Why most ‘renewable energy’ options don’t add new wind and solar to the grid

bucket of green paint with spill
Photo credit: Neep at the English Language Wikipedia.

Virginia residents who want to do right by the planet are confronted with a bewildering array of renewable energy and “green power” options. Unfortunately, few of these programs actually deliver renewable energy. People who want the gold standard — electricity from new wind and solar projects — are completely out of luck if their utility is Dominion Energy Virginia or Appalachian Power. 

To understand how there can be so many options and none of them good, we first have to talk about renewable energy certificates.  RECs are a topic that is way more interesting than it sounds because — well, it would have to be, wouldn’t it? RECs are how we know that some electricity can be attributed to a renewable source. If you want to know what kind of renewable energy your utility is buying, or if you yourself want to buy renewable energy, RECs matter.

RECs are not electricity; they aren’t even real certificates. They were conceived of as an accounting tool enabling a utility to show it is in compliance with a state mandate to include a percentage of renewable energy in its mix. A utility amasses RECs associated with its own renewable generating sources, or buys them from renewable sources it doesn’t own, and then “retires” them to show compliance with the law. Since RECs are separate from the electricity itself, they can be bought and sold independently. There is even an online marketplace for your REC shopping convenience. 

RECs are also how voluntary buyers of renewable energy, like customers of Arcadia or Dominion’s Green Power Program, know they’re actually getting what they pay for —assuming they understand that what they pay for is not actually energy, and may have no relationship to the electricity powering their home or business. If you buy RECs, you are still using whatever electricity your utility provides, but you are also paying a premium on top of your regular bill. 

There is no nationwide, generally accepted definition of “renewable energy,” just as there is no definition of “natural” in food labeling. In Virginia, there is a state law defining what counts as renewable, and it includes not just solar, wind and hydro, but also a range of burnable fuels like biomass and municipal solid waste that foul the air and contribute to climate change. Buyer beware!  

The Virginia Clean Economy Act narrowed the list of sources that Dominion and APCo can use to meet the law’s new renewable portfolio standard, and also limited the locations of qualifying facilities. After 2025, happily, most of the RECs retired by Dominion and APCo under the VCEA will come from Virginia wind and solar facilities. 

But crucially, the VCEA didn’t change the definition of renewable energy in the code. Dominion won’t be able to use RECs from its biomass plants to meet the VCEA, but it can still sell them to anyone else and label the product “renewable” without falling afoul of the law. Anyone buying a renewable energy product from Dominion had better check the list of ingredients. 

It’s not just Dominion. Anyone buying RECs from Arcadia or anywhere else should take a good look at what they are getting, and ask themselves if the money they spend means new renewable energy will be added to the grid. 

The answer is probably no. If the RECs come from a wind farm in Texas or Iowa, the electricity from those turbines doesn’t feed into the grid that serves Virginia, so you can’t even pretend it is powering your house. It also doesn’t mean anyone built a wind farm because of REC buyers like you. Wind energy is already the cheapest form of new energy in the central part of the U.S. People build wind farms because they are profitable, not because they can sell RECs. In fact, those wind farms are swimming in surplus RECs, because states in the center of the country don’t have renewable energy mandates to make their own utilities buy them.  

For that matter, a lot of RECs come from facilities that were built before the idea of RECs even existed. Hundred-year-old hydroelectric dams can sell RECs; so can fifty-year-old paper mills that sell biomass RECs from burning wood. 

With this background, let’s look at the offerings available in Virginia and see which are worth paying more for. 

Dominion Energy Virginia

In theory, Dominion customers will have the ability to buy real solar energy directly from independent providers beginning as early as 2023, thanks to shared solar legislation sponsored by Sen. Scott Surovell and Del. Jay Jones and passed in 2020. The law envisions independent solar developers building solar facilities in Virginia and selling the electricity (and the RECs) to subscribers who are Dominion customers. But the SCC opened a Pandora’s box last fall by allowing Dominion to propose the rules, and in an act of classic Dominion overreach, the utility has now proposed to collect an average of $75 a month as a “minimum bill” from every customer who buys solar energy from someone else. A fee like that would end the program before it ever started.

 The matter is hardly settled. The solar industry has asked for an evidentiary hearing and suggested that the minimum bill should be set at a single dollar. If all else fails, the program may go forward serving only low-income customers, whom the legislation exempts from the minimum bill. 

Dominion customers can hope for the best, but any shared solar option is still at least two years away. 

In the meantime, the utility’s website lists four renewable energy options: two that sell RECs, one that sells actual energy (and retires the RECs for you) and one that doesn’t exist. 

• The REC-based Green Power Program has been around for a decade, and as of 2019 it had more than 31,000 subscribers. Dominion’s “product content label” projected that for 2020 the program would likely consist of 56 percent wind RECs, 34 percent biomass RECs, and 10 percent solar RECs. Facilities are advertised as being “in Virginia and the surrounding region,” but the fine print reveals sources as far away as Mississippi, Georgia, Missouri and Alabama, none of which are part of the PJM transmission grid that serves Virginia.  (Side note: the biomass icon is a cow, not a tree, which is misleading but charming, unless they might be burning cows, in which case it is deeply disturbing.) With the website out of date, I contacted Dominion for current content information: solar is now up to 13 percent, but, sadly, biomass still makes up 35 percent of the mix (but now it has a leaf icon!).

• REC Select. When I say “buyer beware,” I have this offering in mind. Dominion has been authorized to go Dumpster diving to buy the cheapest RECs from around the country and from any facility that meets Virginia’s overly-expansive definition of renewable energy. The website implies that so far the company is only buying wind RECs from Oklahoma and Nebraska, an indication of just how cheap those are. But under the terms of the program, the RECs could come from 50-year-old paper mills in Ohio or hundred-year-old hydroelectric dams. No educated consumer would buy this product, and both Dominion and the SCC should be ashamed of themselves for putting it out there.

• The 100% Renewable Energy Program delivers actual energy from Virginia, and retires RECs on your behalf. That’s the good news. But only a few of the solar farms are new; the rest of the energy comes from old hydro plants and, worse, from biomass plants that are so highly polluting that they don’t qualify for Virginia’s renewable energy mandate under the VCEA. The inclusion of biomass makes the program more expensive than it would be otherwise. So why include biomass when no one wants it? Because Dominion doesn’t really care if you sign up for this program. The company only offers it to close off a provision in the law that allowed customers to buy renewable energy from competitors if their own utility doesn’t offer it.

• Dominion’s website does list one attractive program under the name “community solar.” Like the shared solar program already discussed, it would deliver actual solar energy from new facilities to be built in Virginia, while retiring the RECs on your behalf. This would pass all our tests, except that it doesn’t exist. The SCC gave Dominion the green light to offer the program more than two years ago, and we’ve heard nothing since, even though the enabling legislation appears to make it mandatoryfor both Dominion and APCo. 

Appalachian Power

APCo never developed a community solar program either, and the shared solar program discussed earlier would not be available to APCO customers even if it gets off the ground. But APCo does have two renewable energy offerings. 

• For its Virginia Green Pricing program, APCo put together wind and hydro from its own facilities. That means it’s actual energy and reasonably priced, at less than half a cent per kWh. But these are existing facilities that all its customers had been paying for until APCo figured out how to segment the market and make more money, and the hydro is old. (As with Dominion’s renewable energy program, the real purpose of the new product was to close off competition.) 

• Even cheaper is Alternative Option-REC, the RECs for which “may come from a variety of resources but will likely be associated with energy from waste, solid waste and hydro facilities.” No biomass, anyway, but I still have trouble imagining who would pay extra for (literally) garbage. 

Virginia electric coops

Some electric cooperatives offer real renewable energy to customers, and a couple have community solar programs that are quite attractive.  

• Central Virginia Electric Cooperative and BARC Electric Cooperativeoffer community solar programs that not only deliver actual solar energy, but also let customers lock in a fixed price for 20-25 years. Four other coops also offer a solar energy option, and at least one other is working on it.

• Many coops also sell RECs, of mixed quality. Shenandoah Valley Electric Cooperative offers RECs generated by wind farms owned or contracted byOld Dominion Electric Cooperative, the generation cooperative that supplies power to most Virginia coops. Rappahannock Electric Cooperative, however, sells only biomass RECs.

• Bottom line: if you are a member of an electric cooperative, you may have better options than either Dominion or APCo is offering — and if you don’t, hey, you’re an owner of the coop, so make some noise!

Arcadia

 If you like RECs, you don’t have to buy them from your own utility. The folks at Arcadia have struggled for years to offer products that put new renewable energy on the grid. In states that allow community solar, Arcadia now offers wind and solar from projects in those states. Everywhere else, they just sell RECs. The website provides no information indicating where the facilities are, meaning they could be out in the same central plains states that are awash in surplus wind RECs. Their game plan appears to be for all the nice liberals with climate guilt to throw enough money at red state RECs that eventually the day will come when demand exceeds supply and drives the price up enough to incentivize new projects. The plan sounds self-defeating to me, but in any case, buyers should keep in mind that the RECs bought before that glorious date will have incentivized precisely nothing. 

Other options

Obviously, if you have a sunny roof, you can install solar onsite and net-meter. Of all the programs available today, that’s the one that will save you money instead of making you spend more. 

If you don’t have a sunny roof, but you’d still like to see your money put solar onto the grid, consider contributing to a church, school or non-profit that is going solar, or to an organization that puts solar on low-income homes. Two that operate in Virginia are Give Solar, which puts solar on Habitat for Humanity houses, and GRID Alternatives, which trains workers to install solar on low-income homes here and abroad. If everyone in Virginia who is currently buying RECs were to choose this alternative instead, it would put millions of dollars to work building new solar in Virginia, and lowering the energy bills of people who most need the help.

And that might make it the best option of all.

A version of this article first appeared in the Virginia Mercury on May 21, 2021.

Carbon-free electricity by 2035? Virginia is ready.

(Photo by Dennis Schroeder / NREL)

Virginia’s General Assembly made history in 2020 by becoming the first state in the South to pass a law requiring the full decarbonization of its electric sector. The Virginia Clean Economy Act requires our two largest utilities, Dominion Energy and Appalachian Power, to close all Virginia carbon-emitting power plants by 2045. As of 2050, the state will not issue carbon allowances to any other power plants in the commonwealth, including those owned by electric cooperatives and independent generators.  

Less than a year later, President Joe Biden wants to move up the date for a carbon-free electric grid nationwide to 2035. Biden is also targeting a net-zero carbon economy by 2050. On that, Virginia is actually more ambitious, at least on paper, since the Commonwealth Energy Policy sets a goal for a net-zero economy by 2045. 

But the electric sector has to come first, mainly because it’s the linchpin for reductions in the rest of the economy.  Clean electricity allows for clean transportation when cars, trucks and buses are electrified, and for clean buildings when gas heating and gas appliances are replaced with electric. It’s harder to zero out emissions from industry and agriculture; we do need more time to develop cost-effective solutions for those. 

The good news is the U.S. is already halfway to zero, according to a new report from Lawrence Berkeley National Laboratory that compared CO2 emissions from the power sector today to projections 15 years ago. But a lot of that achievement came from replacing coal with fracked gas, with energy efficiency and renewables making up the rest. From here on in, efficiency and carbon-free sources have to carry the whole load.

What would it take for Virginia to achieve a carbon-free grid just 14 years from now, half the time allowed by the VCEA? Questions fall roughly into three categories: cost, feasibility and reliability. All three will be easier to overcome if the whole country is working together towards a single goal, especially if the federal government does more than just point the way. But there’s a strong case for optimism regardless.  

Cost

Cost is the biggest concern in the minds of most people, but it shouldn’t be. It’s been three years since solar became the cheapest form of new power generation in Virginia, and prices continue to drop. The International Energy Administration declared last year that falling prices mean solar is “becoming the new king of the world’s electricity markets,” poised to become the primary source of new electricity generation worldwide by 2030. (Did you read about the solar project in Saudi Arabia that will deliver solar at barely over a penny per kilowatt-hour?)

Wind has been the cheapest form of generation for years in many states, and its price is still falling. Of course, for Virginia the big wind opportunity lies offshore. Offshore wind technology is still in its infancy in the U.S., making it relatively expensive, but its price trajectory is also steeply downward. Once the industry scales up and American manufacturing, supply chain and workforce replace European imports, prices will fall further — though it may never match solar on price. 

The only expensive part of an all-renewables scenario right now is the challenge of keeping supply in sync with demand. But as with wind and solar, the cost of battery storage technologies has been falling.

Meanwhile, what happens to our existing fossil fuel plants? Closing coal plants was already the right move for consumers. Virginia’s few remaining coal plants don’t run much and are money sinks. Dominion’s newest coal plant, for example, has a 10-year net present value of negative $472 million. Shuttering coal plants will save money today as well as speeding us along the path to zero carbon.

By contrast, we have a lot of gas plants that currently make money, so our utilities are even more loath to plan for their demise. Dominion spent most of the last decade building out a huge fleet of natural gas combined-cycle plants on the theory that fracking would make gas a cheap fuel forever. The theory ignored the growing competitiveness of wind and solar that was evident even early on in the building spree. This isn’t just hindsight talking; in 2013 I wrote that Dominion’s newly-approved 1,358-megawatt Brunswick County Power Station was destined to become a giant concrete paperweight as clean energy displaced fossil fuels. Yet a few years later Dominion added to its paperweight collection with the even larger Greensville County Power Station. 

In both cases the equally short-sighted State Corporation Commission approved these investments, so bad luck, ratepayers: we are stuck paying off the capital costs whether the plants run or not. That does not mean we have to operate them; projections show that by 2030 it will be cheaper to turn gas plants into solar panel factories while we run our grid on wind and sunlight. 

Feasibility

 A rapid transition to a carbon-free grid poses logistical challenges. We need enough suitable land to hold all that solar. (Agrivoltaics will help.) The federal government needs to identify new areas of the ocean for offshore wind turbines. We also need solutions to seasonal fluctuations in demand. We need new transmission lines. We need enough lithium for batteries, steel for turbines, silicon for solar and a trained workforce, stat!  

Federal coordination will be key to solving many of these challenges, but we can also reduce land acquisition and transmission barriers if we don’t insist on replacing large, utility-owned fossil fuel power plants only with large, utility-owned wind and solar farms. Virginians will benefit far more if we prioritize solar and storage on rooftops, parking lots, brownfields, closed landfills and rights-of-way. That’s not just about space, but about assigning value to benefits like storm resilience, emergency preparedness and local jobs. 

For the same reason, we should insist on building homes better. Houses that are well insulated need less heat in the winter and air conditioning in the summer, reducing the problem of seasonal swings in energy demand. (They are also healthier and more comfortable.)

Reliability

A rapid transition to a carbon-free grid is a climate imperative, but it’s still a tall order for a utility or a regulator whose job it is to keep the lights on. Batteries, energy efficiency and demand response programs can do only so much. Planners will also have to factor in the likelihood that by 2035, many vehicles will be electric, and electricity will replace gas appliances in new buildings and retrofits. Balancing supply and demand 24/7 with just today’s tools would not be an easy job. 

And, fortunately, they will not be working with today’s tools. The pace of change in energy and computer technology over the past 14 years will be matched or exceeded by the pace of the next 14. Green hydrogen gets all the press, but hundreds of other innovations will also combine to make a zero-carbon energy supply feasible and reliable — and, not incidentally, far better for people and the planet than what we have now. 

In fact, we are witnessing the launch of a new era in energy, what Tony Seba’s RethinkX Project calls “the fastest, deepest, most profound disruption of the energy sector in over a century,” driven by low-cost solar, wind and battery storage (SWB).

The Project’s report Rethinking Energy 2020-2030 puts it this way: “The SWB disruption of energy will closely parallel the digital disruption of information technology. Just as computers and the Internet slashed the marginal cost of information and opened the door to hundreds of new business models that collectively have had a transformative impact upon the global economy, so too will SWB slash the marginal cost of electricity and create a plethora of opportunities for innovation and entrepreneurship. What happened in the world of bits is now poised to happen in the world of electrons.” 

So, a carbon-free grid by 2035? Bring it on, President Biden. Virginia is ready.

A version of this article ran in the Virginia Mercury on April 16, 2021.

In the aftermath of a devastating winter storm, can we take lessons from Texas?

Photo by Pixabay on Pexels.com

It is never fun to see our fellow Americans suffer, whether it’s from pandemic diseases or weather disasters. Our hearts go out to the residents of Texas who suffered without electricity and heat for days, some of them also without safe drinking water, and a few of them even dying from exposure, fires or carbon monoxide poisoning as they tried to keep warm. 

On the other hand, picking apart the preposterous excuses from Texas leaders seeking to avoid responsibility for the fully preventable power outages and the misery that accompanied them—well, that’s another matter. And it’s made so much easier by those leaders’ insistence on trying to score political points instead of admitting that at least some of the blame rests on their shoulders. 

Take Governor Greg Abbott, who went on Fox News to blame liberals for the debacle. Ignoring his state’s failure to plan for climate change and invest in power grid winterization, he told talk show host Sean Hannity the problem was actually the portion of the state’s electricity supply that comes from wind and solar. “This shows how the Green New Deal would be a deadly deal for the United States of America. Our wind and our solar got shut down, and they were collectively more than 10 percent of our power grid, and that thrust Texas into a situation where it was lacking power on a statewide basis.”

No one in Abbott’s echo chamber pointed out that a) solar actually did just fine, b) states like Iowa and South Dakota, with much worse winter weather, rely much more heavily on wind power than Texas does, yet there are no stories about their turbines seizing up and their grids collapsing, and c) if a shortage of ten percent shuts your grid down, you have way more problems than you can blame on the Green New Deal. In fact, the biggest factor in the grid failure was some 28,000 megawatts of coal, nuclear and gas power that went offline, as the Electric Reliability Council of Texas reported

For his part, former Governor Rick Perry preferred swaggering to problem-solving, saying in a blog post, “Texans would be without electricity for longer than three days to keep the federal government out of their business.” This seems to have been written at about the same time Governor Abbott was asking the federal government for disaster relief

And then there was Ted Cruz. I’m not referring to the farce of his skipping out on the post-storm misery to fly to Cancun, then pinning it on his daughters before high-tailing it home to make a show of handing out relief supplies. That incident just reminds us that no matter how deep our divisions, Americans can always find unity in our collective loathing of Ted Cruz.  

No, in this case I want to point to a pair of tweets from Cruz, almost exactly two years apart. February 13, 2019: “Success of TX energy is no accident: it was built over many years on principles of free enterprise & low regulation w more jobs & opportunities as the constant goal. We work to export this recipe for success t more & more states so that all Americans enjoy the same prosperity.” 

And here he is on February 22 of this year, reacting to news that free enterprise and low regulation had produced $5,000 electric bills for some customers in the aftermath of the storm: “This is WRONG. No power company should get a windfall because of a natural disaster, and Texans shouldn’t get hammered by ridiculous rate increases for last week’s energy debacle. State and local regulators should act swiftly to prevent this injustice.”

Luckily for us, lots of other people have been more interested in understanding what happened and preventing it from happening again than in trying to duck blame and score political points. The real story, it turns out, is simple at its core: “low regulation” meant the Texas grid and power providers did not adequately prepare for winter storms that climate change is making worse than they used to be. And because the Texas grid is cut off from the rest of the country (a feature, not a bug, to cowboy politicians), when the crisis hit there was no way to import power from other states that were better prepared.

Let’s take a closer look at what went wrong, how it could have been avoided, and what lessons it offers for the rest of us. 

The setup: an isolated grid with “free enterprise and low regulation”

The grid that serves Texas is uniquely isolated, which also gives it a unique vulnerability. The Electric Reliability Council of Texas serves most of the state, and no other states. Texans are proud of that (or were before this month), because it means there is no role for federal regulators like FERC. It also means that when power ran out, ERCOT couldn’t just import it from parts of the country with a surplus. Of course, states near Texas also suffered in the storm, so there may not have been a lot of surplus power to be had. It is worth noting, though, that the border city of El Paso fared better than the rest of Texas because it is not part of ERCOT but part of a larger regional transmission organization (RTO) serving several southwestern states.

Another feature of ERCOT is the low regulation that Ted Cruz celebrated. ERCOT keeps it simple for power generators. They get paid for the power they produce. Other RTOs have what is called a “capacity market” to reward generating plants just for being available to run when called on, and they penalize participants who fail to perform. ERCOT does neither. With a reserve capacity of only about ten percent and no way to guarantee generators would be available when needed, ERCOT had set itself up for trouble.

If generators had faced penalties for nonperformance, they could have—and almost certainly would have—spent the money needed to prepare their facilities for colder-than-usual weather. Winterization is a normal cost of doing business for a power provider in a northern state, but Texas winters are usually warm enough not to require it. If you won’t be penalized for not winterizing, you have little incentive to do it when you’re competing on cost with other power sellers. 

ERCOT was vulnerable for another reason. Demand for power in Texas is usually higher in summer, with air conditioners running, than it is in the state’s typically mild winters, so ERCOT plans for that. But in cold weather, gas-fired power plants face competition for fuel, when some of the gas supply goes for heating buildings. This month, when gas wells and pipelines also froze up, there simply wasn’t enough fuel to go around. ERCOT’s overreliance on gas proved to be a liability much greater than the smaller amount of renewable energy on the grid. 

The last important feature of the Texas system is retail competition. Electricity customers in ERCOT can choose among dozens of power providers. Some providers keep rates constant; others offer a variable rate that just passes through the wholesale cost of power, with only a small monthly fee added. When wholesale rates are low, the consumer saves money on a plan like that. But regulators didn’t insist on any safeguard to protect customers against the possibility of wholesale prices spiking to astronomical levels due to a power shortage. That’s exactly what happened in the aftermath of this month’s storm. 

That $5,000 power bill Cruz criticized? That’s unfettered free-market supply-and-demand at work. It’s a feature, not a bug. If you don’t like that feature, Senator Cruz, maybe low regulation isn’t for you. Helping consumers avoid power bills in the thousands of dollars would have been easy, but it would have required a little bit of regulation. 

The storm; or how nature takes no interest in political posturing

Well before this storm hit, ERCOT was fully aware of the vulnerabilities of its particular brand of laissez-faire operations. Ten years ago, in the wake of another winter storm, Texas operators were warned of the dire consequences that could ensue if they did not require generators to winterize operations. 

But, they didn’t, and this chart from the U.S. Energy Information Agency shows what happened to generation as a result. Before the storm, you can see natural gas and coal plants running less when high winds produce plenty of cheaper wind power, then cranking up when wind speeds drop. As the week goes on, power supply from natural gas plants increases to meet higher demand from colder weather, while other generation holds steady. Then suddenly you see every category of energy resource except solar drop in output, as critical components of some generating units freeze up and the units fall offline, while fuel supplies also dwindle. Some wind generation falls off, but so does coal, nuclear, and—especially—natural gas, just as they are all needed most.   

The storm was, to be sure, one of the worst winter storms ERCOT had ever faced. And the situation could have been worse. If operators had not proactively cut power to customers, demand in excess of supply would have damaged grid infrastructure so severely that large swaths of the population would have been without power for weeks or months. (Let us now praise faceless bureaucrats, for they just saved Texas.)

So it was bad, and could have been worse. Why didn’t Texas prepare for it, even after being warned? I have one theory. People who cling to simplistic notions that global warming “should” produce only warmer winters have a tiresome habit of pointing to cold weather as evidence that climate change isn’t real, but I think they also take secret comfort in the idea that if the planet is warming, extreme cold weather events will become less common, with less need to prepare for them. If your political philosophy requires you to see regulation as an evil, your own willful misunderstanding of climate science might provide all the excuse you’re looking for not to act. 

Could it happen here? 

Bad weather can happen anywhere, and it’s always safer not to gloat. That said, several features distinguish ERCOT from PJM, and Texas from Virginia. As noted before, PJM has a capacity market that rewards even otherwise-uneconomic generators for hanging around being ready to produce at short notice, and those generators are penalized if they don’t perform when needed. As a result, we are much less likely to see the kind of power shortage and price spikes that Texans experienced. (Not that PJM is without flaws. Its capacity market unnecessarily discriminates against wind and solar, its policies are making the integration of renewable energy harder than it ought to be, and it has incentivized such an oversupply of gas generation that consumers are paying higher prices for the inefficiency. But that’s another story.)  

Virginia also features monopoly power companies rather than retail choice. There is plenty of disagreement as to whether that is good or bad for consumers. The monopoly model requires strong regulation to ensure captive consumers aren’t being overcharged, and are being offered the products they want—like renewable energy. Critics (and I’m among them) have argued that Virginia isn’t doing enough on this front. 

On the other hand, the retail choice model depends on consumers being well informed, and also requires regulators to scrutinize the tactics of power providers and punish the ones who take advantage of unwary consumers. So, ironically, a deregulated electricity market requires strong regulation to protect participants. Strong regulation could have prevented Texas providers from offering residential customers a tariff based on wholesale prices, with risks that residents couldn’t easily understand or mitigate against.   

Texas was also more vulnerable to disruption because power generators were not required to winterize their plants or penalized for not doing so. Sure, a winterized plant would have turned a hefty profit in this storm, but in a more average winter, the extra cost would not have paid off. The option not to winterize isn’t a good one in PJM. As a result, when the power does go out in PJM, the problem is inevitably in the delivery infrastructure, not the generation.

Virginia’s system of vertically-integrated utilities means our utilities own their electric generation as well as the power lines. They can charge customers for building and maintaining those generating facilities, so they have less incentive to skimp on weatherization. That increases the reliability of those facilities. But even if several power plants in Virginia were to fail all at once, we could still draw power from more than 1,200 facilities across PJM, or even from the larger Eastern Interconnection. By design, Texas does not have that option.

One distinction between ERCOT and PJM that doesn’t make a difference, in spite of Governor Abbott’s claims, is the greater percentage of wind in ERCOT than in PJM. Wind actually makes up 23% of generation in ERCOT, more than perhaps Abbott wanted to admit, given that most of it came online under his watch. In PJM, wind makes up only about 3%. If Abbott were correct that wind turbines can’t handle winter weather, that would be a reason for more northern grids like PJM to avoid wind. But of course, Abbott’s claim is political wishful thinking divorced from reality. Wind turbines operate just fine in the much colder winters of Iowa, the Dakotas, Canada—heck, even in the frigid and stormy North Sea, where offshore wind ramps up production in winter

As for solar, you could see from the chart that it was not affected by the cold weather. Texas residents who were lucky enough to have both rooftop solar and batteries spent the aftermath of the storm bragging about never losing power. That’s a compelling argument not just for more solar in the generation mix, but for more distributed generation in particular, including solar microgrids and resilience hubs to help communities weather future storms. 

In the wake of this month’s storm, the independent Electric Power Research Institute (EPRI) analyzed what went wrong and issued recommendations for Texas grid operators. Among the unsurprising recommendations: ERCOT should do better planning for resource adequacy and increase its interconnections to other power systems so it does not have to go it alone. 

I would add one more recommendation: keep your ideology out of it. You can’t deliver reliable power that is also reasonably priced without robust regulation. If leaders refuse to learn from this winter, they’ll simply set up Mother Nature for another opportunity to mess with Texas.   

A version of this article appeared in the Virginia Mercury on February 25, 2021.

How a Biden presidency will help Virginia’s energy transition

Photo credit: NREL

Immediately following the 2016 election of Donald Trump, I wrote a column titled “Why Trump won’t stop the clean energy revolution.”

If you were to read it now, you would yawn. What seemed bold back then now feels like forecasting the inevitable. Of course coal has not come back. Of course wind and solar are cheaper now than fossil fuels. Of course people agree a zero-carbon future is achievable. 

Still, few of us could have predicted how far off course Trump would try to take us. Withdrawing from the Paris climate accord was the least of it. The Washington Post tallied more than 125 rollbacks of environmental regulations and policies over the past four years. Trump’s more flamboyant acts of perfidy distracted attention away from his sustained attack, not just on climate science, but on the laws protecting America’s lands, air and water.

Really, we should be grateful Trump staffed his administration with grifters and sycophants who repeatedly bungled the details and opened their decisions to legal challenge. Incompetence is underrated. Skilled managers would have done much more damage. 

Yet the past four years have also pushed us closer to the brink of climate chaos and the collapse of ecosystems. We wasted time we did not have. 

As president, Joe Biden will be able to undo most of the environmental rollbacks with new executive orders and agency actions. Biden has also promised a long list of new initiatives, though many of them would require Democratic control of the Senate. 

Virginia and other states partially filled the four-year void with commitments to decarbonize our electricity supply and build renewable energy. But even for Virginia the path to zero-carbon would be a lot easier with federal action. Public support for climate action is strong even from Republicans, though it’s hard to imagine a really aggressive climate bill getting a floor vote in the Senate while Mitch McConnell is in charge. (In my dreams, Maine Senator Susan Collins announces she is changing her party affiliation to Independent and will caucus with Democrats to get a climate bill passed. I have really great dreams.)

Let’s assume for now, though, that Joe is on his own. What can he do through executive orders and agency actions? A lot, it turns out, so I’ll just focus on a few high-profile moves and how they might affect the energy transition here in Virginia.

Carbon emissions: a new Clean Power Plan? Recall that back in 2016, the EPA finalized regulations under the Clean Air Act designed to reduce carbon emissions from power plants with state-by-state targets. Lawsuits and backpedaling by the Trump EPA prevented the Clean Power Plan from ever taking effect, and the replacement plan was derided for its weakness

Four years later, a Biden EPA could use the same Clean Air Act authority to write new regulations. The thing is, though, the Clean Power Plan put the squeeze on coal-dependent states but would have had virtually no effect on Virginia. And that was before the Virginia Clean Economy Act set us on a path to decarbonization, putting Virginia ahead of any revamped rule that might come out of the EPA now. 

A better scenario for us would be if the threat of new climate action from EPA brought Republican senators to the table for a climate bill that would, say, impose a carbon tax (or fee-and-dividend) in return for stripping EPA of its authority to regulate carbon emissions. 

But I promised to focus on what Biden can do without Congress, so let’s get back to that. 

Coal. Among the protections Trump tried to roll back are EPA regulations like the Mercury and Air Toxics Standard and the Coal Ash Rule, both of which limit pollution caused by coal plants. While both are in litigation (see “bungling,” above), we can expect the EPA under Biden to reverse course and, if anything, tighten these protections. Virginia has already committed to closing most of its coal plants, a decision that will prove even wiser when coal plants have to meet stricter standards.  

Of course, these Trump regulatory rollbacks didn’t do the coal industry any good. Nationally, coal plants have continued to close at an even faster rate than they did during Obama’s second term. The false hopes Trump offered for a coal renaissance forestalled real efforts to help communities in Appalachia transition. 

Here in Virginia, even coalfields legislators understand the need to diversify the economy of Southwest Virginia. Biden’s election is their wake-up call to stop trying to revive a past that was never a golden era for workers anyway, however enriching it was for the coal bosses. 

Fracked gas. Biden made it clear he would not ban fracking other than on federal lands, but we can expect stronger regulations to limit the leakage of methane from wellheads, pipelines and storage infrastructure. That’s a Virginia priority, too. 

Energy efficiency. Federal efficiency requirements for products including appliances and HVAC systems have proven to be low-cost and consumer-friendly. A renewed focus on strong national standards will help reduce per-capita energy consumption and help Virginia meet its carbon reduction goals at less cost to consumers. 

Wind and solar. It would take legislation to extend federal tax credits for renewable energy, but there are other actions the Biden administration can take to support wind and solar. These include increased funding of R&D through the Department of Energy (a program that already has support in Congress), and removing tariffs on imported solar panels. 

The Federal Energy Regulatory Commission can also help wind and solar. FERC has caused its share of climate damage, most memorably for Virginians by approving the Atlantic Coast and Mountain Valley pipelines. FERC’s decisions also control the playing field for the electricity sector, including rules that currently disadvantage wind and solar in the wholesale markets. These rules could just as easily be rewritten. Although FERC is an independent agency, Biden will have an opportunity to appoint climate-friendly FERC commissioners as vacancies occur and terms expire. 

And indeed, FERC is already starting to come around. Chairman Neil Chatterjee recently hosted a technical conference and issued a proposed policy statement on carbon pricing in regional markets, an act that may have led Trump to demote him this month. 

Offshore wind. Within the Department of Interior, the Bureau of Ocean Energy Management (BOEM) issues offshore energy leases and oversees development of offshore projects, including wind farms. More than a year ago offshore wind activity at BOEM ground almost to a halt, setting back one project after another. Congress isn’t happy, and it may direct more funding to BOEM to help re-start the process. 

Biden will also direct BOEM to get out of the way of current projects and begin the process of designating new offshore lease areas for development. Both of these are critical to Virginia’s clean energy plans. (Of course, an investment tax credit for offshore wind would help, too — but there I go again, looking for legislation.)

Transportation. Until Trump came in, the auto industry was gradually improving fuel economy standards in new cars and light trucks. Biden will put that program back in place, and likely impose more stringent tailpipe emission standards. These moves will boost the transition to electric and hybrid vehicles and lead to lower carbon emissions from the transportation sector, another Virginia priority.

Declaring a national climate emergency. It’s a long shot, but Biden could use his executive authority to declare a climate emergency the way Trump declared a national emergency to redirect funds from national defense to his border fence. There are many ways this could help the Virginia transition if Biden were to go this route. 

But of course he won’t. Biden is no Trump. And for that, we should all be grateful. 

This article was originally published in the Virginia Mercury on November 12, 2020.

The SCC’s vanishing trick: turning shared solar into no solar

Photo courtesy of Department of Energy, via Wikimedia Commons.

With Virginia fully committed to the clean energy transition, you would think that by now, residents would be able to check a box on their utility bill to buy solar energy, or at least be able to call up a third-party solar provider to sell them electricity from solar.

Not so. Sure, if you’re fortunate enough to own your own house or commercial building, and it’s in a sunny location and the roof is sound, you can install solar panels for your own use. Renters, though, are completely out of luck, which means almost all lower and moderate-income people are shut out of the solar market.

Actually, we were all supposed to be able to buy solar by now. A 2017 law required utilities to offer a “community solar” program. Utilities would buy electricity from solar facilities and sell it to customers. At least one electric cooperative followed through, but although Dominion Energy, Virginia’s biggest utility, created a program and had it approved by the SCC in 2018, the company has never offered it.

So this year the General Assembly passed two bills that would finally bring the benefits of solar energy to a broader range of customers. One would be community solar but under a different name. It would let anyone buy electricity from a “shared solar” facility, with at least 30 percent of the output reserved for low-income customers.

The other, the leadoff section of the Solar Freedom legislation, would let residents of apartment buildings and condominiums share the output of a solar array located on the premises or next door.

The bills were narrowed in committee to apply only in Dominion Energy territory (and for the multifamily program, to a part of Southwest Virginia served by Kentucky Utilities). Dominion also lobbied successfully for changes to the shared solar bill that raised red flags with solar industry members and advocates. Dominion has a long history of putting barriers in the way of customers who want solar, and the final language of the shared solar legislation pretty much invited that sort of mischief.

Still, it was left to the State Corporation Commission to write rules implementing the programs, so customers had reason to hope Dominion would not be allowed to make the programs unwieldy and expensive.

Ha. What has emerged from the SCC in the form of proposed rules manages to be both incoherent and everything Dominion wants. The reason for that is clear: most of the rules are copied and pasted from proposals Dominion submitted in August.

Adopting the recommendations of a company that failed to follow through on its own program seems like a bad idea. Hasn’t Dominion abdicated its right to tell other companies how to execute community solar?

And of course, with Dominion writing the rules, the programs won’t work. The shared solar option doesn’t kick in until at least 2023, and customers won’t be told what it will cost them. The SCC proposes to hold an “annual proceeding” to decide each year how much subscribers will have to pay in the form of a minimum bill, an amount that can then change from year to year.

This minimum bill is not the eight or nine dollar fixed charge that all customers pay today; it’s a whole new charge representing various of Dominion’s real or imagined costs of doing business, which Dominion says it needs to recover from the subscribers to compensate it for the fact that some other company is now selling them electricity.

How much might this be? No one knows. And because no one knows, it’s also impossible for solar companies or other third-party providers to offer the program. They can’t sell a product whose price is unknown, and banks aren’t going to loan them money to build a solar facility with no assurance that there will be customers.

There are really only two ways to save this program. The SCC could hold an evidentiary hearing upfront to examine the costs Dominion claims it needs to recover and then decide what the minimum bill ought to be. If that number is so high that the program can’t work, the SCC gets the privilege of telling the General Assembly there won’t be a shared solar program after all.

Alternatively, the SCC can follow the lead of states that already have successful programs and set the minimum bill (upfront) at a level that still saves customers money, so projects have a fighting chance of getting off the ground. If Dominion thinks it is losing money on the deal, that’s a claim it can pursue in its next rate case — which is where the dispute belongs.

Either way, the industry needs clarity, and it needs it now.

Multifamily solar: from straightforward to hopeless

The drafters of Solar Freedom thought they’d avoided the mess that threatens to tank the shared solar program. The multifamily provision of Solar Freedom is simply a way to let residents of apartment buildings and other multifamily units enjoy the same benefits available to homeowners who install solar under the net metering program. Instead of putting solar on a roof they own, they can buy the output of solar panels on the roof of the building where they live. It’s not net metering, but that’s the model.

Since the solar is onsite, none of these projects will be big. Keeping it simple and inexpensive is important. The law provides that utilities will credit participating customers for their share of solar at a rate “set such that the shared solar program results in robust project development and shared solar program access for all customer classes.” More specifically, the commission “shall annually calculate the applicable bill credit rate as the effective retail rate of the customer’s rate class, which shall be inclusive of all supply charges, delivery charges, demand charges, fixed charges and any applicable riders or other charges to the customer.”

The law couldn’t be clearer: there is to be no minimum bill, and the utility cannot load up a customer’s bill with lots of miscellaneous extra charges. All those charges that the SCC loads into the shared solar program’s minimum bill are, for the multifamily program, already included in the retail rate.

End of discussion? Not hardly. The SCC’s implementing rules — which are Dominion’s rules — get around this problem by dumping all the minimum bill elements from the shared solar rules onto the program provider instead (that is, the company that owns the solar panels).

Solar Freedom doesn’t actually allow that, either, so the SCC has decided these costs should be part of the one fee the utility is allowed to collect, for “reasonable costs of administering the program.” Never mind that items like “standby generation and balancing costs” have nothing to do with administering the program.

Oh, and the SCC won’t decide what the administrative charge will be until it holds an annual proceeding. And the amount can change every year. So once again, the SCC has designed a program that no solar company will be able to offer.

The SCC rules are so blatantly contrary to the program mandate set out in Solar Freedom that one can’t help but wonder whose side the SCC is on.

It is certainly not the customers’. We want solar.

The SCC is accepting comments on the proposed rules for both the shared solar and multifamily programs through Monday.

This article originally appeared in the Virginia Mercury on October 30, 2020.

Is a new pumped hydro project needed for the energy transition, or one more Dominion boondoggle?

Back in 2017, two Republican legislators from Southwest Virginia helped Dominion Energy Virginia secure legislation allowing the utility to charge ratepayers for a new pumped hydro storage facility to be built in the coalfields region. 

Dominion Energy headquarters, Richmond, VA
Dominion Energy’s new headquarters building in Richmond, Virginia

The law even deemed the project “in the public interest.” Three years later, Dominion included a new pumped hydro project in its 2020 Integrated Resource Plan. The 300-megawatt facility would be built in Tazewell County and come online in 2030.

But — surprise, surprise — details in the IRP reveal the project to be unneeded and its price exorbitant. That leaves just one question: Will the State Corporation Commission approve the IRP anyway?

Pumped hydro stores surplus energy using two reservoirs, one at the top of a hill and one at the bottom. When you need energy, you release water from the upper reservoir and let it flow down through a hydroelectric turbine to the lower reservoir. When you have a surplus of energy, you use it to pump water uphill to fill the upper reservoir. Repeat as needed. It’s not high-tech, but it gets the job done.

Today pumped storage is used mostly to store surplus energy at night from baseload fossil fuel and nuclear plants that run 24/7, then use the energy to meet the surge in demand during daylight and early evening hours. As wind and solar become bigger players, pumped storage can also help integrate these variable resources in much the same way that batteries can. 

But pumped storage is land-intensive, and each project has to be designed for its own particular site, making it expensive to develop. Or in this case, very expensive. In its 2017 Annual Report, Dominion said its project would cost up to $2 billion and provide up to 1,000 MW of storage capacity ($2 million per megawatt, not terrible for this kind of storage). Three years later the size has shrunk by 70 percent but the cost has actually gone up and now stands at $2.3 billion ($7.7 million per megawatt, genuinely terrible). 

That didn’t stop Dominion from including the 300 MW of new pumped storage hydro in every scenario of its IRP, not allowing its modeling software the option of rejecting it as unneeded or as more expensive than other options.

What was once an interesting project idea now looks a heck of a lot like another Dominion boondoggle.

As Virginia embarks on a transition to 100 percent carbon-free electricity, the ability to store energy has become a hot topic of discussion. How much do we need, and can batteries do it all? The one advantage that pumped storage has over batteries is that a pumped storage facility can supply energy over a longer duration: 10 hours as opposed to the four hours typical of most batteries. For the rare occasions when you really need those extra hours, pumped hydro can be a solution.

As it happens, though, Dominion is already the majority owner of the world’s largest pumped hydro project. The 3,000 MW facility in Bath County, Virginia, has been in operation since 1985. Dominion earns money by selling its energy storage service to the operator of the regional transmission grid, PJM Interconnection. 

Three thousand megawatts is a lot of storage; the Bath County facility is even nicknamed “the world’s largest battery.” So building more pumped storage would only be reasonable if the Bath County facility were already being used to its maximum capacity (or was projected to max out in the future), and if a new facility could meet a need that can’t be met by alternatives like batteries. Unfortunately for Dominion, neither of those is true. Tazewell is a solution in search of a problem. 

Consumers smell a rat. Dominion customer Glen Besa intervened in the IRP case this summer to challenge the inclusion of the Tazewell project. Besa retired a few years ago as director of the Virginia Chapter of the Sierra Club; he is acting on his own behalf in this case, represented by attorney William Reisinger of the firm ReisingerGooch. 

The firm hired energy storage expert Kerinia Cusick. Her testimony points out that the IRP shows the Bath County facility is expected to be used lessover the coming years, not more. The IRP projects capacity factors for the facility will decline steadily from 10.7 percent in 2021 to 7.5 percent in 2035. If an existing facility has spare capacity, there is no good case for building another facility like it.

Cusick also compared the $2.3 billion cost of the Tazewell project to an equivalent amount of battery storage. Not surprisingly, the battery storage won hands down. Indeed, Cusick noted, the cost of battery storage has fallen over the years and is projected to continue doing so. By contrast, she found Dominion had understated the costs of the pumped storage project by excluding items like land costs and taxes. (The real number she calculated, unfortunately, is not available to us. It has been redacted from the public version of Cusick’s testimony.)

In sum, there is no need for the Tazewell project, and no economic case to support it. Adding billions of dollars in unneeded infrastructure to Dominion’s rate base will add profit for Dominion shareholders but drive up electricity bills for consumers.

There’s no way the SCC would let Dominion get away with this if legislators hadn’t used the magic words “in the public interest.” Now the question is whether those magic words are all it takes to ram a project through.

The SCC takes its job of protecting ratepayers seriously; it does not welcome legislative interference. Only grudgingly did the SCC allow itself to be coerced into approving Dominion’s offshore wind pilot when the legislature proclaimed the pilot project in the public interest. In that case, after pointing out the high cost and risks borne by ratepayers, the SCC order concluded by grumbling, “Recent amendments to Virginia laws that mandate that such a project be found to be ‘in the public interest’ make it clear that certain factual findings must be subordinated to the clear legislative intent expressed in the laws governing the petition.”

But the offshore wind pilot was just that, a pilot, and its $300 million price tag represented an investment in a new industry that is expected to become a mainstay of Virginia’s future energy supply. Legislators knew the costs, and judged them acceptable. 

Pumped hydro, on the other hand, is a mature technology. The proposed Tazewell project won’t lead to bigger and better things, driving costs down along the way. Legislators deemed it “in the public interest” for Dominion to locate a pumped storage project in the coalfields because they are desperate for jobs there. But they were misled about the actual cost. That ought to matter.

If it doesn’t matter — if the SCC decides “in the public interest” always means a blank check to Dominion, written by the General Assembly but charged to the account of customers — then legislators need to change the law. We can’t afford another boondoggle.

This article originally appeared in the Virginia Mercury on October 7, 2020.

COVID-19 throws a lemon at Virginia’s plan for an energy transition. It’s time for lemonade.

solar panels on a school roof

The solar panels on Wilson Middle School are saving money for Augusta County taxpayers. Photo courtesy of Secure Futures.

In mid-March, the Virginia General Assembly passed legislation to transition our economy from fossil fuels to clean energy over the coming years. Two weeks later, Virginia shut down in response to the COVID-19 pandemic. Among the businesses whose very existence is now in peril are the energy efficiency companies and solar installers we will be counting on to get us off fossil fuels.

Home weatherization and energy efficiency programs have come to an almost complete halt in Virginia, including programs run by Dominion Energy Virginia. Nationwide, the energy efficiency sector has lost almost 70,000 jobs. Meanwhile, companies that install solar, especially rooftop systems, report plummeting sales. The Solar Energy Industries Association reports that nationally, 55 percent of solar workers are already laid off or suffering cutbacks.

The timing seems terrible — although to be fair, there’s no good time for an economy-crushing, worldwide pandemic. Eventually, however, the virus will run its course or be defeated through vaccine or cure. At that point, we will face a choice: we can stagger blinking out into the sunlight aimlessly wondering now what?, or we can execute the well-developed plan we have spent these weeks and months formulating.

Let’s go with the second option.

First, it’s worth remembering that nothing happening now will change the trajectory of clean energy. Solar and wind had banner years in 2019, continuing their steady march to dominance. Wind has become the largest single source of electricity in two states, Iowa and Kansas. The island of Kauai in Hawaii is now 56 percent powered by renewable energy, mostly solar. Across the U.S. wind, solar and hydro produce more electricity than coal. Wind is the cheapest form of new electric generation nationally; solar takes pride of place in Virginia.

Meanwhile, fossil fuel is even more firmly on its way out. Six of the top seven U.S. coal companies have gone into bankruptcy since 2015. That was before the lockdown sent energy demand down, further hurting high-priced coal.

Fracked gas helped kill coal but is itself vulnerable to price competition from renewables. Odd as it sounds, the collapse in oil prices will make natural gas more expensive. That’s because oil producers in Texas and North Dakota are closing wells that produced natural gas along with oil. The tightening supply of gas may finally make fracking companies in Appalachia profitable, but it means higher prices for utilities. Wind and solar will just keep looking better.

The Trump administration is still trying futilely to hold back the tide, but the U.S. will get a lot farther riding the wave than struggling against it. Congressional leaders should declare the country “all in” on clean energy. Instead of bailing out the highly polluting fossil fuel industries, they should put that money to work creating more jobs and economic development — and actually doing something about climate change — with energy efficiency and renewables.

Congress should return the Investment Tax Credit for solar (and offshore wind) to the 30 percent level in effect last year and keep it there, instead of continuing the phase-out now in effect. Congress should also give solar owners the option of taking the credit as a cash grant, as it did during the last recession, and for the same reason: tax-based incentives are less useful in a recession, when companies can’t use the credits.

Virginia’s Sens. Tim Kaine and Mark Warner have a critical role to play in convincing their colleagues to support solar. So far neither is rising to the task.

On the state level, Northam did the right thing in signing this year’s energy legislation, allowing utilities and industry members to start planning for the future. But the Clean Economy Act gets wind and solar off to a very slow start; Dominion doesn’t have to build Virginia solar for five years yet. And though the new laws remove many policy constraints on customer-sited solar, they offer next to nothing in the way of financial incentives.

Governor Northam should make it clear he intends to make rooftop solar a priority for next year, along with projects on closed landfills, former coal mine areas, and other brownfields, with a special focus on areas hardest-hit economically. He can also encourage corporations that do business in Virginia to meet their sustainability goals with Virginia wind and solar, starting right now.

The governor should also prioritize building efficiency. Virginia will be adopting a new residential building code this year, and if past years are any indication, its energy efficiency provisions will fall short of the most recent model code standard. It’s up to the governor to make sure Virginia adopts the full code.

Local governments are already taking advantage of suddenly-empty buildings to accelerate maintenance and repairs. But it’s a good time to think bigger, with new financing tools available that make energy efficiency retrofits and solar facilities cash-positive right from the start.

Energy performance contracting allows the energy savings to pay for retrofits. The Department of Mines, Minerals and Energy keeps a list of pre-qualified energy service companies and offers expertise to help local government employees navigate the process.

This year’s legislation also greatly expanded local governments’ ability to finance on-site solar through third-party power purchase agreements, effective July 1. The PPAs are structured so that a school district, municipality or any commercial or non-profit customer can have a solar array installed at no cost, paying just for the energy produced.

In December, Fairfax County awarded contracts for PPAs to install solar on more than a hundred sites, including schools and other government buildings. The county’s contract is “rideable,” which allows other counties and cities to piggyback, getting the same terms without the need for new contract negotiations.

Unfortunately, local governments in southwest Virginia are prevented from pursuing PPAs — not by state legislation, which allows it starting July 1, but by a contract with Appalachian Power that governs their electricity purchases from the utility. The contract is up for renewal this year; disgracefully, APCo is refusing to agree to new terms allowing the localities to use solar PPAs. APCo should back off, and let local governments in economically depressed southwest Virginia start saving money and supporting solar jobs this year.

Arlington County has gone beyond on-site solar, contracting for a share of a large solar farm in southern Virginia that will provide more than 80 percent of the electricity for county government operations. It’s a model any locality can adopt.

Virginia residents and businesses also have good reasons to focus on clean energy. The enforced down-time many people are experiencing means more time to research options, and companies are motivated to offer low prices on energy efficiency upgrades and rooftop solar.

The federal government offers more generous tax credits this year than next. Credits for residential energy efficiency equipment and a deduction for energy efficient commercial buildings expire at the end of this year.

The investment tax credit for solar (as well as for geothermal heat pumps, fuel cells and small wind turbines) stands at 26% for projects placed in operation this year, but it will drop to 22% in 2021. It falls to 10% for commercial customers and disappears altogether for residential customers in 2022. If Congress acts to raise the credit to 30%, buyers will get an even bigger boost. If it doesn’t, there will be a rush this year to get projects done by the end of the year, so customers should secure their place in line now.

Virginia nonprofits have helped hundreds of residents and businesses save money on solar and EV chargers through bulk purchasing programs. Virginia Solar United Neighbors just announced a series of virtual information sessions to promote the Arlington Solar EV Co-op. And LEAP, which closed operations temporarily due to the virus, reports it has restarted two programs, Solarize NOVA and Solarize Piedmont.

In an ideal world, the U.S. would already be well along in executing a comprehensive plan for a clean energy transition, one that includes job retraining for workers, and that resists counterproductive efforts to save the fossil fuel industry. But we can do the next best thing, and use the tools of government, the market and consumer choice to speed us in the right direction.

COVID-19 has handed all of us a big, fat lemon. Let’s make some lemonade.

 

A version of this article appeared originally in the Virginia Mercury on April 30, 2020.

 

With a framework for Virginia’s energy transition in place, here’s what happens next

workers installing solar panels on a roof

One expected effect of the Clean Economy Act will be a boom in solar jobs across Virginia. Photo courtesy of NREL.

With Democrats in charge, Virginia passed a suite of bills that establish a sturdy framework for a transition to renewable energy in the electric sector.

At the center of this transformation are the Clean Economy Act, HB1526/SB851, and the Clean Energy and Community Flood Preparedness Act, HB981/SB1027. Other new laws direct further planning, make it easier for customers to install solar, improve the process for siting wind and solar farms, and expand financing options for energy efficiency and renewable energy.

Gov. Ralph Northam has signed some bills already, and has until April 11 to sign the others or send them back to the General Assembly with proposed amendments. Once signed, legislation takes effect on July 1.

I assume the Governor has other things on his mind right now than asking the General Assembly to tinker further with a bill like the Clean Economy Act, though bill opponents may be using the virus pandemic to argue for delay. That would be a self-defeating move; as the economy restarts, Virginia is going to need the infusion of jobs and investment that come with the build-out of clean energy. And one of the strongest arguments in support of our energy transition, after all, is that it will save money for consumers.

So what happens after July 1? How does this all work? Let’s look at the way these major pieces of legislation will change the energy landscape in Virginia.

Virginia joins RGGI, and CO2 emissions start to fall. 

Virginia’s Department of Environmental Quality has already written the regulations that call for Virginia power plants to reduce emissions by 30 percent by 2030. The mechanism for achieving this involves Virginia trading with the Regional Greenhouse Gas Initiative, a regional carbon cap and trade market.

The regulations have been on hold as the result of a budget amendment passed last year, when Republicans still ruled the General Assembly. After July 1, DEQ will be able to implement the regulations, with the commonwealth participating in carbon allowance auctions as early as the last quarter of this year or the first quarter of 2021.

In addition to joining RGGI, the Clean Energy and Community Flood Preparedness Act also allows the commonwealth to earn money from the allowance auctions. The Department of Housing and Community Development will spend 50 percent of auction proceeds on “low-income efficiency programs, including programs for eligible housing developments.”

The Department of Conservation and Recreation will get 45 percent of the auction proceeds to fund flood preparedness and climate change planning and mitigation through the Virginia Community Flood Preparedness Fund. The last 5 percent of proceeds will cover administrative costs, including those for administering the auctions.

Energy efficiency savings become mandatory, not just something to throw money at.

Two years ago, the Grid Transformation and Security Act required Dominion and Appalachian Power to propose more than a billion dollars in energy efficiency spending over 10 years, but the law didn’t say the programs had to actually be effective in lowering electricity demand.

This year that changed. For the first time, Virginia will have an energy efficiency resource standard (EERS) requiring Dominion to achieve a total of 5 percent electricity savings by 2025 (using 2019 as the baseline); APCo must achieve a total of 2 percent savings. The SCC is charged with setting new targets after 2025. At least 15 percent of the costs must go to programs benefiting low-income, elderly or disabled individuals, or veterans.

The EERS comes on top of the low-income energy efficiency spending funded by RGGI auctions.

Dominion and Appalachian Power ramp up renewables and energy storage. 

The Clean Economy Act requires Dominion to build 16,100 megawatts of onshore wind and solar energy, and APCo to build 600 megawatts. The law also contains one of the strongest energy storage mandates in the country: 2,700 MW for Dominion, 400 MW for Appalachian Power.

Beginning in 2020, Dominion and Appalachian must submit annual plans to the SCC for new wind, solar and storage resources. We’ll have a first look at Dominion’s plans just a month from now: the SCC has told the company to take account of the Clean Economy Act and other new laws when it files its 2020 Integrated Resource Plan on May 1.

The legislation provides a strangely long lead time before the utilities must request approval of specific projects: by the end of 2023 for APCo (the first 200 MW) or 2024 for Dominion (the first 3,000 MW). But the build-out then becomes rapid, and the utilities must issue requests for proposals on at least an annual basis.

In addition to the solar and land-based wind, Dominion now has the green light for up to 3,000 MW of offshore wind from the project it is developing off Virginia Beach, and which it plans to bring online beginning in 2024. All told, the Clean Economy Act proclaims up to 5,200 MW of offshore wind by 2034 to be in the public interest.

Dominion’s plans for new gas plants come to a screeching halt.

Before the 2020 legislative session, Dominion’s Integrated Resource Plan included plans for as many as 14 new gas combustion turbines to be built in pairs beginning in 2022. In December, the company announced plans to build four gas peaking units totaling nearly 1,000 MW, to come online in 2023 and 2024.

But that was then, and this is now. The Clean Economy Act prohibits the SCC from issuing a certificate of convenience and necessity for any carbon-emitting generating plant until at least January 1, 2022, when the secretaries of natural resources and commerce and trade submit a report to the General Assembly “on how to achieve 100 percent carbon-free electric energy generation by 2045 at least cost to ratepayers.”

Even with no further moratorium, Dominion will find it hard to sell the SCC on the need for new gas plants on top of all the renewable energy and energy storage mandated in the Clean Economy Act. Solar and battery storage together do the same job that a gas peaker would have done — but they are required, and the gas peaker is not. Meanwhile, the energy efficiency provisions of the act mean demand should start going down, not up.

Dominion has already signaled that it recognizes the days of new gas plants are largely over. On March 24, Dominion filed a request with the SCC to be excused from considering new fossil fuel and nuclear resources in its upcoming Integrated Resource Plan filing, arguing that “significant build-out of natural gas generation facilities is not currently viable” in light of the new legislation.

Fossil fuel and biomass plants start closing.

By 2024, the Clean Economy Act requires the closure of all Dominion or APCo-owned oil-fueled generating plants in Virginia over 500 MW and all coal units other than Dominion’s Virginia City Hybrid plant in Wise County and the Clover Station that Dominion co-owns with Old Dominion Electric Cooperative.

This mandate is less draconian than it sounds; it forces the closure of just two coal units, both at Dominion’s Chesterfield plant. Other Dominion coal plants in Virginia have already been retired or switched to using gas or biomass, and one additional coal plant in West Virginia lies beyond the reach of the legislation. Oil-fired peaking units at Yorktown and Possum Point were already slated for retirement in 2021 and 2022. APCo owns no coal or biomass plants in Virginia.

Although the exceptions might appear to swallow the rule, the truth is that coal plants are too expensive to survive much longer anyway. One indication of this is a March 24 report Dominion filed with the SCC showing its fuel generation sources for 2019: coal has now fallen to below 8 percent of generation.

By 2028, Dominion’s biomass plants must shut down, another victory for consumers. All other carbon-emitting generating units in Virginia owned by Dominion and APCo must close by 2045, including the Virginia City plant and all the gas plants.

As of 2050, no carbon allowances can be awarded to any generating units that emit carbon dioxide, including those owned by the coops and merchant generators, with an exception for units under 25 MW as well as units bigger than 25 MW (if they are owned by politically well-connected multinational paper companies with highly-paid lobbyists).

Solar on schools and other buildings becomes the new normal.

In December, Fairfax County awarded contracts for the installation of solar on up to 130 county-owned schools and other sites, one of the largest such awards in the nation. Using a financing approach called a third-party power purchase agreement (PPA), the county would get the benefits of solar without having to spend money upfront. The contracts were written to be rideable, meaning other Virginia jurisdictions could piggyback on them to achieve cost savings and lower greenhouse gas emissions.

Fairfax County’s projects, along with others across the state, hit a wall when, on Jan. 7, the SCC announced that the 50 MW program cap for PPAs in Dominion territory had been reached. But with the passage of the Clean Economy Act and Solar Freedom legislation, customers will be able to install up to 1,000 MW worth of solar PPAs in Dominion territory and 40 MW in APCo territory.

Fairfax County schools will soon join their counterparts in at least 10 other jurisdictions across the state that have already installed solar. With the PPA cap no longer a barrier, and several other barriers also removed, local governments will increasingly turn to solar to save money and shrink their carbon footprints.

Virginia agencies start working on decarbonizing the rest of the economy. 

In spite of its name, the Clean Economy Act really only tackles the electric sector, with a little spillover into home weatherization. That still leaves three-quarters of the state’s greenhouse gas emissions to be addressed in transportation, buildings, agriculture and industry. Ridding these sectors of greenhouse gas emissions requires different tools and policies.

Other legislation passed this session starts that planning process. SB94(Favola) and HB714 (Reid) establish a policy for the commonwealth to achieve net-zero emissions economy-wide by 2045 (2040 for the electric sector) and require the next Virginia Energy Plan, due in 2022, to identify actions towards achieving the goal. Depending on who the next governor is, we may see little or nothing in the way of new proposals, or we may see proposals for transportation and home electrification, deep building retrofits, net-zero homes and office buildings, carbon sequestration on farm and forest land and innovative solutions for replacing fossil fuels in industrial use.

Collateral effects will drive greenhouse gas emissions even lower.

Proposed new merchant gas plants are likely to go away. With Virginia joining RGGI and all fossil fuel generating plants required to pay for the right to spew carbon pollution, the developers of two huge new merchant gas plants proposed for Charles City County will likely take their projects to some other state, if they pursue them at all.

Neither the 1,600 MW Chickahominy Power Station and the 1,050 C4GT plant a mile away planned to sell power to Virginia utilities; their target is the regional wholesale market, which currently rewards over-building of gas plant capacity even in the absence of demand. The Chickahominy and C4GT developers sought an exemption from RGGI through legislation; the bill passed the Senate but got shot down in the House.

If the C4GT plant goes away, so too should Virginia Natural Gas’ plans for a gas pipeline and compressor stations to supply the plant, the so-called Header Improvement Project.

Other coal plants will close. Although the CEA only requires Dominion to retire two coal units at its Chesterfield Power Station, other coal plants in the state will close by the end of this decade, too. That’s because the economics are so heavily against coal these days that it was just a matter of time before their owners moved to close them.

Adding the cost of carbon allowances under RGGI will speed the process along. That includes the Clover Station, which Dominion owns in partnership with Old Dominion Electric Cooperative (ODEC), and the Virginia City Hybrid Electric plant in Wise County, Dominion’s most expensive coal plant, which should never have been built. 

The Atlantic Coast and Mountain Valley Pipelines find themselves in more trouble than ever. If I had a dollar for every time a Dominion or Mountain Valley spokesperson said, “Our customers desperately need this pipeline,” I would not be worried about the stock market right now.

The fact is that no one was ever sure who those customers might be, other than affiliates of the pipeline owners themselves—and that doesn’t exactly answer the question. With Virginia now on a path away from all fossil fuels, neither pipeline has a path to profitability inside Virginia any longer, if they ever had one.

 

A version of this article originally appeared in the Virginia Mercury on March 31. 

It’s halftime at the GA, and do we ever have a show!

battle scene

Tense negotiations over the Clean Economy Act. (Aniello Falcone, Metropolitan Museum of Art)

Welcome to “Crossover,” the day on which the Virginia House and Senate have to finish the work on their bills and send them over to the other chamber. This is sudden death time; if a bill didn’t get across the finish line in time, it is dead for the year.

In past years, henceforth to be known as “the bad old days,” almost nothing good even got out of committee, much less reached Crossover. Clean energy advocates could pretty much plan vacations for the second half of February.

This year the Democrats are on a tear, especially in the House. Yes, a lot of good bills have been heavily watered down. This is still the Old Dominion, with the emphasis on Dominion. And it is definitely too early to break out the champagne, because the action isn’t over for the bills still in play. But overall, 2020 is shaping up to be a watershed year for clean energy.

BILLS STILL ALIVE

Energy Transition

HB1526/SB851, the Clean Economy Act, has been the subject of intense and continuous negotiation. First there were a bunch of amendments that weakened it; then there were a bunch that strengthened it. It’s been a wild ride, and we may still see more changes during the second half of Session. But it’s alive! (HB1526 passed the House 52-47; Democrats Rasoul and Carter voted no. SB851 passed the Senate on a party-line vote of 21-19.)

SB94 (Favola) rewrites the Commonwealth Energy Policy to bring it in line with Virginia’s commitment to dealing with climate change. The bill sets a target for net-zero greenhouse gas emissions economy wide by 2045, and in the electric sector by 2040. This section of the Code is for the most part merely advisory; nonetheless, it is interesting that Dominion Energy supported the bill. (Passed the Senate 21-18, on party lines.)

Delegate Reid’s HB714 is similar to SB94 but contains added details, some of which have now been incorporated into SB94. (Passed the House 55-45 with a substitute.)

HB672 (Willett) establishes a policy “to prevent and minimize actions that contribute to the detrimental effects of anthropogenic climate change in the Commonwealth.” State agencies are directed to consider climate change in any actions involving state regulation or spending. Local and regional planning commissions are required to consider impacts from and causes of climate change in adapting comprehensive plans. (Passed the House 55-44 with a substitute.)

HB547 (Delaney) establishes the Virginia Energy and Economy Transition Council to develop plans to assist the Commonwealth in transitioning from the use of fossil fuel energy to renewable energy by 2050. The Council is to include members from labor and environmental groups. (Passed the House 54-45.)

RGGI bills, good and bad

The Democratic takeover of the General Assembly means Virginia will finally join the Regional Greenhouse Gas Initiative (RGGI), either according to the regulations written by DEQ or with a system in place that raises money from auctioning carbon allowances.

HB981 (Herring) and SB1027 (Lewis) is called the Clean Energy and Community Flood Preparedness Act. It implements the DEQ carbon regulations and directs DEQ to enter the RGGI auction market. Auction allowances are directed to funds for flood preparedness, energy efficiency and climate change planning and mitigation. We are told this is the Administration’s bill. A similar bill, HB20 (Lindsey), was incorporated into HB981. (HB981 passed the House 53-46. SB1027 passed the Senate 22-18.)

SB992 (Spruill) requires the Air Board to give free allowances for three years to any new power plant that was permitted before June 26, 2019, the effective date of the carbon trading regulations. Essentially it gives special treatment to two planned gas generation plants that aren’t needed and therefore have sketchy economics unless they get this giveaway. Clean energy advocates will be looking to kill this one in the House. (Passed the Senate 27-13. A number of Democrats who should know better voted for the bill.)

RPS

The Clean Economy Act contains a renewable portfolio standard (RPS) requiring utilities to include in their electricity mix a percentage of renewable energy that ratchets up over time. In addition, HB1451 (Sullivan) is a stand-alone RPS bill that also includes an energy storage mandate. It appears to be identical to the RPS and storage provisions of the CEA (of which Sullivan is also the patron). (Passed the House 52-47.)

Customer-sited solar/net metering

Solar Freedom SB710 (McClellan) and HB572 (Keam) lifts barriers to customer-sited renewable energy such as rooftop solar. The changes include lifting the caps on PPAs and net metering, and eliminating standby charges. Nearly identical versions were filed by Delegates Lopez (HB1184) (rolled into HB572) and Simon (HB912) (ditto). SB532 (Edwards), a stand-alone bill to make PPAs legal, was rolled into SB710. (SB710 passed the Senate 22-18 with a substitute that is much more limited than the original bill. HB572 passed the House with just a minor substitute 67-31. HB1647 (Jones) is a Solar Freedom bill that also includes community solar. (Passed the House 55-45.) Several provisions of Solar Freedom also appear in the Clean Economy Act.

HOAs HB414 (Delaney) and SB504 (Petersen) clarifies the respective rights of homeowners associations (HOAs) and residents who want to install solar. The law allows HOAs to impose “reasonable restrictions,” a term some HOAs have used to restrict solar to rear-facing roofs regardless of whether these get sunshine. The bill clarifies that HOA restrictions may not increase the cost of the solar facility by more than 5%, or decrease the expected output by more than 10%. (HB414 passed the House 95-4. SB504 passed the Senate 40-0.)

Community solar

HB1647 (Jones) (see above) includes community solar in a bill that otherwise looks like Solar Freedom.

SB629 (Surovell) creates a program for “solar gardens.” (Substitute passed the Senate 39-0.)

HB1634 (Jones) requires utilities to establish shared-solar programs that allows customers to purchase subscriptions in a solar facility no greater than 5 MW. (Amended with a substitute; it now looks a lot like SB629. Passed the House 99-0.)

HB573 (Keam) affects the utility-controlled and operated “community solar” programs required by 2017 legislation. The bill requires that “an investor-owned utility shall not select an eligible generating facility that is located outside a low-income community for dedication to its pilot program unless the investor-owned utility contemporaneously selects for dedication to its pilot program one or more eligible generating facilities that are located within a low-income community and of which the pilot program costs equal or exceed the pilot program costs of the eligible generating facility that is located outside a low-income community.” (Passed the House 90-8.)

Offshore wind

The CEA contains detailed provisions for the buildout and acquisition of offshore wind. HB234 (Mugler) directs the Secretary of Commerce and Trade to develop an offshore wind master plan. (Passed House unanimously with substitute.)

SB860 (Mason) and HB1664 (Hayes) puts the construction or purchase of at least 5,200 MW of offshore wind in the public interest. (SB860 passed the Senate 22-18. HB1664 amended to incorporate HB1607, but with less gold-plating than the other bill. HB1664 passed the House 65-34.)

HB1607 (Lindsey) and SB998 (Lucas) allows Dominion to recover the costs of building offshore wind farms as long as it has a plan for the facilities to be in place before January 1, 2028 and that it has used reasonable efforts to competitively source the majority of services and equipment. All utility customers in Virginia, regardless of which utility serves them, will participate in paying for this through a non-bypassable charge. Surely this bill came straight from Dominion. (HB1607 amended to incorporate HB1664; only 1664 moves forward. SB998 passed the Senate 40-0.)

Nuclear and biomass

SB828 and SB817 declare that any time the Code or the Energy Policy refers to “clean” or “carbon-free” energy, it must be read to include nuclear energy. In subcommittee, Senator Lewis suddenly announced he was amending the bills to add “sustainable biomass” as well. After an uproar and a crash course on biomass, both bills eventually went back to being only about nuclear. (Both bills passed the Senate unanimously.) Unfortunately, some biomass from paper companies did creep into the Clean Economy Act in spite of the best efforts of clean energy advocates.

Energy Efficiency

HB1526/SB851, the Clean Economy Act, contains a mandatory energy efficiency resource standard (EERS) and contains other provisions for spending on low-income EE programs. HB981 (the RGGI bill) specifies that a portion of the funds raised by auctioning carbon allowances will fund efficiency programs.

There are also a few standalone efficiency bills. HB1450 (Sullivan) and SB354 (Bell) appear to be the same as the efficiency provisions of the CEA, though the standalone applies only to Dominion and APCo. (HB1450 passed House 75-24,picking up a respectable number of Republicans. SB354 stricken at request of patron in C&L.)

HB1576 (Kilgore) doesn’t set new efficiency targets, but it makes it harder for large customers to avoid paying for utility efficiency programs. In the past, customers with over 500 kW of demand were exempt; this bill allows only customers with more than 1 MW of demand to opt out, and only if the customer demonstrates that it has implemented its own energy efficiency measures. (Passed the House, 99-0.)

HB575 (Keam) beefs up the stakeholder process that Dominion and APCo engage in for the development of energy efficiency programs. (Passed the House 99-0 and referred to Senate C&L.)

SB963 (Surovell) establishes the Commonwealth Efficient and Resilient Buildings Board to advise the Governor and state agencies about ways to reduce greenhouse gas emissions and increase resiliency. Every agency is required to designate and energy manager responsible for improving energy efficiency and reducing greenhouse gas emissions. (Passed the Senate 40-0.)

SB628 (Surovell) requires the residential property disclosure statement provided by the Real Estate Board to include advice that purchasers should obtain a residential building energy analysis as well as a home inspection prior to settlement. (Passed the Senate 26-14.)

Energy storage

HB1183 (Lopez) requires the SCC to establish a task force on bulk energy storage resources. (Passed the House 91-9 with a substitute.)

SB 632 (Surovell) creates a storage target of 1,000 MW and states that this is in the public interest.  Senator Surovell says this bill originated with the Governor’s office. (Passed the Senate 20-19 with a substitute.)

Siting, permitting, and other issues with utility-scale renewable energy

HB1327 (Austin) allows localities to impose property taxes on generating equipment of electric suppliers utilizing wind turbines at a rate that exceeds the locality’s real estate tax rate by up to $0.20 per $100 of assessed value. Under current law, the tax may exceed the real estate rate but cannot exceed the general personal property tax rate in the locality. Wind developer Apex Clean Energy helped develop the bill and supports it. (Passed the House 81-12, now goes to Senate Finance.)

HB656 (Heretick) and SB875 (Marsden) allow local governments to incorporate into their zoning ordinances national best practices standards for solar PV and batteries. (Both bills passed their chambers unanimously with substitute language.)

HB1131 (Jones) and SB762 (Barker) authorize localities to assess a revenue share of up to $0.55 per megawatt-hour on solar PV projects, in exchange for which an existing tax exemption is expanded. (HB1131 Passed the House 54-42 with a substitute. SB762 passed Senate 40-0.)

HB657 (Heretick) and SB893 (Marsden) exempt solar facilities of 150 MW or less from the requirement that they be reviewed for substantial accord with local comprehensive plans. (HB657 passed the House with a substitute, 59-41. SB893 was passed by indefinitely—killed—in Local Government.)

HB1434 (Jones) and SB763 (Barker) reduces the existing 80% machinery and tools tax exemption for large solar projects. (HB1434 passed the House 57-41. SB763 passed the Senate 40-0.) 

SB870 (Marsden) authorizes local planning commissions to include certain regulations and provisions for conditional zoning for solar projects over 5 MW. (Passed Senate 40-0 with a substitute.)

HB1675 (Hodges) requires anyone wanting to locate a renewable energy or storage facility in an opportunity zone to execute a siting agreement with the locality. (Passed House 89-7.)

Grants, tax deductions, tax credits and other financing

HB654 (Guy) authorizes DMME to sponsor a statewide financing program for commercial solar, energy efficiency and stormwater investments. The effect would be to boost the availability of Commercial Property Assessed Clean Energy (C-PACE) in areas of the state where the locality has not developed a program of its own. (Passed House 75-23. Assigned to Senate Committee on Local Government.)

SB754 (Marsden) authorizes utilities to establish on-bill financing of energy efficiency, electrification, renewable energy, EV charging, energy storage and backup generators. (Passed Senate 40-0 with a substitute.)

HB1656 (O’Quinn) authorizes Dominion and APCo to design incentives for low-income people, the elderly, and disable persons to install energy efficiency and renewable energy, to be paid for by a rate adjustment clause. (Passed the House 95-4.)

HB1707 (Aird) makes changes to the Clean Energy Advisory Board, which is (already) authorized to administer public grant funding. (Passed the House 65-33 with a substitute. Referred to Senate Ag.)

SB634 (Surovell) establishes the Energy Efficiency Subsidy Program to fund grants to subsidize residential “efficiency” measures, interestingly defined as solar PV, solar thermal or geothermal heat pumps. It also creates a subsidy program for electric vehicles. (Passed the Senate 32-7. Senator Surovell has requested a budget amendment of $1 million for the fund. )

SB1039 (Vogel) allows a real property tax exemption for solar energy equipment to be applied retroactively if the taxpayer gets DEQ certification within a year. (Passed the Senate 40-0.)

SB542 (Edwards) repeals the sunset date on crowdfunding provisions and provides fixes for certain existing obstacles to this financing approach. (Passed the Senate 40-0.)

Customer rights to shop for renewable energy

HB868 (Bourne) and SB376 (Suetterlein and Bell) allows customers to buy 100% renewable energy from any licensed supplier, regardless of whether their own utility has its own approved tariff. (HB868 passd the House 55-44. But note that its Senate companion SB376 was passed by indefinitely in C&L.)

HB 889 (Mullin) and SB 379 (McPike), the Clean Energy Choice Act, is broader than HB868. The legislation allows all customers to buy 100% renewable energy from any licensed supplier regardless of whether their utility has its own approved tariff. In addition, large customers (over 5 MW of demand) of IOUs also gain the ability to aggregate their demand from various sites in order to switch to a competitive supplier that offers a greater percentage of renewable energy than the utility is required to supply under any RPS, even if it is not 100% renewable. Large customers in IOU territory who buy from competing suppliers must give three years’ notice before returning to their utility, down from the current five years. The SCC is directed to update its consumer protection regulations. (HB889 passed the House 56-44. But its Senate companion SB379 passed by indefinitely in C&L.)

Other utility regulation

HB528 (Subramanyam) requires the SCC to decide when utilities should retire fossil fuel generation. (Passed the House 55-44.)

HB1132 (Jones, Ware) put the SCC back in control of regulating utility rates. (Passed the House 77-23.)

SB731 (McClellan) also affects rates, in this case by addressing a utility’s rate of return. The SCC determines this rate by looking first at the average returns of peer group utilities, and then often going higher. The bill lowers the maximum level that the SCC can set above the peer group average. (Passed the Senate 38-1.)

HB167 (Ware) requires an electric utility that wants to charge customers for the cost of using a new gas pipeline to prove it can’t meet its needs otherwise, and that the new pipeline provides the lowest-cost option available to it. (Note that this cost recovery review typically happens after the fact, i.e., once a pipeline has been built and placed into service.) Last year Ware carried a similar bill that passed the House in the face of frantic opposition from Dominion Energy, before being killed in Senate Commerce and Labor. (Passed the House unanimously with a substitute. It will now go to Senate C&L, where it may still have trouble from a Dominion-friendly committee.)

DEAD FOR THE YEAR

Green New Deal HB77 (Rasoul) sets out an ambitious energy transition plan and includes a fossil fuel moratorium. (Sent from Labor and Commerce to Appropriations, where it was not brought up. This is a polite way of killing a bill without anyone having to vote on it).

Undercutting RGGI HB110 (Ware) says that if Virginia joins RGGI, DEQ must give free carbon allowances to any facility with a long-term contract predating May 17, 2017 that doesn’t allow recovery of compliance costs. Rumor has it the bill was written to benefit one particular company. (Left in Labor and Commerce.)

Clean energy standard Instead of an RPS, SB876 (Marsden) proposed a “clean energy standard” that made room for some coal and gas with carbon capture. (Recognizing a number of problems with this approach, Senator Marsden rolled his bill into SB851; that’s GA-speak for killing a bill while still giving the patron points for trying).

Greenhouse gas inventory HB525 (Subrmanyam and Reid) require a statewide greenhouse gas inventory covering all sectors of the economy. (Laid on the table in a subcommittee, which also means it was killed.)

Brownfields HB1306 (Kory) directs the Department of Mines, Minerals and Energy to adopt regulations allowing appropriate brownfields and lands reclaimed after mining to be developed as sites for renewable energy storage projects. (Stricken from docket in House Ag.) HB1133 (Jones) makes it in the public interest for utilities to build or purchase, or buy the output of, wind or solar facilities located on previously developed sites. (Continued to 2021, yet another polite way of killing a bill, though it leaves them not technically dead. So should we call them the undead? Let’s hope the concept is resurrected next year, anyway.)

Local action HB413 (Delaney) authorizes a locality to include in its subdivision ordinance rules establishing minimum standards of energy efficiency and “maintaining access” to renewable energy. (Left in Cities, Counties and Towns.)

Retail choice SB842 (Petersen) provides for all retail customers of electricity to be able to choose their supplier, and instructs the SCC to promulgate regulations for a transition to a competitive market for electricity. Existing utilities will continue to provide the distribution service. The bill also requires suppliers of electricity to obtain at least 25% of sales from renewable energy by 2025, 50% by 2030, and 100% by 2050. Renewable energy is defined to include “sustainable biomass” but not waste incineration or landfill gas. (Continued to 2021.)

Resilience hubs HB959 (Bourne) directs DMME to establish a pilot program for resilience hubs. These are defined as a simple combination of solar panels and battery storage capable of powering a publicly-accessible building in emergency situations or severe weather events, primarily to serve vulnerable communities. (Continued to 2021.)

Net metering HB1067 (Kory) deals with a specific situation where a customer has solar on one side of property divided by a public right-of-way, with the electric meter to be served by the solar array on the other side. The legislation declares the solar array to be located on the customer’s premises. (Item 4 of Solar Freedom would also solve the problem.) (Continued to 2021.)

Utility restructuring

HB1677 (Keam) replaces Virginia’s current vertically-integrated monopoly structure with one based on competition and consumer choice. Existing monopoly utilities would be required to choose between becoming sellers of energy in competition with other retail sellers, or divesting themselves of their generation portfolios and retaining ownership and operation of just the distribution system. Other features: a nonprofit independent entity to coordinate operation of the distribution system; performance-based regulation to reward distribution companies for reliable service; consumer choices of suppliers, including renewable energy suppliers; an energy efficiency standard; a low-income bill assistance program; and consumer protections and education on energy choices. (This was politely continued to 2021 in Labor and Commerce with no debate. The patrons were complimented for “starting a conversation.”)

HB206 (Ware) was, I’m told, the beta version of Delegate Keam’s HB1677. (Incorporated into HB1677, which was continued to 2021.)

SB842 (Petersen) seeks to achieve the same end as HB1677 and HB206, but it puts the SCC in charge of writing the plan. The bill provides for all retail customers of electricity to be able to choose their supplier, and instructs the SCC to promulgate regulations for a transition to a competitive market for electricity. Existing utilities will continue to provide the distribution service. The bill also requires suppliers of electricity to obtain at least 25% of sales from renewable energy by 2025, 50% by 2030, and 100% by 2050. Renewable energy is defined to include “sustainable biomass” but not waste incineration or landfill gas. (Continued to 2021.)

Anti-renewable energy bills

HB205 (Campbell) adds unnecessary burdens to the siting of wind farms and eliminates the ability of wind and solar developers to use the DEQ permit-by-rule process for projects above 100 megawatts. (Laid on the table in subcommittee.)  HB1171 (Poindexter) is a make-work bill requiring an annual report of the acreage of utility scale solar development, as well as the acreage of public or private conservation easements. (Continued to 2021.) HB1636 (Campbell) prohibits the construction of any building or “structure” taller than 50 feet on a “vulnerable mountain ridge.” You can tell the bill is aimed at wind turbines because it exempts radio, TV, and telephone towers and equipment for transmission of communications and electricity. (Laid on the table in subcommittee. FWIW, we’re told it was aimed at hotels, not wind. Yeah, sure . . .) HB1628 (Poindexter) prohibits the state from joining RGGI or adopting any carbon dioxide cap-and-trade program without approval from the General Assembly. (Passed by indefinitely in subcommittee. Yep, another way to kill a bill.)

Financing

HB461 (Sullivan) establishes a tax credit of 35%, up to $15,000, for purchases of renewable energy property. It is available only to the end-user (e.g., a resident or business who installs solar or a geothermal heat pump). Unfortunately, loose drafting would have also made the credit available for wood-burning stoves and other non-clean energy applications. (Died in a Finance subcommittee on a 5-5 vote.)

HB633 (Willett) establishes a tax deduction up to $10,000 for the purchase of solar panels or Energy Star products. (Stricken from docket in a Finance subcommittee.)

HB947 (Webert) expands the authority of localities to grant tax incentives to businesses located in green development zones that invest in “green technologies,” even if they are not themselves “green development businesses.” Green technologies are defined as “any materials, components, equipment, or practices that are used by a business to reduce negative impacts on the environment, including enhancing the energy efficiency of a building, using harvested rainwater or recycled water, or installing solar energy systems.” (Continued to 2021.)

SB1061 (Petersen) allows residential customers to qualify for local government Property Assessed Clean Energy (PACE) financing programs for renewable energy and energy efficiency improvements; currently the availability of this financing tool is restricted to commercial customers. (Continued to 2021.)

HB754 (Kilgore) establishes the Virginia Brownfield and Coal Mine Renewable Energy Grant Fund, which will support wind, solar or geothermal projects sited on formerly mined lands or brownfields. (Left in Appropriations.)

[Updated February 12 to include late votes and fix a random meaningless line, and later to correct various other screw-ups that people have kindly brought to my attention.]

Renewable energy bills to watch

People gathered with signs supporting climate action

Grassroots activists gather at the steps of the Virginia Capital on January 14. Photo courtesy Sierra Club.

Yesterday’s post launched my annual roundup of energy and climate bills with a comparison of the two major energy transition bills filed to date, HB1526/SB851, the Clean Economy Act, and HB77, the Green New Deal Act. Today I’m covering other renewable energy bills. You will be glad to see I am addressing each only briefly, given the large number of them. Bills can still be filed as late as tomorrow evening, and there is often some lag in the Legislative Information System, which posts the bills, their summaries, their committee assignments, and what happens to them. I will add to this list once I’ve seen the rest, so check back for updates.

Most of these bills will be heard in Senate Commerce and Labor, or now in the House, Labor and Commerce, committees. Both House and Senate have established energy subcommittees. In the Senate, the subcommittee is advisory and does not have the power to kill a bill outright. The House subcommittee used to be a killing field for good bills. Hopefully this year will be different.

Bills with monetary implications typically must go to Finance or Appropriations.

As always, the action will be fast and furious, and it is already underway. Blink and you will miss it.

RPS

Both HB1526/SB851, the Clean Economy Act, and HB77, the Green New Deal Act, contain a renewable portfolio standard (RPS) requiring utilities to include in their electricity mix a percentage of renewable energy that ratchets up over time. In addition, HB1451 (Sullivan) is a stand-alone RPS bill that also includes an energy storage mandate. It applies only to IOUs but otherwise appears to be identical to the RPS and storage provisions of the CEA (of which Sullivan is also the patron).

Instead of an RPS, SB876 (Marsden) establishes a “clean energy standard” applicable to both IOUs and coops. A “clean energy resource” is defined as “any technology used to generate electricity without emitting carbon dioxide into the atmosphere,” including “(i) electric generation facilities that are powered by nuclear, solar, wind, falling water, wave motion, tides, or geothermal power; (ii) a natural gas-fired generation facility with 80 percent carbon capture; or (iii) a coal-fired generation facility with 90 percent carbon capture.” Aside from the contradiction in terms inherent in this definition, the clean energy standard also suffers from a delay in its starting point to 2030, when it begins at 30%–or about where Dominion is today with its nuclear plants. Considering only offshore wind and solar development already underway, the CES would not be a meaningful spur to new renewable energy for at least another 15 years. A couple of strong points, however: the bill also requires the closure of all coal-fired generation facilities by 2030, and requires workforce transition and community assistance plans. [Update: we’re told Senator Marsden agrees with the criticisms of this bill and does not intend to present it, at least without significant amendment.]

SB842 (Petersen) provides for all retail customers of electricity to be able to choose their supplier, and instructs the SCC to promulgate regulations for a transition to a competitive market for electricity. Existing utilities will continue to provide the distribution service. The bill also requires suppliers of electricity to obtain at least 25% of sales from renewable energy by 2025, 50% by 2030, and 100% by 2050. Renewable energy is defined to include “sustainable biomass” but not waste incineration or landfill gas.

Customer-sited solar

Solar Freedom” is back this year for another attempt to lift barriers to customer-sited renewable energy, including rooftop solar. The primary vehicles are SB710 (McClellan) and HB572 (Keam), with nearly identical versions from Lopez (HB1184) and Simon (HB912). It contains 8 provisions:

  1. Raising from 1% to 10% the cap on the total amount of solar that can be net metered in a utility territory, ensuring small-scale solar continues to grow.
  2. Making third-party financing using power purchase agreements (PPAs) legal for all customers of IOUs, removing current cap. The SCC reports the program in Dominion’s territory is now filled, putting in jeopardy Fairfax County’s ambitious solar plans. In Southwest Virginia in APCo territory, the program is even smaller and narrower, and several projects have been unable to move forward.
  3. Allowing local government entities to install solar facilities of up to 5 MW on government-owned property and use the electricity for schools or other government-owned buildings located on nearby property, even if not contiguous. This would allow Fairfax County to move forward with a planned solar facility on a closed landfill; localities with closed landfills across the state could similarly benefit.
  4. Allowing all customers to attribute output from a single solar array to multiple meters on the same or adjacent property of the same customer.
  5. Allowing the owner of a multi-family residential building to install a solar facility on the building or surrounding property and sell the electricity to tenants. This is considered especially valuable for lower-income residents, who tend to be renters.
  6. Removing the restriction on customers installing a net-metered solar facility larger than required to meet their previous 12 months’ demand. Many customers have expressed interest in installing larger facilities to serve planned home additions or purchases of electric vehicles.
  7. Raising the size cap for net metered non-residential solar facilities from 1 MW to 3 MW, a priority for commercial customers.
  8. Removing standby charges on residential facilities sized between 10-20 kW. Current charges are so onerous that few customers build solar arrays this size, hurting this market segment.

Other PPA and net metering bills

HB1647 (Jones) is similar to Solar Freedom but includes community solar and leaves out meter aggregation.

Five of the eight provisions of Solar Freedom also appear in the Clean Economy Act, omitting only numbers 3,4 and 5. SB532 (Edwards) is a stand-alone bill to make PPAs legal, using an approach similar to that of Solar Freedom and the CEA. HB1067 (Kory) deals with a specific situation where a customer has solar on one side of property divided by a public right-of-way, with the electric meter to be served by the solar array on the other side. The legislation declares the solar array to be located on the customer’s premises. (Item 4 of Solar Freedom would also solve the problem.)

Resilience hubs

HB959 (Bourne) directs DMME to establish a pilot program for resilience hubs. These are defined as a simple combination of solar panels and battery storage capable of powering a publicly-accessible building in emergency situations or severe weather events, primarily to serve vulnerable communities.

HOAs

HB414 (Delaney) and SB504 (Petersen) clarifies the respective rights of homeowners associations (HOAs) and residents who want to install solar. The law allows HOAs to impose “reasonable restrictions,” a term some HOAs have used to restrict solar to rear-facing roofs regardless of whether these get sunshine. The bill clarifies that HOA restrictions may not add more than $1,000 to the cost of solar facility, or decrease the expected output by more than 10%.

Community solar.

Three years ago legislation passed to allow utilities to set up so-called community solar programs. A couple of coops followed through, notably one from Central Virginia Electric Cooperative. Dominion received SCC approval to launch a small program back in 2018, but still hasn’t done so. That leaves a large base of potential customers—people without sunny roofs, apartment dwellers, or anyone who can’t afford to install solar—with no options.

The Clean Economy Act has detailed provisions for community solar, supported by the trade organization Community Solar Access. An alternative as a stand-alone bill is SB629 (Surovell). It creates an opportunity for subscribers in the territory of investor-owned utilities to buy from small (under 2 MW) “solar gardens” developed by third-party owners. Utilities would credit purchasers at the retail rate minus the utility’s costs. Preference would be given to solar gardens with low-income subscribers.

HB573 (Keam) does not establish a new program. It affects the utility-controlled and operated “community solar” programs required by 2017 legislation (and still not rolled out yet, though I assume the facilities have been selected). The bill requires that “an investor-owned utility shall not select an eligible generating facility that is located outside a low-income community for dedication to its pilot program unless the investor-owned utility contemporaneously selects for dedication to its pilot program one or more eligible generating facilities that are located within a low-income community and of which the pilot program costs equal or exceed the pilot program costs of the eligible generating facility that is located outside a low-income community.” I read this to mean utilities must select more expensive sites and develop more expensive programs in low-income areas than elsewhere, which seems . . . odd.

HB1634 (Jones) requires utilities to establish shared-solar programs that allows customers to purchase subscriptions in a solar facility no greater than 5 MW. (For what it’s worth, the GA passed a similar law in 2017, and we are still waiting for Dominion’s program.)

Resolving local disputes over utility-scale projects

Developers of utility-scale solar and wind sometimes face pushback at the local level. Opposition can come from residents who worry about viewsheds or who have been subjected to anti-renewables propaganda, and from local officials who want to collect tax revenue above the local real estate tax rate. Industry organizations and counties have worked to come up with a number of bills to resolve the concerns, though in some cases the counties have split on whether to support them.

HB1327 (Austin) allows localities to impose property taxes on generating equipment of electric suppliers utilizing wind turbines at a rate that exceeds the locality’s real estate tax rate by up to $0.20 per $100 of assessed value. Under current law, the tax may exceed the real estate rate but cannot exceed the general personal property tax rate in the locality. Wind developer Apex Clean Energy helped develop the bill and supports it.

Bills supported by the solar industry organization MDV-SEIA include:

  • HB656 (Heretick) and SB875 (Marsden) allow local governments to incorporate into their zoning ordinances national best practices standards for solar PV and batteries.
  • HB1131 (Jones) and SB762 (Barker) authorize localities to assess a revenue share of up to $0.55 per megawatt-hour on solar PV projects, in exchange for which an existing tax exemption is expanded.
  • HB657 (Heretick) and SB893 (Marsden) exempt solar facilities of 150 MW or less from the requirement that they be reviewed for substantial accord with local comprehensive plans.
  • HB1434 (Jones) reduces the existing 80% machinery and tools tax exemption for large solar projects.
  • SB870 (Marsden) authorizes local planning commissions to include certain regulations and provisions for conditional zoning for solar projects over 5 MW.

Other RE siting bills

HB1133 (Jones) makes it in the public interest for utilities to build or purchase, or buy the output of, wind or solar facilities located on previously developed sites.

HB1675 (Hodges) requires anyone wanting to locate a renewable energy or storage facility in an opportunity zone to execute a siting agreement with the locality.

A few bills appear designed to make wind and solar projects harder to site, or are intended to rile up sentiment against solar: HB205 (Campbell) adds unnecessary burdens to the siting of wind farms and eliminates the ability of wind and solar developers to use the DEQ permit-by-rule process for projects above 100 megawatts. HB1171 (Poindexter) is a make-work bill requiring an annual report of the acreage of utility scale solar development, as well as the acreage of public or private conservation easements. HB1636 (Campbell) prohibits the construction of any building or “structure” taller than 50 feet on a “vulnerable mountain ridge.” You can tell the bill is aimed at wind turbines because it exempts radio, TV, and telephone towers and equipment for transmission of communications and electricity.

Grants, tax deductions, tax credits and other financing

HB754 (Kilgore) establishes the Virginia Brownfield and Coal Mine Renewable Energy Grant Fund, which will support wind, solar or geothermal projects sited on formerly mined lands or brownfields. (See also Jones’ HB1133, which makes it in the public interest for utilities to build or purchase, or buy the output of, wind or solar facilities located on previously developed sites. And see Kory’s HB1306, which directs DMME to adopt regulations allowing brownfields and lands reclaimed after mining to be developed as sites for renewable energy storage projects.)

HB461 (Sullivan) establishes a tax credit of 35%, up to $15,000, for purchases of renewable energy property. It is available only to the end-user (e.g., a resident or business who installs solar or a geothermal heat pump).

HB633 (Willett) establishes a tax deduction up to $10,000 for the purchase of solar panels or Energy Star products.

HB654 (Guy) authorizes DMME to sponsor a statewide financing program for commercial solar, energy efficiency and stormwater investments. The effect would be to boost the availability of Commercial Property Assessed Clean Energy (C-PACE) in areas of the state where the locality has not developed a program of its own.

HB947 (Webert) expands the authority of localities to grant tax incentives to businesses located in green development zones that invest in “green technologies,” even if they are not themselves “green development businesses.” Green technologies are defined as “any materials, components, equipment, or practices that are used by a business to reduce negative impacts on the environment, including enhancing the energy efficiency of a building, using harvested rainwater or recycled water, or installing solar energy systems.”

SB542 (Edwards) repeals the sunset date on crowdfunding provisions and provides fixes for certain existing obstacles to this financing approach. The bill is the result of lessons learned in developing a 2019 “solar bonds” program for five commercial and non-profit customers.

SB754 (Marsden) authorizes utilities to establish on-bill financing of energy efficiency, electrification, renewable energy, EV charging, energy storage and backup generators.

HB1656 (O’Quinn) authorizes Dominion and APCo to design incentives for low-income people, the elderly, and disable persons to install energy efficiency and renewable energy, to be paid for by a rate adjustment clause.

HB1701 (Aird) authorizes the Clean Energy Advisory Board to administer public grant funding, and makes small changes to the Board.

SB634 (Surovell) establishes the Energy Efficiency Subsidy Program to fund grants to subsidize residential “efficiency” measures, interestingly defined as solar PV, solar thermal or geothermal heat pumps. It also creates a subsidy program for electric vehicles.

SB1039 (Vogel) allows a real property tax exemption for solar energy equipment to be applied retroactively if the taxpayer gets DEQ certification within a year.

SB1061 (Petersen) allows residential customers to qualify for local government Property Assessed Clean Energy (PACE) financing programs for renewable energy and energy efficiency improvements; currently the availability of this financing tool is restricted to commercial customers. Note the potential interplay with HB654, above.

Customer rights to shop for renewable energy

HB868 (Bourne) and SB376 (Suetterlein and Bell) allows customers to buy 100% renewable energy from any licensed supplier, regardless of whether their own utility has its own approved tariff.

HB 889 (Mullin) and SB 379 (McPike), the Clean Energy Choice Act, is broader than HB868. The legislation allows all customers to buy 100% renewable energy from any licensed supplier regardless of whether their utility has its own approved tariff. In addition, large customers (over 5 MW of demand) of IOUs also gain the ability to aggregate their demand from various sites in order to switch to a competitive supplier that offers a greater percentage of renewable energy than the utility is required to supply under any RPS, even if it is not 100% renewable. Large customers in IOU territory who buy from competing suppliers must give three years’ notice before returning to their utility, down from the current five years. The SCC is directed to update its consumer protection regulations.

Offshore wind

The CEA contains detailed provisions for the buildout and acquisition of offshore wind. HB234 (Mugler) directs the Secretary of Commerce and Trade to develop an offshore wind master plan.

SB860 (Mason) and HB1664 (Hayes) puts the construction or purchase of at least 5,200 MW of offshore wind in the public interest.

HB1607 (Lindsey) and SB998 (Lucas) allows Dominion to recover the costs of building offshore wind farms as long as it has a plan for the facilities to be in place before January 1, 2028 and that it has used reasonable efforts to competitively source the majority of services and equipment. All utility customers in Virginia, regardless of which utility serves them, will participate in paying for this through a non-bypassable charge. Surely this bill came straight from Dominion.