Assessing the Investment Risks of U.S. Offshore Wind Projects Amid National Security Scrutiny: A Case Study of Dominion Energy's CVOW

The U.S. offshore wind sector, once hailed as a cornerstone of the energy transition, is now navigating a treacherous landscape of regulatory uncertainty and national security concerns. At the heart of this turbulence lies Dominion Energy's Coastal Virginia Offshore Wind (CVOW) project, a flagship endeavor that has become a flashpoint for broader debates over energy policy, grid reliability, and geopolitical risk. For investors, the CVOW saga underscores the volatile interplay between strategic energy goals and political headwinds, demanding a nuanced understanding of the risks at play.

The CVOW Case Study: A Project at the Crossroads

Dominion Energy's CVOW project, one of five major offshore wind initiatives under construction in the U.S., has been abruptly suspended by the Department of the Interior over alleged national security risks. According to a report by , the 90-day pause stems from classified Department of Defense assessments highlighting vulnerabilities tied to the proximity of large-scale wind farms to population centers and the rapid advancement of adversarial technologies. The Interior Department's decision, part of a broader freeze on all five U.S. offshore wind projects, aims to evaluate mitigation strategies for these risks.

Dominion has pushed back aggressively, arguing that CVOW is critical to Virginia's energy security and economic growth. The company warns that the pause could destabilize the grid, inflate energy costs, and cost thousands of jobs, despite the project having undergone rigorous regulatory scrutiny. This standoff reflects a deeper tension: while offshore wind is essential for decarbonization, its strategic value is now being weighed against perceived national security trade-offs.

Regulatory Uncertainty: A Political Wild Card

The CVOW suspension is not an isolated incident but part of a broader pattern of regulatory instability. The Trump administration's January 2025 executive order temporarily halted offshore wind leasing and permitting, de-designating 2.5 million acres of federal waters for development. This move, coupled with the Interior Department's suspension of subagency authority for renewable energy authorizations, has shifted federal focus toward oil and gas, creating a hostile environment for offshore wind developers.

The fallout is palpable. notes that U.S. , with the five-year outlook slashed by 40% due to policy shifts. Meanwhile, 17 states and the District of Columbia have sued the federal government, alleging that the project freeze jeopardizes $100 billion in investments and 40,000 jobs. For investors, this legal and political tug-of-war introduces a high degree of unpredictability, as project timelines and profitability hinge on outcomes far beyond market forces.

Strategic Energy Transition Risks: Beyond Policy

Even absent regulatory headwinds, U.S. offshore wind faces inherent strategic risks. The sector's growth is constrained by supply chain bottlenecks, surging project costs, and geopolitical uncertainties, such as reliance on foreign technology and materials. For instance, NextEra Energy initially approached offshore wind with skepticism but pivoted to aggressive market entry in 2025. Yet, even NextEra's bold moves are now shadowed by the same regulatory uncertainties that have derailed smaller competitors.

Compounding these challenges is the review process, which, while not the primary cause of delays, adds layers of complexity to project approvals. Investors must also grapple with the fact that offshore wind's long-term viability depends on sustained policy support, a commodity in short supply given the current political climate.

Implications for Investors: Navigating the Storm

For those considering exposure to U.S. offshore wind, the CVOW case and broader regulatory environment demand caution. First, diversification is key: portfolios should not be overly concentrated in projects with high political risk. Second, investors must closely monitor policy developments, particularly the outcome of the lawsuit against the federal freeze and potential shifts in administration priorities. Third, companies with strong lobbying capabilities and diversified energy portfolios-such as Dominion Energy itself-may be better positioned to weather regulatory storms.

However, the risks remain acute. highlights , , leaving a narrow window for project execution. This compressed timeline amplifies the stakes for developers and investors alike, as any further delays could derail long-term returns.

Conclusion: Balancing Opportunity and Risk

The U.S. offshore wind sector stands at a crossroads. While projects like CVOW represent a vital step toward decarbonization, they are now inextricably linked to national security debates and political volatility. For investors, the path forward requires a delicate balance: embracing the long-term potential of renewable infrastructure while hedging against the short-term turbulence of regulatory uncertainty. As Dominion Energy's battle with the Interior Department unfolds, one thing is clear-those who bet on offshore wind must do so with eyes wide open to the strategic risks ahead.