RICHMOND, Va. – Dominion Energy, Inc. (NYSE: NYSE:D) has reached an agreement to buy a 40,000-acre offshore wind lease from Avangrid, Inc. (NYSE: NYSE:AGR), which will be renamed CVOW-South, the company announced today. The deal is valued at roughly $160 million, comprising the lease purchase and associated development cost reimbursement.
The acquisition, expected to close in the fourth quarter of 2024 pending regulatory approvals, could support an 800 MW offshore wind generation capacity, potentially serving 200,000 homes and businesses in the 2030s. This aligns with the goals of the Virginia Clean Economy Act and addresses the anticipated doubling of electric demand in Virginia over the next 13 years.
Robert M. Blue, chair, president, and CEO of Dominion Energy, highlighted the importance of this transaction in meeting future energy needs and leveraging the company's expertise from the Coastal Virginia Offshore Wind (CVOW) commercial project. The CVOW, which is under construction about 25 miles north of the CVOW-South lease, is on track for completion by the end of 2026.
Dominion Energy is mindful of community concerns regarding the proposed landing site in Sandbridge, Va., and is committed to engaging with local stakeholders. The company has not provided detailed cost or in-service date estimates for CVOW-South, as these will be developed during future development phases.
The current 2.6-GW CVOW project has seen progress with 25 monopiles installed since the installation campaign began on May 22, 2024. The company aims to install between 70 and 100 monopiles during the first of two installation seasons, which extend through the end of October.
Dominion Energy, serving more than 4.5 million customers across 13 states, is committed to reliable, affordable, and increasingly clean energy, with a goal of achieving Net Zero emissions by 2050.
This press release contains forward-looking statements subject to risks and uncertainties, including the completion of the CVOW project and the acquisition of CVOW-South. Factors that could cause actual results to differ include obtaining regulatory approvals and satisfying other conditions to closing.
The information herein is based on a press release statement.
In other recent news, Avangrid, a major player in sustainable energy, has made significant strides in its operations. The company secured full federal approval for its New England Wind 1 offshore project, marking a significant step in the permitting process for the 791-megawatt venture. Construction is set to begin in 2025, with an anticipated operational date by 2029.
Avangrid also secured two green loan agreements totaling $1.2 billion for Eligible Green Projects, further demonstrating its commitment to sustainable energy. The company's Q1 results showed an adjusted earnings per share (EPS) of $0.88, surpassing analyst estimates, despite falling short on revenue expectations.
On the leadership front, Avangrid Networks CEO Catherine Stempien announced her resignation effective July 2024, with no successor named yet. In its ongoing commitment to renewable energy, Avangrid has shown support for Array Technologies' new manufacturing facility in Albuquerque, New Mexico, following a $30 million contract to supply solar trackers for the True North solar project in Texas. These are among the recent developments shaping Avangrid's trajectory in the sustainable energy sector.
InvestingPro Insights
In light of Dominion Energy's strategic acquisition of the offshore wind lease, investors may find it beneficial to consider the financial metrics and market sentiment surrounding Avangrid, Inc. (AGR), the company from which the lease was purchased. According to InvestingPro data, Avangrid currently boasts a market capitalization of $13.68 billion, with a Price/Earnings (P/E) ratio of 15.27 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 15.29.
The company's Price/Book ratio as of the last twelve months stands at a low 0.69, indicating that the stock may be undervalued relative to its assets. This is particularly interesting for investors looking for value investment opportunities in the energy sector. Moreover, Avangrid's PEG Ratio for the same period is 0.48, suggesting that the stock may be priced attractively relative to its earnings growth potential.
From an operational perspective, one of the InvestingPro Tips highlights that Avangrid operates with a significant debt burden, which is a crucial factor for investors to consider, especially when evaluating the financial health and risk profile of the company. Furthermore, another tip indicates that analysts predict the company will be profitable this year, which could signal a positive outlook for its financial performance.
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