. 22, Virginia Energy and Stonepeak are collectively accountable for funding the remaining CVOW development, capped at a complete undertaking value of $11.3 billion. If development bills surpass this threshold, Stonepeak might elect to contribute further capital. If Stonepeak opts out, Virginia Energy has the precise to cowl the additional prices, which might proportionally enhance its possession share within the OSW Undertaking LLC. The settlement notably features a monetary incentive for value administration: If complete undertaking prices fall under $9.8 billion, excluding financing prices, Virginia Energy will obtain a further $100 million from an preliminary withholding by Stonepeak. Nonetheless, if prices exceed this $9.8 billion threshold, the withholding quantity will lower, with no further funds launched to Virginia Energy if bills transcend the $11.3 billion cap.
As POWER reported in November 2021, Dominion initially projected a $9.8 billion set up value for the undertaking in an estimate filed with the Virginia State Company Fee. The estimate accounted for detailed engineering, aggressive bidding, and part prices, together with 176 Siemens Gamesa generators, transmission infrastructure, and contingency funds.
The LLC settlement grants Virginia Energy majority management of OSW’s seven-member board, permitting it to nominate a majority of administrators so long as it holds a minimal 25% curiosity and stays the undertaking supervisor. Stonepeak retains customary minority rights, together with the flexibility to nominate administrators primarily based on possession ranges and oversight of key undertaking choices. Moreover, the settlement supplies for quarterly money distributions primarily based on efficiency and consists of governance protections, switch rights, and different stipulations for each events.
Individually, Virginia Energy and OSW entered right into a undertaking administration settlement granting Virginia Energy complete management over the undertaking’s administration, design, procurement, and operations. Underneath that settlement, Virginia Energy will lead CVOW’s development, commissioning, and eventual decommissioning, guaranteeing continuity in undertaking oversight as mutually agreed upon with Stonepeak.
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).
