Dominion Energy, Inc. (D) | The Buildout — AI Infrastructure
The Verdict
Dominion Energy is a regulated electric utility: it generates, transmits, and distributes electricity across Virginia, North Carolina, and South Carolina. In the AI infrastructure buildout, it is not a supplier of chips, servers, or data-center real estate; it is the utility that must expand generation, transmission, and distribution so that data-center load can connect and run. The investment case is about constructing and financing new capacity and recovering that spend through regulated rates and riders.
| Market Cap | — |
| Revenue (TTM) | $18.2B |
| Revenue Growth | +19.8% |
| EBITDA Margin (TTM) | 33.9% |
| Net Debt | $22.4B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Data-center contracting pipeline passed 50 GW, with 10.4 GW under electrical service agreements (ESAs); forecast demand through 2045 is said to be more than covered by signed ESAs and CLOAs.
- Five-year capital plan raised 30% from $50B to ~$65B; rate-base CAGR guided to ~10%, with over 90% of the increase at Dominion Energy Virginia.
- Virginia high-load revenue, the cleanest disclosed data-center signal, rose 66% year over year in Q1 2026 — $636M versus $383M.
- CVOW reached first power in March 2026; last four turbine installs averaged about two days each, and the budget was cut about $100M to $11.4B.
- New Virginia storage legislation raises the target to 20 GW by 2045 from 3 GW by 2035, a growth vector not yet fully embedded in the plan.
What We’re Watching
- CVOW execution: 9 turbines installed as of the Q1 2026 call; completion beyond July 2027 adds $150M–$200M per quarter.
- NextEra merger approval: the May 18, 2026 all-stock combination is subject to shareholder and regulatory approvals, with multiple shareholder-alert announcements following the deal.
- Concentration: high-load revenue in Q1 2026 was $636M versus $383M a year earlier, up 66%, and all of it was in Virginia Power; growth is tied to a narrow high-load segment.
- Reported earnings swings: Q2 2026 GAAP net income fell to $340M ($0.37/share) from $760M ($0.88/share) a year earlier; the supplied news digest does not attribute the decline.
The core thesis is strengthening: the pipeline has moved from roughly 47 GW to over 50 GW, the capital plan was raised, CVOW reached first power, and all guidance was reaffirmed. But the post-quarter record introduces two unresolved items — the NextEra merger and an unexplained Q2 2026 GAAP net-income decline. The central open question is whether CVOW stays on its improved installation trajectory through 2026 and how the pending merger reshapes the standalone capital and financing plan.
Earnings Beat
Q2 2026 revenue was $4,480 million, with the financial block recording EBITDA of $944 million at a 21.1% margin. The July 31 press release reported GAAP net income of $340 million, or $0.37 per share, down from $760 million, or $0.88 per share, in Q2 2025; operating earnings were $712 million, or $0.79 per share.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $4.5B | $5.1B | $3.8B | +17.6% |
| Gross margin | 0.0% | 51.6% | 50.4% | -5040bps |
| EBITDA | $944M | $2.1B | $1.8B | −46.1% |
| EPS | — | $0.71 | $0.89 | −55.1% |
Since our last update, we continue to see accelerating and durable demand from our differentiated, high-quality, low-risk data center customers.— Steven D. Ridge, CFO, May 1, 2026
Management tone: On the Q1 2026 call, management's tone was confident, disciplined, and execution-oriented. The clearest shift was on CVOW: after prior caution following a first-turbine blade-damage event, management said the installation rate had ramped markedly, with the last four turbines averaging about two days each. Management also introduced deliberate language that the company is monitoring catalysts that could enhance or extend its long-term growth rate.
Management Guidance
Management reaffirmed FY2026 operating EPS guidance of $3.40–$3.60 excluding the 45Z benefit, with the inclusive range at $3.45–$3.69; the RNG 45Z assumption is 7 cents, range 5–9 cents. Long-term operating EPS growth was reaffirmed at 5%–7% off the 2025 midpoint of $3.30, with a bias to the upper half starting 2028. The five-year capital plan is approximately $65 billion, up from $50 billion, with a ~10% rate-base CAGR. FFO-to-debt remains above 15%. The Q2 2026 press release provided no new guidance.
Trajectory
The code-computed revenue trajectory reads as accelerating, with trailing revenue growth at 19.8% year over year. Quarterly revenue is seasonal but stepped up to $5,144 million in Q1 2026 from $4,093 million in Q4 2025 before easing to $4,480 million in Q2 2026. Margins are compressing across gross, operating, and EBITDA lines because fuel and purchased-power costs pass through revenue without touching net income, while depreciation, interest, and nonregulated exit costs pressure reported results. Trailing-twelve-month EBITDA stands at $6,181 million (33.9% margin), and free cash flow conversion is negative, with TTM FCF equal to negative 94% of net income.
The Model
The model's FY+1 projection is $19,500 million of revenue and $7,820 million of EBITDA at a 40.1% margin. FY+2 moves to $21,300 million of revenue and $8,776 million of EBITDA at a 41.2% margin. The near-term forecast is anchored by the data-center contracting pipeline and the raised ~$65 billion five-year capital plan; FY+2 reflects continuing conversion of regulated capex into higher EBITDA as rate base compounds.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $16.5B | $19.5B | $21.3B |
| YoY Growth | — | +18.1% | +9.2% |
| EBITDA | $6.8B | $7.8B | $8.8B |
| EBITDA Margin | 41.2% | 40.1% | 41.2% |
Projections are the median of 5 independent model runs. The model’s revenue sits 11.2% above analyst consensus.
Management reaffirmed FY2026 operating EPS guidance of $3.40–$3.60 excluding the 45Z benefit, with the inclusive range at $3.45–$3.69; the RNG 45Z assumption is 7 cents, range 5–9 cents. Long-term operating EPS growth was reaffirmed at 5%–7% off the 2025 midpoint of $3.30, with a bias to the upper half starting 2028. The five-year capital plan is approximately $65 billion, up from $50 billion, with a ~10% rate-base CAGR. FFO-to-debt remains above 15%. The Q2 2026 press release provided no new guidance.
What Could Go Right — and Wrong
- The data-center ESA base grows beyond 10.4 GW as earlier-stage SELOA/CLOA contracts convert.
- CVOW completes the majority of turbines by end 2026 and the remainder early 2027 prior to June, avoiding the post-July 2027 cost step-up.
- Virginia storage capital accelerates into the plan, converting the 20 GW by 2045 target into regulated rate base at $2.5B–$3B per GW.
- Millstone secures a recontracting arrangement above its current 55% contracted share, reducing post-2029 merchant exposure.
- The NextEra combination closes, combining two regulated growth programs and adding scale.
- CVOW slips beyond July 2027, and each extra quarter adds $150M–$200M of project cost.
- Data-center commitments pause or shift geography, slowing the pipeline beyond 50 GW and ESA conversion.
- The financing plan pressures credit or dilutes shareholders; Q1 2026 already included ~$1.2B of ATM common issuance.
- Millstone recontracting fails, leaving unhedged output exposed to merchant markets after 2029.
- The NextEra merger stalls or breaks, reopening the question of how Dominion funds its capital plan alone.
Looking Ahead
The next twelve months are execution-heavy. CVOW installation must move from nine turbines to majority service by end 2026 and the remainder by early 2027 prior to June. In Virginia, the SCC storage technical conference in 2026 and the fall IRP set up the next capital-plan update on the Q4 call or early next year. Millstone negotiations run through Q3 2026, while North Carolina interim rates take effect December 2026 and the final decision is expected February 2027. The NextEra combination awaits shareholder and regulatory approvals; no closing timeline is stated in the sources.
- Q3 2026Millstone negotiations — Negotiations with local state utilities follow Q2 2026 DEEP decisions.
- Fall 2026Virginia IRP update — Fall IRP and storage technical conference outline the 20 GW storage path.
- Dec 2026North Carolina interim rates — Interim rates effective; final decision expected February 2027.
- End 2026CVOW majority in service — Tests whether most of the 2.6 GW project is in service by year-end.
- Early 2027CVOW remainder completion — Remainder expected prior to June; post-July 2027 delays add $150M–$200M/quarter.
- Feb 2027North Carolina rate case decision — Final decision expected; true-up and finalization March 2027.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $14.5B | $16.5B | $18.2B | +14.2% |
| Gross Margin | 47.7% | 49.0% | 37.1% | +127bps |
| EBITDA | $6.3B | $6.8B | $58.8B | +8.5% |
| EBITDA Margin | 43.4% | 41.2% | 33.9% | 215bps |
| Net Income | $1.9B | $3.0B | $2.2B | +61.0% |
| Free Cash Flow | −$7.4B | −$7.3B | −$26.1B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)37.1%
- EBITDA Margin (TTM)33.9%
- Net Margin (TTM)12.1%
- ROIC5.5%
- FCF Conversion-33.7%
- SBC / Revenue0.0%
The Company
Dominion Energy is a Richmond, Virginia-headquartered regulated utility serving about 4.1 million primarily electric customers in Virginia, North Carolina, and South Carolina. It owns roughly 30.7 GW of electric generating capacity, 10,800 miles of electric transmission lines, and 80,400 miles of distribution lines. In the AI infrastructure buildout, Dominion is the demand-bearing utility: it sells the electricity, transmission, distribution, and new generation that data centers in its service territory consume.
Dominion operates three reported segments — Dominion Energy Virginia (DEV), Dominion Energy South Carolina (DESC), and Contracted Energy. DEV is the economic center of gravity: in Q1 2026 it contributed $3,768 million of external revenue. The company is vertically integrated as a regulated utility, owning nuclear stations at Surry, North Anna, Millstone, and Summer plus the 2.6 GW Coastal Virginia Offshore Wind project. It has been narrowing toward the regulated core through divestitures of gas distribution and Cove Point, and its growth model runs on converting data-center load into rider-eligible transmission, generation, and distribution investment.
Business Segments
Competitive Landscape
Dominion describes itself as one of the nation's leading developers and operators of regulated offshore wind and solar power and the largest producer of carbon-free electricity in New England. In the large-load power market, the intel file's neighbor read-through positions Dominion's Virginia footprint against other regulated utilities and generation owners — FirstEnergy, AES, and NextEra — that are also competing for data-center demand. Dominion does not disclose a separate AI or data-center revenue or EPS split.
- FirstEnergyNamed in neighbor read-through as having about 4 GW in final contract negotiations, nearly doubling contracted demand.
- AESNamed in neighbor read-through with 2.1 GW of signed data-center agreements in Ohio and Indiana expectations of 1.5–2.5 GW.
- Named in neighbor read-through with large-load advanced discussions up from about 9 GW to about 12 GW; also the May 18, 2026 all-stock merger counterparty.
Supply Chain
Dominion is the demand-bearing utility and project developer in the chain: it buys turbines, fuel, grid equipment, and construction services, then sells regulated power and interconnection capacity. The neighbor transcripts do not name Dominion directly; supplier identities are largely leads or verified relationships from filings.