Global energy demand is expected to surge by 2030, driven by rapid consumption growth in emerging economies. The expansion of artificial intelligence (AI) is further accelerating this demand, while industries are under increasing pressure to meet ambitious sustainability targets by focusing on low- and zero-carbon energy solutions.
As the world shifts toward cleaner energy, tech giants are investing billions into the sector, making energy stocks highly attractive in today’s market.
Among these stocks, Dominion Energy (NYSE: D) is emerging as one of the most promising players, owing to its innovative partnerships and long-term growth initiatives prioritizing renewable energy.
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Currently, Dominion Energy’s stock is trading close to its 52-week high at $59, marking a year-to-date gain of 28%.
Dominion’s strategic partnership with Amazon and data center demand
A key development for Dominion Energy occurred in October 2024 when the company announced a Memorandum of Understanding (MOU) with Amazon Web Services (AWS) to explore small modular nuclear reactors (SMRs) near Dominion’s North Anna nuclear power station.
In an interview with CNBC, Dominion Energy CEO Robert Blue highlighted the importance of this collaboration:
“We look at this as a partnership between one of America’s most innovative companies, Amazon, and one of its most reliable, Dominion Energy. We’ve been operating nuclear power plants safely and reliably for more than 50 years. As we considered the demand that’s coming on our system—from data centers, electrification of the economy, and population growth—it made a lot of sense to work with a company like Amazon to provide exactly what our customers want: reliable, carbon-free electricity.”
Research indicates that over the past five years, Dominion’s network has connected 81 data centers, requiring 3.5 GW of electricity. AWS anticipates that the new SMRs will generate at least 300 megawatts of power for the Virginia region, allowing Dominion to benefit further from AI-driven electricity demand.
Renewable energy expansion
In addition to nuclear power, Dominion continues to expand its renewable energy footprint, particularly through its Coastal Virginia Offshore Wind (CVOW) project.
This 2.6 gigawatt project, currently the largest offshore wind farm under construction in the U.S., is set to power over 660,000 homes by the end of 2026.
The company’s recent sale of a 50% non-controlling interest in CVOW to Stonepeak brought in $2.6 billion in proceeds, representing reimbursement of 50 percent of project-to-date investments, with Stonepeak funding half of the remaining costs. These measures have strengthened Dominion’s financial position and reinforced its focus as a regulated electric utility business.
Earlier this year, Dominion Energy successfully launched Charybdis, the first Jones Act-compliant offshore wind turbine installation vessel in the U.S., marking a major milestone as the vessel transitioned from land to water. This achievement follows the completion of the ship’s hull welding and the commissioning of its four legs and jacking system.
As of July, Dominion Energy has connected nine new data centers this year, staying on track to meet its projection of 15 new connections by the end of 2024.
The company also outlined ambitious plans in its 2024 Integrated Resource Plan, filed with the Virginia State Corporation Commission and the North Carolina Utilities Commission, to bring 21.1 GW of new clean energy capacity online over the next 15 years.
To meet this demand surge, Dominion will continue utilizing gas-fired resources as a “bridge” while advancing renewable projects.
By 2039, Dominion intends to add approximately 3.4 GW of offshore wind to the 2.6 GW already in progress, along with around 12 GW of solar energy and 4.5 GW of battery storage. Additionally, Dominion plans to deploy five small modular nuclear reactors in the mid-2030s, contributing an extra 1,340 MW to its energy portfolio.
Financial performance and valuation metrics
Dominion Energy’s current valuation reflects a solid position in the utility sector, with a market cap of $50.24 billion and an enterprise value of $94.52 billion. While its trailing PE ratio of 31.61 and forward PE of 19.47 suggest a somewhat high valuation, the PEG ratio of 1.56 indicates a reasonable alignment between price and expected growth.
Although the stock may not appear undervalued, Dominion’s strong investments in renewable energy and partnerships, combined with its stable revenue stream, make it a stable long-term investment. Investors should weigh its relatively high valuation against its future earnings growth potential.
In conclusion, Dominion Energy’s forward-looking approach to clean energy, strategic partnerships with industry leaders like Amazon, and robust financial performance make it a compelling choice for investors.
As the global shift toward sustainable energy accelerates, Dominion Energy stands well-positioned to capitalize on this transition, emerging as a key player in powering the future of sustainable growth.
