Dominion Energy: ~$50B Of Accretive Growth Investment

Core Insights - The demand for electricity from data centers has transitioned from speculation to solidified contracts, indicating a strong growth trajectory for Dominion [1][12][58] - The regulatory environment is favorable for utilities, allowing them to be the primary source of incremental power generation, which supports Dominion's growth plans [2][5][16] - Dominion is making significant progress on the Coast of Virginia Offshore Wind (CVOW) project, which is expected to enhance its position in the offshore wind market [6][54] Demand and Contracts - Approximately 8 GW of data center capacity has entered into electric service agreements with Dominion, ensuring that the utility has customers for its incremental power generation [14][48] - The financial structure of these agreements places the burden of withdrawal on the data centers, further securing Dominion's revenue stream [2][12] Regulatory Environment - The Federal Energy Regulatory Commission (FERC) has been supportive of utilities, rejecting requests for colocation that could shift costs to residential consumers [4][51] - Recent rulings from the Public Service Commission of South Carolina and the North Carolina Utilities Commission have authorized returns on equity (ROE) of 9.94% and 9.95%, respectively, aiding Dominion's growth [16][52] Financial Outlook - Dominion has projected a capital investment of $43 billion between 2025 and 2029, with expectations that this figure may increase due to solidified demand [8][44] - The company is generating a nearly 400 basis point spread between its cost of equity and the allotted ROE, which is expected to lead to significant earnings accretion [9][33] Offshore Wind Development - Monopile driving for the CVOW project has commenced, with 78 successfully installed as of October 31, 2023, and the project is on track for completion by the end of 2026 [6][55] - The levelized cost of energy for the CVOW project has decreased to $56/MWh from an initial estimate of $80-$90, indicating improved project economics [55] Market Position and Growth - Dominion is positioned to become a leader in offshore wind energy in the U.S., with a diversified energy generation portfolio that includes nuclear, natural gas, and solar [27][54] - The anticipated growth rate for Dominion is expected to expand into the high single digits, reflecting the increasing demand and successful project execution [44][35]