Dominion Energy secures new offshore wind lease for $17.7M

A Dominion Energy subsidiary won provisional rights to a 176,505-acre lease area off Virginia Beach’s coast, adjacent to the section of the ocean where the $9.8 billion Coastal Virginia Offshore Wind project is being constructed, the U.S. Department of the Interior announced Wednesday.

Virginia Electric and Power Co. bid $17.65 million, or approximately $100 per acre, for the lease area about 35 nautical miles from the mouth of the Chesapeake Bay. The Fortune 500 utility’s winning bid gives Dominion the option to construct more wind turbines, beyond the 176-turbine CVOW wind farm, which is expected to be completed by the end of 2026 and produce up to 2.6 gigawatts of electricity, powering 660,000 customers’ homes and businesses.

The area leased by Dominion could support between 2.1 gigawatts and 4.0 gigawatts of offshore wind energy generation, according to a news release from the company.

The Bureau of Ocean Energy Management, which governs leasing of ocean property, auctioned off two East Coast wind leases Wednesday. The other lease, 101,443 acres off Delaware Bay, was provisionally won by Equinor Wind US, which bid $75 million. Six companies participated in the auction, according to a federal news release. The leases don’t authorize construction or operation of an offshore wind facility, but they provide the right to submit a project plan for BOEM’s review. 

This was the fifth offshore wind lease sale held during the Biden-Harris administration, which has set a goal of deploying 30 gigawatts of offshore wind energy capacity by 2030. Wednesday’s sale resulted in more than $23 million bidding credits, $11 million of which will go toward workforce training and domestic supply chain, and $11 million for compensatory funding for affected fisheries.

“Offshore wind is critical to our all-of-the-above approach to meet the unprecedented growth of our customer electric demand over the next decade,” Robert M. Blue, chair, president and CEO of Dominion Energy, said in a statement. “Winning this lease area gives us another low-cost option to meet that growing demand.”

Wednesday’s news came after Dominion’s announcement in July that it plans to acquire a 40,000-acre offshore wind lease off North Carolina’s Outer Banks for $160 million from Avangrid, a Connecticut-based sustainable energy company, with the deal expected to close in the fourth quarter of the year. That property will be called CVOW-South and, if fully built out, is expected to generate 800 megawatts of electricity, enough capacity to serve 200,000 homes and businesses. Dominion said last month that it does not yet have detailed cost or timeline estimates for the project.

On Monday, Dominion Energy announced workers had completed the foundation for the 50th monopile for the CVOW project. Monopiles are the foundation posts of the 176 turbines being erected.

Dominion Energy expects to hit its target of setting between 70 and 100 monopiles into the sea floor by the end of October, and have the wind farm operational by the end of 2026. Dominion will take a break from installing the wind turbines between Nov. 1, 2024, and April 30, 2025, due to federal protections for endangered North Atlantic right whales. 

Dominion announced in February that it plans to sell a $3 billion, 50% stake in CVOW this year to investment firm Stonepeak, although Dominion will retain control of construction and operations of the wind farm. The deal is expected to close at the end of the year.

In April, Secretary of the Interior Deb Haaland announced a new five-year offshore wind leasing schedule, which includes up to 12 potential offshore wind lease sales through 2028.