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Dominion to buy Kitty Hawk offshore wind lease for $160M

Two pilot turbines at Dominion Energy's Coastal Virginia Offshore Wind project site off Virginia Beach in June.
Katherine Hafner
WHRO News File
Two pilot turbines at Dominion Energy's Coastal Virginia Offshore Wind project site off Virginia Beach in June.

Dominion Energy announced this week it has agreed to buy a 40,000-acre offshore wind power lease off the Outer Banks.

If the sale gets the OK from federal and local officials later this year, the utility will pay Avangrid Renewables $160 million for the site, Kitty Hawk North Wind. The site has struggled to get permitting from the city of Virginia Beach for onshore transmission infrastructure due to neighborhood opposition.

Dominion said the planned 800-megawatt wind farm could generate enough electricity for about 200,000 homes and businesses, and would connect to its existing transmission grid.

In a statement Monday, Dominion president and CEO Bob Blue said the acquisition gives the company another way to meet rising power demands across the state.

"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,” Blue wrote.

Dominion is also racing to meet terms outlined in the 2020 Virginia Clean Economy Act. The law, meant to accelerate decarbonizing the state electric grid, requires the utility to source power from offshore wind facilities that produce up to 5.2 gigawatts of electricity by the end of 2035.

The company recently started constructing a 2.6-gigawatt wind farm about 27 miles off the Oceanfront, called the Coastal Virginia Offshore Wind project or CVOW. The $9.8-billion project includes 176 turbines and is expected to be finished in late 2026.

Dominion calls the new Outer Banks lease CVOW-South. It’s currently planned to include 69 turbines.

Avangrid Renewables — a Connecticut-based subsidiary of the Spanish renewable energy company Iberdrola — acquired a 122,000-acre federal lease off the coast of Corolla, North Carolina, in 2017 for about $9 million.

The company, which also has offshore wind projects in the New England region, will retain a chunk of that — about 82,000 acres — for its own portion, Kitty Hawk South, while turning over the rest to Dominion.

Both Kitty Hawk projects are waiting for federal permitting to begin construction.

Avangrid has sought for several years to get approvals from Virginia Beach to run cables from the Kitty Hawk project to an underground landing site in Sandbridge. But the process has been delayed after neighborhood residents fought the project.

Dominion spokesperson Jeremy Slayton wrote in an email that the company will do its own analysis of potential cable route options — but “based on what we know now, Sandbridge appears to present the most ideal, cost-effective solution to come ashore and interconnect with the transmission grid.”

“We know the community has concerns and we take them seriously,” he said. “We look forward to hearing for ourselves what questions and suggestions they have.”

Avangrid did not respond to questions about the motivation behind the sale and its planned cable landing site for the Kitty Hawk South farm.

In a news release, CEO Pedro Azagra said the transaction “advances our strategic priorities by providing significant capital infusion for reinvestment.”

Both Dominion and Avangrid are authorized to bid at a federal auction next month for a separate, 101,000-acre offshore wind lease adjoining the main CVOW farm. It could double the size of Dominion’s existing project.

“The lease auction is a potential option for regulated offshore wind generation development to meet the needs of our customers,” Slayton wrote.

Copyright 2024 WHRV

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