News Summary
The Coastal Virginia Offshore Wind (CVOW) project led by Dominion Energy confronts nearly $500 million in unexpected costs due to new tariffs on steel and aluminum. These tariffs could significantly affect project expenses and residential energy bills as Dominion prepares to absorb some of the costs. Currently, the project is 55% complete and aims to power 660,000 homes once finished in 2026. With legal challenges against recent regulatory changes, the project continues to evolve amid rising expenses.
Virginia – The Coastal Virginia Offshore Wind (CVOW) project, spearheaded by Dominion Energy, is projected to face additional expenses nearing $500 million due to tariffs, as per recent statements made by the company’s president and CEO, Bob Blue, during an earnings call. These unforeseen costs stem predominantly from newly imposed tariffs on steel and aluminum, which have significant implications for the clean power sector reliant on imported materials.
As of the first quarter of 2025, the project has already encountered an actual tariff cost of $4 million. Should current tariff policies remain in effect, projected costs could escalate to around $120 million by the second quarter of 2025. If these tariffs are sustained until the project’s expected full operation in 2026, cumulative impacts could inflate to nearly $500 million. In response, Dominion Energy is planning to absorb approximately $130 million of these escalating costs, which will ultimately affect the financial burden on residential consumers.
For residential customers, this could translate to an average increase of $0.04 per month on their energy bills throughout the project’s duration. The CVOW is designed to be a 2.6-gigawatt offshore wind farm, situated about 29 miles off the coast of Virginia Beach. Once completed, it is expected to generate enough energy to power up to 660,000 homes.
As of May 1, progress on the project has resumed with monopile installations restarting after a seasonal hiatus for whale migration. The project is currently about 55% completed. Notably, over 80% of the project’s planned 176 monopiles have been fabricated and transported to Virginia, with the final 32 monopiles slated for steady delivery in the near future.
Historically, the project’s budget has seen adjustments due to increased costs associated with network upgrades mandated by PJM, the regional electric grid operator, as well as higher expenses linked to onshore electrical interconnection. Initial cost estimates for the project have risen from $9.8 billion to $10.7 billion, which reflects an overall 9% increase from previous projections, excluding the impacts of tariffs.
The increase in tariffs can be traced back to President Trump’s decision to raise tariffs on steel and aluminum by 25%, significantly affecting clean power initiatives that depend on imported resources, including vital components for wind and solar installations. On the first day of his administration, Trump issued an executive order that paused all approvals, permits, and loans for existing and upcoming onshore and offshore wind projects. However, this directive has not yet cast a shadow over the CVOW project.
In light of ongoing challenges, a coalition consisting of 17 states plans to file a lawsuit against Trump’s executive order, asserting that it undermines national goals for securing reliable and affordable energy. Meanwhile, Dominion Energy maintains favorable relationships with federal regulators, expressing confidence in the uninterrupted progress of the CVOW project.
Amid the tariffs and regulatory complexities, the construction of an additional facility in Virginia designated for manufacturing subsea high-voltage direct-current cables is underway. This development represents a positive step forward, contributing to the resilience of the wind energy sector while battling existing challenges.
Deeper Dive: News & Info About This Topic
- Pilot Online: Tariffs Impacting Virginia Offshore Wind
- Fast Company: Trump’s Tariffs Added $4M to Virginia Wind Project
- ENR: Korean Offshore Wind Cable Maker Starts $700M Virginia Plant
- Wind Insider: Clearway and Microsoft Partner on Wind Project
- Canary Media: GOP Think Tank Now Supports VA Offshore Wind
- Wikipedia: Offshore Wind Farm
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- Encyclopedia Britannica: Offshore Wind Energy
- Google News: Virginia Offshore Wind Project
