Offshore wind farm developed by Dominion observes minor cost increase due to tariffs, according to CEO's statement
President Trump's tariff policy has increased the cost of Dominion Energy's Coastal Virginia Offshore Wind (CVOW) project by approximately $506 million, raising the total estimated cost to around $10.9 billion. This increase is primarily due to tariffs on steel and other imports needed for the offshore wind farm's construction [1][2].
Despite these higher costs, Dominion Energy expects the project to remain on schedule for completion by late 2026, with electricity delivery beginning in early 2026 [1][5]. The CVOW project, which will consist of 176 turbines producing 2.6 GW of clean energy, is the largest offshore wind project in the U.S. and is considered critical to meeting Virginia’s growing electricity demand, especially amid data center expansion [2][3].
Logistics challenges such as complying with the Jones Act have been addressed by deploying a U.S.-built installation vessel, the Charybdis, further supporting the project's progress despite trade policy headwinds [2]. The first turbine of the project is scheduled to be installed in September, in line with the original schedule [1].
However, there has been a delay in the completion of Charybdis, the first Jones Act-compliant offshore wind turbine installation vessel in the U.S., due to work on the vessel's internal communication technology [1]. The Charybdis vessel is expected to complete sea trials later than initially anticipated, preventing an early start to turbine installation.
Despite the tariff-related cost increases, Dominion Energy has worked with vendors to mitigate some of these costs and refine its cost estimates, which has reduced the expected tariff-driven price bump compared to earlier projections [1]. As a result, the increased cost will result in an average of three cents per month increase in customer bills over the entire life of the project [1].
Dominion Energy expects to preserve all of the tax credits provided in their forecast to investors, either through safe harboring or under long-standing rules [1]. The project is expected to qualify for Inflation Reduction Act tax credits under the new safe harbor deadlines [1].
It's worth noting that only about 20% to 25% of Dominion Energy's clean energy projects will require "active mitigation" [1]. Blue, Dominion's CEO, is "quite pleased" with the final shape of the One Big Beautiful Bill Act, which has significantly reduced and curtailed many of the Inflation Reduction Act's renewable energy tax credits [6].
In summary, Trump's tariffs on steel and imported components have increased the CVOW project's cost by about $506 million but have not derailed its completion timetable or its role in advancing clean energy in Virginia [1][2][3]. The project's fabrication and installation are going well, and it is one of the most affordable sources of energy for Dominion's customers [1].
- Despite the additional costs from tariffs, Dominion Energy has successfully worked with vendors to reduce the expected tariff-driven price bump.
- The renewable energy industry, specifically the CVOW project, is vital to meeting Virginia's growing electricity demand, particularly in light of data center expansion.
- The finance sector can take note as Dominion Energy expects to preserve all of the tax credits provided to investors, qualifying for Inflation Reduction Act tax credits under new safe harbor deadlines.
