Dominion Energy Wins Key Approval for Largest US Offshore Wind Farm

Dominion Energy's Coastal Virginia Offshore Wind (CVOW), destined to become the largest offshore wind project yet in the United States, cleared another major hurdle by receiving a favorable Record of Decision from the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM). This decision set the project up for final construction approvals and to begin onshore work before the end of the year.

The favorable decision for the project comes as good news for an industry that remains under pressure. The Biden administration continues to highlight its target of deploying 30 gigawatts of offshore wind energy capacity by 2030, while the execution of the projects continues to hit hurdles. Citing the rejection of its application to reprice its power purchase agreements in New York, BP today became the latest company to report it would take an impairment charge. The company told investors it was recording a pre-tax impairment charge of $540 million in the third quarter for its three offshore wind projects planned in partnership with Equinor. Last week, Equinor reported it was taking a $300 million charge against the same projects.

Dominion however reports its project is on time and on budget after some challenges during the planning process. At one point, Dominion threatened to walk away from its project if it could not reach terms with Virginia. Last week, however, they highlighted the project was moving ahead marking the delivery of the first eight monopiles to the staging facility in Portsmouth.

BOEM said after carefully considering the analysis and alternatives, the Department of the Interior approved a combination of two alternatives which will include up to 176 wind turbine generators, each with a capacity of 14.7 megawatts. The announcement said the combination would reduce impacts to navigation and a known fish haven, allow for ocean co-use, and meet the energy needs of Virginia. 

"Receiving a favorable Record of Decision from the Bureau of Ocean Energy Management is a monumental achievement for Dominion Energy and the Coastal Virginia Offshore Wind team," said Bob Blue, Dominion Energy's chair, president and chief executive officer. “More than a decade of work has gone into the development, design, and permitting of CVOW.”

Located approximately 23.5 nautical miles offshore of Virginia Beach, the CVOW project is the largest yet in the U.S. and will provide about 2.6 GW of energy capable of powering over 660,000 homes according to Dominion. They expect to complete construction in late 2026.

BOEM highlights that today’s decision follows the earlier approval of the Vineyard Wind 1, South Fork Wind, Ocean Wind 1, and Revolution Wind projects. When completed, they said these five projects will collectively add more than 5 GW of renewable energy to the U.S. nation’s grid, enough to power more than 1.75 million homes. BOEM also contends that it remains on track to complete reviews of at least 16 offshore wind energy project plans by 2025, representing more than 27 gigawatts of clean energy.

While the projects are gaining the necessary federal approvals, the developers are continuing to struggle with the changing economics brought about by long approval processes and the recent spikes in inflation. They are also challenged to meet the requirements for the proposed tax incentives while reporting problems in the supply chain are making it challenging to proceed with the projects. Three projects in Massachusetts earlier in the year withdrew from their power purchase agreements compelling the state to rebid the projects while New York’s recent decision likely means it will also have to rebid its projects.

Experts cite the current issues as hurdles and not obstacles. They believe longer term the industry will overcome the early challenges as the first of the projects now including CVOW move forward.