Dive Brief:
- Dominion Energy subsidiary Virginia Electric and Power Company has agreed to buy the offshore wind lease and associated developments related to Avangrid's proposed 800-MW Kitty Hawk North Wind facility. Dominion will rename the project CVOW-South, associating it with Dominion’s 2.6-GW Coastal Virginia Offshore Wind project in development about 25 miles to the north, the utility said Monday.
- The news came a day before the American Clean Power Association released its 2024 Offshore Wind Energy Market Report, which forecasts $65 billion in private offshore wind investment by 2030. In a release, ACP said the industry’s 2024 momentum is “likely to continue.”
- Currently, the U.S. has 4.8 GW of offshore wind capacity in development after last year’s project cancelations removed 2.4 GW from that queue, the Energy Information Administration noted in a Tuesday report.
Dive Insight:
Virginia Electric and Power Company agreed to acquire Kitty Hawk North Wind from Avangrid for $160 million — $117 million for the nearly 40,000-acre lease, and $43 million in development cost reimbursement, Dominion said in a release. Dominion and Avangrid are seeking necessary approvals from the Bureau of Ocean Energy Management and the City of Virginia Beach, and hope to close the transaction in the fourth quarter of this year.
Once completed, the project will be connected to Dominion’s transmission grid, according to the release. Dominion also noted that it 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 that the CVOW project’s development continues to be on schedule, with the wind farm expected to come into service by the end of 2026.
CVOW, combined with Vineyard Wind and Revolution Wind, make up the 4 GW under active construction in the U.S., ACP noted in its report, while there are currently 12 GW of projects with active offtake agreements.
Overall, there is 56 GW of offshore wind capacity in development across 37 leases in the U.S., ACP said, adding that “market analysts forecast that there will be 14 GW of offshore wind deployed by 2030, 30 GW by 2033, and 40 GW online by 2035.”
“After the successful start-up of the 132 MW South Fork wind farm earlier this year, and with 136 MW operational at Vineyard Wind, offshore wind is gaining momentum with three projects under construction and thirty-seven more in development,” said ACP’s Chief Policy Officer Frank Macchiarola.
In EIA’s Tuesday analysis, the agency said that “the amount of offshore wind generating capacity that is under construction or planned in the United States is in flux after two projects in New Jersey were canceled last year,” referring to Ørsted’s cancellation of its 2.4-GW Ocean Wind 1 and 2 projects in November.
Ørsted Americas CEO David Hardy said in April that the biggest lesson his team had taken from 2023 was “derisking projects much earlier or spending a lot less until projects are derisked.” The company had cited supply chain issues, inflation and interest rates as factors that made the project financially nonviable. Those same factors were also cited by developers that rebid power purchase agreements last year.
But ACP said that while “contract cancellations and rebidding impacted offshore wind development in 2023, states have been quick to open new solicitations and streamline processes,” and noted that BOEM boosted momentum with its recent announcement that it will hold four lease sales in the second half of this year.
