Dominion Energy has agreed to sell a 50% noncontrolling interest in the Coastal Virginia Offshore Wind (CVOW) Commercial project to infrastructure investor Stonepeak
The 2.6-GW CVOW Commercial project is the largest offshore windfarm in the US and will be fully constructed in late 2026. Under the terms of the agreement, Dominion Energy will retain full operational control of the construction and operation of CVOW Commercial.
Dominion Energy chair, president and chief executive Robert Blue said the project continues to proceed on-time and on-budget and consistent with previously communicated timing and cost expectations. He said a competitive partnership process attracted high-quality interest resulting in what he described as “a compelling partner for CVOW.”
Stonepeak is one of the world’s largest infrastructure investors with more than US$61Bn in assets under management and an extensive track record of investment in large and complex energy infrastructure projects including offshore wind. “Their significant financial participation will benefit both our project and our customers,” said Mr Blue.
“This transaction achieves several objectives including adding an attractive, well-capitalised, and high-quality partner; establishing robust cost-sharing that provides meaningful protection from any unforeseen project cost increases; and improving our quantitative and qualitative business risk profile through the creation of a highly credit-positive partnership,” Mr Blue continued.
“We have reviewed the transaction with our credit-rating agencies and expect it to be viewed as a significant credit-positive, which will ultimately benefit our customers. A financially healthy Dominion Energy with a strong credit profile and balance sheet is optimally positioned to attract the capital we need to support the Commonwealth of Virginia’s economic and environmental goals.”
Stonepeak senior managing director Rob Kupchak said, “Having previously partnered with Dominion Energy, we look forward to extending our relationship through CVOW, which is a fitting addition to our global renewables strategy given its potential to provide meaningful renewable capacity to the US, advanced stage of development, and downside-protected fundamentals.
“Dominion Energy’s impressive track record building and operating large-scale infrastructure projects paired with Stonepeak’s experience successfully constructing offshore wind assets gives us confidence in CVOW’s path forward.”
Stonepeak will invest in a newly formed subsidiary of Dominion Energy Virginia. Subject to State Corporation Commission (SCC) of Virginia approval, the subsidiary will be a public utility in Virginia entitled to recover its costs of constructing and operating the project under the existing Virginia offshore wind rider programme. Cost-recovery will utilise the capital structure of and cost of capital at Dominion Energy Virginia.
Dominion Energy will retain full operational control of the construction and operations of CVOW Commercial. Dominion Energy expects to consolidate the partnership for accounting purposes. Stonepeak will own a 50% noncontrolling equity interest and will have customary minority interest rights.
The transaction requires approvals from the SCC and the North Carolina Utilities Commission, as well as certain consents from the Bureau of Ocean Energy Management and other regulatory agencies regarding the assignment of certain contracts and permits needed for the partnership post-closing. The transaction is expected to close by the end of 2024 after all required approvals and consents have been received.
Under the terms of the agreement, Dominion Energy expects to receive proceeds of approximately US$3Bn, representing 50% of the CVOW construction costs incurred through closing, less US$145M (an initial withholding). If the final construction costs of CVOW are US$9.8Bn or less, excluding financing costs, Dominion Energy will receive US$100M of the initial withholding. Such amount is subject to downward adjustment with Dominion Energy receiving no withheld amounts if the total costs, excluding financing costs, of CVOW exceed US$11.3Bn.
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