D Q2 2025: Offshore wind on track; EPS in upper half of guidance
- Offshore wind execution remains robust. Management expressed high confidence in sticking to the schedule for sea trials and turbine installation, with strong progress on monopile installations and significant derisking from avoiding barge transfers.
- Strong financial performance with tailwind benefits. The team highlighted a solid start to 2025 with favorable weather, robust sales, and persistent tailwinds that could push operating EPS toward the upper end of guidance.
- Proactive regulatory and tax strategy. Management’s focus on preserving tax credits and effectively mitigating tariff impacts, along with steady progress in regulatory discussions, supports a favorable long‑term financial outlook.
- Offshore Wind Project Scheduling Risk: Despite management’s high confidence, potential delays in vessel commissioning (sea trials starting later than expected) could cascade into turbine installation delays, negatively impacting project timelines.
- Reliance on Favorable Tailwinds for EPS: The financial outlook depends partly on continued favorable weather and robust sales; any deterioration in these tailwinds could force a downward revision of the EPS guidance, pressuring near-term financial performance.
- Transmission Network Upgrade Cost Uncertainty: The delay from PJM in finalizing the network upgrade cost update introduces uncertainty, which might lead to unforeseen cost increases that could adversely affect operating margins.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Operating EPS | FY 2025 | $3.28 to $3.52, midpoint $3.40 | $3.28 to $3.52, midpoint $3.40 | no change |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Offshore Wind Execution & CVOW | The project was discussed extensively in Q1 2025 (55% complete, detailed updates on transition pieces, monopiles, turbines ), Q4 2024 (50% complete with permits secured and cost increases noted ), and Q3 2024 (43% complete with early installations and export cable progress ). | In Q2 2025, Dominion reported a significant acceleration with 60% completion, record monopile installation, vessel commissioning updates, and updated cost estimates. | Positive acceleration with improved progress and efficiency. |
Favorable Weather & Tailwind Effects | Q1 2025 noted a weather boost contributing about $0.03 per share and overall tailwind benefits. Q4 2024 and Q3 2024 provided only normal weather or limited mention of weather impacts. | Q2 2025 highlighted continued favorable weather and tailwind factors that contributed to a strong start and the potential to remain in the top half of guidance. | Consistent positive sentiment; the emphasis on favorable weather remains strong and supportive. |
Robust Data Center Demand | Q1 2025 emphasized strong and sustained data center demand with long-term planning and new rate proposals. Q4 2024 detailed unprecedented load growth and significant increases in contracted capacity. Q3 2024 noted robust demand levels and transmission planning support. | Q2 2025 continued to show strong sales performance driven by record peak days in key regions, indicating robust demand from data centers. | Bullish, with consistently high demand that reinforces long-term growth. |
Tariff Exposure, Regulatory & Tax Strategy | Q1 2025 discussed detailed tariff cost estimates including potential cumulative impacts, new rate class proposals, and tax timing benefits. Q4 2024 detailed increased project cost due to network upgrades, regulatory updates, and some discussion on cost-sharing. Q3 2024 provided related regulatory updates and discussions about tariff exposure. | Q2 2025 reported slightly lower current tariff cost impacts through the project lifecycle and highlighted improvements via vendor cost-mitigation strategies with updated estimates. | Steady management with improved supplier performance and slightly reduced tariff impact. |
Transmission Network Upgrade Cost Uncertainties | Q1 2025 anticipated final cost numbers by July with minimal expected deviations. Q4 2024 noted increased cost estimates due to higher-than-expected network upgrade requirements, though final costs were pending. Q3 2024 did not discuss this topic explicitly. | Q2 2025 mentioned awaiting final network cost decisions from PJM by late September, expecting similar cost levels to previous updates. | Stable uncertainties with minor delays; overall sentiment remains cautious but consistent. |
Execution, Scheduling & Permitting Risks | Q1 2025 highlighted that the CVOW project was fully permitted with strong supply chain resilience. Q4 2024 emphasized de-risking measures, clear scheduling, and robust contingency planning. Q3 2024 reaffirmed on-time execution and effective risk management across installations. | Q2 2025 continued to demonstrate effective execution with high installation progress, updated vessel schedules, and maintained permitting certainty. | Consistent and positive; execution and permitting risks are well-managed through rigorous planning and contingency measures. |
Capital Investment & Growth Guidance | Q1 2025 noted strong equity issuance and demand growth driven by data centers. Q4 2024 provided an updated 5‑year capital forecast increased to $50 billion and maintained steady operating guidance. Q3 2024 discussed disciplined growth with potential incremental capex and an upward bias. | Q2 2025 reaffirmed its sizable growth capital program with no significant adjustments, focusing on well‐executed projects like CVOW. | Steady outlook; capital investment and growth guidance remain consistent with prior plans. |
Emerging SMR Development | Q3 2024 featured a detailed discussion on SMR technology, citing factors such as demand growth, carbon‐free generation, and collaborations with partners like Amazon; commercialization was targeted around 2034. | There was no mention of SMR development in Q2 2025. | The topic has dropped out of current discussions, suggesting a lower emphasis compared to Q3 2024. |
Weak Residential Sales Trends | Q1 2025 acknowledged a slight weakness in residential sales but noted strong overall trends in commercial segments. Q4 2024 and Q3 2024 did not emphasize residential sales issues. | Q2 2025 did not mention residential sales trends. | Previously noted as a minor concern, this topic is now de‑emphasized in current discussions. |
Hurricane & Natural Disaster Impact Risks | Q3 2024 detailed significant impacts from Hurricane Helene with extensive restoration efforts and cost estimates. Q4 2024 also discussed the hurricane’s effects and highlighted successful storm restoration in South Carolina. | Q2 2025 did not mention hurricane or natural disaster impact risks. | A key focus in Q3 and Q4 has been absent in Q2, indicating either lower immediate risk exposure or a strategic de‑emphasis of the topic. |
IRP & Gas-Fired Generation with Uncertain CCS Costs | Q3 2024 discussed the IRP with substantial gas-fired generation that did not incorporate CCS costs, noting challenges with demonstrating CCS technology and reliance on EPA regulation adjustments. | Q2 2025 did not include any discussion of IRP or gas-fired generation with uncertain CCS cost considerations. | The topic was addressed in Q3 2024 but has not been mentioned in Q2, suggesting it is no longer a focus. |
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Offshore Schedule
Q: Vessel delay contingency?
A: Management emphasized that the vessel is now expected in August with sea trials beginning next week, and any slight delay will be absorbed by a flexible schedule since turbine installations can occur at any time. -
Fiscal Guidance
Q: Is guidance trending above midpoint?
A: They noted a strong start with favorable weather and sales tailwinds, suggesting results are likely to trend toward the upper half of the fiscal 2025 EPS range, subject to further quarterly confirmation. -
PJM Delay
Q: Reason for PJM cost update delay?
A: Management explained that PJM is experiencing a heavy workload with no statutory deadline, so the delay is logistical rather than a sign of significant cost changes. -
OBB & Tax Credits
Q: Impact of OBB on tax credits?
A: They clarified that the overall impact of OBB has been positive, with established safe harbor plans ensuring that tax credits remain intact without pulling forward project in-service dates.
Research analysts covering DOMINION ENERGY.