CVOW Resumes: A 90-Day Trade on a Trump Suspension Lift

The immediate catalyst is clear. On Friday, a federal judge temporarily lifted the Trump administration's suspension of the Coastal Virginia Offshore Wind (CVOW) project, allowing construction to resume. This is a necessary tactical win for Dominion Energy, the owner and developer, to avoid project death. The suspension, issued in December, halted five East Coast wind farms over national security concerns, creating an existential risk.

CVOW is the largest offshore wind project under construction in the U.S., a commercial-scale 2.6-gigawatt venture that would power more than 600,000 homes. The project is scheduled to start dispatching power by the end of the first quarter of 2026, a critical timeline for meeting surging demand in northern Virginia, the world's largest data center market. Dominion called the suspension "arbitrary and illegal" and argued that stopping the project would threaten grid reliability for key military, AI, and civilian assets.

The judge's order grants a preliminary injunction, but it's a 90-day reprieve. This frames a clear, near-term risk/reward setup. The win buys time to restart work safely and push toward the 2026 delivery target. Yet the underlying legal battle continues, and the 90-day clock is ticking. The victory is real, but it is also temporary.

The Financial Mechanics: Cost, Schedule, and the $1B Risk

Dominion Energy's CVOW project is now two-thirds complete, with $8.2 billion invested out of an estimated $11.2 billion total cost. That total has already risen from the $9.8 billion estimate from November 2021, a climb driven by tariffs and other factors. The project's completion remains scheduled for late 2026, with first power due in the first quarter.

The specific cost of a new suspension is stark. While Dominion hasn't quantified its own exposure, the parallel case of the Empire Wind project illustrates the risk. There, a judge noted that Equinor would lose more than $1 billion in contracts and that a specialized ship needed for construction would set sail for another project if work didn't restart. That specialized vessel is a critical resource; losing it means not just a contract penalty but a major delay in the construction schedule. For CVOW, which is further along, the risk is a similar, though perhaps less existential, financial hit to its bottom line and timeline.

The bottom line is that Dominion has already spent heavily to reach this point. The 90-day reprieve is a tactical win to protect that investment and keep the project on track for its 2026 delivery target. But the underlying cost overrun and the vulnerability of specialized assets mean the financial risk from any further regulatory reversal remains substantial.

The Valuation and Trade Setup

The market's initial reaction to the judge's order was positive but measured. Dominion Energy's stock rose about 1% on the news, reflecting relief that the project is back on track but also a wait-and-see stance on the temporary nature of the win. This muted pop suggests investors see the 90-day reprieve as a necessary step, not a definitive resolution.

The project's financial structure provides a critical buffer. Stonepeak Infrastructure Partners is funding 50% of costs up to $11.3 billion. This cost-sharing mechanism is designed to protect Dominion's shareholders and customers from the full brunt of any cost overruns. The company has stated that the expected average impact on a typical residential customer's bill over the project's life is just 43 cents per month. This arrangement spreads the risk and helps maintain financial discipline.

The primary risk remains the expiration of the current order. The 90-day preliminary injunction is a reprieve, not a permanent fix. The suspension could be reinstated after that period, creating a high degree of uncertainty that will linger over the stock. For a tactical trade, this sets up a clear timeline: the next major catalyst is the 90-day clock running out. The immediate setup is for a stock that has already priced in the win, leaving limited upside from here unless Dominion can secure a more durable legal resolution.

Catalysts and What to Watch

The 90-day order is a tactical win, but the real test is what happens when it expires. The immediate next event is the 90-day suspension order set to run out in late March. The Department of Interior could appeal the judge's preliminary injunction or seek to reinstate the suspension after that period. Any move to extend the pause or reverse the order would trigger a new wave of regulatory and legal uncertainty, directly threatening the project's timeline and Dominion's financial exposure.

For Dominion, the next earnings report is a key data point. The company's Q4 earnings will provide a formal update on the project's status, any new cost overruns, and schedule impacts from the suspension. While the company has already disclosed the $8.2 billion invested and $11.2 billion total cost, the earnings call will offer management's latest assessment of risks and the path to the 2026 delivery target. Watch for any language suggesting delays or additional capital needs.

Beyond the legal clock, broader political developments are the ultimate wildcard. The project's fate is tied to the administration's stance on offshore wind, a policy area where President Trump has been vocal. His recent comments labeling wind farms as "losers" and his administration's aggressive actions against multiple projects show a clear ideological opposition. While Dominion has strong local support, including from candidates across the political spectrum, the federal political climate remains hostile. Any shift in administration priorities or new regulatory actions from the Department of Interior could upend the current reprieve.

The bottom line is that the 90-day order buys time, but it does not resolve the underlying conflict. Investors must monitor the expiration clock, the next earnings report for financial updates, and the political landscape for signs of renewed pressure. The current setup is a race against time, with Dominion needing to demonstrate progress toward its 2026 target before the next political or legal hurdle appears.