Dominion to purchase second offshore wind lease area off coast of North Carolina • Virginia Mercury

Dominion Energy announced Monday afternoon the acquisition of a second offshore wind project area that could put the utility closer to achieving renewable energy goals outlined in state law.

In a news release, the utility stated it will purchase from Avangrid a 40,000-acre lease area that could produce 800 megawatts of electricity off the coast of North Carolina for a price of about $160 million, including $117 million in acquisition and $43 million in development reimbursement costs.

Construction hasn’t started yet on an offshore wind farm in the area, as Avangrid’s proposals for the space and an adjacent one were pending federal regulators’ approvals, which Dominion will still continue to seek.

In a statement on the deal, Dominion’s Chair, President and CEO Bob Blue called out the increased projections in energy needs the utility is facing and touted the company’s experience learned through building its first offshore wind project, the 2.6 gigawatt Coastal Virginia Offshore Wind Project.

“With electric demand in our Virginia territory projected to double in the next 13 years, Dominion Energy is securing access to power generation resources that ensure we continue to provide the reliable, affordable, and increasingly clean energy that powers our customers every day,” Blue said. 

Dominion Energy must follow the Virginia Clean Economy Act, state law passed in 2020 that seeks to decarbonize the electric grid by mid century. As part of that law, Virginia’s largest utility must produce 5.2 gigawatts of offshore-wind generated electricity.

Construction of the $9.8 billion CVOW project — which is expected to generate enough power to serve 666,000 homes and avoid creating emissions equal to the amount generated by one million cars on the roadway — began in May. Now rising about 27 miles off the coast of Virginia Beach, it is expected to be finished in 2026. 

The Avangrid lease area Dominion is acquiring, located about 36 miles from the shore of Virginia Beach and 27 miles off the coast of North Carolina, is called Kitty Hawk North Wind but will be renamed CVOW-South. 

Dominion’s acquisition leaves Avangrid with what will be called Kitty Hawk South, about 80,000 acres that could be used to deliver up to 2.4 gigawatts of power to North Carolina, Virginia, other states or private companies.

Avangrid CEO Pedro Azagra said in a statement the deal provides, “significant capital infusion for reinvestment” 

“Executing this agreement allows us to move forward with our long-term plans for the development of Kitty Hawk South, further demonstrating our commitment to accelerating the clean energy transition in the United States.”

The deal is expected to close in the fourth quarter of this year after securing approval from the Bureau of Ocean Energy Management and the City of Virginia Beach. Detailed in-service dates or cost estimates for the wind farm, which won’t be recovered from ratepayers until Dominion files with its regulators, the State Corporation Commission, were not immediately available.

The project needs Virginia Beach’s approval, after the city in November told Avangrid the company’s plans to bring transmission cables from their offshore wind project onshore in a wealthy Sandbridge area of the city didn’t sit well with the community, following public pushback. Dominion, in its release, stated that it is aware of the concerns, and “is committed to working closely with the community, the Commonwealth of Virginia, and the City of Virginia Beach as it considers this project.”

Monday’s deal announcement comes after the Bureau of Ocean and Energy Management announced an upcoming auction for new lease areas in August that could create up to 6.3 gigawatts of electricity. One of the sites, a 176,500 acre area, is directly west of Dominion’s CVOW project, while the other, a 101,443 acre area, is off the shore of Delaware and Maryland.

“We plan to participate in the lease auction to give us another potential option for regulated offshore wind generation development to meet the needs of our customers,” said Dominion Spokesperson Jeremy Slayton.