Dominion to Buy Second Offshore Wind Lease Off North Carolina Coast • Virginia Mercury

Dominion Energy on Monday afternoon announced the acquisition of a second offshore wind project site, a move that could put the utility closer to meeting renewable energy goals set out in state law.

In a news release, the utility said it would buy a 40,000-acre lease off the coast of North Carolina that could produce 800 megawatts of electricity from Avangrid for about $160 million, including $117 million for the acquisition and $43 million for development cost recovery.

Construction of an offshore wind farm in the area has not yet begun because Avangrid’s proposals for the site and an adjacent farm are pending approval by federal regulators, which Dominion will continue to pursue.

In a statement about the agreement, Dominion Chairman and CEO Bob Blue highlighted the growing energy demand forecasts the company faces and highlighted the experience the company has gained in building its first offshore wind project, the 2.6-gigawatt Coastal Virginia Offshore Wind Project.

““With electricity demand in our Virginia territory expected to double over the next 13 years, Dominion Energy is securing access to energy-generating resources so we can continue to provide reliable, affordable and increasingly cleaner energy to power our customers every day,” Blue said.

Dominion Energy must comply with the Virginia Clean Economy Act, a state law passed in 2020 that aims to decarbonize the electricity grid by mid-century. The law requires Virginia’s largest utility to produce 5.2 gigawatts of electricity generated by offshore wind.

Construction on the $9.8 billion CVOW project — which is expected to generate enough energy to power 666,000 homes and avoid emissions equivalent to one million cars on the road — began in May. It now rises about 27 miles off the coast of Virginia Beach and is scheduled for completion in 2026.

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

With the acquisition, Dominion Avangrid takes over a site 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 that the agreement includes:“a significant injection of capital for reinvestment”

““The signing of this agreement allows us to advance our long-term growth plans for 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 approval from the Bureau of Ocean Energy Management and the city of Virginia Beach. Specific commissioning dates or estimated costs for the wind farm, which won’t be recovered from ratepayers until Dominion files paperwork with its regulator, the State Corporation Commission, weren’t immediately available.

The project requires approval from Virginia Beach after the city November informed Avangrid that the company’s plans to bring transmission cables from its offshore wind project ashore in the city’s affluent Sandbridge neighborhood had not gone down well with the community, following public outcry. Dominion said in its statement that it was aware of the concerns and “is committed to working closely with the community, the Commonwealth of Virginia and the City of Virginia Beach as we consider this project.”

The announcement of the agreement on Monday came after the Bureau of Ocean and Energy Management announced an upcoming auction of new lease areas August which could generate up to 6.3 gigawatts of electricity. One of the sites, a 176,500-acre site, is immediately west of Dominion’s CVOW project, while the other, a 101,443-acre site, is off the coast of Delaware and Maryland.

“We plan to participate in the lease auction to obtain another potential option for the development of regulated offshore wind energy that will allow us to meet the needs of our customers” said Dominion spokesman Jeremy Slayton.