CVOW project : Dominion Energy, Stonepeak forge $3bn offshore wind energy partnership

In a significant development for the renewable energy sector, Dominion Energy, Inc. has announced a strategic partnership with Stonepeak through the sale of a 50% noncontrolling interest in the Coastal Virginia Offshore Wind (CVOW) commercial project. This landmark deal, valued at approximately $3 billion, underscores the growing interest and investment in sustainable energy projects. Dominion Energy will maintain full operational control over the construction and management of CVOW, ensuring the project’s continued progress on-time and within budget.

Under the agreement, Stonepeak, a leading infrastructure investor with over $61 billion in assets, will invest in a newly formed subsidiary of Dominion Energy Virginia. This move is expected to bring about robust cost-sharing mechanisms and improve Dominion Energy’s business risk profile significantly. The partnership formation is pending approval from the State Corporation Commission of Virginia and other regulatory bodies, with a projected closure by the end of 2024.

Dominion Energy, under the leadership of Robert M. Blue, emphasizes that this transaction aligns with the company’s objectives of adding a financially solid partner to the project, thereby enhancing cost efficiency and risk management. Stonepeak’s participation is seen as a crucial step in supporting the Commonwealth of Virginia’s environmental and economic goals, with Dominion Energy positioned to meet the capital demands for providing an exceptional customer experience.

The CVOW project, set to be the largest offshore wind farm in the U.S., is poised to generate sufficient renewable energy to power up to 660,000 homes by late 2026. Featuring 176 turbines and spanning nearly 113,000 acres off Virginia Beach, CVOW represents a significant advancement in the U.S.’s commitment to renewable energy sources.

The financial structure of the deal includes a 50/50 cost-sharing arrangement for the project’s construction costs, up to a certain threshold, thereby ensuring both parties are equally invested in the project’s success. This strategic partnership also aims to improve Dominion Energy’s estimated 2024 consolidated FFO-to-debt by approximately 1.0% and reduce overall financing needs during the construction phase.

Legal advisement for this transaction was provided by McGuireWoods LLP and Morgan Lewis, with Citi and Goldman Sachs & Co. LLC acting as co-financial advisors. The collaboration between Dominion Energy and Stonepeak marks a significant milestone in the development of renewable energy infrastructure in the United States, showcasing the potential for public-private partnerships to drive progress in sustainable energy initiatives.

This partnership between Dominion Energy and Stonepeak is a testament to the viability and attractiveness of large-scale renewable energy projects in today’s market. By leveraging Stonepeak’s financial strength and Dominion Energy’s operational expertise, the CVOW project is well-positioned to meet its objectives efficiently. This deal not only reflects the growing trend of investment in renewable energy but also highlights the importance of strategic partnerships in overcoming the challenges associated with large infrastructure projects.