Dominion and Duke Energy will walk away from controversial pipeline project as U.S. utilities grapple with future role of natural gas
Virginia clean energy mandates, pipeline costs and challenges, and shifting nationwide imperatives are driving Dominion to move away from natural gas.
U.S. utility group Dominion Energy agreed Sunday to sell most of its natural gas business and abandon its multi-billion dollar Atlantic Coast Pipeline project with Duke Energy meant to supply its home-state market of Virginia.
The announcement marks a major shift for Dominion away from competitive natural gas markets and toward state-regulated utilities focused increasingly on clean energy. Those utilities include Dominion Virginia, its flagship which faces a new state mandate to achieve 100 percent clean energy by 2045, and is asking state regulators to approve a long-range energy plan that vastly increases its stake in solar power, energy storage and offshore wind.
Dominion will sell its 7,700 miles of natural gas storage and transmission pipelines and about 900 billion cubic feet of gas storage facilities to Berkshire Hathaway Inc. for about $9.7 billion including debt, giving a major boost to its goal to reach net-zero emissions of carbon and methane by 2050. The deal still requires approval by federal regulators. Dominion will retain a 50-percent stake in its Cove Point liquefied natural gas (LNG) facility in Maryland while Berkshire Hathaway will acquire a 25 percent stake.
With the sale of 100 percent of Dominion Energy Transmission, Questar Pipeline and Carolina Gas Transmission and 50 percent of Iroquois Gas Transmission System, Dominion expects up to 90 percent of its future operating earnings will come from regulated electric and natural gas utilities serving about 7 million customers in Virginia, the Carolinas, Ohio, and Utah. Those include South Carolina utility SCANA Corp., acquired last year, and Questar Corp., a natural gas utility serving Utah.
Last year Democrats took control of Virginia’s legislature, and in March passed a 100-percent clean energy law that will force Dominion to supply 30 percent of its power from renewables by 2030 and 100 percent by 2045, compared to about 5 percent today. Dominion Virginia now gets about 25 percent of its power from coal, one-third from natural gas and more than one-third from nuclear power.
Dominion Virginia’s new integrated resource plan (IRP) submitted in May calls for nearly 16 gigawatts of solar, more than 5 gigawatts of offshore wind, and 2.7 gigawatts of energy storage over the next 15 years. It’s a major turnaround from previous plans rejected by the SCC that would have increased its reliance on newly built natural gas plants, although the new plan doesn’t commit to closing existing natural gas plants.