Dominion's Data Center Bet: Is Virginia's Grid Ready?
Dominion Energy's latest quarterly report paints a picture of steady growth, but a closer look reveals a high-stakes gamble on data center expansion. While regulated electric sales rose 3.3% year-over-year and operating earnings climbed to $921 million, the real story lies in the explosion of data center demand. The numbers are staggering: contracted capacity rose by about 7 GW (that's 17%) since December 2024. More telling, capacity with a construction letter of authorization jumped from 5.2 GW to 9 GW.
Dominion has received requests for 17 GW of delivery points from data centers so far in 2025, and over 58 GW since 2020. To put that in perspective, the Coastal Virginia Offshore Wind (CVOW) project, a massive undertaking in itself, is only projected to deliver 2.6 GW. So, we're talking about data centers potentially demanding over twenty times the power of a major offshore wind farm. This is not just growth; it's a fundamental shift in Dominion's energy landscape.
The Offshore Wind Mirage
The CVOW project, now 66% complete, is facing its own set of challenges. While Dominion anticipates completion by the end of 2026, turbine installation could slip into early 2027 due to Charybdis vessel delays. The total project cost stands at $11.2 billion, which includes a $206 million contingency. However, U.S. tariffs are expected to add a whopping $690 million to the bill through 2026 ($218 million borne by Dominion, the rest by Stonepeak, its partner). The levelized cost of electricity is now projected at $84/MWh, up from $63/MWh in August, primarily due to lower renewable energy credit revenue.
Here's where the narrative gets interesting. Dominion expects the levelized cost of electricity to support a net monthly customer bill savings of 63 cents. Sixty-three cents? That's less than the cost of a cup of coffee. Is this really the grand clean energy future we were promised?
I've looked at hundreds of these filings, and the emphasis on 63 cents feels… unusual. It's a microscopic saving being touted as a major win. Are they trying to distract from the bigger picture – the rising costs and the comparatively small impact on customer bills? And what happens if those renewable energy credits don't materialize as projected?
It feels a bit like selling a fuel-efficient car while quietly building a gas-guzzling monster truck in the back. All this green energy investment, and yet the grid is simultaneously being prepared to support a massive influx of power-hungry data centers. The Chesterfield Energy Reliability Center (a gas-fired peaker plant) is moving forward, and Dominion's Virginia integrated resource plan (IRP) has pushed back the date of a possible small modular reactor (SMR) by five years.
The data center boom is a double-edged sword. Yes, it brings economic activity and jobs to Virginia. But it also places immense strain on the power grid, potentially negating the benefits of renewable energy investments. Dominion has connected 450 data centers already, with more than 25% of its sales going to data centers in Virginia. The typical data center project takes four to seven years from delivery point request to meter hookup. Dominion has communicated firm rates for over 25 GW of capacity expected to energize through 2031. That’s a lot of juice.
A Numbers Game?
Dominion's resource strategy includes a roughly $50 billion five-year capital investment plan through 2029, encompassing transmission, thermal, and renewable power projects. They envision a "cadence roughly of a [gigawatt] of solar a year." But is that enough?
Dominion CEO Robert Blue expressed confidence that "bipartisan support at all levels of government" would endure for Coastal Virginia Offshore Wind after Virginia’s statewide elections. This confidence is… notable. Given the shifting political winds, relying on bipartisan support seems optimistic. The question is, what's the backup plan if that support wanes? Dominion says largest offshore wind project in US on track - Utility Dive
The rise of data centers is not just a Virginia issue; it’s a national trend. But Virginia, with Dominion's strategic positioning, is at the epicenter. The company has a memorandum of understanding with Amazon to explore an SMR at its North Anna nuclear power plant. But SMRs are still years away from widespread deployment.
Is the Juice Worth the Squeeze?
Dominion is betting big on data centers, and Virginia's energy future hangs in the balance. While the company touts renewable energy initiatives and modest customer savings, the sheer scale of data center demand threatens to overwhelm the grid and potentially undermine those efforts. The key question is whether Dominion can manage this explosive growth while maintaining a reliable and sustainable energy supply. The numbers suggest a tightrope walk, and the margin for error is shrinking.
