Dominion Energy Raises Cost Expectations for Offshore Wind Project, Tariff Impact Less Than Previously Feared
Dominion Energy revealed during its earnings call on Friday that its 2.6-gigawatt Coastal Virginia Offshore Wind project remains on schedule for completion by the end of 2026 and is eligible for tax credits under the Inflation Reduction Act. However, due to the impact of Trump's new tariff policies, project costs are expected to rise by $506 million, bringing total costs to $10.9 billion, with average monthly customer bills increasing by about 3 cents. CEO Bob Blue stated that despite doubled steel tariffs, through collaboration with suppliers and completion of regulatory analysis, the expected cost increase has been revised downward compared to the previous quarter.
Key Points
- Dominion Energy's 2.6 GW Coastal Virginia Offshore Wind project remains on track for completion by the end of 2026 and is eligible for tax credits under the new safe harbor deadline of the Inflation Reduction Act, company leadership said on a Friday earnings call.
- However, due to President Trump's new tariff policies, the company expects project costs to rise slightly. Dominion estimates that the new tariffs will increase project costs by $506 million, bringing the total project cost to $10.9 billion. Dominion President, CEO, and Chairman Bob Blue said the added costs will increase customer bills by an average of 3 cents per month over the project's lifetime.
- Blue said that despite the doubling of steel tariffs, the company's expectations for tariff-related cost increases have been slightly reduced compared to last quarter "due to working with suppliers to identify cost mitigation strategies, as well as completing analysis of final trade regulations and annexes."
In-Depth Analysis
Blue said that the proposed tariff increases on Mexico and the European Union would add an additional $134 million in costs to the project.
"Project manufacturing and installation are progressing very smoothly, and CVOW remains one of the most economical energy sources for customers," he said. "We will install the first turbine in September, which aligns with our original plan... In fact, we are far ahead of schedule, with monopile installation speeds exceeding any other U.S. offshore wind project to date."
Blue said the project has installed 134 of 176 monopiles (76%), as well as all pin piles.
The company expects the completion of Charybdis (the first U.S. Jones Act-compliant offshore wind turbine installation vessel) to be delayed due to work on the vessel's internal communications technology.
"We originally expected the vessel to complete sea trials last month, which would have allowed us to start turbine installation earlier," Blue said. Charybdis "eliminates the need for a barge, which will help us maintain turbine installation progress," and its cost is $715 million, consistent with initial estimates, he said.
Blue also said the company is "fairly satisfied" with the final form of the One Big Beautiful Bill, which significantly reduces and cuts many renewable energy tax credits in the IRA.
"We are confident that through safe harbor or transition rules, we will retain all the credits we have included in our investor forecasts," he said. Dominion expects CVOW and many of its other projects to be unaffected.
Blue said only about 20% to 25% of the company's clean energy projects require "some active mitigation measures." "As I mentioned, we expect to be able to achieve this, and we have a plan in place."