One of the things I like about involving myself in Virginia policy-making is the feeling that it’s possible for an ordinary citizen to participate. Sure, you’re a little fish in a big pond, but legislators will meet with you, and even listen if you propose a bill or suggest changes to legislation. That’s unlike trying to be heard at the federal level, where folks without money and connections typically have no entrée. 

But sometimes, even in Virginia, you do what you can and then you just have to wait to see what the big fish do. Some things, my friends, are out of our hands.

That’s the situation now with the Virginia budget, which is hung up on the question of whether to end the data center sales tax exemption and thereby liberate $1.6 billion for other priorities, as the Senate budget provides, or continue the exemption while conditioning it on data centers meeting energy efficiency and clean energy targets, as the House budget provides. 

Gov. Abigail Spanberger is caught in the middle of a battle being fought by formidable generals on both sides and from her own party. Spanberger’s pro-business instincts naturally align her with the House approach, which would also bolster her environmental bona fides if the deal includes the clean energy conditions. But mainly, I suspect, she just wants this fight over with. 

Can Spanberger negotiate a resolution that keeps the promises made to operators of existing data centers, caps the exemption for future development and imposes clean energy requirements on all of them, while providing at least some savings? 

It’s a big challenge, and we little fish don’t have much of a role here. Yet a lot rides on the outcome, not just for data centers but for those of us who care about livable communities, climate and clean air. (Which ought to be everyone, but somehow isn’t.)

Apart from whatever happens with the budget, this was a good year for clean energy but a surprisingly poor year for data center legislation. A Democratic trifecta, concerns about rising utility rates and public sentiment mostly opposed to data center sprawl were not enough to pass bills mandating limits on water use, stricter pollution controls and stronger siting standards. 

On the other hand, it was another good year for Dominion Energy. Witness what happened when the governor proposed amendments to Louise Lucas’s Senate Bill 253 and Destiny LeVere Bolling’s House Bill 1393. As passed by the General Assembly, the legislation expanded Dominion’s ability to stick ratepayers with the cost of an expensive program for putting distribution lines underground. Spanberger proposed limits on that program’s ratepayer impacts, but then she went further. In a whole new paragraph, she proposed to cap Dominion’s return on equity at 9.3% (down from the current 9.8%), with excess profits to be returned to ratepayers. 

This would have saved millions of dollars for ratepayers, but the General Assembly turned down the changes, supporting Dominion’s ability to charge ratepayers for its undergrounding program and protecting its profitability. The amendments were rejected by voice vote, because who wants to go on record with something like that? 

However, legislators did accept other amendments from the governor requiring the SCC to exercise stricter scrutiny of costs associated with data centers to ensure they are not borne by other ratepayers, including residents. Lucas had put something like this in her bill, but legislators recognized that the governor’s language was better. 

With some amendments agreed to and others rejected, SB253 and HB1393 are now back with the governor, who will have to either accept the General Assembly’s version or veto them outright. 

Other data center bills

Apart from SB 253/HB 1393 and the proposed budget amendments, only a few new laws will impact data center development. Most important among these is one allowing utilities to delay providing service to customers when necessary for grid reliability or to avoid exceeding capacity constraints. Other legislation requires utilities to developdemand flexibility programs for data centers, but such programs would be voluntary. 

In an effort to limit the potential for overbuilding infrastructure, Dominion will now be required to provide information allowing the SCC to investigate the utility’s electric load forecasting. The General Assembly accepted an amendment from the governor increasing access to information used in making forecasts.

Residents impacted by data center development won very little in the way of protections. Localities will now have to require data centers to conduct site assessments before they can get special use permits or in rezoning. The Department of Environmental Quality will be prohibited from issuing air permits for diesel generators that don’t meet a Tier 4 equivalent standard for pollution controls, and beginning July 1, 2027, data centers will be required to report their water use. In addition, the Department of Energy will lead efforts to find ways to use the waste heat from data centers.

Renewable energy and storage

The General Assembly passed contentious solar siting legislation that raises standards while requiring localities that reject projects to report their reasons to the SCC. The governor’s minor amendments were accepted; they include a cross-reference to other legislation defining agrivoltaics.

The governor signed legislation significantly increasing the amount of storage Dominion and APCo are required to procure, and adding new targets for long-duration storage (over 10 hours). A separate bill requires Dominion to model economic dispatch scenarios for storage in its IRPs.

An energy storage facility that is co-located with a solar farm that already has an approved special exception will not be required to go through a new permitting process. Legislators acceded to the governor’s amendment limiting the capacity of the storage facility to 100% of the nameplate capacity of the solar facility. 

Shared solar, a/k/a community solar, is set to expand significantly under bills approved for Dominion and APCoterritories. While the existing program in Dominion territory has so far benefited only low-income customers, the legislation requires that the expanded program enroll nearly as many non-low-income customers.

Though most of the renewable energy action this year has been around solar, the governor also approved legislation establishing an offshore wind industry workforce program. 

Distributed resources

The percentage of renewable energy certificates that Dominion must obtain from projects below 1 MW is set to increase. The 50-kW minimum for power purchase agreements (PPAs) will no longer apply, allowing residents and small commercial customers to use solar or wind PPAs.    

Standby charges for net-metered solar can now be assessed only above 20 kW for residential projects in Dominion territory. (In 2020, the VCEA removed them entirely in Appalachian Power territory.)

Balcony solar, also called plug-in solar, will become legal, with no local permit or utility approval required. The legislation provides for a maximum output from the solar panels of 1200 kW. The SCC will develop a notification form that the customer must provide to the utility.

Localities can now require solar canopies to be included on some new parking lots.

Appalachian Power must develop a virtual power plant (VPP) program, following similar legislation last year for Dominion. Separate legislation authorizes VPP programs for electric cooperatives.

By July 1, 2028, localities must adopt streamlined permitting software for residential solar, which can be an existing platform like the national SolarAPP+ or a Virginia-specific platform to be developed by Virginia’s Department of Energy. 

A consumer protection bill requires solar companies to provide a set of disclosures to residential customers in an effort to eliminate predatory practices.

A distributed energy resources task force will meet to discuss additional ways to support distributed solar and storage. The governor amended this bill mainly to specify that the task force will be chaired by the Chief Energy Officer, which the House and Senate concurred with. In March the governor appointed Southern Environmental Law Center attorney Josephus Allmond to this new cabinet position, a move applauded by distributed energy advocates.

Finance

Most proposed grant funds for renewable energy did not survive their voyages to the Finance and Appropriations committees, but two avoided the shoals and have now been approved by the governor. One is a new clean energy innovation bank and fund. The other is a one-year, $2 million grant fund to defray solar interconnection costs incurred by public bodies. 

Utility regulation

The governor approved the General Assembly’s overhaul of the utility planning process. Among the changes, Appalachian Power will once again have to submit integrated resource plans (IRPs) to the State Corporation Commission, all IRPs will use a 20-year planning period instead of 15 years, and both utilities must align their IRPs more closely with the VCEA. 

Also approved was a bill requiring the SCC to consider and make recommendations on proposals concerning performance-based regulation of utilities.  

Dominion and APCo will now have to submit annual reports to the SCC disclosing their votes at regional transmission organization PJM and explaining how these votes are in the public interest. The utilities’ votes were previously secret. Rising electricity rates due to data center demand and PJM’s failure to move on renewable energy projects awaiting interconnection have triggered suspicions that the utilities with voting power at PJM might be acting – ahem – other than in their customers’ best interests. 

Of course, the move that will most affect the plans of utilities and other power generators is Virginia’s return to the Regional Greenhouse Gas Initiative, required now by statute. The timeline and procedure is laid out in the budget, but the administration hasn’t waited for that to be finalized. A statement from RGGI welcoming Virginia back into its fold says our participation will be in effect in time for this September’s carbon auction.

Grid optimization

The governor proposed, and legislators agreed to, a disappointing amendment to a bill requiring Dominion and APCo to assess their surplus interconnection capacities and establish pilot programs to add solar and storage at these connection points. The General Assembly had set hard targets for the pilot programs, subject to SCC approval; the amendment loosens the targets with the addition of the phrase “up to” those amounts. This further weakens a bill that was already a skinny version of its original handsome self. 

Finally, Dominion and APCo will need to report grid utilization metrics to the SCC, which will use that data to report on the potential for increased grid utilization using non-wires alternatives.