The cost of building the nation’s largest offshore wind farm off the Virginia Beach coast has jumped by nearly 10% since the original budget, Dominion Energy announced this week.
The utility now plans to spend $10.7 billion on the Coastal Virginia Offshore Wind project, up from $9.8 billion in 2021.
Dominion said in a news release the increase is tied to higher costs from building electrical interconnection onshore, as well as network upgrades assigned by the regional electric grid operator.
That operator, PJM Interconnection, coordinates the movement of electricity in 13 states, including Virginia and northeastern North Carolina.
“New electric generation resources constructed within PJM, like CVOW, are assigned costs by PJM that are deemed necessary to effectively integrate these resources and ensure the reliability and stability of the electric grid,” Dominion said in this week’s statement.
The higher cost of network upgrades “reflect the significant increase in demand growth that require incremental generation and transmission resources across the system.”
Under a settlement approved by state regulators a few years ago, Dominion is only allowed to surcharge customers for about half of the additional costs.
As a result, the average household in Virginia can expect to pay about 43 more cents per month over the life of the wind farm.
The Virginia Beach wind farm will include 176 turbines about 27 miles off the Oceanfront that generate about 2.6 gigawatts of electricity, or the rough equivalent of 660,000 homes.
The project is a key piece of Dominion’s plan to meet terms of the 2020 Virginia Clean Economy Act, which requires the utility to source power from offshore wind facilities that produce up to 5.2 gigawatts of electricity by the end of 2035.
Dominion said this week it is about halfway done with construction and plans to finish on time, by the end of next year.
Meanwhile, the Trump administration wants to roll back the East Coast’s burgeoning offshore wind industry. One of the president’s first executive orders temporarily paused all federal permitting and leasing of offshore wind projects.
Dominion said it does not expect the order to impact the Virginia Beach project, because it already cleared federal permitting and is under construction. It’s one of nine fully permitted offshore wind farms planned along the Atlantic.
However, Trump’s directive asked federal officials to “review the ecological, economic, and environmental necessity of terminating or amending any existing wind energy leases.”
Dominion also owns two other offshore leases that have not yet sought permitting – one directly next to the CVOW site and another off the Outer Banks.
The Virginia wind farm is also facing a lawsuit from a coalition of conservative interest groups that argue Dominion and the federal government were negligent in assessing the project’s potential impacts to endangered whales. It’s unclear whether the new administration’s lack of support for offshore wind will impact Dominion’s court case.
The National Legal Policy Center is one of the groups suing Dominion. Attorney Paul Kamenar said in a recent statement that “offshore wind developers are clearly whistling past the graveyard when they claim the Trump administration will have no effect on their construction plans.”
