Author Archives: Ivy Main

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It’s time for Virginia to plan its next offshore wind farm

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offshore wind turbines

Virginia’s first commercial offshore wind farm is on track to start construction next year and to be fully operational in 2026.  The Coastal Virginia Offshore Wind (CVOW) project being developed by Dominion Energy will be the single largest offshore wind farm in the U.S. and among the first full-scale commercial wind projects built in U.S. waters. 

Yet it has taken us 10 years to get this far. Future projects will have shorter timelines now that the industry is gaining its footing and government bodies have figured out how to regulate it. Even so, the complexity of planning, permitting and building giant wind turbines 25 miles out in the ocean means Virginia needs to start planning the next project now to ensure that the supply chain businesses that have located here, and the workers we are training to build CVOW, still have reason to remain in Virginia come 2027. 

For most Virginians, offshore wind may still feel experimental because it has produced only two small projects in the U.S.: a 5-turbine wind farm off of Rhode Island’s Block Island built in 2016 and a two-turbine pilot project 27 miles out from Virginia Beach that started generating power in 2020. But at least 30 other projects are underway up and down the East Coast, including one currently under construction off Massachusetts and another off of New York that will begin construction this year. Plans are also underway for wind farms in the Great Lakes, off the West Coast and in the Gulf of Mexico. 

Together these projects add up to more than 53,000 megawatts (MW), exceeding the Biden Administration’s 30,000 MW by 2030 goal – enough to power 10 million homes with clean, renewable energy. According to the U.S. Department of Energy, independent forecasts show that goal to be solidly realistic. The U.S. offshore wind industry itself recently announced a longer-term target of 110,000 MW, reflecting the business community’s expectations for growth. 

The industry is also far more mature in other parts of the world. Global capacity passed the 50,000 MW milestone last year, and the global pipeline stands at more than 368,000 MW. (Surprise, surprise: China is eating our lunch, installing 13,790 MW in 2021 alone.)

Perhaps the most compelling evidence for the promise of the offshore wind industry in the U.S. is the size of industry events. In the course of a dozen years, U.S. offshore wind conferences have gone from gatherings of a few hundred academics, environmentalists and entrepreneurs in a hotel ballroom to the nearly 4,000 business people and hundreds of exhibitors who packed the Baltimore convention center at the end of March for the Business Network for Offshore Wind’s International Offshore Wind Partnering Forum (IPF).

Often the governor of a state hosting one of these annual conferences uses the occasion to unveil new goals or infrastructure investments; Maryland Gov. Wes Moore did not miss his chance this year. He announced that Maryland plans to develop 8,500 MW once the federal Bureau of Ocean Energy Management makes new lease areas available, a goal behind only New Jersey’s 11,000 MW target and New York’s 9,000 MW. Virginia’s goal begins to look cautious by comparison.

The industry does face challenges. Inflation and supply chain issues have disrupted timelines and threatened profitability. There aren’t enough workers. Transmission constraints hinder the ability to get power to customers. Permitting is a pain in the neck. Here in the mid-Atlantic, it’s hard to identify new areas of the ocean suitable for wind farms, in large part because the Department of Defense wants it all for itself. 

Other challenges are more of the good kind, such as the fact that wind turbine sizes are increasing faster than ships capable of transporting and installing them can be built. Larger turbines mean more power at less cost, and no one is quite sure what the upper size limit might be. On land, the difficulty of transporting blades that can be the length of a football field means turbines are limited to about 3 MW. Fabricating parts at coastal facilities allows turbines to scale up as far as physics and advanced material manufacturing allow.

Dominion installed 6-MW turbines for its pilot project, which was seen as the new standard a few years ago. Today the company plans to use 15-MW turbines. Each one of these massive turbines is said to produce enough energy to power 20,000 European households. I have not seen that figure translated into U.S. suburban McMansions, but it is still an eye-popping amount of emissions-free power from a single structure.  

Oh, and Dominion handled the installation ship issue by building its own vessel, which it will rent out for the Massachusetts and New York projects until it is needed for Virginia’s and others in the queue. Problem solved, at least for Virginia, though the industry needs many more ships.  

Will the cost of energy come down? 

Virginia’s CVOW project has been criticized for its high overall cost, largely the result of our immature domestic industry. The Biden Administration has set a goal to lower costs by one-third by 2030. If history is any indication, this should be readily achievable. A National Renewable Energy Laboratory (NREL) analysis shows costs have fallen by more than half since 2016, and projects that by 2030, the levelized cost of energy from offshore wind turbines will fall by another third.  

Scaling up turbines to capture more wind energy is one approach to bringing the per-kilowatt-hour price down. Economies of scale, a U.S. supply chain, and a range of innovative technologies are all expected to contribute. And of course, the Inflation Reduction Act, with its tax credits for domestic manufacturing and renewable energy, is creating a gold rush of sorts, as companies compete to get a piece of the action. 

Another significant factor in reducing costs is automation and machine learning. Some of the gains are incremental, such as optimizing turbine operation and improving turbine siting through improved wind and wake modeling. Other advances seem like windows into a future where robots take charge. Multiple exhibitor booths at IPF displayed crewless, self-piloting survey and depth-monitoring vessels and underwater robots capable of doing more tasks than humans can. Biologists and geologists stay comfortably ashore while on-board computers collect information at sea around the clock and send the data back. 

Today’s innovation will inform the next great leap forward for the industry: floating wind turbines that open deep water to energy production. Right now, floating turbines must be tethered to the seafloor  and connected to cables to bring power to shore. For various reasons this technology is more expensive than fixed-foundation turbines, but here, too, the industry expects to become competitive in the future. 

Some people are thinking much bigger. Walt Musial, a principal engineer at NREL who is one of the top researchers in the field, gave an IPF audience a look into the future. There, automation and AI could make it possible for unmoored, cableless turbines to pilot themselves around the oceans, chasing the best winds, avoiding hurricanes and turning electricity into liquid fuels like ammonia to drop off at ports of call or offshore “energy islands.”  Musial even referred to these turbines as “vessels,” evoking a whole new kind of wind-powered transportation.

 A display at the Business Network for Offshore Wind’s IPF conference exhibits an autonomous wind turbine that could contribute to the nation’s future wind energy capacity. (Ivy Main/The Virginia Mercury)

It’s a great time for workers entering the industry — if you can find them 

Though un-crewed, AI-directed traveling wind turbines may be the future, the present still requires foundations, cables, service vessels and, especially, a large workforce. Attracting and training an offshore wind workforce has become such an urgent issue that the topic earned its own track at IPF. 

To its credit, this heavily male, heavily white-dominated industry says it is committed to recruiting a diverse workforce and ensuring equitable development of offshore wind, also a goal of the Biden Administration. It will have to; right now, no one has enough workers, so finding them means recruiting from overlooked communities and addressing the social and economic barriers that have kept many people out of the skilled labor force. 

While not new to other large infrastructure projects, Community Benefit Agreements with detailed commitments covering local job creation and other investments, are new for offshore wind. Dominion has not entered any such agreement in Virginia, but as part of its case before the State Corporation Commission last fall in which it received permission to proceed with CVOW, the company signed a stipulation agreeing to an extensive and diverse community outreach program. Eileen Woll, Offshore Energy Program Director for the Sierra Club’s Virginia Chapter, told me Dominion is following through on this pledge.

Woll is also part of a task force made up of academic and community groups from the Hampton Roads area that has developed a plan for community engagement and outreach to identify potential workers from harder-to-reach demographic groups. She told me the “Breaking Barriers” project team has applied for a $500,000 grant from the U.S. Department of Energy to fund their work.  

The Virginia booth at IPF. (Ivy Main)

Halting steps towards Virginia’s next project 

The Virginia Clean Economy Act made special provision for Dominion’s CVOW project as part of an overall target of 5,200 MW. If CVOW makes up 2,600 MW, where will the rest come from? A project under development off Kitty Hawk, North Carolina, would connect to the grid in Virginia Beach, but Dominion has shown no interest in buying the power; nor has Duke Energy. Dominion makes more money acting as its own developer. Huge energy users like the data centers operated by Amazon Web Services in Virginia could absorb all the energy from several Kitty Hawks, but Amazon hasn’t stepped up either.

Meanwhile, the federal Bureau of Ocean Energy Management (BOEM) has identified 1.7 million acres offshore North Carolina, Virginia, Maryland and Delaware with potential for new leasing. The challenge is to make space for wind in an area already claimed by fishing interests, the Coast Guard, and the Department of Defense. If Virginia leaders are serious about building an enduring offshore wind industry here, they will have to engage in some tough negotiations.

For his part, Gov. Glenn Youngkin seems to be trying to ensure that the next Virginia project will be subject to competitive bidding to avoid a repeat of the process that made Dominion Energy the sole developer and holder of the only Virginia lease area. The governor amended an offshore wind bill from Sen. Mamie Locke, D-Hampton, that was something of a nothingburger as passed by the General Assembly. Youngkin’s amendment turns the legislation into a plan requiring Dominion to work with the State Corporation Commission and other government agencies on a competitive solicitation process for the next offshore wind project. 

There is no guarantee that this will work, given that BOEM awards leases to high bidders. But if BOEM offers multiple wind energy areas for lease near Virginia, and awards the leases to multiple developers, then an SCC-led competitive process seems feasible, with a better result for consumers.

The governor’s language may have been inspired by a House bill from Del. Suhas Subramanyam, D-Loudoun, that would have had the SCC study the ownership structure of offshore wind projects and report on how to achieve the best outcome for consumers. Republicans killed that bill, but presumably they will be more open to promoting competition when the idea comes from their own party. 

The General Assembly will consider the governor’s amendment when it reconvenes on April 12. Let’s hope his amendment indicates that Youngkin is ready and willing to start the next phase of Virginia’s offshore wind industry.

This article was originally published in the Virginia Mercury on April 10, 2023.

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Yes, RGGI works

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At the heart of the political fight over Virginia’s participation in the Regional Greenhouse Gas Initiative (RGGI) is a seemingly simple question: does a requirement that Virginia power plants pay for the right to spew CO2 actually lower CO2 emissions? Critics argue no; supporters say yes. There is evidence for both, but in the long run, the benefits of RGGI for both Virginia and the climate are clear.

RGGI operates as a carbon cap-and-trade agreement between 12 northeastern states. Carbon-emitting power plants must buy allowances through an auction process. This makes high-carbon fossil fuel electricity more expensive relative to zero-carbon sources like wind, solar and nuclear. The result, in theory, is that utilities are incentivized to buy less of the former and more of the latter. In states like Virginia, where utilities own generating plants, RGGI provides an incentive for them to abandon coal plants and build more zero-carbon sources. 

RGGI administrators say it has succeeded in lowering carbon emissions in member states by more than 50%, twice as fast as the nation as a whole. RGGI states typically spend at least some of the money raised in the carbon allowance auctions on energy efficiency improvements that allow people to use less electricity, further reducing emissions.

But RGGI doesn’t operate in isolation. Several RGGI states are members of the PJM regional grid, comprising 13 states, including some that don’t participate in RGGI. Critics point out that, instead of building or buying renewable energy, a utility in a RGGI state can buy electricity produced in a state that doesn’t participate in RGGI. Fossil fuel plants in a non-RGGI state like West Virginia don’t have to pay to pollute, giving them a competitive edge over similar Virginia plants. 

This is known as “leakage,” a loophole that lets fossil fuel energy “leak” into RGGI states. If there were enough leakage, lower carbon emissions in RGGI could be offset by the higher emissions elsewhere in PJM, leaving overall emissions unchanged.

Stephen Haner, a respected advocate for low energy rates at the conservative Thomas Jefferson Institute for Public Policy, says this is what’s happening in Virginia. He cites data to show a big jump in electricity imports from 2020 to 2022. According to this calculation, CO2 emissions actually increased under RGGI, when they were supposed to be decreasing.

But there are problems with this analysis, starting with the fact that Virginia entered RGGI in 2020, at the onset of the pandemic. That year saw energy demand — and emissions — plummet. It would be strange indeed if Virginia emissions did not rise when the economy rebounded. 

Energy demand is also increasing in Virginia due to the boom in data center construction. Data centers are huge energy hogs, and they are being built faster than our utilities can build new electricity generation to serve them. The new generation will be zero-emission solar and, soon, offshore wind; meanwhile the electricity has to be imported from elsewhere in PJM.

Bill Shobe, an economist with the Weldon Cooper Center at the University of Virginia who has done extensive work in support of Virginia’s energy transition, told me in an email there are other reasons to be skeptical of the conclusion that RGGI caused Virginia’s carbon emissions to increase. I’ll spare you the weedy details, but among other things, Virginia’s nuclear production decreased significantly from 2020 to 2021, which has nothing to do with RGGI. And as Shobe notes, the data centers would get built somewhere, if not here, so perhaps they should not be counted against us.

I am not as forgiving of data centers as Shobe is. Tech companies have chosen Virginia for its fiber optic network and generous tax incentives, and they point to Virginia’s climate laws as progress in meeting their own sustainability commitments. Data centers are taking our money and busting our carbon cap; they owe it to us to procure their own renewable energy, if not in Virginia, then within PJM.

Data centers notwithstanding, Shobe’s own calculations show leakage to be much less than Haner’s data suggests. “It is abundantly clear that emission leakage is relatively modest,” he told me. “In the end, the other advantages of RGGI (lowering compliance costs, revenue for efficiency and flood resilience, etc.) will swamp the small leakage margin.” 

For RGGI critics like Haner and Gov. Glenn Youngkin, of course, effects on CO2 emissions are really beside the point anyway. They would gladly accept higher emissions if it meant lower rates. 

This is analogous to what happens when American manufacturers move operations to countries with cheaper labor and lax environmental laws. One way to stem the tide would be to lower our own environmental standards and suppress wages in the U.S., removing the incentive to offshore operations by making life equally miserable everywhere. 

The better alternative is to raise the bar everywhere so that everyone benefits. That’s not just the right thing to do; it actually works. In the international arena, American leadership on clean energy investment is already forcing other countries to discuss upping their game. Here in the U.S., RGGI has attracted new member states — like Virginia — and prompted discussions within PJM about creating a region-wide clean energy market.

Of course, Virginia alone doesn’t have the market power to force other states to change. Fortunately for us and for the climate, leakage will become less of an issue over time as renewable energy outcompetes fossil fuel power everywhere. PJM’s carbon emissions have trended steadily lower, first as methane displaced coal, and more recently as renewable energy displaces all fossil fuels. That displacement will accelerate with federal clean energy incentives in place and innovation continuing to drive renewable energy costs lower. 

Meanwhile, Virginia crafted its energy transition framework with an eye for ensuring our economy gains, no matter what other states do. As Shobe noted, lowering carbon emissions is just one benefit of RGGI membership; carbon auctions fund energy efficiency and flood control projects here, and the switch away from high-emission coal plants means our residents breathe cleaner air. 

Our RGGI law is also part of a larger package designed to create jobs and economic development here at home. The Virginia Clean Economy Act provides for utilities to procure electricity from solar and wind generating facilities and battery storage located in Virginia, which will reduce leakage over time. It also requires an increasing percentage of Dominion and Appalachian Power’s electricity to come from renewable energy. After 2025, most of that must come from in-state facilities. 

As I’ve shown before, building low-cost wind and solar helps to lower rates and provides price stability when fossil fuel costs spike. Virginia’s energy transition is just getting underway, but it will deliver benefits for years to come. 

This article was originally published in the Virginia Mercury on March 29, 2023.

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Is your electricity bill keeping you in the dark?

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A seemingly simple question came across my desk a few weeks ago: What does Dominion Energy Virginia charge residents per kilowatt-hour (kWh)? Given how frequently I write about Dominion, I was embarrassed not to have a quick answer. In my own defense, though, Dominion makes it hard to find out. And when you do find out, the answer is, it depends. 

Examine a recent bill, and you will see the number of kilowatt-hours you used in the preceding month, a confusing list of charges and the dollar amount that you owe. You can do the math to figure out what you paid this month per kilowatt-hour, but that’s more of a snapshot than the whole picture.

 A Fairfax resident’s Mar. 6, 2023 Dominion Energy electricity bill. (Ivy Main/The Virginia Mercury)

I asked colleagues to send me their utility bills to see what people were actually paying, and I got out my calculator. Everyone’s rate was different, and the more electricity they used, the less they paid per kWh. Even after I removed state and local taxes from the equation, rates ranged from a low of 12.2 cents per kWh for a home that used 2930 kWh in February, to a high of 17.3 cents for a home that, thanks to solar panels, drew just 179 kWh from the grid in the same time period. 

As that solar home shows, the flat rate of the basic customer charge skews the average price higher. That basic charge is currently $6.58 per month, according to Dominion’s residential rate schedule, but you won’t see it on your bill. 

The rate schedule reveals other information your bill doesn’t tell you, and that’s where the real impact lies: you pay less per kWh, in both generation and distribution charges, for the electricity you use in excess of 800 kilowatts per month from October through May. From June to September, you pay less in distribution charges for every kilowatt over 800, but more in generation charges.

You’re also charged a single rate year-round for transmission, which is different from distribution. Plus, every kilowatt-hour is subject to a list of riders – “charges applied to certain rate schedules to recover various costs associated with Dominion Energy’s electric operations and electricity production,” according to Dominion – and non-bypassable charges. The rate schedule doesn’t identify these charges, but the bill does, albeit with no explanation for how the amounts are determined. Your bill also lists fuel as a separate charge under Electricity Supply, though fuel does not appear in the rate schedule. 

Still with me? No? All of this must make sense to the State Corporation Commission, which approved the rate schedule, but it is thoroughly opaque to customers. 

The sufficiently dogged can find a worksheet on Dominion’s website that breaks out all these costs. If you plug in the month and a number of kWh you used, it will calculate a bill. You still need to do the math yourself to arrive at the price per kWh, but you can then play with numbers to see how usage affects rates. 

Doing that confirms what I saw in my colleagues’ bills. Assuming 1,000 kWh, the number Dominion uses to represent the “typical” customer, the price works out to 14 cents in winter.  Change that to a frugal 500 kWh and you get 15 cents. Raise it to 2,000 kWh, and it goes down to about 13 cents. 

When challenged about this in the past, Dominion justified its buy-more, pay-less winter rate structure by arguing it was needed to make bills affordable for customers with electric heating, whose use can double or triple in the wintertime. The company didn’t mention that it also benefits wealthier people with large homes, and decreases the incentive for customers to conserve energy.

It also turns out that large homes do well in summer, too. According to the worksheet, a customer using 1,000 kWh in June would pay 14.6 cents per kWh. For 2,000 kWh, it rises slightly to 14.7 cents. The customer who uses only 500 kWh pays the highest rate, at 15 cents. Energy efficiency, alas, is not rewarded. 

So Dominion’s bills aren’t just confusing, they mask a perverse incentive in the rate structure that rewards people who use more electricity. This year’s utility legislation changes a lot of things, but it doesn’t require greater clarity in billing,  nor does it fix that upside-down incentive.

All utility bills are not equal

This perverse incentive is shared by some other Virginia utilities, though not all, and not all hide the ball the way Dominion does. Appalachian Power’s website shows it charges a single rate no matter how much you use. There’s neither a price break nor a penalty for higher consumption. The website provides two examples, for customers using 1,000 and 2,000 kWh, respectively. This makes it easy to calculate what you’re paying per kWh (about 16.5 cents), though you won’t find that number on either the website or the bills themselves. But neither the bill nor APCo’s website mentions the existence or amount of the basic customer charge, which can only be inferred from the website examples.

I also looked at February bills sent me by customers of Northern Virginia Electric Cooperative (NOVEC) and Rappahannock Electric Cooperative (REC). In both cases the bills were easy to understand. They identify the flat monthly charge, though in both cases the charge is unfortunately more than twice as high as Dominion’s. The bills also list the rates applicable per kWh for generation, transmission and distribution. Both utilities give a year-round volume discount on the distribution charge for higher levels of usage, another regrettable feature. However, REC’s SCC filing shows it imposes a higher electricity supply charge in summer for monthly usage over 800 kWh. I could not find current information about NOVEC’s rates online; I hope its customers have better access. 

Being able to understand your electric bill matters. Virginia’s average residential rates increased 20% between December 2021 and December 2022, according to the U.S. Energy Information Agency, mostly due to last year’s spike in the price of methane gas and coal. Even before last year, our bills were higher than those in most other states. 

Consumers have an array of options to help them lower their energy costs, including new federal and state programs and incentives for weatherization, energy efficient appliances and renewable energy. But customers who are confused about what they currently pay are less likely to act.

For the same reason, utility rate structures should incentivize customers to take steps that conserve energy. Lower rates for using more electricity undercut the value of investments in energy efficiency. 

If utilities want to help their customers, they can start by sending the right message.

This article was originally published in the Virginia Mercury on March 16, 2023.

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A dog, a food fight and other highlights from the 2023 General Assembly session

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Cartoon describes Amazon replacing Dominion as the major political power in Virginia

For followers of Virginia energy policy, 2023 will be remembered as the year Dominion Energy lost its stranglehold on the General Assembly. The utility’s all-out campaign to boost its return on equity earned it little more than crumbs. By contrast, a bill to return authority over rates to the State Corporation Commission garnered overwhelming support. 

Another surprise loser was the nuclear industry. Gov. Youngkin and boosters of small modular reactors (SMRs) expected a lot more love, and incentives, than legislators proved willing to dole out this early in the technology’s development. 

Less noticed was the rise to political power of one of Dominion’s largest customers, Amazon Web Services. Many legislators may still not have caught on, but the corps of lobbyists who haunt the hallways of the General Assembly building know a 500-pound gorilla when they see one. As one lobbyist put it: “Amazon is the new Dominion.”

These are the standout takeaways from a legislative session in which, otherwise, few significant energy bills emerged from the scrum. Senate Democrats ably protected the energy transition framework established in 2020 and 2021, but modest efforts to accelerate the transition mostly failed. Of the roughly 60 bills I followed this session, only a handful made it to the governor’s desk. 

Republican attacks on the energy transition failed

The three foundational bills of Virginia’s energy transition — the Regional Greenhouse Gas Initiative (RGGI), the Virginia Clean Economy Act (VCEA) and Clean Cars — all came under attack this year, as they did last year. And again, repeal efforts failed every time.

Senate Democrats blocked the one bill that would have pulled Virginia out of RGGI. Gov. Youngkin remains bent on achieving the pullout by regulation through  Department of Environmental Quality rulemaking. 

In the transportation sector, every bill to repeal the Air Pollution Control Board’s authority to implement the Advanced Clean Car Standard failed in the Senate as Democrats held the line. 

Efforts to undermine key parts of the VCEA failed, including House and Senate bills that would have given the State Corporation Commission more authority over closures of fossil fuel plants and require it to conduct annual reviews designed to second-guess the VCEA’s framework for lowering emissions and building renewable energy. 

A House bill that would have exempted certain industrial customers categorized as “energy-intensive trade-exposed industries” from paying their share of the VCEA’s costs passed the House on a party-line basis. However, with the bill facing certain death in Senate Commerce and Labor, patron Lee Ware, R-Powhatan, requested it be stricken. At the time, he had reason to expect that a compromise approach proposed by Sen. Jeremy McPike, D-Prince William, would pass. McPike’s bill would have had the SCC put together a group of experts to study the issue and make recommendations. After passing the Senate, however, McPike’s study bill went to House Energy and Commerce, which insisted on amending it to mirror Del. Ware’s bill. That did not go over well in the Senate, where the House substitute was  unanimously rejected. McPike then asked the Senate to kill his own bill, and the energy-intensive trade-exposed industries got nothing. 

Raids on the VCEA produced mixed results

One of the VCEA’s strengths is in creating incentives for clean energy. That’s also a vulnerability, because everybody and their brother wants in on the incentives — and this year, once again, the brothers came peddling some pretty sketchy stuff.

In the end, however, the VCEA sustained little damage. An effort to open up the renewable energy category to coal mine methane was modified to become simply a policy to encourage the beneficial capture and use of methane that would otherwise escape from old coal mines into the air. However, methane extraction jobs in four Southwest Virginia counties will now qualify for a “green jobs” tax credit.

More successful was an effort by the forestry industry to allow more woody biomass to qualify for the renewable portfolio standard (RPS); this was in spite of drawbacks including high levels of pollution, expense and large climate impact. As passed, the House and Senate bills will allow Dominion-owned biomass plants to remain open and have their output qualify for the RPS, so long as they burn only waste wood from forestry operations. Climate advocates opposed the change, but remain hopeful that Dominion and the SCC will want to close these uneconomic biomass plants to protect ratepayers. 

Two different House bills that tried to shoehorn nuclear and hydrogen into the RPS failed in the Senate. A third bill promoting small modular nuclear reactors (SMRs) got more traction initially; it would have had the SCC develop a pilot program for SMRs with a goal of having the first one operational by 2032. After it passed the House, the Senate Commerce and Labor committee adopted amendments to require the SCC to examine the cost of any SMRss  relative to alternatives, and to prevent ratepayers from being charged for the costs if an SMR never became operational. The Senate voted unanimously for the bill with these protections included, but the House rejected them. Ultimately, the bill died, a remarkable setback for the governor’s nuclear ambitions.

Utility reform consumed most of the session (again)

Dominion’s money grabs have turned into near-annual food fights. This one almost wrecked the cafeteria. 

The action proceeded along two fronts. One consisted of bipartisan, pro-consumer House and Senate legislation promoted as the Affordable Energy Act, intended to return ratemaking authority to the SCC. As passed, it merely authorizes the SCC to modify Dominion’s or Appalachian Power’s base rates going forward, if it determines that current rates will produce revenues outside the utility’s authorized rate of return. If that strikes you as hard to argue with, you’re not alone; no one in either chamber voted against it. 

Far more divisive was Dominion’s own effort to secure an increased rate of return on equity (ROE). This legislation earned its own bipartisan support from Dominion loyalists, led by Senate Majority Leader Dick Saslaw, D-Fairfax, for the Senate bill and House Majority Leader Terry Kilgore, R-Scott, for the House bill. 

As initially drafted, it probably should have been called the Unaffordable Energy Act instead of the reassuringly bureaucratic-sounding Virginia Electric Utility Regulation Act. The bill described a formula for determining Dominion’s allowed ROE that SCC staff calculated could result in an ROE as high as 11.57%, up from the currently-allowed 9.35%. SCC staff told legislators this could cost ratepayers $4 billion through 2040. In return, the bill offered some near-term savings for customers but also would have removed the last vestige of retail competition and opened VCEA coal plant retirement commitments to second-guessing by the SCC.

Dominion pulled out all the stops. The company supplemented its own in-house lobbying corps of 13 with another 17 top lobbyists from around Richmond. Former senator John Watkins signed on, as did former FERC commissioner Bernard McNamee. CEO Bob Blue showed up personally  to push the bill. Dominion ran full-page ads in the Washington Post and Virginia newspapers touting a provision of the bill that would save ratepayers $300 million (neglecting to mention that it was the ratepayers’ own money). The ad featured a dog so people could be sure Dominion was being friendly.

It didn’t work. The consumer advocates hung tough, and Gov. Youngkin, possibly a cat person, added his weight to the resistance. As the Mercury reported, the “compromise” that all parties now swear they are delighted with gives Dominion very little kibble. The coal plants will be retired on schedule, ratepayers will see savings and a larger percentage of over earnings will be returned to customers in the future. In exchange, Dominion’s future return on equity will be bumped up to 9.7%, but only for two years, after which the SCC will have discretion to set the ROE as it deems fair. (That is, if Dominion doesn’t start the next food fight first.)

Appalachian Power had its own troubles this session. APCo-only legislationthat would have replaced the requirement for an integrated resource plan with an “annual true-up review” was radically amended to become an entirely different bill. It now allows both utilities to finance the high fuel costs they’ve incurred due to soaring natural gas and coal prices. The amendments were welcomed both as a way to handle the fuel debt and so that no one had to figure out what a true-up review is. The bills passed handily.

One other successful piece of legislation may help avoid future food fights. Sen. Scott Surovell, D-Fairfax, and Del. Kilgore worked together to resuscitate the Commission on Electric Utility Regulation (CEUR) and create more transparency around utility planning. The original bill also created a structure for state energy planning, but that proved too much for House Republicans, who amended it down to the lean bill that passed. 

Over the years CEUR earned a bad reputation as an entity that rarely met but that served as an excuse for legislators to defer action on pro-consumer bills. That makes advocates somewhat wary of this bill. On the other hand, provisions welcoming stakeholders into the utility integrated resource planning process seems likely to benefit the public, if not the utilities.  

Elsewhere, consumers did poorly

Dominion may have taken a drubbing on its money grab, but it did pretty well in guarding its monopoly. The Dominion-friendly Senate Commerce and Labor committee killed a bill to allow customers to buy renewable energy at a competitive rate from a provider other than their own utility. Bills to expand shared solar passed the Senate but died in the House. 

Indeed, the House turned into a killing field for any bill with the word “solar” in it, no matter how innocuous or popular. A House Rules subcommittee killed a bill that would have helped schools take advantage of onsite solar, though it had passed the Senate unanimously. A resolution to study barriers to local government investments in clean energy was left in House Rules. A bill to create a solar and economic development fund passed the Senate but was tabled in House Appropriations. A resolution directing the Department of Transportation to study the idea of putting solar panels in highway medians never got a hearing in House Rules. A consumer-protection effort for buyers of rooftop solar was tabled in House Commerce and Energy. A bill clarifying the legality of solar leases passed the Senate unanimously, only to be left in House Commerce and Energy. 

Do we detect a little frustration on the part of House Republicans at the complete failure of their anti-clean energy agenda? Why, yes. Yes, we do.

The only pro-consumer legislation to pass was a very modest bill requiring the SCC to establish annual energy efficiency savings targets for Dominion customers who are low-income, elderly, disabled or veterans of military service. But legislation that would have made homeowners eligible for low-cost loans through property-assessed clean energy (PACE) programs failed.

Offshore wind remains on track

Dominion beat back an effort to make it hold ratepayers harmless if its Coastal Virginia Offshore Wind project fails to produce as much energy as expected. A bill to allow the company to create an affiliate to secure financing for the project passed. 

Legislation to move up the VCEA’s deadline for offshore wind farm construction from 2034 to 2032 passed; the law now also requires that the SCC consider economic and job creation benefits to Virginia in overseeing cost recovery. However, a bill that would have required the SCC to issue annual reports on the progress of CVOW failed. That bill would also have required the SCC to analyze alternative ownership structures that might save ratepayers money. 

The gas ban ban fails again

This year’s attempt to bar local governments from prohibiting new gas connections passed the House on a party-line vote but was killed in Senate Commerce and Labor. A Senate companion bill from Democrat Joe Morrissey, which had caused something of a tizzy initially, was stricken at Morrissey’s request. 

And this year’s big winner is … Amazon!

With data centers now making up over 21% of Dominion’s load and since they have already sucked up over a billion dollars in tax subsidies, this should have been the year Virginia government woke up to the need for state oversight of the industry. Alas, no. Bills that would limit where data centers could be sited failed. Senate legislation that would have simply tasked the Department of Energy with studying the impact of data centers passed the Senate on a voice vote but was killed in a subcommittee of House Rules on a 3-2 vote, the same fate suffered by a similar House bill. 

Who could be against studying the impact of an industry this big? Aside from the data center industry that is enjoying the handouts, the answer is the Youngkin administration. The governor is so pleased with Amazon’s plan to spend $35 billion on more data centers across Virginia that he promised the company even greater handouts. 

Those handouts take the form of a bill creating the Cloud Computing Cluster Infrastructure Grant Fund, with parameters that ensure only Amazon gets $165 million. In addition, the far more impactful sales and use tax exemption, currently set to expire in 2035, will be continued out to 2040 with an option to go to 2050; again, this is all just for Amazon, unless some other company manages to pony up $35 billion in data center investments. In return, Amazon must create a total of just  1,000 new jobs across the entire commonwealth, and only 100 of them must pay “at least one and a half times the prevailing wage.” A jobs bill, this is not.

With the sales and use tax exemption already costing Virginia $130 million per year and growing rapidly, this legislation will be very costly. You would not know it, though, from the budget analysis performed for legislators. Through the magic of accounting rules, that analysis managed to conclude that the budget impact of this legislation would be zero. 

As preposterous as that is, it may explain why only a few legislators voted against the bill. They have no idea what the governor is getting us into.

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Don’t give data centers a pass on pollution

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Senator Petersen and a group of advocates
Senator Chap Petersen talks with advocates at the General Assembly on February 3. Photo courtesy of Piedmont Environmental Council

In 2019, with Northern Virginia’s data center boom well underway, I worked with the Sierra Club to provide comments to the Department of Environmental Quality (DEQ) on a proposed major source air permit for a data center. 

We urged that the data center, owned by Digital Realty, be required to minimize its reliance on highly-polluting, back-up diesel generators by installing on-site solar and battery storage. While rooftop solar alone wouldn’t produce more than a fraction of the energy a data center uses, solar panels and batteries could provide a strong first line of defense against grid outages, without the air pollution. 

It wasn’t a new idea; other data centers elsewhere were using clean energy and storage or installing microgrids capable of providing all of the power the facility needed. Yet DEQ rejected the suggestion and gave the go-ahead for the data center to install 139 diesel generators with no pollution controls. 

Three years later, data centers have proliferated to such a degree that the power grid can’t keep up. DEQ is now proposing that more than 100 data centers in Loudoun, Prince William and Fairfax counties be given a variance from air pollution controls so they can run their diesel generators any time the transmission system is strained. DEQ is taking comments on the proposal through March 14 and will hold a hearing at its office in Woodbridge on February 27.

As a resident of Fairfax County, I’ll be one of the people forced to breathe diesel pollution to keep data centers running. Make no mistake: There would be no grid emergency without these data centers’ thousands of megawatts worth of electricity demand. And there wouldn’t be a threat to Northern Virginia’s air quality without their diesel generators. 

It’s fair to ask: Should these data centers have been built if the infrastructure to deliver power to them wasn’t ready? I’d also like to know why DEQ thinks it’s okay to impose on residents the combined pollution from many thousands of diesel generators firing at once, when it has known since at least 2019 that viable, clean alternatives exist. 

Batteries alone are an obvious solution for short-term emergency use, and can provide exactly the kind of help to the grid that will be needed this year. Instead of calling on data centers to run diesel generators, a grid operator can avoid the strain by tapping into a data center’s battery, a solution Google is implementing.      

But data centers can economically lower their energy and water costs as well as reduce strain on the electric grid by reducing their energy use and using on-site renewable energy. Global energy management companies like Schneider Electric, Virginia AECOM and Arlington’s  The Stella Group design microgrid solutions for data centers and other facilities that need 24/7 power.

I contacted Stella Group president Scott Sklar to ask how feasible it is for Northern Virginia’s data centers to meet their needs without diesel generators, given land constraints that limit their ability to meet demand with on-site solar. He told me data centers can start by reducing their cooling load by two-thirds by using efficiency and waste heat; cooling, he says, accounts for 38% to 47% of electricity demand. Cost-effective energy efficiency can reduce energy demand by one-third, and waste-heat-to-electricity can meet another 25% to 38% of the remaining electric load. “If you cut the cooling load and use waste heat to electricity, then you only need renewable energy and batteries for a maximum of half,” he concluded. “That’s doable.”

If Virginia data centers don’t start taking these kinds of measures, the situation will get worse. This year’s grid strain may be relieved through construction of new generation and transmission infrastructure, but the industry’s staggering growth rate threatens to create future problems. In 2019, when the Sierra Club was urging DEQ to think about the environmental impact of data centers, the industry consumed 12% of Dominion Virginia Energy’s total electric supply. Today, that number has risen to 21%, a figure that does not include the many data centers served by electric cooperatives rather than Dominion.  

Just last month, Gov. Youngkin announced that Amazon Web Services will invest $35 billion in  new data centers in Virginia, at least doubling Amazon’s existing investments here. By way of thanks, Youngkin wants taxpayers to provide up to $140 million in grant funding to Amazon and extend Virginia’s already-generous tax subsidy program. Ratepayers would also subsidize the build-out by contributing to the cost of new generation and transmission.

Amazon claims to lead the list of tech companies buying renewable energy, though its investments are mostly in other states and abroad. A scathing report in 2019 showed Amazon owned the majority of the data centers in Virginia at that time, but had made few investments in renewable energy here. Since then, Amazon has developed new solar facilities statewide, including enough to power its new Arlington headquarters. But as I discussed in a previous column, all the solar in Virginia would not be enough to make a dent in the energy appetite of Northern Virginia’s data centers, of which Amazon owns more than 100.  

I have no special beef with Amazon, but I do think that a rich tech company with pretensions to sustainability leadership should do more to walk the walk in the state that hosts so much of its operations. Surely that includes not relying solely on diesel generators for back-up power at its data centers. 

I also have no beef with data centers in general. They provide necessary services in today’s world, and they have to go somewhere. Data centers could be a valuable source of revenue and economic development for Southwest Virginia and other parts of the state that are not grid-constrained, if there are guardrails in place to protect nearby communities and the environment, and if they help rather than hurt our clean energy transition. Right now, none of this is the case.

Unfortunately, Gov. Youngkin not only doesn’t want guardrails, he doesn’t even want to know where and why they are needed. On February 3, a representative of his administration spoke in committee in opposition to legislation filed by Sen. Chap Petersen, D-Fairfax that would have the Department of Energy and DEQ study the impact of data centers on Virginia’s environment, energy supply and climate goals. The Senate agreed to the study, but a similar bill died in the House, and a House subcommittee killed Petersen’s Senate version Monday on a 2-1 vote. (The vote was later changed to 3-2 when two delegates who missed the meeting, and the discussion, added their votes. Killing a bill in a tiny subcommittee is one way House procedures allow delegates to avoid accountability on controversial issues — but that’s a topic for another day.)

I spoke with Sen. Petersen by phone after the subcommittee hearing. He pointed out that the administration would have been able to shape the study any way the governor wanted, and would have had control over the recommendations as well. Petersen’s conclusion: “He just doesn’t want anyone looking at it.”

Refusing to look at a problem, however, never makes it go away. And in this case, the problem is just getting bigger.

This article was originally published in the Virginia Mercury on February 15, 2023.

Update: On March 7, DEQ issued a new permit variance limited to data centers in Loudoun County. Although DEQ doesn’t say so, it appears that the original proposal has been modified. The comment period will now run through April 21, and another hearing will be held on April 6.

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The gas stove culture wars come to Virginia

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Gas stoves have been in the headlines a lot recently. On the heels of a studyquantifying their contribution to childhood asthma, Consumer Product Safety Commission member Rich Trumka, Jr. issued a tweet suggesting the agency might take them off the market, a comment he later walked back. 

Too late: cue the outrage from the right. “If the maniacs in the White House come for my stove, they can pry it from my cold dead hands,” tweeted Rep. Ronny Jackson, R-Texas. A number of people tweeted back that they were eager to see this happen, but then it turned out no one in the White House actually wants to ban gas stoves, anyway.

What kind of stove you use might seem an odd contender for a culture war issue, but the outrage beast needs constant feeding. The ranting leaves no time for anyone to point out that electricity powers the great majority of U.S. stoves, methane gas isn’t even an option in much of the country, and — eh — we Americans don’t really cook that much, anyway. If we were arguing over microwave ovens, more of us would have a dog in this fight.

But the mere fact that you never gave your stove much thought before does not excuse you from taking sides now. If you are a Democrat, you must drool over induction stoves, even if you aren’t sure what they are or how they work. If you are a Republican, you must support burning fossil fuels in the kitchen and weep for the plight of Michelin-starred chefs whose restaurants you can’t afford to go to (and indeed, many of whom have been won over by induction, the ingrates). 

One of the difficulties the gas industry faces in politicizing stoves is that it wins over the wrong people. An Energy Information Agency map shows the percentage of households that cook with gas is highest in a bunch of blue states like California and New York, and lowest in the deep-red South and the Dakotas. 

The reasons are pragmatic, not political. Gas utilities in rural states like North Dakota are much less likely to have invested in the expensive network of distribution pipelines needed to bring service to far-flung communities. The rural geography problem affects much of the South as well, but weather is a factor, too. Since furnaces, not cookstoves, are the big fuel users, the relatively warm winters of the South make it a less lucrative market than the colder North. Thus, electricity dominates heating as well cooking in southern states. 

If gas companies have chosen not to serve areas where they would make less money, who can blame them? On the other hand, with gas furnaces increasingly unable to compete with more efficient heat pumps, they now risk losing their northern customers to electric alternatives. Either they sit and stare into the abyss of an all-electric future in which they are obsolete, or they have to do what they can to slow their inevitable decline.

And so they set out to convince state legislatures to prevent local governments from barring new gas hookups in their communities, as many left-leaning cities have been doing in the interests of climate and health. Gas stove diehards are the industry’s unwitting (and sometimes witting) poster children.  

On the face of it, the gas industry has been successful: at least 20 statescontrolled by Republican legislatures have enacted gas ban preemption laws. Sadly for the gas utilities, the wins have occurred in those southern and rural states where they don’t have as much business to protect anyway. 

That’s what makes Virginia an important next target. Almost one-third of Virginia households are customers of natural gas utilities, and only a handful of rural Virginia counties have no gas service at all. There is certainly room for growth. Yet a number of urban and suburban localities have adopted climate goals that call on their governments to lower greenhouse gas emissions. The gas industry fears these localities may decide banning new gas hookups could be one step towards the goal. 

The risk seems slight. Virginia is a Dillon Rule state, meaning local governments have only the authority delegated to them by the General Assembly. Given the difficulty Virginia localities have had even getting authority to ban single-use plastic bags (they still can only tax them, not pry them from your cold, dead hands), it seems unlikely they would seek, or get, authority to ban new gas hookups any time soon.

Indeed, when the General Assembly first considered legislation to preempt gas bans last year, the focus was on the City of Richmond and the incompatibility of the city’s 2050 carbon-neutrality pledge with its continued operation of its own gas utility. The city itself didn’t seem to be thinking that far ahead, and climate activists have since complained that Richmond is more intent on upgrading its gas infrastructure than in phasing it out. Still, the gas industry had a target to point to.

The House was willing to adopt the full gas preemption ban, but a Senate committee reworked the legislation to focus on the problem at hand. The law that passed imposed a requirement that any municipality with a gas utility notify its customers and put the utility up for sale before exiting the business. All parties pronounced themselves satisfied, declared victory and went home. 

This year the gas industry has no threat to point to but is nonetheless again trying to get the preemption bill passed. The bill language includes a kind of culture war code term, a declaration that “energy justice” means you have the right to buy gas if you can afford it and the gas company has the right not to supply you if you can’t, or if serving you isn’t profitable for the company. 

The better description for this, surely, is the free market, which is quite distinct from justice. So, is it justice or merely irony that even if it were to pass, many Republicans who voted for the bill still wouldn’t get gas service for their constituents because serving rural areas is not in the interests of the industry? 

As it did last year, the Republican-led House has passed the industry’s bill along party lines. In the Democratic-controlled Senate, though, matters get interesting. This year the gas industry secured a Senate patron, Democrat Joe Morrissey. Though Morrissey is hardly popular in the party, he is still at least one Democratic vote for the bill in a closely divided chamber. 

It seems obvious enough that the preemption ban is on the wrong side of history, at a time when our burning of fossil fuels is already causing climate chaos. It’s also not going to stave off the inevitable for long. Building electrification will continue. Over time, more consumers will choose heat pumps and induction stoves over methane gas, not for political reasons but for health reasons and because the technology is better. 

But if we agree the gas industry will lose out in the end, is it really a big deal if Virginia localities are barred from doing something they don’t seem to have authority to do anyway?

Well, actually, yes. Even if Virginia localities can’t make a blanket prohibition on new gas connections, it’s not hard to imagine that a locality might choose to reject a particular gas connection to a particular construction project or subdivision where the gas line would cross parkland or wetland, or be problematic for some other very specific, very local and very legitimate reason. 

Virginia’s balance of power has always recognized that land-use decisions should be made at the local level. This legislation hands a cudgel to the gas industry and developers to override a legitimate local land use decision.

For that, legislators should have a better reason than taking sides in a culture war.

This article was originally published by the Virginia Mercury on February 7, 2023.

Note: A reader in rural Virginia pointed out that the legislation also protects users of propane, which is a common heating fuel in rural areas that are not served by methane gas utilities. I didn’t address propane because although the bill addresses it, it’s really peripheral to the point of the legislation. The gas industry lives and dies on methane, not propane, and propane is so often used for heating in rural areas that there’s little chance of any rural locality wanting to ban it. So no, that still is not a reason to support the bill.

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These bills could bring more clean energy to your community

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Solar schools, climate resiliency, energy efficiency: Local governments are now involved in energy planning – whether they feel ready for it or not. Some localities have adopted climate goals that require them to look for ways to lower carbon emissions; others just want to save money on high energy bills.

Virginia has chipped away at the barriers to renewable energy and started putting hundreds of millions of dollars into energy efficiency programs, thanks to laws like Solar Freedom, the Virginia Clean Economy Act (VCEA) and the Clean Energy and Community Flood Preparedness Act, which made Virginia part of the Regional Greenhouse Gas Initiative (RGGI). 

But even a positive policy environment doesn’t flatten all barriers. At all levels of government — and for that matter, in homes and businesses — energy-saving projects get stalled by confusing information, lack of money or financing, layers of opaque bureaucracy or fear of uncertain outcomes. 

Attacks on Virginia’s clean energy transition framework and utility reform get most of the ink during this legislative session, but some less-noticed bills are focused on moving ahead by removing stumbling blocks to clean energy and identifying funding. 

I made a brief mention of some of these in my bill round-up last week, including House Joint Resolution 545 from Briana Sewell, D-Prince William, asking the Department of Energy to recommend ways to overcome barriers that keep local governments and their constituents from purchasing clean energy. There is also Senate Bill 1333 from Ghazala Hashmi, D-Richmond, to facilitate local clean energy projects for low- and moderate-income residents. Senate Bill 1419 from David Suetterlein, R-Roanoke, would allow retail choice in renewable energy purchasing, and Senate Bill 949 from Chap Petersen, D-Fairfax, would allow residents to access low-cost public financing of clean energy. 

The shared solar bills I covered last week also allow local governments to participate. And although I’m not tracking them myself, there are other bills that encourage local resiliency planning, give localities authority to require electric vehicle charging infrastructure or support transit solutions. 

Overwhelmingly — but not exclusively! — the bills this year that try to move the ball forward on clean energy come from Democrats, a bad sign when the House and governor are Republican. I have seen many bills die in committee for reasons that have little to do with the bill, and Gov. Youngkin notoriously vetoed bills last year seemingly  as a “personal and political move” against the bills’ patron senator.  It’s also a short session this year, so if a bill is complicated or has opposition from favored industries, it goes into committee with a strike against it. 

But many of these bills support private investments or save money for taxpayers, which are thankfully still bipartisan priorities. And some energy innovations are now mainstream across Virginia, in red counties as well as blue. Among these are solar schools. 

So let’s take a deeper look at one piece of legislation, the solar school roofs study at the center of Senate Bill 848 from Barbara Favola, D-Arlington, and House Bill 1852 from Suhas Subramanyam, D-Loudoun.

solar panels on a school roof
Wilson Middle School, Augusta County. Photo courtesy of Secure Futures.

 I wish they all could be solar schools

In the summer of 2021, I was dismayed to learn that the school board for the city of Norfolk had been told none of their brand-new schools could be outfitted with solar panels because the roofs weren’t designed to take the extra weight. As a result, Norfolk could not do what dozens of school districts across Virginia have been doing: installing solar arrays to provide some or all of the energy the school consumed, saving money for taxpayers and giving students hands-on exposure to a fast-growing technology with terrific career potential.   

What a missed opportunity, and yet, Norfolk wasn’t alone. I soon learned about a new school in Richmond where educators were eager for solar, but the steep pitch of the roof on the main part of the building wasn’t suitable. That left only a flat-roofed side wing that couldn’t hold enough panels to meet more than a fraction of the school’s needs.

From conversations with architects and solar developers, I know that building a school with a roof that can hold solar panels doesn’t have to be an added expense; mainly, you just have to plan for it. Wyck Knox, the architect who designed Arlington’s two net-zero energy schools (among others), says even building a school that can produce as much energy as it uses doesn’t have to cost more, if you simply approach the design process with that goal. 

Designing a school with a solar-ready roof pays off when the school district enters a power purchase agreement (PPA) with a solar company that installs and owns the solar array. The school pays just for the electricity it produces, typically at a rate lower than what the utility charges. 

As of this year, the financing options have expanded. The Inflation Reduction Act allows tax-exempt entities like local governments and schools to claim federal tax credits for renewable energy and batteries directly. 

So why aren’t all schools solar schools? The answers might differ from one school district to the next, but generally it’s because nobody thought of it at the right time, or they don’t know how to go about it, or the right people aren’t on board. One stubborn facilities manager can stall a project indefinitely. 

The U.S. Department of Energy says energy is the second largest expensefor schools, after teacher salaries. Taxpayers should be able to expect their school districts will pursue strategies like onsite solar that reduce energy costs. 

Personally, I support requiring school districts to, at the very least, analyze whether they could save money with solar roofs before they lock in designs that don’t include them. However, House Republicans killed an effort last year to impose such a requirement. And some school officials say it isn’t needed because they want to do solar; they just need help with the process. 

With that in mind, Senate Bill 848 and House Bill 1852 task the Commission on School Construction and Modernization with developing recommendations to help schools incorporate renewable energy in the construction or renovation of schools. 

The commission itself recommended several pieces of legislation that are now before the General Assembly, including some around construction funding. That should make it easier to integrate solar recommendations into their other work. 

Favola said, “I am extraordinarily excited about the possibility of providing school systems with technical assistance on how to incorporate solar and other renewable energy components in their renovations and new buildings.”

You and me both, Senator. You and me both. 

This article was originally published in the Virginia Mercury on January 26, 2023.

Update January 27: I may have given Republicans too much credit, at least those in the House. Although Senator Favola’s bill sailed through a Senate committee and is headed for a floor vote, a House subcommittee killed Delegate Subramanyam’s companion bill–in spite of a long line of speakers in support and no opposition. It was a bad meeting for Subramanyam; his shared solar bill also died in that committee. Senator Sutterlein’s retail competition bill has also been killed in a bipartisan vote in Senate Commerce and Labor, a Dominion-friendly committee.

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Attacks on Virginia’s climate laws are front and center at the General Assembly

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People gathered in a square listening to speakers.
Climate advocates gathered at the Virginia Capitol on Friday to defend Virginia’s clean energy laws. Speakers included Senators Creigh Deeds, Ghazala Hashmi, David Marsden and Scott Surovell, and Delegates Rip Sullivan, Nadarius Clark, Rodney Willett and Alfonso Lopez. Photo courtesy of Mary-Stuart Torbeck, Virginia Sierra Club.

Every year I do a round-up of climate and energy bills at the start of the General Assembly session. This year, as expected, Republicans continue their assault on the hallmark legislation passed in 2020 and 2021 committing Virginia to a zero-carbon economy by 2050. In addition, this year features the usual assortment of bills doing favors for special interests, efforts to help residents and local governments go solar and a brand-new money and power grab by Dominion Energy.

Republicans are not down with the energy transition

Dominion Energy may have baked the transition to renewables into its planning, but unsurprisingly, the Virginia Republican Party thinks the fight to preserve fossil fuel dependence is a winning issue. The three foundational bills of Virginia’s energy transition — the Regional Greenhouse Gas Initiative (RGGI), the Virginia Clean Economy Act (VCEA) and Clean Cars — all come in for attack, either by outright repeal or death-by-a-thousand-cuts.

Senate Bill 1001 (Richard Stuart, R-Westmoreland) would repeal the Clean Energy and Community Flood Preparedness Act, the statute that propelled Virginia into the Regional Greenhouse Gas Initiative. Participation in RGGI is the vehicle by which utilities buy allowances to emit carbon pollution. Under RGGI, the number of allowances available declines every year, and Virginia’s power sector would reduce CO2 emissions 30% by 2030. The allowance auctions have already raised hundreds of millions of dollars that by law must be used for low-income energy efficiency programs and flood resilience projects. A similar bill failed last year, and Senate Democrats have pledged to block the effort again. Meanwhile, Gov. Glenn Youngkin is trying to withdraw Virginia from RGGI administratively, a move that former Attorney General Mark Herring ruled wasn’t legal. 

Carbon allowance auctions are a foundational piece of the VCEA as well, but it is a much bigger law that touches on too many aspects of energy regulation for repeal of the whole thing. This isn’t stopping Republicans from trying to undermine key provisions. House Bill 2130 (Tony Wilt, R-Rockingham) and Senate Bill 1125 (Travis Hackworth, R-Tazewell) would give the State Corporation Commission more authority over closures of fossil fuel plants and require it to conduct annual reviews aimed at second-guessing the VCEA’s framework for lowering emissions and building renewable energy. Achieving the VCEA’s climate goals is decidedly not the purpose; meanwhile, the legislation would remove business certainty and undercut utility planning.

Other attacks on the VCEA take the form of favors for specific industries, but would effectively make the VCEA’s goal of reaching 100% carbon-free electricity by 2050 at the least cost to consumers impossible. I’ve dealt separately with small modular reactors, hydrogen and coal mine methane below. 

In addition, House Bill 1430 and House Bill 1480 (Lee Ware, R-Powhatan) exempt certain industrial customers categorized as “energy-intensive trade-exposed industries” from paying costs that the VCEA makes all customers pay. The exemption would last four years. The result would be nice for those industries but would shift costs onto everyone else. The bill seems likely to pass the House, but the same bill last year died in the Senate. However, Senate Bill 1454 (Jeremy McPike, D-Prince William) proposes the SCC put together a group of experts to study the issue and make recommendations.

In the transportation sector, no fewer than seven bills sought to repeal the Air Pollution Control Board’s authority to implement the Advanced Clean Car Standard: House Bill 1372 (Buddy Fowler, R-Hanover), House Bill 1378 (Wilt), Senate Bill 778 (Stuart), Senate Bill 779 (Stephen Newman, R-Bedford), Senate Bill 781 (Bill DeSteph, R-Virginia Beach), Senate Bill 782 (Bryce Reeves, R-Fredericksburg) and Senate Bill 785 (Ryan McDougle, R-Hanover). The Senate bills were killed in committee on Tuesday. The House bills are likely to pass that Republican-led chamber, but it appears clear that Senate Democrats intend to hang fast to Clean Cars.

Although so many identical bills might look like a failure of legislators to coordinate efforts, in fact the senators all signed on as co-patrons to each other’s bills, along with a dozen House Republicans. Republicans think they have a winning issue for the November election, and lots of them want to claim they filed “the” legislation attempting to repeal Clean Cars.

Raiding the store for polluter interests

If the VCEA is here to stay, there are some decidedly non-green industries that want to claim the green mantle to get in on the action. It’s not about making themselves feel better about their high greenhouse gas emissions. It’s about getting a piece of the market for renewable energy certificates and undermining the integrity of the renewable energy label. 

House Bill 1643 (Terry Kilgore, R-Scott) and Senate Bill 1121 (Hackworth) proclaim coal mine methane a renewable energy. House Bill 2178 (James Morefield, R-Tazewell) makes coal mine methane a qualifying industry for Virginia’s green job creation tax credit. 

Burning wood for electricity produces as much CO2 as coal, at a cost much higher than solar energy today. Yet House Bill 2026 (Israel O’Quinn, R-Bristol) and Senate Bill 1231  (Lynwood Lewis, D-Accomack) remove the requirement in the VCEA for the retirement of Dominion’s generating facilities that burn wood for electricity and allow these generating plants to qualify as renewable energy sources.

SMRs and hydrogen

Speaking of raiding the store, House Bill 2197 (Kathy Byron, R-Bedford) allows “advanced nuclear technology” to qualify for Virginia’s renewable portfolio standard (RPS). The bill defines the term as “a small modular reactor or other technology for generating nuclear energy,” which looks like an opening for existing nuclear plants as well. Even if it isn’t, treating any kind of nuclear technology as a renewable resource upsets the VCEA’s calibrated approach to nuclear as a zero-carbon technology alongside renewable energy, not in place of it. 

House Bill 2311 (Kilgore) goes a step further, declaring both nuclear and hydrogen to be renewable energy sources and making them eligible for the RPS. Hydrogen, of course, is a fuel made from other sources of energy, which can be renewable but are more typically fossil fuels currently. Given Youngkin’s interest in seeing hydrogen made from coal mine methane, you can see where this is headed.  

House Bill 2333 (Danny Marshall, R-Danville) calls on the SCC to develop a pilot program to support building small modular nuclear reactors, with a goal of having the first one operational by 2032. In spite of the word “pilot,” the bill is ambitious. It contemplates four sites, each of which can have multiple reactors of up to 400  megawatts each.  

Utility reform 

Some of these bills are reform bills; some are “reform” bills. To recognize the difference, it helps to know whether the proponent is a public interest organization or the utility itself. When Dominion tells you it has a bill you’re going to love, you can be pretty sure the result will be bad for ratepayers. 

Senate Bill 1321 (Jennifer McClellan, D-Richmond, and Creigh Deeds, D-Charlottesville) and House Bill 1604 (Ware), billed as the Affordable Energy Act, is real reform legislation that gives the SCC authority to lower a utility’s base rates if it determines that existing rates produce “unreasonable revenues in excess of the utility’s authorized rate of return.” 

Other straightforward measures include House Bill 2267 (Wilt) and Senate Bill 1417 (David Suetterlein, R-Roanoke), which allow the SCC to decide to add the cost of a new utility generation project into base rates instead of granting a rate adjustment clause (RAC), and House Bill 1670 (Marshall), which returns rate reviews to every two years instead of the current three years. 

Dominion, however, has its own “reform” bill, introduced by its favorite Democratic Senate and Republican House leaders. As is typical for Dominion, Senate Bill 1265 (Dick Saslaw, D-Fairfax) and House Bill 1770 (Kilgore) is long, dense and deadly effective in crushing competition and protecting profits. The bitter pill is sugarcoated with short-term rebates and concessions to minor reform proposals, such as biennial rate reviews in place of triennial reviews and consolidating many RACs into base rates. A somewhat less objectionable substitute moved forward in Senate subcommittee this week, but further negotiations are expected to produce yet more changes.

The warring factions may be able to find common ground in House Bill 2275 (Kilgore) and Senate Bill 1166 (Scott Surovell, D-Fairfax), legislation creating a structure for state energy planning.

House Bill 1777 (O’Quinn) and Senate Bill 1075 (Frank Ruff, R-Mecklenburg) change how the SCC regulates rates of Appalachian Power – but not Dominion. They require the SCC to conduct “annual rate true-up reviews (ART reviews) of the rates, terms and conditions for generation and distribution services” by March 31, 2025 and annually after. They also remove the requirement for an integrated resource plan. 

Retail choice

Past years have seen efforts to restore the ability of customers to buy renewable energy from providers other than their own utilities, an important option for a resident or business that wants to buy renewable energy at a competitive rate. Senate Bill 1419 (Suetterlein) marks at least the fourth year in a row for this effort. A Senate subcommittee voted against it this week.

Dominion’s “reform” bill, on the other hand, clamps down further on retail choice. In light of Youngkin’s support for retail choice in his energy plan, it is interesting to see Republicans like Kilgore instead enabling Dominion’s anticompetitive efforts. 

solar panels on a school roof
Wilson Middle School, Augusta County. Photo courtesy of Secure Futures.

Goosing investments in solar and efficiency

With the passage of the federal Inflation Reduction Act last summer, renewable energy and energy efficiency tax credits are more generous and easier to access than ever before. Senate Bill 848 (Barbara Favola, D-Arlington) and House Bill 1852 (Suhas Subramanyam, D-Loudoun) direct the Commission on School Construction and Modernization to figure out how to help schools take full advantage of onsite solar. 

House Joint Resolution 545 (Briana Sewell, D-Prince William) directs the Department of Energy to study barriers to clean energy investments by localities and their residents and issue recommendations to help. 

Senate Bill 1333 (Ghazala Hashmi, D-Richmond) creates a program within the Department of Energy to be known as the Commonwealth Solar and Economic Development Program. The program will implement solar, energy efficiency and other economic development projects in specified census tracts. 

Senate Bill 1323 (McClellan) requires the SCC to establish for Dominion Energy Virginia annual energy efficiency savings targets for customers who are low-income, elderly, disabled or veterans of military service. 

Senate Bill 984 (Monty Mason, D-Williamsburg) clarifies that lease arrangements for onsite solar are legal, whether or not they’re net metered, including when battery storage is part of the project. (For context: Leasing has always been an option for onsite solar, but the IRA has increased interest in this approach. It is considered especially attractive for residential projects that, except when the customer is low-income, are barred by Virginia law from using third-party power purchase agreements.) The bill also ensures owners can be paid for grid services using the facilities. Another welcome provision of the bill is removing standby charges for residential customers who have batteries along with their solar panels. Currently, residents with systems over 15 kW must pay hefty standby charges.

House Joint Resolution 487 (Marshall) directs the Department of Transportation to study the idea of putting solar panels in highway medians.

Meanwhile, House Bill 2355 (Jackie Glass, D-Norfolk) is a consumer-protection effort for buyers of rooftop solar and other small arrays, who have sometimes been the victims of unscrupulous companies that overcharge and under-deliver.

Shared solar

Virginia has been wading into community solar like a child at the seashore, dipping a toe in and then running away again and again, without ever truly entering the water. A 2020 law establishing a “shared solar” program in Dominion territory was supposed to get us swimming. At the SCC, however, Dominion won the right to impose such a high minimum bill as to make the program unworkable for any but low-income customers, who are exempt from the minimum bill.   

Senate Bill 1266 (Surovell) attempts to address the problems with the shared solar program in Dominion territory. Surovell was the author of the 2020 law and criticized the SCC’s action for making shared solar unavailable to anyone other than low-income residents. His approach would limit the minimum bill to more than twice the basic customer charge, while also increasing the size of the program to at least 10% of the utility’s peak load and allowing non-jurisdictional customers like local governments to participate. 

Senate Bill 1083 (Edwards and Surovell) creates a shared solar program in Appalachian Power territory. It builds on the framework of the existing program in Dominion territory, but the minimum bill is limited to $20. It also seeks to prevent the interconnection problems that industry members have complained about by limiting costs and requirements to those “consistent with generally accepted industry practices in markets with significant penetration levels of distributed generation.”

On the House side, House Bill 1853 (Suhas Subramanyam, D-Loudoun) combines both Senate bills into one bill that addresses both Dominion and Appalachian Power. For both, it limits the minimum bill to two times the basic customer charge, and it includes the interconnection language. 

offshore wind turbines

Offshore wind

Senate Bill 1441 (Mamie Locke, D-Hampton) moves up the VCEA’s deadline for offshore wind farm construction from 2034 to 2024, a change I don’t understand at all, given that the current timeline calls for completion of the Coastal Virginia Offshore Wind Project (CVOW) in 2026. The bill also requires that when Dominion seeks cost recovery, the SCC must give preference “for generating facilities utilizing energy derived from offshore wind that maximize economic benefits to the Commonwealth, such as benefits arising from the construction and operation of such facilities and the manufacture of wind turbine generator components.” I look forward to learning what’s behind that, too. 

Senate Bill 1854 (Subramanyam) seeks annual reports from the SCC on the progress of CVOW, including “the status and the anticipated environmental impacts and benefits of such projects” that  “analyze the current and projected capital costs and consumer rate impacts associated with such projects.” It also wants “an analysis of the ownership structure chosen by an electric utility for previously approved wind energy projects and the costs, benefits, and risks for consumers associated with utility-owned and third-party-owned projects.” This analysis would compare the Virginia project with other U.S. projects, potentially a useful analytical tool for the next offshore wind project that comes along. 

House Bill 1797 (Nick Freitas, R-Culpeper) declares that ratepayers will be held harmless if CVOW’s annual net capacity factor falls below 42% as measured on a three-year rolling average. The capacity factor is the average output of the wind turbines as a percentage of their full potential. In its filing with the SCC, Dominion projected CVOW would hit that 42% mark. If wind speeds turn out to be stronger than projected, the turbines will produce more energy at a lower cost. If the wind (or the machinery) doesn’t meet expectations, the capacity factor will be lower and costs will be higher. The bill would make Dominion absorb the loss in that event. However, the SCC did just resolve this issue in a way that takes account of both ratepayer interests and the newness of the technology, making it unlikely that many legislators will want to revisit this topic.  

Senate Bill 1477 (Lewis) allows Dominion, subject to SCC approval, to create an affiliated company to build some or all of its offshore wind project, with the purpose of having the affiliate secure equity financing.

House Bill 2444 (Bloxom) moves up the timeline for Virginia offshore wind projects under the VCEA from 2034 to 2032 (I wonder if this is what Senator Locke’s bill was supposed to say). It also requires the SCC to give preference to requests for cost recovery by Dominion for “generating facilities utilizing energy derived from offshore wind that maximize economic benefits to the Commonwealth.” I don’t understand if this is intended to discourage Dominion from pursuing projects off the shores of other states, or if it is a poorly-worded way to support in-state manufacturing of components.

Residential PACE

Senate Bill 949 (Petersen) makes homeowners eligible for property-assessed clean energy (PACE) programs, which provide low-cost financing for energy efficiency and renewable energy upgrades. Currently PACE loans are only available to commercial customers. 

Data centers

Virginia has a data center problem. Northern Virginia hosts the largest concentration of data centers in the world, and the energy they consume now amounts to 21% of Dominion’s load. This growth has happened with no state oversight; indeed, it’s been goosed by a billion dollars’ worth of state tax incentives over the past decade. Meeting the energy demand of data centers requires more generation and more transmission lines, usually paid for by all utility customers. 

Senate Joint Resolution 240 (Chap Petersen, D-Fairfax), and House Joint Resolution 522 (Danica Roem, D-Manassas) task the Department of Energy with studying data centers’ impact on Virginia’s environment, energy supply, electricity rates and ability to meet climate targets. The bills also ask for recommendations on whether tax incentives should be conditioned on use of renewable energy or on meeting siting criteria. 

Both Roem and Petersen also have bills that deal with specific siting issues, mostly unrelated to energy. Senate Bill 1078 (Petersen) limits areas where data centers can be sited (e.g., not near parks and battlefields, a barb likely aimed at the Prince William Gateway project). However, it also requires localities to conduct site assessments for impacts on carbon emissions as well as water resources and agriculture. 

Meanwhile, though, legislators seem determined to increase taxpayer handouts to data centers. Following Governor Youngkin’s announcement about Amazon’s plans to invest billions of dollars in new data centers in Virginia, Delegate Barry Knight (R-Virginia Beach) filed House Bill 2479, creating the Cloud Computing Cluster Infrastructure Grant Fund to throw more money at a corporation that seems likely to have more money already than Virginia does.

Return of the gas ban ban 

Last year the natural gas industry tried to get a law passed to ban localities from prohibiting gas connections in new buildings. Some cities in other states have done that to protect the health and safety of residents and protect the climate; meanwhile, about 20 red states have passed laws to prevent their local governments from doing it. But no Virginia locality has attempted to ban gas connections, in part because as a Dillon Rule state, our local governments don’t appear to have that authority. That isn’t stopping the gas industry from seeking to ban bans here; House Bill 1783 (O’Quinn) and Senate Bill 1485 (Morrissey) would do just that. Obnoxiously, it calls the right to use gas “energy justice,” which is surely the best reason to oppose it.  

A version of this article appeared in the Virginia Mercury on January 18, 2023.

Update January 19: Two new bills have been added since yesterday. Senator Morrissey filed SB1485 (gas ban ban), and Senator Lewis filed SB1477 (Dominion offshore wind affiliate).

Update January 23: Delegate Bloxom filed HB2444, added to the offshore wind section above. Delegate Knight filed HB2479, a bill to enrich Amazon; see data centers.

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Dominion Energy says solar will dominate by 2040

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Photo credit iid.com

When the Virginia General Assembly convenes this week for the 2023 session, Republicans will once again try to undo the commonwealth’s framework for a transition to renewable energy. Led by Gov. Glenn Youngkin, they will attack Virginia’s participation in the Regional Greenhouse Gas Initiative and the Virginia Clean Economy Act (VCEA) and continue seeking ways to keep a money-losing coal plant in Wise County in operation. 

Meanwhile, Virginia’s largest utility has already decided that renewable energy, especially solar, is the future. Dominion Energy’s just-released Climate Report 2022 projects that under every set of assumptions modeled, solar energy will become the mainstay of its electricity generation fleet no later than 2040. 

As for coal, it disappears from the energy mix by 2030 even in a scenario that assumes no change from present policy, in spite of the fact that the VCEA allows the Wise County coal plant to operate until 2045. As for fracked gas, it hangs on longer but in ever-smaller amounts, mostly to help meet winter peak demand. 

Dominion modeled three scenarios for this report. The “current policy” scenario assumes the policy landscape and technology options stay the same as they are presently, and that Dominion does its part in driving a global temperature increase of 2.1°C by 2050. That’s in keeping with Virginia’s climate law, and also with Dominion’s internal commitment to achieve net-zero emissions by 2050. 

That much warming is not a good outcome, considering the climate chaos the planet is experiencing today with barely over 1 degree of warming. Yet even under a 2.1°C scenario, Dominion’s model predicts solar energy will provide 40% of the electricity supply by 2040, followed by nuclear at 30% and (offshore) wind at 19%. 

The “emerging technologies” scenario also assumes a temperature increase of 2.1°C by 2050, but adjusts for the likelihood that technological change will lead to “advanced dispatchable zero-carbon technology” options that could displace much of the need for energy storage. These might include hydrogen, carbon sequestration and storage, and methane gas produced as the result of poor animal waste disposal practices at factory farms — what Dominion calls renewable natural gas, or RNG. 

Small modular reactors, SMRs, are not included in this scenario (and are hardly mentioned at all in the report), perhaps because operating them as peaker plants would be crazy expensive. Even without SMRs, though, the report says overall cost savings would be slight for this scenario, and solar would still be the leading source of electricity by 2040. 

Finally, the report models an “accelerated transition” scenario that reduces emissions more aggressively, in line with an effort to keep the global temperature increase to 1.5°C by 2050. This is the upper bound of warming considered tolerable by many climate scientists, but it would require Dominion’s electricity business to reach net zero by 2035. Dominion’s model shows solar would make up nearly two-thirds of the electric supply in that scenario. Offshore wind would be held to just 17%, apparently because at that point more wouldn’t be needed. 

I’d argue that offshore wind should carry more of the load to create a more balanced portfolio, but it’s a moot point: The report writers clearly think this scenario is just a thought exercise. The scenario consistent with keeping global warming to 1.5°C is described in a way that seems intended to discourage anyone from pursuing the matter.

“The heavier reliance on renewable capacity in this scenario,” it warns, “would require significantly greater capital investment at a much more rapid pace in preparation for a net zero mix by 2035. … Achieving such a rapid pace of emissions reductions would require predictable, dependable, and rapid wholesale shifts in public policy and technology advancements capable of maintaining system reliability and customer affordability. Also necessary would be supportive regulatory treatment and timely permitting for significant near-term zero-carbon infrastructure development and transmission system enhancements.”

In other words, the report seems to say, fuggedaboutit. It’s just too hard.

If that feels defeatist, it’s worth remembering how far Dominion has come to reach a point where it is even writing climate reports, not to mention declaring on page 1 that “climate change presents one of the greatest challenges of our time, and we take seriously our leadership role in helping to mitigate it.”

This is new, and you have to look back only a decade to appreciate how radical this declaration is. When 2013 opened, Dominion had just completed construction of that regrettable coal plant in Wise County and had begun a fracked gas plant building spree that would continue even after solar emerged as the cheapest source of new electricity in Virginia. Climate activists like myself were dismissed when we warned that new gas plants would be reduced to giant concrete paperweights well before the end of their design life, leaving ratepayers paying off stranded assets.

Even in 2016, when now-CEO Bob Blue was president of Dominion Virginia Power, Blue was proclaiming natural gas “the new default fuel” for electric generation. As late as the spring of 2020, the company’s integrated resource plan still called for building more gas plants. That plan acknowledged the strategy would violate Virginia’s new climate law, so it argued against the law. 

Yet I suspect Blue may deserve credit for the remarkable about-face at Dominion beginning in 2020. That summer Dominion Energy began significantly reducing its investments in fossil gas outside of the electric sector, scrapping plans for the Atlantic Coast Pipeline and selling off its gas transmission and storage assets. That year it also sold half of its interest in the Cove Point liquified natural gas export facility. It is reportedly considering selling the other half now as part of what Blue called in November “a ‘top-to-bottom’ business review aimed at ensuring that it is best positioned to generate substantial long-term value for shareholders.” 

Maybe Blue got religion on climate, maybe he’s just a savvy businessman. It’s a really good sign of the times that you can’t always tell the difference. 

But of course, Dominion is stuck with a heck of a lot of gas generating plants that it has to justify post hoc, which helps to explain its lack of enthusiasm for the 1.5°C scenario. Another part of the explanation lies in Dominion’s remaining gas investments outside the electric sector. Although Dominion Energy Virginia is solely an electric utility and does not supply gas to retail customers in Virginia, a separate Dominion Energy subsidiary sells gas in other states. So far these assets don’t seem to be going the way of the gas transmission business and Cove Point.

Dominion’s climate report tries valiantly to justify holding onto its retail gas business. The report declares, “Natural gas is also part of our long-term vision and consistent with our Net Zero commitment.” 

Sure, and the Tooth Fairy is real. Of the greenhouse gas reduction approaches cited — fixing leaks, making “renewable” methane from waste products, blending hydrogen into pipelines, and using creative carbon accounting with “offsets” — none make sense either economically or from a climate standpoint. 

Maybe he cares about climate, but apparently Blue doesn’t want to give up yet on a profitable business. Fortunately, at least for the planet, the retail gas business is about to enter a terminal decline as homes and businesses electrify. Getting out now would be the smart move from both the business and climate perspective.

Because what will eventually power all these homes, no matter which scenario you choose?  Renewable energy, and especially solar.

This article was originally published in the Virginia Mercury on January 6, 2023.

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Virginia has a data center problem

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Pageland Lane, currently running through farms and parks, will be the central artery of the new data center district.
Pageland Lane is currently rural but would be expanded to four lanes as part of the PW Gateway project. Boosters say increased tax revenues will benefit parks and schools.

Actually, Virginia has several data center problems.

One seems like a good problem to have, at least if you are a locality looking to attract business.

Data centers pay a lot of local taxes while requiring little in the way of local services, and the steady buildout has supported thousands of construction jobs across the region. Indeed, so many data center companies have chosen to locate in Northern Virginia that we now host the largest concentration of data centers in the world. No wonder other regions of the commonwealth are angling to bring data centers to their neck of the woods too.

But there’s more to being the data center capital of the world than just raking in cash. To drive through Data Center Alley is to witness suburban sprawl on steroids, with its attendant deforestation, loss of farmland and loss of wildlife habitat. The environmental destruction doesn’t stop at a facility’s property line; a single building covers acres of land, causing massive rainwater runoff problems that can impact streams and drinking water resources miles downstream.

Other problems are unique to the industry. Cooling the servers requires a single data center to consume as much water as a city of 30,000-50,000 people, and giant fans make the surrounding area noisy day and night. The average data center has so many backup diesel generators onsite that it requires a major air source permit from the Department of Environmental Quality. The generators have to be started up regularly to ensure they will work in an outage. Multiply those startups by the total number of data centers in Northern Virginia, and the result is poorer air quality across the region.

Moreover, data centers require astonishing amounts of energy to power their operations and cool their servers. The industry uses over 12% of Dominion Energy Virginia’s total electricity supply, more than any other business category. Electric cooperatives supply more. Industry sources put Virginia’s total data center load at 1,688 megawatts as of 2021 — equivalent to about 1.6 million homes. Feeding ever more of these energy hogs requires utilities to build new electric generation and transmission lines, with costs and impacts borne by all ratepayers.

Many data center operators have pledged to run their operations on renewable energy, but only a few major tech companies have followed through on building solar facilities in Virginia. Indeed, their energy appetite is so great that if all Virginia data centers ran only on solar energy with battery backup, meeting their current demand would require all the solar currently installed in Virginia, Maryland, DC, Pennsylvania, West Virginia and Delaware put together. (For you energy nerds, I’m assuming a 25% capacity factor for solar; that is, meeting 1,688 megawatts of data center load would take 6,752 megawatts of solar.)

That’s not a reason to send data centers somewhere else — unless, of course, we’re talking about data centers that host cryptocurrency mining (and yes, they exist in Virginia, with more on the way). Those data centers we should certainly send elsewhere, preferably to Mars, unless scientists find life there, and in that case to the nearest black hole in outer space. As for the others, we’d just like them to be part of the climate solution rather than adding to our carbon footprint.

Why are data centers so keen to locate in Northern Virginia? Historically the draws were the fiber-optic network in Northern Virginia, proximity to Washington, D.C., relatively low-cost energy and a concerted early effort on the part of Loudoun County to make locating here as easy as possible.

Then there are the state subsidies. Since 2010, Virginia has offered tax incentives to data centers that locate in the commonwealth. The data center sales and use tax exemption is by far Virginia’s largest economic development incentive. It’s also an increasingly expensive one, rising from $30 million in outlays in 2010 to $138 million in 2020. A state audit showed Virginia taxpayers had provided over $830 million to data center operators through 2020; by now the total is certainly over $1 billion.

A 2019 report of the Joint Legislative Audit and Review Commission found that Virginia received back only 72 cents for every dollar of the data center tax incentive while creating very few jobs. That money-losing proposition was judged “moderately successful.”

Thus far, opposition to data centers has tended to be local and focused mainly on land use issues. Preservationists have been at the forefront of opposition to Prince William County’s proposed Digital Gateway, a data center development across more than 2,100 acres in an area known as the “Rural Crescent.” The development would abut parkland and Manassas National Battlefield, leading opponents to call this a new Battle of Manassas. Citizens have sued the board of county supervisors for approving an amendment to the county’s comprehensive plan that allows the data center expansion.

The battle has spilled across the border into Fairfax County, whose leaders worry that stormwater runoff from the development will pollute the county’s main drinking water source, the Occoquan Reservoir.

The divide on data center siting is polarizing, but it isn’t partisan. The Democratic majority on the Prince William board of supervisors approved the Gateway project over opposition from Republican Supervisor Yesli Vega and state Del. Danica Roem, a Democrat. In a scathing op-ed, Roem argues that there’s no such thing as a green data center.

Since data centers provide essential services and have to locate somewhere, the answer isn’t to ban them from the state (crypto-mining operations excepted!). A better approach would be for Virginia to guide development away from overburdened areas to parts of the state that are desperate for new businesses, and to link tax incentives to energy efficiency and the use of renewable energy and reclaimed water.

Right now Virginia is operating on auto-pilot, paying ever more in tax incentives and fueling conflict, sprawl and carbon emissions. That needs to change.

This commentary appeared in the Virginia Mercury on December 9, 2022. Following that publication, I received emails about a data center proposal in Fauquier County with complaints strikingly similar to those in Prince William County. In addition, a reader in Chesapeake wrote that plans for the development of the Frank T. Williams Farm between a wildlife management area and the Great Dismal Swamp have proceeded with minimal public knowledge or input.

On December 11, Senator Chap Petersen sent an email to constituents criticizing the PW Gateway proposal for its impact on the battlefield and stating, “In the 2023 session, I intend to file legislation to both study and set logical limits on the siting of server farms in historically sensitive areas, as well as on the conversion of agricultural land.”

UPDATE: In its Q3 earnings call, Dominion Energy revealed data centers now make up approximately 21% of its Virginia load (see slide 30). Richmond, we have a problem.