Dominion Energyʻs offshore wind project gets major approval from Virginia commission

The Virginia State Corporation Commission (SCC) approved Dominion Energy Virginia’s cost recovery plan for its proposed Coastal Virginia Offshore Wind Project (CVOW) – a major milestone in the development of the $9.8 billion project.

The 2.6-gigawatt project, to be sited 27 miles off the coast of Virginia Beach, features 176 wind turbines, each generating 14.7 megawatts of power. The commission also approved approximately 17 miles of new transmission lines and other onshore infrastructure and facilities needed to deliver the energy offshore to homes and businesses across Virginia. When it is complete in 2026, it will generate enough clean energy to power up to 660,000 homes.

“Our customers expect reliable, affordable energy, and offshore wind is key for delivering on that mission. We are very pleased that the commission has approved this important project that will benefit our customers. We are reviewing the specifics of the order, particularly the performance requirement,” Robert Blue, chair, president, and CEO of Dominion Energy, said on Aug. 5.

For the rate year Sept. 1, 2022, to Aug. 31, 2023, the commission approved a revenue requirement of $78.7 million to be recovered through a new rate adjustment clause, or Rider OSW. Over the 35-year lifetime of the project, a residential customer using 1,000 kilowatt-hours of electricity per month, there will be an average monthly bill increase of $4.72 and a peak monthly bill increase of $14.22 in 2027.

This is the largest project of its kind in the United States. The commission deemed the project to be in the public interest.

“In so finding that these costs must be recovered from customers, the Commission is also keenly aware of the ongoing rise in gas prices, inflation, and other economic pressures that are impacting all utility customers. This is a prescriptive statute, and we applied it based on the record in this case,” the commission stated, in its approval.

Further, to mitigate the impact on ratepayers, the commission mandated some consumer protections. Among them, the commission said that each annual Rider OSW update application filed by Dominion prior to the project’s commercial operation shall include any material changes to the project, the most recent biannual project update, and a written explanation as to the reason for any cost overruns and the “reasonableness and prudence” of the additional costs. Also, the commission said customers shall be held harmless for any shortfall in energy production below an annual net capacity factor of 42 percent, as measured on a three-year rolling average.

According to Dominion, the project is expected to save Virginia customers more than $3 billion during its first 10 years in operation. However, if gas prices continue to rise and these ongoing commodity market pressure trends continue, the savings could double to nearly $6 billion – as the turbines require no fuel costs to operate.

Further, CVOW could create hundreds of direct and indirect jobs during construction and more than a thousand during operations, while attracting companies to make investments to make Virginia a hub for offshore wind.