Dominion Energy has disclosed that the cost of the Coastal Virginia Offshore Wind (CVOW) project has risen by approximately 9%, bringing total estimated costs to $10.7 billion, up from the previous estimate of $9.8 billion. The project, which is fully permitted and has a capacity of 2.6 gigawatts, is roughly 50% complete and remains on schedule for completion by the end of 2026.
This marks the first cost increase since the original budget was submitted to the Virginia State Corporation Commission (SCC) in November 2021. The rise in costs is attributed to higher expenses related to network upgrades and onshore electrical interconnections. These costs are assigned by PJM, the regional electric grid operator, as part of the generator interconnection process.
“New electric generation resources like CVOW are assigned costs necessary to integrate them effectively into the grid and maintain its reliability,” Dominion Energy said in a statement.
Despite the increase in some onshore costs, other project costs, including offshore, have remained consistent with initial estimates. Dominion Energy has stated that the project is designed with cost-sharing mechanisms to minimize the impact on customers and stakeholders. According to the SCC-approved settlement in December 2022, 50% of any project cost increases beyond $10.3 billion will be borne by the project owners, not customers.
As a result of the updated cost estimate, Dominion Energy anticipates an average increase of 43 cents per month for typical residential customers who use 1,000 kWh of electricity.
Additionally, Dominion Energy has a financing agreement with Stonepeak, which will fund half of the estimated $900 million increase in project costs. Stonepeak is expected to contribute around $450 million.
Dominion Energy also highlighted significant progress in the construction of the project. These milestones include the installation of the first 16 transition pieces, which serve as connections between the wind turbine foundations and towers. The first of three 4,300-ton offshore substations was delivered to the Portsmouth Marine Terminal in Virginia Beach at the end of January. Fabrication of the wind turbine towers and blades is currently underway, with nacelle fabrication expected to begin later this quarter.
