Dominion Energy, Avangrid sign offshore wind lease deal in Virginia

Richmond, Va.-based Dominion Energy Inc., through its Virginia Electric and Power Company subsidiary, yesterday agreed to pay Avangrid Inc. roughly $160 million to acquire the offshore wind lease for the Kitty Hawk North Wind development area.

“This transaction gives our company another potential option to meet… 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 Blue, chairman, president, and chief executive officer of Dominion Energy.

The agreed-upon sale includes a payment of about $3,000 per acre for the nearly 40,000-acre lease. The sale price also consists of a lease acquisition payment of $117 million and associated development cost reimbursement to Avangrid.

“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.”

Avangrid will retain ownership and associated rights to the Kitty Hawk South lease and will continue developing the area, which has the potential to deliver up to 2.4 Gigawatts of power to North Carolina, Virginia, or other states or private companies.

Blue said the deal will also allow Dominion Energy to leverage the expertise it is currently gaining during the development and construction of the Coastal Virginia Offshore Wind (CVOW) commercial project. The CVOW is located about 25 miles north of the Kitty Hawk North Wind development area, which will be known as CVOW-South once the deal is approved by regulators.

“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,” Blue added.

If the deal is approved by regulators and once construction is completed, CVOW-South would have enough capacity to serve 200,000 homes and businesses, according to Blue, who noted that the project would connect to the company’s transmission grid.

“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,” he said.

Dominion on Monday acknowledged that community concerns exist regarding the proposed landing site in Sandbridge, Va., and said it is committed to working closely with the community, the Commonwealth of Virginia, and the City of Virginia Beach as it considers this project.

Dominion Energy and Avangrid expect to close the transaction in the fourth quarter, pending all necessary approvals.

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