Why Did Dominion Energy Stock Plunge Today?
Key Points
The government says offshore wind projects pose national security risks.
Dominion says its Coastal Virginia project is essential for national security.
A $2 billion haircut in market value today could be a buying opportunity.
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Shares of Dominion Energy (NYSE: D) dived today after an announcement from the U.S. Department of the Interior. The typically stodgy utility stock plunged as much as 5.8% at this morning's low.
As of 12:32 p.m. ET, Dominion shares pared some of that drop, but were still off by 5.4%. Here's what's going on.
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Wind power and national security
The Department of the Interior announced the immediate pause of leases for five large-scale offshore wind projects under construction, including Dominion's Coastal Virginia Offshore Wind Project (CVOW).
Regarding the order, Secretary of the Interior Doug Burgum stated:
Today's action addresses emerging national security risks, including the rapid evolution of the relevant adversary technologies, and the vulnerabilities created by large-scale offshore wind projects with proximity near our east coast population centers.
The lease pause would allow the government to work with related parties to assess the possibility of mitigating the security risks, according to the release. That risk, according to the department, is from government reports that "have long found that the movement of massive turbine blades and the highly reflective towers create radar interference called 'clutter.'"
Dominion Energy released its own statement in response. The utility company stated that the CVOW, the largest project of its kind in the United States, itself is "essential for American national security." Dominion cited growing energy needs in Virginia, including power needed for military installations such as warship manufacturing, as well as artificial intelligence (AI) data centers.
The company states that the wind energy project is only months away from generating a massive 2,600 megawatts (MW) of power. That amount of electricity would be the equivalent of what's needed to power hundreds of thousands of homes.
Investors seeking income may want to consider taking advantage of the over $2 billion drop in Dominion's market capitalization and buy the dip after today's news.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends Dominion Energy. The Motley Fool has a disclosure policy.
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