US utility Dominion Energy has entered an agreement with private equity investor Stonepeak to sell a 50% non-controlling interest in the Coastal Virginia Offshore Wind project (CVOW).  

Dominion Energy will retain full operational control over the construction and operations of CVOW, while Stonepeak’s 50% stake comes with customary minority interest rights.

Stonepeak will invest in a newly formed subsidiary of Dominion, subject to approval by the State Corporation Commission of Virginia.

CVOW is a 2.6GW offshore wind project situated 27 miles offshore Virginia Beach. It can meet the electricity demands of 660,000 homes.

Dominion Energy has been developing the project since 2013 and plans to commence offshore construction in spring 2024, with completion targeted for the end of 2026.

Stonepeak senior managing director Rob Kupchak stated: “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.

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“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, and we are excited to partner with Dominion in delivering this critical renewable energy generation resource to its customers.”

The transaction is expected to close by the end of 2024.

Dominion Energy will receive $3bn on closure, which is 50% of the CVOW construction costs incurred up to that point, minus an initial withholding of $145m.

If the final construction cost is $9.8bn or under, Dominion will receive an additional $100m from the initial withholding.

This amount may be reduced if the total costs exceed $11.3bn.

Dominion Energy and Stonepeak will equally share the remaining capital required for CVOW’s construction, provided the total project cost remains below $11.3bn.

The agreement includes a 50/50 cost-sharing arrangement for up to 15% above the current project budget of $9.8bn and up to 20% above the pre-contingency budget of $9.45bn.

For costs between $11.3bn and $13.7bn, the investor has the option to make additional capital contributions.

In February 2024, US utility Eversource Energy agreed to divest its 50% stake in two offshore wind projects in the US to Global Infrastructure Partners for $1.1bn.

The transaction included Eversource’s stake in the 704MW Revolution Wind and the 132MW South Fork Wind projects.