Virginia regulators have approved a settlement regarding rules for the construction cost and performance of Dominion Energy’s proposed 2.6GW Coastal Virginia Offshore Wind (CVOW) project.
The settlement, first unveiled in late October, would provide some sharing of construction costs with electricity consumers but – crucially – would not require a performance guarantee.
The state corporation commission (SCC) stated that the settlement “adequately protects the interests of consumers”.
Dominion had warned it might scrap the project were a performance guarantee required. Such a guarantee would have been unprecedented in the US.
According to the settlement, Dominion will cover 50% of excess construction costs if they increase from the currently estimated $9.8 billion to a range of $10.3-$11.3 billion.
It would pay all excess costs if they increase to between $11.3-$13.7 billion. If construction costs rise above $13.7 billion, SCC would review the issue.
Dominion would also have to provide a detailed explanation of the factors contributing to any shortfall in energy output from projected amounts. An SCC spokesperson said that if Dominion’s explanation is inadequate there might have to be a “remedy”, which could be financial.
The utility also must ensure that its customers receive the benefits of the Inflation Reduction Act, which extended the production and investment tax credits.
Dominion stated that the project “advances offshore wind and the clean energy transition in Virginia,” and added that it is “a transformative economic development opportunity for Hampton Roads and Virginia”.
Dominion still needs approval from the US Bureau of Ocean Energy Management (BOEM) before it can start construction.
BOEM launched a consultation on a draft environmental impact statement for the project this month (16 December), which runs until 14 February 2023. It will use feedback for its final decision on the project.