$160mn M&A! Why did Dominion Energy Acquire an 800 MW Wind Lease Offshore Virginia and North Carolina?

published on 09 July 2024

Deal Details:

📄 Dominion will acquire the 40,000-acre Kitty Hawk North Wind offshore wind lease and associated developments from Iberdrola subsidiary Avangrid. The deal value comprises a payment of ~$3,000 per acre and $43mn in development cost reimbursement. The lease, which is located ~25 miles south of the 2.6 GW Coastal Virginia Offshore Wind (CVOW), will henceforth be known as CVOW-South.

Deal Drivers:

🌿 2035 Target: Under the 2020 Virginia Clean Economy Act, Dominion must propose the construction or purchase of 5.2 GW of offshore wind projects by 2035, to help decarbonize the state’s electric grid by 2050. The 2.6 GW CVOW and 800 MW CVOW South projects will help the utility achieve 65% of its mandate.

💡 $77/MWh LCOE: Enerdatics believes that Dominion aims to replicate its development model for the CVOW project, which reached financial close at an LCOE of $77/MWh and is contracted to sell power at a tariff of $93.1/MWh. The company was able to achieve this by securing EPC agreements early, leveraging fixed price contracts, locking in manufacturing slots, and hedging currency and commodity costs.

🚢 Jones Act Compliance: The US’s Jones Act requires American-made wind turbine installation vessels (WTIVs) to transport equipment within United States’ waters. Dominion is currently building the first Jones Act-compliant WTIV, scheduled to be completed in 2025. The move will significantly help de-risk offshore wind construction.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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