Dominion Energy expands offshore wind capacity with new lease

RICHMOND, Va. – Dominion Energy, Inc. (NYSE: D) has acquired the rights to a 176,505-acre lease area off the coast of Virginia Beach, providing the company with additional options for offshore wind energy development. The lease, won with a bid of $17.7 million, could support an energy generation capacity between 2.1 and 4.0 gigawatts according to the Bureau of Ocean Energy Management.

The newly secured area is situated approximately 35 nautical miles from the Chesapeake Bay mouth and is adjacent to the east of Dominion Energy’s current 2.6-gigawatt Coastal Virginia Offshore Wind (CVOW) project, which is underway and expected to be operational by the end of 2026. As of now, 54 monopiles have been installed for the CVOW project, aligning with the company’s installation targets.

This acquisition comes after Dominion Energy’s purchase of the Kitty Hawk Wind North lease area, soon to be called CVOW South, from Avangrid (NYSE:) in early July. The CVOW South area spans 40,000 acres and has the potential to produce 800 megawatts, which could power approximately 200,000 homes.

Robert M. Blue, chair, president, and CEO of Dominion Energy, stated that offshore wind is a pivotal component of the company’s strategy to meet the growing electric demand of its customers.

Dominion Energy serves over 4.5 million customers across 13 states and is focused on delivering reliable and affordable clean energy daily. The company has also committed to achieving Net Zero emissions by 2050.

This expansion aligns with the goals of the Virginia Clean Economy Act and highlights Dominion Energy’s commitment to diversifying its energy sources. The information for this article is based on a press release statement.

Dominion Energy reported a strong second quarter, with earnings per share (EPS) of $0.65, surpassing both BMO Capital’s and the consensus estimate of $0.57. This robust performance led BMO Capital Markets to raise its price target on Dominion Resources (NYSE:) from $53.00 to $57.00, while maintaining a Market Perform rating. Despite this upgrade, BMO Capital cited challenges, including timing and execution risks associated with Dominion’s Coastal Virginia Offshore Wind (CVOW) project and modest regulatory risks tied to the company’s biennial review process.

Virginia Electric and Power Company issued $1.2 billion in senior notes, a transaction that involved underwriting agreements with several financial institutions, including BNP Paribas (OTC:) Securities Corp. and BofA Securities, Inc. The proceeds from this issuance are expected to be used for general corporate purposes.

Dominion Energy confirmed its financial guidance for the upcoming years, focusing on debt reduction and lowering interest expenses. The company also reported steady progress on the CVOW project, which is currently one-third complete. Infrastructure upgrades are in progress to support the growth in Virginia’s data centers, contributing to an expected 4.5% to 5.5% demand growth in 2024.

According to analysts, Dominion Energy is confident in maintaining its financial guidance and delivering on its investment growth plans. The company is also closely monitoring an ongoing ISA protest at FERC, though they did not comment further as they are not a party to the proceeding.

InvestingPro Insights

Dominion Energy (NYSE: D) has shown a strong commitment to expanding its renewable energy portfolio, as evidenced by its recent acquisition of a significant lease area for offshore wind energy development. This strategic move not only underscores the company’s dedication to clean energy but also highlights its potential for growth in this sector. As investors consider Dominion Energy’s prospects, several financial metrics and expert insights from InvestingPro provide a clearer picture of the company’s current standing and future potential.

InvestingPro data indicates that Dominion Energy boasts a market capitalization of $46.76 billion, reflecting its substantial presence in the energy sector. With a Price/Earnings (P/E) ratio of 29.57 and a slightly adjusted P/E ratio of 29.85 for the last twelve months as of Q2 2024, the company is priced higher than the industry average, which may suggest investor confidence in its earnings capacity. Additionally, Dominion Energy has maintained a consistent dividend payout, with a notable dividend yield of 4.85%, rewarding shareholders and demonstrating financial stability.

InvestingPro Tips highlight that Dominion Energy operates with a significant debt burden, which is an important consideration for investors assessing the company’s risk profile. However, the company’s ability to maintain dividend payments for 42 consecutive years is a testament to its financial resilience and commitment to returning value to shareholders. For those interested in a more detailed analysis, InvestingPro offers additional tips on the company’s financial health and performance projections.

It is worth mentioning that analysts have revised their earnings estimates downwards for the upcoming period, which could impact the company’s future profitability. Nevertheless, Dominion Energy’s long-term investment in renewable energy infrastructure, such as offshore wind, aligns with global trends towards sustainable energy solutions and may provide opportunities for growth and profitability in the years ahead.

For investors seeking a deeper dive into Dominion Energy’s financials and strategic outlook, there are further InvestingPro Tips available at https://www.investing.com/pro/D, offering comprehensive analysis and expert assessments to inform investment decisions.

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