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Dominion Energy's (D) Arm to Buy Offshore Wind Lease for $160M
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Dominion Energy (D - Free Report) announced that its subsidiary, Virginia Electric and Power Company, has agreed to acquire the Kitty Hawk North Wind offshore wind lease and associated developments, which will be known as CVOW-South, from Avangrid, Inc. (AGR - Free Report) for nearly $160 million. This is inclusive of a payment of about $3,000 per acre for the nearly 40,000-acre lease.
After receiving the necessary approvals from the Bureau of Ocean Energy Management and the City of Virginia Beach, both companies expect to close the transaction in the fourth quarter of 2024.
Benefits of the Agreement
Given that the demand for electricity in its Virginia region is expected to double over the next 13 years, Dominion Energy is working to secure access to resources for power generation. It does so to ensure that its customers can continue to receive consistent, reliable, affordable and increasingly clean energy.
With an 800-megawatt (MW) capacity, CVOW-South may supply electricity to 200,000 homes and businesses. Additionally, the project would be connected to the company's transmission infrastructure.
This initiative can help the company to eventually lower the cost of operations by focusing on infrastructure. The possibility of providing more reliable services and new customer additions should generate more revenues for the company.
Focus on Renewable Energy
Virginia Electric and Power Company is also in the process of building the 2.6-gigawatt (GW) CVOW, which is situated nearly 25 miles (40.2 km) north of the CVOW-South lease area. The project is progressing as planned, staying within its budget and on schedule. It is set to be completed by the end of 2026.
So far, 25 monopiles have been successfully put in place since the project kicked off on May 22, 2024, aligning with the company's objective of installing between 70 and 100 monopiles over the course of the first of two installation seasons, which are expected to be concluded by October.
Dominion Energy’s long-term objective is to add 24 GW of battery storage, solar, hydro and wind (offshore as well as onshore) projects by 2036 and increase the renewable energy capacity by more than 15% per year, on average, over the next 15 years.
D aims to attain net-zero carbon and methane emissions from its electric generation and natural gas infrastructure by 2050. The company aims to cut emissions by 70-80% by 2035 from the 2005 level. By 2035, Dominion Energy also intends to make zero and low-emitting resources accountable for 99% of its electric generation. The company is working on offshore wind, battery storage and hydropower projects to lower emissions.
Per the U.S. Energy Information Administration (EIA), the annual share of U.S. electricity generation from renewable energy sources should be 23% and 25% in 2024 and 2025, respectively.
Peer Moves
Along with D, some other electric power industry companies like Xcel Energy Inc. (XEL - Free Report) and NextEra Energy, Inc. (NEE - Free Report) are also adopting measures to meet clean-energy targets.
Xcel Energy aims to lower emissions by at least 80% within 2030 and achieve carbon neutrality by 2050. In February 2024, NSP filed its Upper Midwest Resource Plan with the MPUC. The plan includes 3,600 MW of new wind and solar resources, 600 MW of battery energy storage and more than 2,200 MW of dispatchable resources, likely to be achieved by 2030. This should help reduce carbon emissions by more than 80%, potentially up to 88%, within 2030.
XEL’s long-term (three- to-five year) earnings growth rate is 6.4%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year increase of 6.3%.
NextEra Energy aims to reduce total carbon emissions by 67% within 2025 from the 2005 level. During the first quarter of 2024, it placed into service nearly 1,640 MW of new, cost-effective solar projects in operation and expanded its contracted renewables backlog by adding 2,765 MW of renewable projects. It expects to add 33-42 GW of new renewables to the generation portfolio via clean energy investments in the 2023-2026 period.
NEE’s long-term earnings growth rate is 8.6%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year increase of 7.3%.
Price Performance
In the past six months, shares of the company have risen 2.9% compared with the industry’s 2% growth.
Image: Bigstock
Dominion Energy's (D) Arm to Buy Offshore Wind Lease for $160M
Dominion Energy (D - Free Report) announced that its subsidiary, Virginia Electric and Power Company, has agreed to acquire the Kitty Hawk North Wind offshore wind lease and associated developments, which will be known as CVOW-South, from Avangrid, Inc. (AGR - Free Report) for nearly $160 million. This is inclusive of a payment of about $3,000 per acre for the nearly 40,000-acre lease.
After receiving the necessary approvals from the Bureau of Ocean Energy Management and the City of Virginia Beach, both companies expect to close the transaction in the fourth quarter of 2024.
Benefits of the Agreement
Given that the demand for electricity in its Virginia region is expected to double over the next 13 years, Dominion Energy is working to secure access to resources for power generation. It does so to ensure that its customers can continue to receive consistent, reliable, affordable and increasingly clean energy.
With an 800-megawatt (MW) capacity, CVOW-South may supply electricity to 200,000 homes and businesses. Additionally, the project would be connected to the company's transmission infrastructure.
This initiative can help the company to eventually lower the cost of operations by focusing on infrastructure. The possibility of providing more reliable services and new customer additions should generate more revenues for the company.
Focus on Renewable Energy
Virginia Electric and Power Company is also in the process of building the 2.6-gigawatt (GW) CVOW, which is situated nearly 25 miles (40.2 km) north of the CVOW-South lease area. The project is progressing as planned, staying within its budget and on schedule. It is set to be completed by the end of 2026.
So far, 25 monopiles have been successfully put in place since the project kicked off on May 22, 2024, aligning with the company's objective of installing between 70 and 100 monopiles over the course of the first of two installation seasons, which are expected to be concluded by October.
Dominion Energy’s long-term objective is to add 24 GW of battery storage, solar, hydro and wind (offshore as well as onshore) projects by 2036 and increase the renewable energy capacity by more than 15% per year, on average, over the next 15 years.
D aims to attain net-zero carbon and methane emissions from its electric generation and natural gas infrastructure by 2050. The company aims to cut emissions by 70-80% by 2035 from the 2005 level. By 2035, Dominion Energy also intends to make zero and low-emitting resources accountable for 99% of its electric generation. The company is working on offshore wind, battery storage and hydropower projects to lower emissions.
Per the U.S. Energy Information Administration (EIA), the annual share of U.S. electricity generation from renewable energy sources should be 23% and 25% in 2024 and 2025, respectively.
Peer Moves
Along with D, some other electric power industry companies like Xcel Energy Inc. (XEL - Free Report) and NextEra Energy, Inc. (NEE - Free Report) are also adopting measures to meet clean-energy targets.
Xcel Energy aims to lower emissions by at least 80% within 2030 and achieve carbon neutrality by 2050. In February 2024, NSP filed its Upper Midwest Resource Plan with the MPUC. The plan includes 3,600 MW of new wind and solar resources, 600 MW of battery energy storage and more than 2,200 MW of dispatchable resources, likely to be achieved by 2030. This should help reduce carbon emissions by more than 80%, potentially up to 88%, within 2030.
XEL’s long-term (three- to-five year) earnings growth rate is 6.4%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year increase of 6.3%.
NextEra Energy aims to reduce total carbon emissions by 67% within 2025 from the 2005 level. During the first quarter of 2024, it placed into service nearly 1,640 MW of new, cost-effective solar projects in operation and expanded its contracted renewables backlog by adding 2,765 MW of renewable projects. It expects to add 33-42 GW of new renewables to the generation portfolio via clean energy investments in the 2023-2026 period.
NEE’s long-term earnings growth rate is 8.6%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year increase of 7.3%.
Price Performance
In the past six months, shares of the company have risen 2.9% compared with the industry’s 2% growth.
Image Source: Zacks Investment Research
Zacks Rank
D currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.