Dominion Energy, Inc. (D): SWOT Analysis [Nov-2025 Updated]

You're looking at Dominion Energy, Inc. (D) as a classic high-stakes utility play: a regulated earnings machine fueled by a massive $50 billion capital plan and unprecedented demand from Virginia data centers. The near-term opportunity is clear-reaffirmed long-term operating EPS growth of 5% to 7% through 2029-but it's all anchored to a high financial leverage, with a late-2025 debt-to-equity ratio around 1.75, plus the execution risk on the $11.2 billion Coastal Virginia Offshore Wind (CVOW) project. The question is simple: can the growth outpace the debt? Let's map the risks and opportunities for 2025.

Dominion Energy, Inc. (D) - SWOT Analysis: Strengths

Regulated pure-play focus provides stable, predictable earnings.

You want stability, and Dominion Energy's core business model delivers it. The company's strategic shift to a regulated pure-play utility, focusing on electricity and natural gas services in states like Virginia and South Carolina, is the bedrock of its financial resilience. This model minimizes exposure to volatile wholesale energy markets because regulators approve rates, allowing for predictable cash flow to cover investments and shareholder returns.

Here's the quick math: For the 2025 fiscal year, the company narrowed its operating earnings per share (EPS) guidance to a range of $3.33 to $3.48 per share, with the midpoint at $3.40 per share. This certainty is a huge advantage. Plus, the company's profitability metrics are robust for the sector, with an operating margin of nearly 29.74% and a net margin of 15%. That's a strong financial cushion.

Strong demand from data centers, with 47 gigawatts of contracted capacity in Virginia.

The explosion of artificial intelligence (AI) and cloud computing has turned Northern Virginia into the world's data center epicenter, and Dominion Energy is the primary beneficiary. This is a massive, accelerating load growth story that directly translates into capital expenditure and rate base growth for the utility.

As of September 2025, the contracted capacity for data centers has reached approximately 47.1 gigawatts (GW), up 17% from 40.2 GW in December 2024. That's a staggering amount of power demand, more than what the entire state of Virginia typically needs. Even better, the committed power agreements (Electric Service Agreements or ESAs) are already nearing 10 GW, which is the locked-in, long-term bedrock for their capital spending plans. This demand surge is the key driver behind the company's updated 2025-2029 capital expenditure forecast of $50.1 billion.

Reaffirmed long-term operating EPS growth of 5% to 7% through 2029.

A regulated utility with a clear growth trajectory is what you look for, and Dominion Energy has reaffirmed its long-term operating EPS growth guidance of 5% to 7% through 2029. This steady growth rate is anchored to their massive infrastructure investment plan, particularly the build-out needed to serve the data center boom and the Coastal Virginia Offshore Wind project.

The growth is calculated off a 2025 operating EPS midpoint of $3.30 per share (excluding the impact of Renewable Natural Gas 45Z tax credits). This guidance provides investors with a clear, defintely achievable target for the next five years, which is rare in a sector often known for sluggish growth. The company is spending money to make money, and the regulatory framework supports it.

Large-scale nuclear fleet (Surry, North Anna) provides reliable, carbon-free baseload power.

Dominion Energy operates a critical asset in the transition to a cleaner grid: a large, highly reliable nuclear fleet. The Surry Power Station and North Anna Power Station are essential for meeting Virginia's clean energy goals while providing stable baseload power-meaning they run 24/7, unlike solar or wind.

These two stations alone generate about 40% of Virginia's electricity and account for approximately 90% of the carbon-free power in the state. The North Anna Power Station's two units, for example, are capable of providing nearly 2,000 megawatts (MW) at peak capacity. Critically, the operating licenses have been extended for decades, securing this baseload capacity far into the future:

• Surry Power Station license extended through 2053.
• North Anna Power Station licenses extended through 2058 and 2060.

This long-term license certainty is a huge competitive advantage for both reliability and meeting Virginia's 2045 clean energy mandate.

Dominion Energy, Inc. (D) - SWOT Analysis: Weaknesses

High Financial Leverage

You need to look closely at Dominion Energy's balance sheet because the debt load is significant. For a utility, a high debt-to-equity ratio (D/E) isn't unusual, but the current level raises a flag. As of September 2025, the consolidated D/E ratio stood at 1.75. This means for every dollar of shareholder equity, the company has borrowed $1.75. That's aggressive financing.

Here's the quick math on the debt composition as of Q3 2025:

• Short-Term Debt & Capital Lease Obligation: $5,258 million
• Long-Term Debt & Capital Lease Obligation: $43,291 million
• Total Stockholders' Equity: $27,691 million

This heavy reliance on debt makes the company more vulnerable to interest rate hikes and economic downturns. It also limits financial flexibility for unexpected costs or new, un-regulated growth opportunities. High leverage is a structural headwind.

Potential Liquidity Issues

The company's near-term ability to cover its obligations is also a concern. Liquidity, or the ease of converting assets to cash, is measured by the Current Ratio (current assets divided by current liabilities). A ratio below 1.0 suggests a company may struggle to meet its short-term debts.

Dominion Energy's current ratio is low, sitting at approximately 0.7. This low figure indicates a negative working capital position, meaning current liabilities exceed current assets. While utilities often operate with lower current ratios due to predictable cash flows from regulated operations, a reading this low still signals potential pressure on its ability to pay short-term obligations like interest payments or vendor bills without having to tap into external financing.

Significant Capital Needs

The push into clean energy and grid modernization requires massive spending, which is a core weakness because it necessitates continuous, substantial capital raising. Dominion Energy's updated five-year capital expenditure (CapEx) plan for the 2025 through 2029 period is now projected at $50.1 billion, a significant increase from the earlier $43.2 billion estimate.

This huge investment is necessary to meet growing demand-especially from data centers-and to build out projects like the Coastal Virginia Offshore Wind (CVOW) project. Still, it means the company must consistently access capital markets, which is expensive, especially in a high-interest-rate environment. What this estimate hides is the execution risk and the potential for further cost creep across a portfolio of projects this large.

CVOW Project Cost Overruns

The Coastal Virginia Offshore Wind (CVOW) project, a key part of the capital plan, has faced substantial cost overruns, primarily from new tariffs. The total estimated capital cost for the 2.6-gigawatt project has risen to approximately $11.2 billion.

The most recent update, based on Q3 2025 results, confirms that actual and forecast tariff costs alone are estimated to be $443 million. This increase is due to new federal tariffs on imported materials and components, like steel, which are essential for the project. These cost bumps are a material headwind, increasing the risk profile of this major investment and placing upward pressure on customer rates for recovery.

Dominion Energy, Inc. (D) - SWOT Analysis: Opportunities

You're looking for clear pathways to growth and de-risking in a utility, and for Dominion Energy, Inc., the opportunities are massive and highly regulated, meaning they come with a built-in path to cost recovery. The key is their multi-billion-dollar capital plan, which is essentially a guaranteed rate base expansion, plus the insatiable power demand from the data center boom in Virginia.

$50 billion capital plan will drive substantial rate base growth through 2029.

Dominion Energy's updated five-year capital investment plan for 2025 through 2029 is a staggering $50.1 billion, up from a previous estimate of $43.2 billion. This isn't just spending; it's investing in regulated assets that are added to the rate base, which is the foundation for future earnings. This massive commitment is projected to drive an annual rate base growth rate of up to 9.4% through 2029, which is a powerful lever for long-term shareholder value.

Here's the quick math: over 80% of this capital is targeted at regulated, high-return projects like electric transmission, distribution, and zero-carbon generation. This structure ensures timely cost recovery and an authorized return on equity (ROE) from regulators.

Regulatory support for the $11.2 billion Coastal Virginia Offshore Wind (CVOW) project, now 66% complete.

The Coastal Virginia Offshore Wind (CVOW) project is a game-changer, and its progress is a clear opportunity. As of the Q3 2025 update in early November, the project is approximately 66% complete. The total estimated project cost, including an unused contingency of $206 million, stands at $11.2 billion. This is the largest offshore wind farm under construction in the U.S. and it's fully permitted, which removes a major regulatory hurdle.

The project's structure also helps de-risk the investment. Dominion Energy completed a non-controlling equity financing deal with Stonepeak, an infrastructure investment firm, which will fund 50% of the project costs up to a certain threshold. This joint venture (JV) helps manage the capital outlay and risk for Dominion.

• Project Capacity: 2.6 GW.
• Completion Target: End of 2026.
• Partner Funding: Stonepeak funds 50% of costs.

Grid modernization and transmission upgrades needed for the massive data center load.

The unprecedented demand from data centers in Northern Virginia is a unique, high-growth opportunity. Dominion Energy is the backbone for the world's largest data center market. The company is experiencing the largest growth in power demand since World War II, with demand forecasted to grow 5.5% annually for the next decade.

To meet this, Dominion is pursuing aggressive infrastructure expansion to capture rate base growth from an estimated 40 GW demand pipeline. In 2025 alone, Dominion plans to connect 15 more data centers, building on the 15 connected in 2024. This demand is driving significant, regulator-approved capital spending:

• SCC approved a $631 million rate hike in March 2025.
• Another $278 million was allocated to grid hardening.

The regulatory environment is supportive, with the Virginia State Corporation Commission (SCC) approving rate increases and transmission projects critical to funding these grid upgrades. This ensures the costs of serving this massive commercial load are recoverable, which is defintely a win for the utility.

Further asset sales or joint ventures could defintely reduce the $48.54 billion debt load.

While the capital plan is a huge opportunity, the flip side is the debt. Dominion Energy's total debt stood at $48.54 billion as of September 2025. Reducing this leverage is a critical opportunity to improve the financial profile and credit rating, which ultimately lowers the cost of future capital.

The company has already demonstrated a willingness to use strategic joint ventures, like the one with Stonepeak on CVOW, to offload capital requirements. The opportunity now lies in pursuing additional, non-core asset sales or new JVs for regulated assets. Selling non-strategic assets, or bringing in partners for other large-scale projects, would generate immediate cash to pay down debt, strengthen the balance sheet, and push the Funds From Operations (FFO) to debt metric closer to the target average of 15% for the 2025-2029 period.

This is a clear, actionable path to de-leveraging while still executing on the core regulated growth strategy. Finance: actively evaluate non-core gas assets for a Q1 2026 sale process.

Dominion Energy, Inc. (D) - SWOT Analysis: Threats

Rising interest rates increase the cost of servicing their large debt position.

Dominion Energy's substantial debt load makes it highly sensitive to the Federal Reserve's continued interest rate policy. Even small increases in borrowing costs can translate into hundreds of millions in additional interest expense, directly eroding net income. The company's total debt stood at a significant $48.54 billion as of September 2025, with long-term debt alone at $40.294 billion for the third quarter of 2025.

The high capital expenditure required for the utility business, including the massive Coastal Virginia Offshore Wind (CVOW) project, means the company must frequently access debt markets. For context, the company's interest expense has been in the range of $0.4 billion to $0.6 billion per quarter in recent periods. The total debt to EBITDA ratio, a key measure of leverage, was a high 6.02x as of the end of 2024, indicating a considerable reliance on earnings to cover debt. A higher-for-longer interest rate environment defintely makes refinancing existing debt more expensive and pressures the cost of capital for new projects.

Regulatory risk on cost recovery for the CVOW project and future rate cases.

The regulatory framework in Virginia, while providing stability, introduces a clear risk of cost disallowance, especially for the multi-billion-dollar Coastal Virginia Offshore Wind (CVOW) project. The Virginia State Corporation Commission (SCC) approved a cost-sharing settlement in December 2022 that caps full customer recovery at $10.3 billion.

As of the third quarter of 2025, the total capital cost estimate for the 2.6 GW project has already climbed to approximately $11.2 billion, up from an earlier estimate of $10.7 billion. This means that 50% of the costs exceeding the $10.3 billion threshold are unrecoverable from customers and must be absorbed by the project owners, Dominion Energy and its partner Stonepeak. Here's the quick math on the current exposure:

This exposure of at least $450 million is a direct threat to shareholder value if costs continue to rise, plus it sets a precedent for intense scrutiny in future general rate cases. The estimated impact on a typical residential customer bill is still relatively low at 43 cents per month over the project's lifetime, but any significant future increase could trigger political backlash and further regulatory pushback.

Construction and operational risks for the complex, 2.6 GW offshore wind farm.

The sheer scale and complexity of the 2.6 GW CVOW project present significant execution risks. The total capital cost is now estimated at approximately $11.2 billion, and a major construction threat is the impact of federal tariffs on imported materials.

For example, new federal tariffs introduced in 2025, including a 50% tariff on steel material value, have already added an estimated $443 million in actual and forecast costs to the project budget. While the project remains on track for completion by the end of 2026, construction milestones carry inherent risks:

• Cost overruns from supply chain disruptions and inflation.
• Technical challenges with the specialized installation vessel, Charybdis, which cost $715 million (up from an original $500 million estimate) and is 96% complete.
• Political risk from a potential future administration reviewing previously issued project permits.

Any delay or technical failure with the specialized equipment like the Charybdis vessel could lead to further cost increases and a delay in bringing the 2.6 GW capacity online, threatening the projected earnings growth from 2025 to 2029.

Political and legislative changes in key states could impact authorized returns on equity (ROE).

As a regulated utility, Dominion Energy's earnings power is fundamentally linked to the authorized Return on Equity (ROE) set by state regulators and influenced by state legislatures. In Virginia, the legislative framework for rate reviews creates a clear cap on upside earnings potential.

The Virginia General Assembly requires biennial reviews of rates, and if Dominion Energy Virginia is found to have earned more than 70 basis points above its fair combined rate of return on generation and distribution services, 85% of those overearnings must be credited back to customers' bills. This mechanism limits the company's ability to retain profits from strong performance or cost control. What this estimate hides is the political pressure to keep rates low, which can influence the Virginia SCC's determination of the 'fair' rate of return itself.

In contrast, the South Carolina Public Service Commission recently authorized an ROE of 9.94% for Dominion Energy South Carolina (DESC) in a comprehensive rate case settlement. This difference highlights the state-by-state political risk, where a less favorable legislative environment can directly compress the core profitability metric-ROE-in the company's largest service territory, Virginia.