RICHMOND, Va. - Dominion Energy Virginia has announced a comprehensive plan to meet the state's surging power demand with a significant expansion in clean energy resources. The company's 2024 Integrated Resource Plan (IRP), filed today with the Virginia State Corporation Commission and the North Carolina Utilities Commission, outlines a strategy to enhance grid reliability while accommodating unprecedented growth in power consumption.
The IRP presents a diversified approach, aiming to generate nearly 80% of new power through carbon-free sources over the next 15 years. This includes the addition of approximately 3,400 megawatts of offshore wind power, augmenting the 2,600-MW Coastal Virginia Offshore Wind project currently in progress. The plan also features an increase in solar capacity by more than 150%, adding around 12,000 MW to the existing 4,750 MW of solar power. Furthermore, the proposal incorporates 4,500 MW of new battery storage and anticipates the deployment of small modular nuclear reactors starting in the mid-2030s.
Natural gas will account for about 20% of the incremental power generation, serving as a reliable backup to support the variability of wind and solar energy production.
The strategy is in response to a forecast from PJM, indicating a 5.5% annual increase in power demand within Dominion Energy's service area for the next decade, with an expectation to double by 2039. Ed Baine, President of Dominion Energy Virginia, emphasized the need for an "all-of-the-above" approach to meet customer needs and maintain service reliability, highlighting the company's success in providing rates 14% below the national average.
Alongside energy generation, Dominion Energy is investing in grid expansion and modernization. In the first half of 2024, the company completed 123 transmission projects and proposed additional large-scale projects with First Energy and American Electric Power (NASDAQ:AEP) to enhance reliability across the PJM region.
Dominion Energy has also focused on improving the distribution grid, burying over 2,000 miles of overhead lines and reinforcing main distribution lines to mitigate storm damage, with plans to continue these efforts in the coming decade.
The company's move towards a cleaner energy portfolio includes a separate proposal for over 1,000 MW of new solar projects in Virginia, which, if approved, would exceed 5,750 MW and power more than 1.4 million homes at peak output.
This announcement is based on a press release statement and reflects Dominion Energy's commitment to addressing growing power needs with a mix of traditional and renewable energy sources.
In other recent news, Dominion Energy has finalized a $2.0 billion asset sale of its subsidiary to Enbridge (NYSE:ENB) Parrot Holdings, LLC. The transaction involved the transfer of all membership interests in Fall North Carolina Holdco LLC, including the Public Service Company of North Carolina. In a recent development, Dominion Energy and Lion Electric have partnered in Virginia's Electric School Bus Infrastructure program, supporting the transition to electric school bus fleets within the state's public school districts.
Additionally, Dominion Energy secured offshore wind leases in a U.S. government auction and issued $1.2 billion in senior notes. The company's Q2 earnings per share (EPS) of $0.65 surpassed both BMO Capital's and consensus estimates of $0.57. This strong performance led BMO Capital Markets to raise its price target on Dominion from $53 to $57.
In the meantime, the Nuclear Regulatory Commission (NRC) extended the operating licenses of the North Anna Power Station's two nuclear reactors, allowing them to continue operations until 2058 and 2060. Siemens Energy has agreed to pay $104 million in a U.S. trade secret case, settling allegations of using stolen trade secrets in gas turbine contract bids involving Dominion Energy. Lastly, Jefferies initiated coverage on Dominion Resources (NYSE:D), forecasting a 5.7% EPS CAGR for Dominion Energy from 2025 to 2028.
InvestingPro Insights
Dominion Energy's ambitious plan to meet Virginia's growing power demand aligns with several key financial metrics and insights from InvestingPro. The company's market capitalization of $48.51 billion USD underscores its significant presence in the utility sector, positioning it well to undertake large-scale projects like the proposed clean energy expansion.
InvestingPro data reveals that Dominion Energy has maintained dividend payments for 42 consecutive years, demonstrating a commitment to shareholder returns even as it invests in future growth. This is further supported by the company's high shareholder yield, as noted in one of the InvestingPro Tips. The current dividend yield of 4.69% is particularly attractive for income-focused investors, especially considering the company's plans for substantial capital expenditures in clean energy projects.
The company's profitability over the last twelve months, as highlighted by InvestingPro, suggests that Dominion Energy has the financial stability to pursue its ambitious expansion plans. With a P/E ratio of 30.68, the stock may appear relatively expensive, but this could be justified by the growth potential outlined in the company's Integrated Resource Plan.
Interestingly, Dominion Energy is trading near its 52-week high, with the stock price at 98.46% of its 52-week peak. This could indicate investor confidence in the company's strategy and future prospects. The 1-year price total return of 43.31% further supports this positive market sentiment.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. In fact, there are several more InvestingPro Tips available for Dominion Energy, providing a deeper understanding of the company's financial health and market position.
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