Dominion takes the wrong way on solar

On February 12, Virginia’s State Corporation Commission held a public hearing to decide whether to approve Dominion Virginia Power’s plan to buy 3 megawatts of solar power from Virginia residents and businesses to sell to the company’s voluntary Green Power Program. Sound like a good idea? It’s not.

Yes, Virginians want solar power. Investing in solar means stably priced electricity, cleaner air and lower greenhouse gas emissions. Solar power is now cost-effective in Virginia even in the absence of state incentives, thanks to federal tax credits and a steep decline in the price of solar panels. But a high upfront cost still limits who can afford to install it.

Utilities and the SCC have a role to play in bringing new solar power onto the grid. Dominion’s program to install 30 megawatts of solar on leased rooftops, which the SCC approved this fall, provides an example of how utilities can strengthen the grid, diversify their power sources, supply valuable peak-demand electricity, and contribute to their own learning curve on integrating renewable energy, all while meeting a portion of their customers’ demand for clean power.

The 3-megawatt program, on the other hand, gets nothing right. Under the program, customers who have solar panels would sell all their solar power to Dominion for 15 cents per kilowatt-hour (kWh), and buy regular fossil-fuel electricity (known as “brown power”) from Dominion at the normal retail rate of about 11 cents. Cost to Dominion: 4 cents/kWh.

Dominion would then resell the solar power to the participants in its Green Power Program, not for the 4 cents it costs the company, but for 11 cents. Dominion would keep 7 cents/kWh.

Dominion tells us that the 7 cents would go to its rate base, not its own bottom line. But it’s clear who loses. The do-gooders who pay extra on their utility bills for the Green Power Program would pay 11 cents for something Dominion bought for 4 cents. They are being played for chumps.

Last year the Green Power Program bought Virginia solar power directly for 4 cents/kWh through the purchase of renewable energy certificates. So why should the program pay 11 cents for something it can get for 4?

Since Dominion administers the program, it will be up to the SCC to prevent this misuse of its funds.

This is only part of the problem. The reason Dominion wants to shift the cost of the solar purchase onto the Green Power Program is its insistence that the value of solar energy isn’t the retail rate of electricity, but is the utility’s “avoided cost”—roughly, the price at which it can buy brown power on the wholesale market, which is around 4 cents/kWh.

Of course, if the current wholesale price were the only thing that mattered, you’d have to question why Dominion ever builds its own electric generation, including its new coal-fired plant that delivers power at 9.3 cents/kWh.

The SCC allows Dominion to build its own generation in Virginia for a host of other reasons, all of which apply equally to Virginia solar. Rooftop solar also provides significant additional benefits to the utility and the electric grid that utility-supplied brown power does not. A number of recent studies have quantified these benefits to prove that net-metered solar (where customers sell solar power to the grid at the retail rate) lowers costs for everyone.

Yet Dominion wants to shift costs onto a voluntary program, while keeping the benefits. This is bad for the Green Power Program, and it sets a terrible precedent for valuing solar that could retard its growth in Virginia. And that would be bad for all of us.

12 thoughts on “Dominion takes the wrong way on solar

    • Thanks, Pete. Obviously, I think the Commissioners were all wrong. They seem to think Green Power Program participants won’t mind being milked, perhaps on the theory that they are nuts anyway to voluntarily give their money away. But I was interested by their order to Dominion to give them a report on the generation benefits of solar.

  1. “They seem to think Green Power Program participants won’t mind being milked, perhaps on the theory that they are nuts anyway to voluntarily give their money away.”

    You certainly don’t beat around the bush, Ivy! This is a great article because it really explains well how Dominion rigs the game!

  2. Virginians, actually anyone, can always go to the bulletin board at:

    https://gats.pjm-eis.com/myModule/rpt/myrpt.asp?r=204&TabName=Bulletin%20Board%20RECs

    and purchase green power directly from sellers with no admin costs. The last presentation I heard on the green power program the contractor/ presenter said that the Dominion used 1/2 the money to administer and market the program and 1/2 to buy the RECs.

    At first blush the Dominion website made it seem like they were buying all production at $0.15/kWh and the assumption I mistakenly made was this meant that EXCESS power would be purchased at $0.105. This made solar a responsible, and with PACE financing, a cash flow positive experience, at least in Loudoun County.

    I spoke with the SCC contact who confirmed that the deal is Dominion buys all solar at $0.15 form the seller and the seller buys all power at $0.105 Net to seller is $0.045 So this is a non-starter financially. Net metering gets you the full $0.105

    We need a PACE program to change the game.

    http://www.change.org/petitions/loudoun-bos-please-help-advance-renewable-energy-upgrades-create-a-property-assessed-clean-energy-pace-district-in-loudoun-county

    Thanks

    Gerry Gurgick
    Ashburn, VA

    • Gerry,
      ‘ Net to seller is $0.045′.? With net metering the net is $0.00 by definition. With DOMs program you will be ahead of net metering by $0.045/kwh . PACE in on hold for now until the feds sort it out.
      With GOOD financing this may make economic sense.
      Jody Solell
      Fairfax, VA

  3. The way to economically beat both of these problems is for people to start their own power companies as small community neighborhood efforts and sell the power to each other. Small community wind farms and solar panel systems can sell on a regional neighborhood by neighborhood basis using a small municipal distribution system created by home-owner profit sharing ventures. Bypass Dominion Power if it won’t pay attention to the environmental costs and health costs of coal and gas electricity and vote with your pocketbook. Coal fired electrical plants cause cancer and nerve damage by the emission oif heavy metals into thew atmosphere we all breath, from Pennsylvania to the shores of Virginia. It causes asthma, and cancers in a percentage of the population. Fracking costs are long term health costs which will last over a hundred years as wells break down and cracks develop in the earth around the cement casings, which will continue to leack methane and VOCs well beyond the time the wells are non-productive and shut down. It will be the largest environmental disaster we will deal with, and the companies will have laws made in Congress which will not hold them accountable economically and morally.

  4. Pingback: General Assembly 2014 – Wind and solar in Virginia: A status update : Virginia Chapter Sierra Club

  5. Pingback: Where are the Renewables? Wind and solar policy in Virginia : Virginia Chapter Sierra Club

  6. Pingback: Where are the Renewables? 2014 update on Virginia wind and solar policy | Power for the People VA

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