Dominion Vitality marked two key milestones in its Thursday third-quarter earnings name — its exit from its interstate pure gasoline pipeline enterprise, and its newest steps towards constructing the mid-Atlantic’s first gigawatt-scale offshore wind farm.
On Monday, the Virginia-based utility accomplished the sale of roughly 80 p.c of its multistate pure gasoline transmission and storage enterprise to Berkshire Hathaway Vitality, and expects the remaining portion to be accomplished early subsequent 12 months.
The entire $9.7 billion deal was introduced on the identical July day that it canceled its Atlantic Coast Pipeline undertaking with Duke Vitality. That cancellation led to Dominion recording a $2.eight billion cost within the second quarter of 2020, driving a GAAP unaudited internet lack of $1.2 billion, or $1.41 per share. Thursday’s third-quarter outcomes had been considerably improved, at GAAP internet earnings of $356 million, or 41 cents per share, though that’s a drop from the $975 million and $1.14 per share in internet earnings reported for the third quarter of 2019.
However promoting its aggressive pure gasoline enterprise has allowed Dominion to refocus on state-regulated electrical and gasoline utilities with about 7 million clients in Virginia, North and South Carolina, Ohio, West Virginia, Utah, Idaho and Wyoming. That gives it extra dependable revenues with state-regulated charges of return, “working in a few of the nation’s most engaging states,” Tom Farrell, government chairman, mentioned in Thursday’s convention name.
It additionally permits Dominion to set its operations on an “unwavering path towards net-zero vitality,” he mentioned. Dominion Virginia, by far its greatest utility, faces a state mandate to obtain 100 p.c clear vitality by 2045, and is looking for regulator approval for a plan that will add 24 gigawatts of renewable vitality and vitality storage to its portfolio over the following 15 years.
A significant chunk of that clear vitality — 5.1 GW by 2034, as per targets set by Virginia’s Clear Economic system Act — will come within the type of offshore wind. That’s nonetheless years sooner or later, however Dominion’s first $300 million, 12-megawatt set up, “was efficiently energized simply weeks in the past,” Dominion CEO Robert Blue mentioned in Thursday’s convention name.
That two-turbine undertaking, the second U.S. offshore wind undertaking to be accomplished after Rhode Island’s 30 MW Block Island wind farm, will ship energy at prices a lot increased than these to be delivered by the larger-scale offshore wind initiatives being deliberate alongside the united statesEast Coast. After a long time of utilizing its lobbying clout to safe favorable insurance policies from state lawmakers, typically on the expense of its ratepayers, Dominion is underneath scrutiny from state regulators to show the cost-effectiveness of its investments, and has seen built-in useful resource plans and grid modernization plans rejected up to now two years.
However Dominion is pledging to hit decrease prices with its subsequent spherical of 2.6 GW of offshore wind, set to value about $7.eight billion. It is looking for to draw turbine provider Siemens Gamesa to construct a producing facility its residence state, and make investments in constructing the huge port amenities and ships wanted to put in them in ocean waters.
Dominion Virginia’s position within the East Coast offshore wind increase
Dominion plans to start the allowing course of for its subsequent offshore wind undertaking with the federal Bureau of Ocean Vitality Administration (BOEM), which oversees offshore wind seabed leases, by 12 months’s finish, Blue mentioned.
“We anticipate BOEM allowing to take about 2 years, with capital funding to scale up round 2023, and full-scale development to start round 2024,” on a path to connecting them to the grid by 2026. Denmark’s Ørsted, the world’s main offshore wind developer, received the unique proper to barter a partnership for the two.6 GW undertaking after taking up offshore development for Dominion’s 12 MW pilot undertaking, though that partnership has not but been accomplished.
Dominion’s long-term offshore wind push is being matched by gigawatts extra of initiatives being deliberate alongside the U.S. Jap seaboard. New York awarded 1.7 GW of offshore wind contracts final 12 months and opened a solicitation for as much as 2.5 GW extra this summer time, because it seeks to hit a state goal of 9 GW by 2035.
New Jersey has set offshore wind targets of three GW by 2030 and 7.5 GW by 2035, and awarded its first contract final 12 months for the 1.1-gigawatt Ocean Wind undertaking. Gov. Phil Murphy has introduced plans for a $400 million offshore wind port facility in a transfer to seize the financial improvement potential additionally being sought by New York, and extra just lately, a consortium of mid-Atlantic states Maryland, Virginia and North Carolina.
State mandates don’t equate to certainty for the U.S. offshore wind business, which has seen some setbacks over the previous 12 months. The $2.6 billion, 800 MW Winery Wind undertaking has seen its 2022 goal date to turn into the primary large-scale U.S. offshore wind undertaking pushed again by a sequence of delays in BOEM’s allowing course of.
Blue mentioned that Dominion was “maintaining a tally of these Northeast initiatives clearly, and studying from them as they transfer by way of allowing.” However he added that the utility’s expertise with getting it 12 MW undertaking by way of the federal allowing course of makes it “snug with our schedule” to finish it by 2026.
Winery Wind has additionally confronted issues from fishing and delivery business teams over the potential navigation hazard its wind farm may create off the Massachusetts coast, main it to think about offering extra spacing between its generators. Dominion’s ocean website doesn’t face the identical points, Blue mentioned, however “we’ll be sure we work with Coast Guard, different events” to make sure they don’t come up.
A singular, utility-owned offshore wind undertaking
Dominion’s undertaking differs from the others alongside the East Coast in that it’s constructing it itself, slightly than contracting the undertaking’s energy technology from an impartial developer. Dominion purchased the ocean tract within the nation’s second-ever aggressive lease public sale in 2013 for a mere $1.6 million. Since then, the value of bids for BOEM auctions has skyrocketed, from $247 per square-kilometer in 2015 to greater than $250,000 per square-kilometer in 2018.
This possession mannequin additionally makes Dominion the offtaker of its personal energy, in comparison with the state-led solicitations and offtake settlement negotiations in different states, though different East Coast utilities like New Jersey’s PSEG and New England’s Eversource are investing in initiatives.
This additionally offers Dominion a possible benefit in offshore transmission planning, in comparison with the complicated challenges of allocating transmission prices amongst a number of initiatives which might be rising in scale over time, based on the Enterprise Community for Offshore Wind, a nonprofit group advising the U.S. offshore wind business.
“This all-in-one centralized method allows Dominion Vitality (and Virginia extra broadly) to be first movers in deploying deliberate transmission belongings” alongside the East Coast, the group famous in a report launched final month. It additionally places it within the place to “strongly contemplate the advantages of establishing a deliberate expandable OSW transmission system that may accommodate Virginia’s whole 5.2 GW purpose.”