Dominion Buying Iberdrola’s US Offshore Wind Lease Area North of CVOW Project Site

Posted on 09 July 2024

Iberdrola, through its US subsidiary Avangrid, and Virginia Electric and Power Company, a wholly-owned subsidiary of Dominion Energy, have signed an agreement under which Dominion will acquire the Kitty Hawk North Wind offshore wind lease area. The site, located some 40 kilometres north of the under-construction Coastal Virginia Offshore Wind (CVOW) project, would be renamed CVOW-South, subject to regulatory approvals of the acquisition.

Dominion will pay roughly USD 160 million (approximately EUR 148 million) for Kitty Hawk North, which includes around USD 3,000 (around EUR 2,770) per acre for the site that spans nearly 40,000 acres and associated development cost reimbursement to Avangrid.

The lease acquisition still needs to be approved by the Bureau of Ocean Energy Management (BOEM) and the City of Virginia Beach. Dominion Energy and Iberdrola expect to receive the necessary approvals over the coming months and close the transaction in the fourth quarter of 2024.

Avangrid secured the rights to develop the Kitty Hawk lease area in May 2017 and the federal permitting process for the lease area, covering 122,405 acres, started in 2021.

In the Construction and Operations Plan (COP) submitted to BOEM, Avangrid detailed the plan for the Kitty Hawk area off North Carolina to be built in phases, with the first phase having an installed capacity of 800 MW and the entire development a total generation capacity of up to 2.5 GW, once all phases are built.

In an update in 2022, BOEM said that the name for the first phase was changed from Kitty Hawk Wind Project to Kitty Hawk North Wind Project to reflect the segmenting of the project. Iberdrola also announced in 2022 that the total installed offshore wind capacity at the lease area would increase to 3.5 GW as the wind turbine technology has advanced.

The export cable for the 800 MW Kitty Hawk North is planned to make landfall in Virginia Beach, Virginia, where Dominion Energy’s 2.6 GW CVOW project will also connect to the grid on land. The landing site for the 2.6 GW CVOW is at the State Military Reservation (SMR), while the project developed by Avangrid is proposed to come onshore at one of several locations pinpointed in the COP, including in Sandbridge.

“The company is aware of the community concerns regarding the proposed landing site in Sandbridge, Va., and is committed to working closely with the community, the Commonwealth of Virginia, and the City of Virginia Beach as it considers this project,” Dominion said in a press release on 8 July.

Once the transaction is completed, Dominion plans to rename the project CVOW-South, aligning the name with the CVOW project which is the biggest offshore wind farm under construction in the US. With the 800 MW added from the to-be-named CVOW-South, Dominion’s CVOW portfolio of projects will climb to 3.4 GW of generation capacity.

“With electric demand in our Virginia territory projected to double in the next 13 years, Dominion Energy is securing access to power generation resources that ensure we continue to provide the reliable, affordable, and increasingly clean energy that powers our customers every day. This transaction gives our company another potential option to meet that growing demand in a size and on a timeframe that is consistent with the regulated business mix, credit, and risk profile objectives of the recently concluded business review,” said Robert M. Blue, chair, president and chief executive officer of Dominion Energy.

“It also allows us to leverage the unique expertise we’ve gained during the very successful development and construction to date of the Coastal Virginia Offshore Wind (CVOW) commercial project, which reduces project risk to the benefit of customers and shareholders. The Virginia model for regulated offshore wind development is proving to be an enabler of on-time and on-budget wind generation at exceptional relative value for our customers and is the model we would intend to pursue for any future offshore wind development.”

Following the sale of Kitty Hawk North, Avangrid will retain the ownership and associated rights to the Kitty Hawk South lease which has the potential to deliver up to 2.4 GW of power to North Carolina, Virginia, or other states or private companies, according to the company.

“As Avangrid continues the construction of our nation-leading Vineyard Wind 1 project and the development of our diverse portfolio of offshore and onshore renewable projects, this transaction advances our strategic priorities by providing significant capital infusion for reinvestment,” said Avangrid CEO Pedro Azagra“Executing this agreement allows us to move forward with our long-term plans for the development of Kitty Hawk South, further demonstrating our commitment to accelerating the clean energy transition in the United States.”

Source: offshoreWIND.biz (https://www.offshorewind.biz/2024/07/09/dominion-buying-iberdrolas-us-offshore-wind-lease-area-north-of-cvow-project-site/?%3Futm_source=offshorewind&utm_medium=email&utm_campaign=newsletter_2024-07-10)

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