Monthly Archives: March 2016

McAuliffe rides to Dominion’s rescue on Remington solar plant

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photo credit Kanadaurlauber

photo credit Kanadaurlauber

Last October, Virginia’s State Corporation Commission turned down an application from Dominion Virginia Power to build a 20-megawatt solar facility on land it owns near Remington, Virginia. The SCC told Dominion it had failed to meet its statutory obligation to consider third-party market alternatives that could save ratepayers money.

Rather than going back to the drawing board, we learned today that Dominion has found another way to build the project. In what is being billed as a “public-private partnership,” Dominion will sell the power from the project to the state of Virginia, and then will sell the associated renewable energy certificates (RECs) to Microsoft to help it meet its renewable energy goals for its data centers.

Governor McAuliffe announced the deal today at an event in Richmond, touting its ability “to reduce Virginia’s carbon emissions and diversify our energy portfolio.”

The deal seems to offer a great outcome for Dominion and Microsoft. A Dominion spokesperson told me the company will have to file a new application with the SCC for a certificate of public convenience and necessity, which they anticipate doing in May. But with no ratepayer impact now, they don’t expect the SCC would deny it this time around.

In this way, Dominion avoids having to consider less expensive means of acquiring solar energy, such as power purchase agreements or bids from third party developers.

The announcement did not say whether the state would pay a premium for power generated at the Remington site. It is also not clear how the deal relates to Governor McAuliffe’s goal, announced last December 21, of having the state derive 8% of its electricity from solar energy within three years. Legally, if Microsoft buys the RECs from the Remington project, the state cannot claim to be purchasing solar energy. So we hope the Governor has not been misled into thinking the state is buying solar energy with this deal.

As a general matter, though, supporting a large solar project fits well within the Governor’s ambitious jobs agenda, and it may be money well spent if it leads to more projects and greater investment. Certainly it beats handing out tens of millions of dollars annually to an ever-shrinking coal industry, as Virginia still does.

But we should keep this 20 MW project in perspective. North Carolina installed 1,134 MW of solar in 2015 alone. And meanwhile over at the SCC, Dominion is awaiting approval of its latest natural gas plant, the 1,600-MW Greensville Power Station, which will increase Virginia’s CO2 emissions by much more than the Remington project could possibly reduce them.

Which is to say, the further we go, the behinder we get.

McAuliffe’s stark choice on the Clean Power Plan: serve Virginia, or Dominion Power

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Photo by Josh Lopez, courtesy of the Sierra Club.

Photo by Josh Lopez, courtesy of the Sierra Club.

After the Supreme Court issued a stay of the EPA’s Clean Power Plan pending its review by the D.C. Circuit, many Republican governors halted compliance efforts in their states, while most Democratic governors opted to continue. Among these was Virginia Governor Terry McAuliffe, who plans to unveil a draft state implementation plan this fall.

Deciding to move forward on President Obama’s signature climate effort was an easy call. Polls show strong support for reducing carbon pollution, and the Governor wants to prove himself a team player who supports his president and his party. McAuliffe often reiterates his conviction that climate change is already producing extreme weather and increasingly severe coastal flooding in Virginia, making government action urgent.

Governor McAuliffe has another choice before him now: he can craft a compliance plan that moves Virginia firmly in the direction of clean energy and lower carbon emissions, or he can adopt one that allows unbridled growth in new power generation from natural gas. The latter could still meet the letter of the law, but it would hugely increase greenhouse gas emissions from Virginia power plants.

McAuliffe has this choice because EPA’s rules come in two parts: the Clean Power Plan addresses existing power plants under one section of the Clean Air Act, while new power plants are addressed under another section of that law. As a result of the statutory structure and EPA’s rules, states can choose to cover both under one set of rules with a total cap on utilities’ CO2 emissions, or they can address new and existing sources separately.

If a state chooses to cover both under a single cap, new generation can be added up to the cap or go beyond if the utility buys emission allowances from another utility. But if a state treats new and existing sources separately, then new sources can grow without limit as long as each new unit meets a unit-specific standard. Of course, building more fossil-fueled power plants of any type will increase carbon emissions, at a time when the U.S. desperately needs to cut back.

The carbon reduction target EPA set for Virginia under the Clean Power Plan is extremely modest. EPA’s numbers show Virginia can meet the target for existing sources simply by not increasing emissions. If the state also includes new power plants under the cap, however, it creates a real incentive to invest in clean energy.

But there’s a problem. Dominion Resources, the Richmond-based parent company of Dominion Virginia Power, is heavily invested in the natural gas sector, primarily transmission and storage. That has led Dominion to lobby for an implementation plan that covers only existing power plants.

Excluding new sources would leave the company free to build as many new natural gas-burning power plants in the state as it wants, locking in years of increased carbon pollution, and further boosting demand for fracked gas and pipeline capacity. Dominion’s plans call for more than 9,500 megawatts of new gas generation in Virginia, equivalent in carbon impact to building eight average-sized coal plants in the state.

McAuliffe can do what Dominion wants, or he can do the right thing for the climate. He can’t do both.

The stakes are high on both sides. McAuliffe has made job creation his number one priority, and he lures new industry to the state with the promise of lower-than-average electricity rates. Dominion says supporting its natural gas plans is the way to deliver on that promise. Whether that is true or not doesn’t count in this calculus; with state law limiting governors to a single term, McAuliffe is focused on the present.

But adopting a plan that allows unlimited increases in greenhouse gas emissions would run contrary to Virginia’s long-term interests. Not only is the state on the front lines of sea level rise, it needs predictable, affordable electricity prices for decades to come. And nothing can provide that better than renewable power and increased energy efficiency.

Neither Dominion nor anyone else can guarantee the price of natural gas over the life of a new power plant. Questions of price and supply bedevil even the best analysts and make forecasting risky. Moreover, the growing awareness of the climate impacts of methane from leaking wells and pipelines is already producing calls for tighter regulation of natural gas. A carbon tax or cap-and-trade legislation would also make all fossil fuels more expensive relative to carbon-free renewables.

While the cost of using natural gas can only go up, the costs of wind, solar and battery storage are expected to continue their astonishing declines. Advances in energy efficiency promise huge savings for states that pursue programs to help customers cut their energy use.

From a bill-payer’s perspective, then, investments in clean energy make more sense than building gas plants, even without taking federal regulations into consideration. Recent analyses show Virginia can cap carbon pollution from new power plants and still save money for electricity customers.

Environmental groups say their number one energy priority this year is to ensure Virginia adopts a Clean Power Plan that includes both existing and new sources, and they are counting on Governor McAuliffe to deliver. Their message is simple: if McAuliffe wants to be on the climate team, Virginia’s compliance plan must reduce CO2 emissions, not let them grow.