Even Appalachian Power doesn’t like its third-party solar option

September 22, 2016 by Ivy Main

Colleges in APCo territory want to use PPAs to install solar facilities like the one recently installed at the University of Richmond, in Dominion territory.

Facing a withering report from a Virginia hearing examiner recommending denial of its request for a renewable energy “Rider RGP,” Appalachian Power Company (APCo) has responded with a simple message to the State Corporation Commission: um, never mind.

APCo proposed Rider RGP as an alternative to third-party power purchase agreements (PPAs) for customers wanting to install rooftop solar. The proposal would have put APCo in the middle of the deal and created a buy-all, sell-all scheme. But the proposal was roundly criticized at last year’s hearing and in witness statements as convoluted and expensive.

On September 19 APCo asked to withdraw its application, citing changed circumstances. In reality, of course, nothing has changed since the Hearing Examiner’s August 31 report, other than APCo learning it was about to lose.

The company probably doesn’t mind being rejected for a program that witnesses said no one would sign up for. The much bigger issue for the company is that if the SCC adopts the hearing examiner’s view, APCo could lose its battle to block PPAs in its service territory.

For those of you just coming to the story, here’s the Cliff Notes version (this earlier post has the unabridged telling): APCo’s customers want the ability to install solar on their property through PPAs, a financing arrangement in which a solar developer installs and owns the panels, selling the electricity that’s generated to the customer. Often this means the customer can reduce its electricity bills without incurring an up-front cost. For tax-exempt institutions like colleges that can’t take advantage of the federal 30% tax credit for solar, the PPA model means the developer can take the tax credit and pass along the savings.

Virginia utilities say this arrangement violates their monopoly on the sale of electricity. Customers point to two statutory provisions that make PPAs legal. One provision allows customers to buy renewable energy from third parties if their utility doesn’t offer it. (No utility in Virginia does.) The other provision defines a net metering customer to include one who contracts with someone else to install and operate a solar facility on the customer’s property—an apt description of a PPA arrangement. Customers would seem to have the better of the argument, surely, but no bank will finance a PPA when a deep-pocketed utility is threatening to sue.

Dominion temporarily settled the issue in its territory with a pilot program that allows some PPAs, but APCo declined to participate. Under pressure from educational institutions that want solar, APCo proposed Rider RGP as an alternative for its territory. Customers and solar advocates seized the opportunity to seek a clear ruling from the SCC on the legality of PPAs. They argued, and the Hearing Examiner agreed, that Rider RGP wasn’t just badly designed, but unnecessary, given the provisions of the statute that already allow PPAs.

APCo doesn’t want the SCC commissioners to confirm this conclusion. It hopes that by withdrawing Rider RGP, the SCC will dismiss the case and not reach the merits of the argument on PPA legality. It is urging the SCC not to consider the point at all, or if it does so, not to take it up until it considers APCo’s plan, announced in April, to offer a green tariff to customers.

That green tariff is the “changed circumstances” APCo says makes Rider RGP unnecessary. If the SCC approves the green tariff, APCo will offer to sell real renewable energy to customers who want it. APCo clearly believes that having that tariff available to customers closes off the statutory provision that allows customers to go to third-party sellers if their own utility doesn’t offer renewable energy.

The green tariff would not, however, affect the legality of PPAs under the other statutory provision, the one that defines net metering customers to include those who have renewable energy facilities located on their property but owned and operated by someone else. Nor does the offer of a green tariff seem likely to satisfy customer demand for PPAs; buying electricity from a utility through a green tariff is a very different animal from having solar panels on your own roof.

The SCC is considering APCo’s request to withdraw its proposal for Rider RGP. It issued an order asking the parties to the case to comment by September 26. Advocates are expected to oppose APCo’s request and to ask the SCC to rule definitively on the legality of PPAs. By doing so, the Commission would finally bring legal clarity to an issue that has been holding back solar development in Virginia.

Update: September 26, Dominion Virginia Power filed a motion to intervene out of time, with a brief begging the SCC not to even look at the legality of PPAs, or if it did, to reject the hearing examiner’s reading of the statute on the grounds that her opinion disagrees with Dominion’s. Dominion’s brief notes that it wrote its own opinion into a tariff, which the SCC approved, and therefore that ought to be more important than whatever the General Assembly actually said.

On October 7, the SCC allowed APCo to withdraw its proposal, ducking the issue of PPA legality and ensuring that more time and money will be wasted on future proceedings.

Your 2016 guide to Virginia wind and solar policy

September 14, 2016 by Ivy Main

[NOTE: The 2017 Guide is now available. You can find it here.]

I could make short work of this year’s update by saying that not much has changed in the way of Virginia renewable energy policy in the past year. The General Assembly punted on almost all of the relevant bills that were presented this winter, and a subcommittee that was formed to review those bills has taken no action to date.

But if the policies haven’t changed, the landscape has. While our legislators sat on their hands, everyone else embarked on what, for Virginia, amounts to a solar binge. Dominion Virginia Power began making good on a pledge to install 400 megawatts (MW) of solar in state by the end of the decade. The Governor has taken the first steps to fulfill a pledge to have state agencies meet 8% of their electric demand with solar. Large corporations suddenly want to take advantage of low solar prices and favorable tax policies to do deals in Virginia. Residents are flocking to bulk purchasing cooperatives for rooftop solar. A few universities and schools are using third-party power purchase agreements (PPAs) to install solar under the limited provisions of Dominion Power’s pilot program.

Very little of this is reflected in the statistics—yet. According to the Solar Energy Industries Association, Virginia increased its total renewable energy capacity from 14 MW at the end of 2014 to 22 MW at the end of 2015. A few years ago, an increase of more than 50% would have been amazing. Today we just have to point out that 22 MW is how much solar capacity North Carolina installs on average every single week.

The further we go, the behinder we get

	Maryland	North Carolina	W. Virginia	Tennessee	Virginia
Solar*	465	2,294	3.4	132	22
Wind**	190	0	583	29	0
Total	655	2,294	586	161	22

Installed capacity measured in megawatts (MW) at the end of 2015. One megawatt is equal to 1,000 kilowatts (kW).

*Source: Solar Energy Industries Association **Source: American Wind Energy Association

This year we will show real progress. Based on the projects announced to date, Virginia will likely have more than 200 MW of solar online by the end of 2016, with more projects in the queue for 2017. So we are headed in the right direction, but these numbers still represent only a tiny fraction of what we could see if we removed the barriers currently holding back private investment in the solar industry and pushed our utilities to make renewables central to their planning.

Moreover, we still have no wind farms in the state, and neither of our investor-owned utilities included Virginia wind in their latest Integrated Resource Plans (with the exception of Dominion Power’s two pilot offshore wind turbines, which probably won’t get built). The one bright spot on wind energy is that Apex Clean Energy continues to move forward with its Rocky Forge wind farm, scheduled for completion next year.

We also have to view Virginia’s progress on solar in the broader context of energy development. Dominion Virginia Power will have built 4,300 MW of new natural gas generation by the end of the decade and has indicated its interest in building far more. The company will add this to a portfolio that’s already 96% fossil fuel and nuclear. This summer two more companies announced plans to build natural gas plants in Virginia, aiming to burn some of the fracked gas that Dominion plans to bring through the Atlantic Coast Pipeline. When the state’s dominant utility is all-in on natural gas, it’s hard for a different energy model to find elbow room.

But we do have good solar and wind resources, and plenty of demand. What we need are policies that welcome participants to the market.

Virginia utilities won’t sell wind or solar to customers*

(*except those with billions of dollars and famous CEOs—see section 14)

Currently, the average Virginia resident can’t pick up the phone and call their utility to buy electricity generated by wind and solar farms. Worse, they can’t buy renewable energy elsewhere, either.

This wasn’t supposed to happen. Section 56-577(A)(6) of the Virginia code allows utilities to offer “green power” tariffs, and if they don’t, customers are supposed to be able to go elsewhere for it. Ideally, a utility would use money from voluntary green power programs to build or buy renewable energy for these customers. However, Virginia utilities have not done this, except in very tiny amounts. Instead, utilities pay brokers to buy renewable energy certificates (RECs) on behalf of the participants. Participation by consumers is voluntary. Participants sign up and agree to be billed extra on their power bills for the service. Meanwhile, they still run their homes and businesses on regular “brown” power, which is not what they want.

In Dominion’s case, these RECs meet a recognized national standard, and some of them originate with wind turbines, but they primarily represent power produced and consumed out of state, and thus have no effect on the power mix in Virginia. For a fuller discussion of the Dominion Green Power Program, see What’s wrong with Dominion’s Green Power Program.

Appalachian Power’s “green pricing” program is even worse, offering RECs from an 80 MW hydroelectric dam in West Virginia. No wind, and no solar.

Other REC programs are available to Virginia consumers. If you’re considering this route, read this post first.

The State Corporation Commission has ruled that REC-based programs do not qualify as selling renewable energy, so under the terms of §56-577(A)(6), customers are currently permitted to turn to other licensed suppliers of electric energy “to purchase electric energy provided 100 percent from renewable energy.”

So you should be able to go elsewhere to buy wind and solar—say, from a solar facility on someone else’s land, or even from a facility on your own rooftop that someone else owns and operates for you. (For more on that, see section 10 on third-party power purchase agreements.) But Virginia utilities claim that the statute’s words mean that not only must another licensed supplier provide 100% renewable energy, it must also supply 100% of the customer’s demand, all the time. Obviously, the owner of a wind farm or solar facility cannot do that. Ergo, say the utilities, a customer cannot go elsewhere.

On August 31, however, a hearing examiner for the SCC rejected this reading. If the SCC agrees, Virginia residents might have new options.

Anticipating the possibility of an adverse ruling from the SCC, this spring APCo filed a proposal with the SCC for a new tariff under of §56-577(A)(6). Instead of RECs, APCo now proposes to offer real green power, combining wind, solar and hydro. None of the power will come from new projects; partly as a result, the tariff will cost more. The SCC will hold a hearing on the proposal this fall. If approved, APCo customers would finally be able to order renewable energy from their utility. But it would also likely close off customers’ ability under the statute to turn to other suppliers of renewable energy.

Dominion has not yet followed APCo’s lead on this one. If the SCC rules that the statute means what it says, we would expect Dominion to offer a green power program consisting of true renewable energy. Indeed, Dominion seems to be working on a green tariff this fall that it is calling “community solar” (see next session). Its real interest may well be the same as APCo’s.

We hope the SCC will require both APCo and Dominion to follow best practices recommended by groups like Advanced Energy Economy Institute: “Utility renewable energy tariff programs must require that utilities build, purchase or contract for a portfolio of renewable energy through a competitive process, and charge customers according to the actual cost of the portfolio, whether that be a net premium or net savings for customers.”

Community solar? Not hardly

Last year Dominion received SCC approval for a program it billed as an offer to sell electricity from solar panels. Notwithstanding its name, however, the “Dominion Community Solar” program is not an offer to sell electricity generated from solar energy, and reading the details, one can only conclude it would attract customers only to the extent they were deceived about it. Perhaps someone within Dominion pointed out to the brass how close this looks to consumer fraud; at any rate, a year has passed and the company still hasn’t launched it.

As for true community solar, only one Virginia utility offers it: a member-owned rural electric cooperative in southwestern Virginia called BARC. The rest of you are out of luck at the moment. Every year for the past several years, legislation has been introduced to support community solar, and every year it has died in the face of utility opposition.

A few bills this year would have enabled community solar, but they were “carried over to 2017”—i.e., killed. A small working group put together by the solar industry association and the utilities is currently trying to come up with a program that utilities will find acceptable. The group has issued a “Request for Information,” available online, and is holding public meetings this fall to get input on a proposal that looks much more like a green tariff than like community solar. (Clearly Dominion likes the name “community solar”–just not, you know, actual community solar.) Another group, the Distributed Solar Collaborative, which includes all stakeholders except utilities, is also evaluating models from other states and plans to put forward a true community solar alternative.

Virginia’s Renewable Portfolio Standard (RPS) is a miserable sham

Many advocates focus on an RPS as a vehicle for inducing demand. In Virginia, that’s a mistake. Virginia has only a voluntary RPS, which means utilities have the option of participating but don’t have to. Any costs they incur in meeting the goals can be charged to ratepayers. Until a few years ago, utilities even got to collect bonus money as a reward for virtue, until it became clear that there was nothing very virtuous going on.

Making our RPS mandatory rather than voluntary would do nothing for wind and solar in Virginia without a complete overhaul. The statute takes a kitchen-sink approach to what counts as renewable energy, so meeting it requires no new investment and no wind or solar.

The targets are also modest to a fault. Although nominally promising 15% renewables by 2025, the statute sets a 2007 baseline and contains a sleight-of-hand in the definitions section by which the target is applied only to the amount of energy not produced by nuclear plants. The combined result is an effective 2025 target of about 7%.

The RPS is as impotent in practice as it is in theory. In the case of Dominion Virginia Power, the RPS has been met largely with old hydro projects built prior to World War II, trash incinerators, and wood burning, plus a small amount of landfill gas and—a Virginia peculiarity—RECs representing R&D rather than electric generation.

There appears to be no appetite in the General Assembly for making the RPS mandatory, and efforts to improve the voluntary goals have repeatedly failed in the face of utility or industry opposition. The utilities have offered no arguments why the goals should not be limited to new, high-value, in-state renewable projects, other than that it would cost more to meet them than to buy junk RECs.

But with the GA hostile to a mandatory RPS and too many parties with vested interests in keeping the kitchen-sink approach going, it is hard to imagine our RPS becoming transformed into a useful tool to incentivize wind and solar.

That doesn’t mean there is no role for legislatively-mandated wind and solar. But it would be easier to pass a bill with a simple, straightforward mandate for buying or building a certain number of megawatts than it would be to repair a hopelessly broken RPS.

Customer-owned generation: for most, the only game in town

Given the lack of wind or solar options from utilities, people who want renewable energy generally have to build it themselves. A federal 30% tax credit makes it cost-effective for those with cash or access to low-cost financing, and bulk purchasing through nonprofits VA-SUN and LEAP makes the process easier and reduces costs.

Last year the GA passed legislation enabling Property Assessed Clean Energy (PACE) loans for commercial customers. Localities now have an option to offer low-cost financing for energy efficiency and renewable energy projects at the commercial level. A bill to extend PACE authorization to residential customers did not get out of committee this year.

Virginia offers no cash incentives or tax credits for wind or solar. The Virginia legislature passed a bill in 2014 that would offer an incentive, initially as a tax credit and then as a grant program, but it did not receive funding. The same bill, reintroduced in 2015, died in a subcommittee.

The lack of a true RPS in Virginia means Virginia utilities generally will not buy solar renewable energy certificates (SRECs) from customers. SRECs generated here can sometimes be sold to utilities in other states (as of now only Pennsylvania) or to brokers who sell to voluntary purchasers.

Limits to net metering hamper growth

Section 56-594 of the Virginia code allows utility customers with wind and solar projects to net energy meter. System owners get credit from their utility for surplus electricity that’s fed into the grid at times of high output. That offsets the grid power they draw on when their systems are producing less than they need. Their monthly bills reflect only the net energy they draw from the grid.

If a system produces more than the customer uses in a month, the credits roll over to the next month. However, at the end of the year, the customer will be paid for any excess credits only by entering a power purchase agreement with the utility. This will likely be for a price that represents the utility’s “avoided cost” of about 4.5 cents, rather than the retail rate, which for homeowners is closer to 12 cents. This effectively stops most people from installing larger systems than they can use themselves.

Legislation passed in 2015 makes it less likely that new solar owners will have any surplus. At Dominion’s insistence, the definition of “eligible customer-generator” was amended to limit system sizes to no larger than needed to meet the customers demand, based on the previous 12 months of billing history. The SCC wrote implementing regulations (see 20VAC5-315-10 et seq.) but failed to address what happens with new construction. The solar trade association MDV-SEIA continues to work towards a solution to that problem.

The new limitation is a problem for other reasons as well. Some solar customers want to install larger systems than they previously needed because their business is expanding or they plan to buy an electric car. But the limitation is also stupid. If customers want to install more clean, renewable energy than they need and are willing to sell the surplus electricity into the grid at the wholesale power price, why would you stop them from performing this service to society? I can understand that the paperwork isn’t worth the hassle for very small amounts of excess electricity, but if there isn’t an app for that yet, I bet some Virginia Tech students could make one.

Aggregated net metering allowed for farms only

Under a bill introduced by Delegate Randy Minchew (R-Leesburg) and passed in 2013, owners of Virginia farms with more than one electric meter are permitted to attribute the electricity produced by a system that serves one meter (say, on a barn) to other meters on the property (the farmhouse and other outbuildings). This is referred to as “agricultural net metering.” Efforts to expand aggregated net metering beyond farms have not succeeded.

Standby charges hobble the market for larger home systems and electric cars

Dominion Power and Appalachian Power are at the forefront of a national pushback against policies like net metering that facilitate customer-owned generation.

The current system capacity limit for net-metered solar installations is 1 MW for commercial, 20 kW for residential. However, for residential systems between 10 kW and 20 kW, a utility is allowed to apply to the State Corporation Commission to impose a “standby” charge on those customers.

Seizing the opportunity, Dominion won the right to impose a standby charge of up to about $60 per month on these larger systems, eviscerating the market for them just as electric cars were increasing interest in larger systems. (SCC case PUE- 2011-00088.) Legislative efforts to roll back the standby charges were unsuccessful, and more recently, Appalachian Power instituted even more extreme standby charges. (PUE-2014-00026.)

The standby charges supposedly represent the extra costs to the grid for transmission and distribution, though there is a great deal of disagreement on that score, and a lot of suspicion that utilities’ real concern is that they will make less money as demand for their dirty energy product falls.

In the summer of 2013, in a filing with the SCC (PUE-2012-00064, Virginia Electric and Power Company’s Net Metering Generation Impacts Report), Dominion claimed it could also justify standby charges for its generation costs, and indicated it expected to seek them after a year of operating its Solar Purchase Program (see discussion below). As far as I can tell, it hasn’t carried out this threat yet, and it would likely need legislation to do so.

Good news for residential solar: homeowner association bans are largely a thing of the past

Homeowner association (HOA) bans and restrictions on solar systems have been a problem for residential solar. In the 2014 session, the legislature nullified bans as contrary to public policy. The law contains an exception for bans that are recorded in the land deeds, but this is said to be highly unusual; most bans are simply written into HOA covenants. In April of 2015 the Virginia Attorney issued an opinion letter confirming that unrecorded HOA bans on solar are no longer legal.

Even where HOAs cannot ban solar installations, they can impose “reasonable restrictions concerning the size, place and manner of placement.” This language is undefined. The Maryland-DC-Virginia Solar Energy Industries Association has published a guide for HOAs on this topic.

Virginia utilities continue their fight against PPAs; now a losing battle?

One of the primary drivers of solar installations in other states has been third-party ownership of the systems, including third-party power purchase agreements (PPAs), under which the customer pays only for the power produced by the system. For customers that pay no taxes, including non-profit entities like churches and colleges, this is especially important because they can’t use the 30% federal tax credit to reduce the cost of the system if they purchase it directly. Under a PPA, the system owner can take the tax credit (as well as accelerated depreciation) and pass along the savings in the form of a lower electricity price.

The Virginia Code seems to sanction this approach to financing solar facilities in its net metering provisions, specifically §56-594, which authorizes a “customer generator” to net meter, and defines an eligible customer generator as “a customer that owns and operates, or contracts with other persons to own or operate, or both, an electrical generating facility that . . . uses as its total source of fuel renewable energy. . . “

Notwithstanding this provision, in 2011, when Washington & Lee University attempted to use a PPA to finance a solar array on its campus, Dominion Virginia Power issued cease and desist letters to the university and its Staunton-based solar provider, Secure Futures LLC. Dominion claimed the arrangement violated its monopoly on power sales within its territory. Secure Futures and the university thought that even if what was really just a financing arrangement somehow fell afoul of Dominion’s monopoly, surely they were covered by the exception in §56-577(A)(6) available to customers whose own utilities do not offer 100% renewable energy. (See Section 2, above.)

Yet the threat of prolonged and costly litigation was too much. The parties turned the PPA contract into a lease, allowing the solar installation to proceed but without the advantages of a PPA.

After a long and very public fight in the legislature and the press, in 2013 Dominion and the solar industry negotiated a compromise that specifically allows customers in Dominion territory to use third-party PPAs to install solar or wind projects under a pilot program capped at 50 MW. Projects must have a minimum size of 50 kW, unless the customer is a tax-exempt entity, in which case there is no minimum. Projects can be as large as 1 MW. The SCC is supposed to review the program every two years beginning in 2015 and has authority to make changes to it. I’m not aware the SCC has reviewed the program to date.

Appalachian Power and the electric cooperatives declined to participate in the PPA deal-making, so the legal uncertainty about PPAs continues in their territories. In June of 2015, Appalachian Power proposed an alternative to PPAs. An evidentiary hearing was held September 29, 2015. A veritable parade of witnesses testified that APCo”s program was expensive, unworkable and unnecessary, given the plain language of the statute allowing PPAs.

Almost a year later, on August 31, 2016, the hearing examiner finally issued her report, recommending that APCo’s application be rejected, both because it is a lousy program and because she, too, reads the Code to allow PPAs currently, making a utility alternative unnecessary. If the commissioners agree with her, this would be a victory for the solar industry and customers. How useful it will be depends on the scope of the final order, however, and on how they view APCo’s effort to close off the opening afforded by §56-577(A)(6) by offering its own renewable energy product.

The problem cries out for a legislative fix. Advocates pushed hard for legislation this year that would open the Virginia market to private investment through third-party PPAs; but as previously noted, the Commerce and Labor committees ducked their responsibilities and failed to act on the bills.

Meanwhile, Secure Futures has developed a third-party-ownership business model that it says works like a PPA for tax purposes but does not include the sale of electricity, and therefore should not trigger a challenge from Appalachian Power or other utilities. Currently Secure Futures is the only solar provider offering this option, which it calls a Customer Self-Generation Agreement.

Tax exemption for third-party owned solar proves a market driver

In 2014 the General Assembly passed a law exempting solar generating equipment “owned or operated by a business” from state and local taxation for installations up to 20 MW. It did this by classifying solar equipment as “pollution abatement equipment.” Note that this applies only to the equipment, not to the buildings or land underlying the installation, so real estate taxes aren’t affected.

The law was a response to a problem that local “machinery and tools” taxes were mostly so high as to make third-party PPAs uneconomic in Virginia. In a state where solar was already on the margin, the tax could be a deal-breaker.

The 20 MW cap was included at the request of the Virginia Municipal League and the Virginia Association of Counties, and it seemed at the time like such a high cap as to be irrelevant. However, with solar increasingly attractive economically, Virginia’s tax exemption rapidly became a draw for solar developers, including Virginia utilities.

In 2016 Dominion proposed changing the exemption to benefit its own projects at the expense of those of independent developers. In the end, the statute was amended in a way that benefits utility-scale projects without unduly harming smaller projects. Many new projects will now be only 80% exempt, rather than entirely exempt. However, the details are complex, with different timelines and different size classes, and anyone looking to use this provision should study it carefully.

Dominion “Solar Partnership” Program encounters limited success

In 2011, the General Assembly passed a law allowing Dominion to build up to 30 MW of solar energy on leased property, such as roof space on a college or commercial establishment. The SCC approved $80 million of spending, to be partially offset by selling the RECs (meaning the solar energy would not be used to meet Virginia’s RPS goals). The program has resulted in several commercial-scale projects on university campuses and corporate buildings. Unfortunately, it has also been plagued by delays and over-spending.

The program was supposed to proceed in two phases, with 10 MW in place by the end of 2013, and another 20 MW by December 31, 2015. However, the program got off to a very slow start. In August of 2014 the company acknowledged it was behind schedule and would likely not achieve more than 13 or 14 MW of the 30 MW authorized before it ran out of money. On May 7, 2015 Dominion filed a notice with the SCC that it needed to extend the phase 2 end date to December 31, 2016, and confirmed that it would install less than 20 MW altogether.

Although Dominion’s web page suggests that it is still taking applications, I’m doubtful.

Dominion’s Solar Purchase Program: bad for sellers, bad for buyers, and not popular with anyone

The same legislation that enabled the “Solar Partnership” initiative also authorized Dominion to establish “an alternative to net metering” as part of the demonstration program. The alternative turned out to be a buy-all, sell-all deal for up to 3 MW of customer-owned solar. As approved by the SCC, the program allows owners of small solar systems on homes and businesses to sell the power and the associated RECs to Dominion at 15 cents/kWh, while buying regular grid power at retail for their own use. Dominion then sells the power to the Green Power Program at an enormous markup.

I ripped this program from the perspective of the Green Power Program buyers, but the program is also a bad deal for most sellers. Some installers who have looked at it say it’s not worth the hassle given the costs involved and the likelihood that the payments represent taxable income to the homeowner. There is also a possibility that selling the electricity may make homeowners ineligible for the 30% federal tax credit on the purchase of their system. Sellers beware.

And then there’s the problem that selling the solar power means you aren’t powering your home or business with solar—which is the whole point of installing it, right?

Dominion’s Renewable Generation tariff for large users of energy finds no takers; Amazon forces a change, with a new tariff in the works that will be available to others

Currently non-utility renewable energy facilities are subject to a size limit of 1 MW for net-metered projects. These limitations constrain universities, corporations, data centers, and other large users of energy that might want to run on wind or solar. On top of this, the utilities’ interpretation of Virginia law prohibits a developer from building a wind farm or a solar array and selling the power directly to users under a power purchase agreement.

In 2013, Dominion Power rolled out a Renewable Generation Tariff (PUE-2012-00142) to allow customers to buy larger amounts of renewable power from providers, with the utility acting as a go-between and collecting a monthly administrative fee.

From the start the program appeared cumbersome and bureaucratic, and Dominion confirmed to me this summer that they have never had any takers. Then suddenly last year, Amazon Web Services made Dominion’s tariff irrelevant. Amazon contracted directly with a developer for an 80 MW solar farm, avoiding Dominion’s monopoly restrictions with a plan to sell the electricity directly into the PJM (wholesale) market. Dominion Energy (an affiliate of Dominion Virginia Power) then bought the project, and Dominion Virginia Power negotiated a special rate with Amazon for the power. This contract became the basis for an “experimental” tariff that Dominion proposes to offer to customers with a peak demand of 5 MW or more, with a program cap of 200 MW. A hearing examiner at the SCC has recommended approval of the special rate.

Dominion used a different model for its deal this year with Microsoft. After the SCC turned down Dominion’s application to charge ratepayers for a 20-MW solar farm in Remington, Virginia, Dominion reached an agreement with Microsoft and the Commonwealth of Virginia under which the state will buy the output of the project, while Microsoft buys the RECs.

Dominion has a strong incentive to make deals with large corporations that want a lot of renewable energy: if they don’t like what Dominion is offering, they can do an end run around the utility. Amazon has shown other companies how to use PJM rules that let anyone develop projects for the wholesale market regardless of utility monopolies, and then “attribute” the solar or wind energy to their operations in any state. With the tax exemption discussed in section 11, Virginia projects apparently now pencil out pretty well.

Dominion moves into utility-scale solar

Well before Amazon and Microsoft showed an interest in large-scale solar projects here, Dominion had announced it wanted to develop 400 MW of solar in Virginia. In 2015, at the utility’s behest, two bills promoted the construction of utility-scale solar by declaring it in the public interest for utilities to build solar energy projects of at least 1 MW, and up to an aggregate of 500 MW. The bill was amended at the solar industry’s behest to allow utilities the alternative of entering into PPAs for solar power prior to purchasing the generation facilities at a later date, an option with significant tax advantages.

Dominion’s first solar project will be a 20 MW solar farm in Remington, Virginia; however, the SCC rejected the company’s plan to charge ratepayers for the project because the company had not considered cheaper third-party alternatives. Governor McAuliffe helped save the project by working out a deal with Microsoft, as discussed above. Meanwhile, Dominion had also solicited bids for additional projects. To date, three have been announced, totaling 56 MW.

Although Dominion will be able to charge ratepayers for these projects, the SCC insists that the RECs be sold—whether to utilities in other states that have RPS obligations, or to customers who want them for their own sustainability goals, or perhaps even to voluntary green power customers. The result is that Dominion still won’t have any solar in its fuel mix. That’s the weird world of RECs for you.

Governor McAuliffe promises the state will purchase 110 MW of solar

Following a recommendation by the Governor’s Climate Change and Resiliency Commission, on December 21, 2015, Governor McAuliffe announced that the Commonwealth would commit to procuring 8% of its electricity from solar, with 75% of that built by Dominion and 25% by private developers.

The first deal that will count towards this goal is an 18 MW project at Naval Station Oceana, announced on August 2, 2016. The Commonwealth will buy the power and the RECs. (The Remington Project did not count, because as the buyer of the RECs, only Microsoft can claim the right to be buying solar power.)

Will a Solar Development Authority help?

One of the MacAuliffe Administration’s initiatives last year was a bill to establish the Virginia Solar Development Authority. The Authority is explicitly tasked with helping utilities find financing for solar projects; there is no similar language about supporting customer-owned solar. So far, nothing seems to have come of it.

Any wind energy yet? Nope, still waiting

No Virginia utility is actively moving forward with a wind farm on land. Dominion Power’s website used to list 248 MW of land-based wind in Virginia as “under development,” without any noticeable progress. Now it just says 247 MW are “being evaluated.” That’s closer to reality, but they probably should put it in the past tense. There has been a lot of press about the standoff in Tazewell County, where supervisors blocked Dominion’s proposed wind farm. Today, Dominion’s advocacy for its project feels perfunctory. The company has signaled it prefers solar, and its 2016 IRP dismisses wind as too costly.

On the other hand, Appalachian Power’s IRP suggests an interest in wind as a low-cost renewable resource. The bad news is that it isn’t proposing to build any new wind in Virginia.

With no utility buyers, Virginia has not been a friendly place for independent wind developers. In previous years a few wind farm proposals made it to the permitting stage before being abandoned, including in Highland County and on Poor Mountain near Roanoke.

Nonetheless, Apex Clean Energy is in the development stages for the 75-MW Rocky Forge wind farm in Botetourt County. No customer has been announced, but the company believes the project can produce electricity at a competitive price, given its good location and improved turbine technology. Construction is planned for 2017.

As for Virginia’s great offshore wind resource, little progress has been made towards harnessing it, even as the nation’s first offshore wind project will begin generating electricity this fall in the waters off Rhode Island. In 2013 Dominion won the federal auction for the right to develop about 2,000 MW of wind power off Virginia Beach, and the company completed a Site Assessment Plan (SAP) this spring.

We had originally been told the federal government’s timeline would lead to wind turbines being built off Virginia Beach around 2020. Now, however, the Bureau of Ocean Energy Management says Dominion has five years from approval of the SAP to submit its construction and operations plan, after which we’ll have to wait for review and approval. Presumably the project will also require an environmental impact statement. So the whole process would be quite slow even if Dominion were committed to moving forward expeditiously. But in fact, it seems increasingly clear that Dominion is just going through the motions and has no interest in seeing the project through. Its 2016 Integrated Resource Plan (IRP) does not even include offshore wind in any of its scenarios for the next 15 years, except for the 12 MW that would be produced by the two test turbines of its VOWTAP project.

Yes, so what about VOWTAP? Dominion had been part of a Department of Energy-funded team to try out new technology, with the pilot turbines due to be installed in 2017. After a second round of bids to build the project still came in higher than expected, Dominion told DOE this spring it could not commit to construction even by 2020, upon which DOE pulled funding. Dominion executives swear the project isn’t necessarily dead, but that puts me in mind of the “ex-parrot” in the Monty Python skit, still on its perch only because it’s been nailed there.

The Clean Power Plan tries to make it better to switch than fight

On August 3, 2015, EPA issued the final rule known as the Clean Power Plan. Under the rule, states with existing fossil-fuel generating plants must develop plans to reduce total carbon pollution from power plants, which could include using renewable energy as an offset to fossil fuel. In Virginia, the task of developing a state implementation plan (SIP) falls to the Department of Environmental Quality. Earlier this year the Supreme Court stayed implementation of the EPA rule while a Circuit Court considers a challenge, following which Virginia Republicans pushed through a budget provision prohibiting DEQ from developing a SIP while the federal rule is stayed.

Assuming the Clean Power Plan survives challenge, it could help incentivize construction of wind and solar facilities. While Virginia’s goals under the plan are modest, the rule means the state, utilities and the SCC must for the first time take carbon emissions into account in their planning. The EPA has signaled a strong interest in seeing wind and solar deployed as solutions.

Virginia hearing examiner says renewable energy PPAs are legal, but will the ruling stick?

September 9, 2016 by Ivy Main

A third-party PPA made it possible to build this solar facility at the University of Richmond. Appalachian Power Company contends that a project like this would be illegal in its territory.

A hearing examiner for the Virginia State Corporation Commission recommended on August 31 that the SCC reject Appalachian Power Company’s proposed alternative to third-party power purchase agreements (PPAs) for renewable energy, concluding the program is not in the public interest. The parties will have three weeks to comment before the recommendation goes to the Commissioners for a final decision. The case is PUE-2015-00040.

The ruling against APCo’s proposed Rider RGP is less important to customers than the reasoning behind it. In addition to finding a myriad of faults with the proposal, the Hearing Examiner concluded it isn’t needed because PPAs are already legal under the Virginia Code. This is an outcome long sought by the solar industry and environmental groups, and one supported by the Attorney General’s Office of Consumer Counsel.

However, the Hearing Examiner’s report is merely a recommendation. Nothing is final until the Commissioners rule, and they could make a decision about Rider RGP without addressing the current legality of PPAs. Moreover, earlier this year, APCo proposed another program that it clearly hopes will nip in the bud any surge of PPA activity that might result from a decision in the present case. (I’ll get to that in a moment.)

The rejection of Rider RGP won’t disappoint any would-be customers. A long line of witnesses testified at the hearing on September 29, 2015 that APCo’s expensive and convoluted program would find no takers. As the Solar Research Institute summarized it, the proposed Rider RGP “would require a customer interested in a solar PPA to first pay for 100% of their service under the standard tariff, pay for 100% of the solar energy generated, pay a $30 program fee, and receive excess payments back through a Renewable Output Credit.” Oh, and they still wouldn’t be using renewable energy. (Note that although solar energy was the focus of the discussion for participants, the decision applies to other forms of renewable energy as well.)

The SCC staff made some suggestions to improve the program, but the hearing examiner, Deborah Ellenberg, concluded it was really beyond saving. Not only that, but the plain language of the Virginia Code makes third-party PPAs legal in the state already. Thus, there is no need for a utility-sponsored alternative.

Ellenberg pointed to two statutory provisions that support the legality of third-party PPAs. First, Virginia Code §56-577 A 5 provides that customers may purchase renewable energy from third-party sellers if their own utility does not offer a tariff for renewable energy. Specifically, customers may:

[P]urchase electric energy provided 100 percent from renewable energy from any supplier of electric energy licensed to sell retail electric energy within the Commonwealth . . . if the incumbent electric utility serving the exclusive service territory does not offer an approved tariff for electric energy provided 100 percent from renewable energy. . . .

Until now, APCo has offered only a green power program that sells RECs, which the SCC says doesn’t count.

The language of §56-577 sounds clear enough, but APCo and Dominion Power have maintained that this section only allows customers to go elsewhere if the other supplier can provide 100% of their electricity from renewable energy, something that can’t be done with a solar facility or a wind turbine.

This flimsy reading of the statute was the basis on which Dominion challenged a PPA at Washington and Lee University back in 2011. The issue was temporarily resolved two years later when Dominion and the solar industry agreed to a pilot program that now allows a limited number of PPAs in Dominion territory, under tight parameters that exclude residential customers. The program never applied in APCo territory, however—a sore point to customers there. APCo has clung to its reading of §56-577, regardless of the growing clamor for renewable energy in southwestern Virginia.

Ellenberg’s report flatly rejects the utility interpretation. If the SCC adopts her reading, any customer in APCo territory would be free to buy renewable energy from third-party suppliers, until APCo offers a qualifying program.

Ellenberg also cited Virginia’s net metering statute. Virginia Code §56-594 authorizes “customer generators” to enter into behind-the-meter PPAs with third parties that own and operate a renewable facility for the customer. Code §56-594 B defines an eligible customer generator for net metering purposes as “a customer that owns and operates, or contracts with other persons to own or operate, or both, an electrical generating facility that . . . uses as its total source of fuel renewable energy . . .” (emphasis added).

Interpreting this provision takes no special legal talent, surely. It would seem to cover residential and commercial facilities installed and owned by third-party developers, including the familiar no-money-down contract offered to residential customers by Solar City. But again, APCo and Dominion Virginia Power claim the Code doesn’t mean what it says. For more than five years they’ve backed up their position with threats of lawsuits, creating the kind of uncertainty that is toxic to development deals.

If the SCC’s final order endorses the hearing examiner’s finding that PPAs are currently legal, the result could be to open up the Virginia solar (and wind) market to large amounts of private investment statewide.

However, Ellenberg’s finding that PPAs are currently legal appears in her discussion but not in her recommendations to the commissioners; her recommendations are limited to the actions she proposes (rejecting or modifying the tariff). The SCC does not have to rule on the question of PPA legality in order to decide this case. Surely, though, it would be strange if it were to duck the opportunity now that the issue has been fully briefed. With solar a hot commodity across the state, the current legal limbo has become a significant economic drag that the SCC ought not to ignore.

As I mentioned, though, APCo still has one card up its sleeve. This spring it proposed a new tariff to offer its customers 100% renewable energy derived from existing wind, solar and hydro projects. The product appears to meet the condition of §56-577. If approved, it would slam shut the door that the Hearing Examiner just opened (or rather, that she said was open all along, if you had dared to go through it into the toxic miasma where gray-suited lawyers lay in wait). APCo’s request for approval of the tariff (PUE-2016-00051) is scheduled to be heard by the SCC on November 15, with comments due by November 8.

Solar advocates take a dim view of APCo’s move. The new tariff won’t build any new facilities; it simply shifts the burden of paying for existing renewable energy projects onto volunteers, at a significant premium. In today’s market, third-party developers can offer electricity generated by new solar projects at competitive prices. So APCo’s tariff looks less like an accommodation to its eco-conscious customers, and more like a maneuver to prevent anyone from building solar on its turf.

It’s high time the SCC put a stop to this anti-competitive behavior and let Virginians build solar projects with their own money. The Commissioners can follow the Hearing Examiner’s advice, or they can take a pragmatic approach and recognize that PPAs are really just a way to finance projects. They don’t turn solar developers into utilities, and APCo should stop wasting everyone’s time and money blocking private investment in a part of the Commonwealth that desperately needs it.

The “fuel” that’s helping America fight climate change isn’t natural gas

August 30, 2016 by Ivy Main

You’ve heard the good news on climate: after a century or more of continuous rise, U.S. CO2 emissions have finally begun to decline, due largely to changes in the energy sector. According to the Energy Information Agency (EIA), energy-related CO2 emissions in 2015 were 12% below their 2005 levels. The EIA says this is “because of the decreased use of coal and the increased use of natural gas for electricity generation.”

Is the EIA right in making natural gas the hero of the CO2 story? Hardly. Sure, coal-to-gas switching is real. But take a look at this graph showing the contributors to declining carbon emissions. Natural gas displacement of coal accounts for only about a third of the decrease in CO2 emissions.

Courtesy of the Sierra Club Beyond Coal Campaign, using data from the Energy Information Agency.

By far the biggest driver of the declining emissions is energy efficiency. Americans are using less energy overall, even as our population grows and our economy expands

Energy efficiency is sometimes called the “first fuel” because cutting waste is a cheaper and faster way to meet energy demand than building new power plants. Improvements in energy performance cut across all sectors of the economy, from industrial machines to home electronics to innovations like LED bulbs replacing famously wasteful incandescent light bulbs.

Energy efficiency’s stunning success in lowering carbon emissions should get more attention, and not just because it is cheaper than building new natural gas-fired power plants. Efficiency has no downsides. Natural gas has plenty. Indeed, when methane leakage from drilling and infrastructure is factored in, natural gas doesn’t look much like a climate hero at all.

And that’s not the full story. A growing share of the credit for carbon reductions also goes to non-carbon-emitting sources, primarily wind, and solar. Both sources exhibit double-digit growth rates. Wind power in the U.S. has grown from a little over 9,000 megawatts (MW) in 2005 to more than 74,000 MW by the end of 2015. In 2005, the solar market scarcely existed. By early this year, we had 29,000 MW installed.

The solar trend is particularly exciting because we are just starting to see the big numbers that result from solar’s exponential growth. In the first quarter of 2016, more solar came online in the U.S. than all other power sources combined. Analysts like Bloomberg New Energy Finance see solar becoming the world’s dominant energy source over the next 25 years, driving out not just coal but also a lot of gas generation as solar becomes the cheapest way to make energy.

For an inspiring look at how this will happen, check out this presentation by author Tony Seba. As Seba argues, solar isn’t a commodity like fossil fuels; it is a technology like computers and cell phones. When technologies like these take off, they take over. Seba refers to solar technology, battery storage, electric vehicles and self-driving vehicles as “disruptive” technologies that are advancing together to upend our energy and transportation sectors.

Another graph shows us how critical these advancements will be. The U.S. is on track to achieve President Obama’s goal announced last year of lowering carbon emissions 17% below 2005 levels by 2020, but we will need more aggressive measures to meet our Paris Agreement target of 26-28% below 2005 levels by 2025. After 2025, of course, we will have to cut greenhouse emissions even further and faster.

Given the urgency of the climate crisis, we don’t have the option of waiting around for the solar revolution to bankrupt the oil and gas industry and fossil-bound electric utilities. These companies will not go quietly; already they are maneuvering to lock customers into fossil fuels. Power producers are engaged in a mad rush to build natural gas plants, and wherever possible, to stick utility customers with the costs.

For Virginians who have felt especially under attack from fracked gas projects recently, this final graph shows it’s not your imagination: Virginia is second only to Texas in new gas plant development underway. And this graph captures only a fraction of the new gas that Virginia’s major utility, Dominion Virginia Power, wants to build. In presentations to state officials, it revealed plans for more than 9,000 megawatts of additional gas generating capacity.

Based on Energy Information Agency data. Chart excludes natural gas generating units already under construction as well as those scheduled to come online after 2020.

Dominion and other gas-happy utilities are betting that once plants are built and consumers are on the hook, regulators won’t want to see them idled ten years from now just because renewable energy has made them obsolete.

Indeed, Dominion and other utilities, including Duke Energy, Southern Company, and NextEra in the Southeast and DTE Energy in the Midwest, even plan to use electricity customers to make money for the gas pipelines they are building, locking Americans further into gas.

This is madness. The only sound energy plan today is one that looks forward to an era of minimal fossil fuel use. It puts efficiency and renewables front and center, shifting natural gas and other fuels to supporting roles that will shrink over time.

The shift is inevitable. Delaying it means allowing the climate crisis to worsen, while sticking customers with higher bills for decades to come. That may suit some utilities just fine, but the cost is too high for the rest of us.

Yay, Dominion is building solar! Just not for you.

August 5, 2016 by Ivy Main

This week’s news of an 18 megawatt solar facility to be installed at Naval Station Oceana in Newport News marks the latest in a string of announcements of new solar projects to be built in Virginia. The Commonwealth had only about 22 megawatts of solar installed as of the end of 2015, but by the end of this year, we should be comfortably into the triple digits. That’s still trivial compared to neighboring North Carolina, which added over 1,000 megawatts last year alone, but it’s grounds for celebration here in the “dark state.”

How is this happening? Customer demand, coupled with falling costs, finally wrought a change of attitude at Dominion Virginia Power. The state’s largest utility dragged its feet on solar for years until announcing, in early 2015, plans to spend $700 million on 400 megawatts of solar power in Virginia by 2020.

The welcome change comes with a caveat: while these new projects will supply solar to important and influential customers like Microsoft, Amazon, and even the state government itself, Dominion offers no programs to supply solar to ordinary Virginians. And indeed, even where ratepayers are footing the bill for projects, our regulators insist that the renewable energy certificates—the right to say it’s solar power—should be sold to someone else.

Dominion’s early adventures in solar were not altogether encouraging. In 2012 the General Assembly authorized the utility to “study” solar by building up to 30 megawatts of distributed (mostly rooftop) projects. The SCC approved $80 million for the “Solar Partnership Program” the following year, with the stipulation that Dominion should sell the renewable energy certificates to reduce the cost to ratepayers. A steep learning curve made for slow and expensive going, and while a number of schools, universities and commercial businesses signed up to host projects, they weren’t permitted to purchase the solar energy being produced right on their property.

In 2013, Dominion created a special tariff “Schedule RG” especially to allow commercial customers to buy renewable energy. Cumbersome, limited and expensive, it never attracted any takers. Dominion spokesman David Botkins suggested to reporters last May the problem was Dominion’s low rates. As in, who wants renewable energy when dirty power is so cheap?

That was one month before Amazon Web Services announced it had contracted for the output of an 80 megawatt solar farm to be built in Accomack County. The project sidestepped Dominion’s limitations by feeding power directly into the Delmarva Power grid in Maryland. Dominion promptly bought the project.

Schedule RG was clearly a failure, but just as clearly, there was money to be made on solar. Dominion just needed to figure out how.

The utility was already trying. In January of 2015 Dominion proposed to build a 20 megawatt solar farm near Remington, Virginia. The State Corporation Commission (SCC) originally rejected Dominion’s proposal, saying the company had not considered third-party alternatives that might be cheaper for ratepayers. (They were proved right when it turned out the Amazon project was slated to deliver power at a cost that was 25% less.)

Dominion didn’t give up on Remington, nor was it willing to turn the project over to a private developer. Instead, it got to work rejiggering the deal into what, this spring, became a public-private partnership. Governor McAuliffe arranged to have the state government, rather than ratepayers, buy the power output from Dominion, while Microsoft agreed to buy the renewable energy certificates (RECs) to meet its corporate commitment to buying renewable energy. (In every solar deal, watch what happens to the RECs.*)

Although I wondered at the time if the state might be taking a financial hit to make the deal work, more recent information suggests the opposite. According to Dominion’s website, “the construction and deployment of this solar asset will lower the cost of the energy purchased by the Commonwealth. The Commonwealth is projected to save $500,000 to $1M in energy costs over the lifetime of the project.”

This tells us two things: one, obviously, we should sell more solar to Microsoft. And two, either the website omits key details about the financing, or the cost of energy produced by solar panels is now pretty darn competitive.

The projects have started coming in more quickly in recent months. In February of this year, Dominion announced it would buy the output of a 20 megawatt solar farm in Chesapeake through a power purchase agreement (PPA) with a North Carolina developer. Other PPAs are said to be under consideration.

Then, on June 30, the SCC gave Dominion approval to move forward on building three new projects totaling 56 megawatts in Powhatan, Louisa, and Isle of Wight counties. The 800 local jobs associated with the projects sparked news stories across the state.

That brings us to this week’s announcement of the deal with the Commonwealth and the Department of the Navy at Oceana. According to Dominion’s press release, Dominion Virginia Power will own and operate the facility, and the Commonwealth will buy the electricity, with Dominion retiring the RECs on the Commonwealth’s behalf.

Deputy Secretary of Commerce Hayes Framme confirmed to me this deal is the first step toward satisfying Governor McAuliffe’s commitment to having the state government get 8% of its power from solar by the time he leaves office, an amount equal to roughly 110 megawatts. That should mean there will be more announcements to come.

The Navy’s role here is especially interesting. Although some news outlets reported the Navy would buy the electricity, this appears to be a misreading of the Navy’s press release. Naval Station Oceana will instead receive “in-kind consideration in the form of electrical infrastructure upgrades” for hosting the project on its land. But the press release dwells mainly on the benefit to the regional grid that serves the naval station:

“Renewable energy projects, like the one at NAS Oceana and others throughout the Mid-Atlantic Region, are win-win-win collaborations. They’re good for the utility companies, good for our installations and good for the communities surrounding our installations,” said Rear Adm. Jack Scorby, Jr., commander, Navy Region Mid-Atlantic. “These projects increase the energy security, energy diversity and energy resiliency of our bases. Energy security, or having assured access to reliable supplies of energy and the ability to protect and deliver sufficient energy to meet mission-essential requirements, is critical to our installations’ roles to support the Fleet.”

The reference to “energy security, energy diversity and energy resiliency” is key here. The Navy will benefit from having a large renewable generation source onsite, one that can be protected from attack and that is not susceptible to fuel supply disruptions.

Come to think of it, “energy security, energy diversity and energy resiliency” are three of the prime reasons we need more solar projects all across the state, and why the benefits shouldn’t be limited to large, influential customers. So yay, Dominion, for getting rolling on all these solar projects! Now please stop blocking the way for the rest of us.

*RECs were invented as a way to identify units of electricity generated by wind, solar and other sources, since the electrons themselves can’t be dyed green. But RECs don’t have to just follow electrons around; they can also be bought and sold separately from the underlying electricity. When the RECs associated with a solar project are sold separately (in the case of the Remington solar project, to Microsoft), the electricity loses its green quality, and the buyer (in this case, the Commonwealth) can’t claim to be buying solar energy. For a fuller explanation of RECs, see this earlier post on the subject.

Sierra Club scorecard plumbs divisions among Virginia legislators

July 18, 2016 by Ivy Main

By and large, Virginia Republicans are still locked in a fossil fuel echo chamber, where “all of the above” and “war on coal” guide their votes. Virginia Democrats mostly acknowledge the damage climate change is doing to the commonwealth and around the planet and support a course correction. And regardless of ideology, large majorities from both parties vote for whatever Dominion Power wants.

These are the major takeaways from this year’s legislative session and the 2016 Climate and Energy Scorecard, just released by the Virginia Chapter of the Sierra Club. Constituents and clean energy advocates will want to look at not just the raw grades of individual legislators, but also the discussion provided in the report, to understand the dynamics of our General Assembly.

Twenty-eight Democrats earned perfect scores. All but a handful of Republicans earned failing grades. Sierra Club gave extra credit to legislators who introduced bills that advanced clean energy. This included several Republicans highlighted in the scorecard, but their bad votes on other bills dragged down their overall scores.

This is really a shame, since some Republicans have worked hard to advance clean energy legislation. Leesburg Delegate Randy Minchew comes to mind here for his dogged efforts on behalf of distributed solar energy, something you might not guess from his overall grade of D.

Often, it seems, reform-minded Republicans go along with their party’s more retrograde positions where they are pressured to do so by their party leaders, or where the votes are so lopsided that there is nothing to gain from breaking with the majority.

If party leaders have an outsize influence on voting, so too does Dominion Power. In fact, if you want to know who the true champions of the people are, don’t look at party affiliation. Look for the few legislators who will stand up to the most powerful political force in Richmond.

That assumes you can find votes to examine. In the introduction to the Sierra Club scorecard, Legislative Chair Susan Stillman noted with frustration this year’s paucity of recorded votes available to score:

The challenges of producing a fair and even scorecard are growing, as are the opportunities for Virginia citizens to have a clear and accurate picture of their elected representative’s voting record. Transparency in the General Assembly sunk to a new low this year: 95% of the bills defeated in the House of Delegates were done so on an unrecorded vote or no vote at all. This is not business-as-usual: just over a decade ago, nearly every bill that passed through the House received a recorded vote.

An ongoing problem, both for scorecard referees and for clean energy advocates, is that most bills that would advance the cause of renewable energy and energy efficiency never make it out of committee; in the House, the bills are heard in a tiny subcommittee. Not only do votes go unrecorded, but this approach deprives most of our elected representatives of the opportunity to vote on some of the most important energy policy issues facing Virginia.

And then there was this year, in which even the subcommittee members never got a chance to vote. A dozen or so of the most promising clean energy bills were never heard at all, but were sent to a newly-formed interim study subcommittee, ostensibly for the purpose of giving these bills the benefit of greater deliberation. The effect was to kill them quietly for the year.

As Stillman notes, all these unrecorded votes make it hard to know where the vast majority of legislators stand:

Without a recorded vote, the public is deprived of the full measure of his or her elected official’s voting history. And the problem of unrecorded votes is growing worse. This year’s unprecedented rate of unrecorded votes in the House is up from 76% in 2015—a 25% jump in one year. Virginia legislators are killing more bills than ever without accountability for their actions. This practice is wrong, and it’s dangerous for our democracy.

Stillman gives a shout-out to the founding members of the new, bipartisan Transparency Caucus for its efforts to make all votes public and ensure every bill gets a hearing.

These would be modest reforms, but welcome. If sunlight is the best disinfectant, there’s a big, dirty House (and Senate) in Richmond that need cleaning.

Northern Virginia activists are ready for 100% renewable energy future

June 14, 2016 by Ivy Main

Ready for 100 Community Outreach Coordinator Taylor Bennett, Mount Vernon Group of the Sierra Club Chair Dean Amel, and Virginia Chapter Sierra Club Chair Seth Heald at Alexandria’s Earth Day celebration in April.

Clean energy advocates in Virginia know we are engaged in a steep uphill climb, and are still so far from the top that we have only a general idea of what it will look like. But activists in Arlington and Alexandria believe it’s time for bold leadership. They are calling on their communities to set a goal of 100% clean and renewable electricity by 2035.

The Ready for 100 Campaign launched today as part of a push by the Sierra Club to show that a future without fossil fuels is achievable. Sierra Club volunteers are working with community groups and other leaders to promote the benefits of clean energy locally. According to Seth Heald, Chair of the Virginia Chapter of the Sierra Club, fifteen U.S. cities, including San Diego, CA, Georgetown, TX, and Columbia, MD, have already committed to 100% clean energy.

Arlington County already has a reputation for its leadership in the energy sector, with a commitment to reduce its greenhouse gas emissions by 80% by 2050 and a number of innovative programs to reduce energy consumption. Now, says Heald, it is time for Arlington to take the next step to “eliminate the fossil-fuel generated pollution that comes from electricity production and is damaging our health and undermining our quality of life.”

Arlingtonians for a Clean Environment (ACE) has signed on as a partner in the effort. “Arlington County has already set a high bar for Virginia, but we can do even better,” said Executive Director Elenor Hodges. “I think this is an effort many residents will get behind.”

“Our current dependence on fossil fuels means that my generation will be dealing with the impact of climate change for our entire lives,” said Helene Turvene a junior at Washington-Lee High School. “A commitment now to 100% renewable energy not only will help to begin reversing those impacts, but it will position our community for a more sustainable future. Students want to know that local leaders are acting with us, and future generations, in mind.”

Alexandria residents are also behind the effort. Samantha Adhoot is an Alexandria-based pediatrician who has often sounded the alarm about the effects of climate change and fossil fuel pollution on children’s health. “By transitioning to 100% clean energy, our city could prevent thousands of asthma attacks and dozens of premature deaths every year,” she said. “This would be a big step in the right direction toward allowing our kids to breathe easier.”

Although the 2035 goal is long-term, the campaign’s benefits could be immediate. The solar industry now employs over 200,000 people nationwide, and with fewer than 1% of them in Virginia, we have tremendous room for growth. And of course, investments in energy efficiency mean savings on utility bills that keep adding up. Stanford scientists say the transition to 100% renewable energy will save the average American family $260 dollars per year in energy costs, and another $1,500 per year in health care costs.

Taylor Bennett, Community Outreach Coordinator for the Ready for 100 Campaign, is hoping to hear from others who want to join the effort. She can be reached at Taylor.Bennett@SierraClub.org.

Virginia’s energy future is up for discussion this Wednesday in Arlington

May 23, 2016 by Ivy Main

Visitors tour the solar installation on the roof of Wakefield HS in Arlington. Photo credit Phil Duncan

Those of you in Northern Virginia might be interested in attending a screening of the film “The Future of Energy” at the Arlington Cinema and Drafthouse on Wednesday, May 25 at 7:30 p.m. I will be leading a discussion of energy issues and the future of renewable energy in Virginia following the movie.

“The Future of Energy: Lateral Power to the People” is billed as “a positive film about the renewable energy revolution,” and “the people and communities leading the way towards a renewable energy future.” You can watch the trailer on the website of the Arlington Cinema and Drafthouse.

Arlingtonians for a Clean Environment (ACE) is hosting the screening. Tickets are $10, or $5 for students at the door. Doors open at 6:30, which is a good time to arrive if you want to order dinner and drinks and talk to some of the local environmental leaders who are attending.

ACE and the Sierra Club have teamed up on a campaign called “Ready for 100,” with a goal of leading Arlington and the city of Alexandria towards a goal of 100% renewable energy for the electric sector by 2035. ACE’s director, Elenor Hodges, and Dean Amel, Chair of the Mount Vernon Group of the Sierra Club, will be on hand to provide more information about the “Ready for 100” campaign. Arlington Energy Manager John Morrill will also be there to answer questions.

ACE is also working with VA-SUN on a new solar bulk-purchasing cooperative for Northern Virginia residents and businesses called the Potomac Solar Co-op and will have information available about it on Wednesday. An information session for the co-op is planned for June 8.

Arlington is already recognized for its leadership on clean energy, with groundbreaking projects like a net-zero-energy elementary school. But getting to 100% will take a truly determined, collective effort on the part of homeowners, businesses and local government. We will also likely need to see reforms to state policies and laws that currently present barriers to renewable energy. These state barriers affect all Virginians, so while Wednesday’s focus will be on Arlington, the discussion will be relevant to everyone who wants to see a clean energy future in Virginia.

Charging green customers more without doing more: Appalachian Power discovers the beauty of market segmentation, and moves to block competition

May 12, 2016 by Ivy Main

This wind farm isn’t in Virginia, and APCo’s proposal doesn’t include building any new wind. But the cows are cute. Photo credit: NREL

Appalachian Power Company has asked the State Corporation Commission to approve a 100% renewable energy product it wants to offer its environmentally-conscious electricity customers. These customers would pay about 18% more for a combination of wind and hydro than they currently do for “brown” power. But APCo doesn’t plan to build new facilities. It will simply segregate out some of its existing wind and hydro (none of it in Virginia) to package as a new, higher-priced product.[i] The case is PUE-2016-00051.

Since APCo currently sells the renewable energy certificates (RECs) associated with these wind and hydro projects to buyers elsewhere, the change means it would terminate those contracts and provide the RECs to its green energy customers along with the electricity. RECs represent the “renewable attributes” of the power (the bragging rights, if you will), so the electricity by itself doesn’t count as renewable if it doesn’t come with the RECs.

The price of RECs represents only a part of the 18% premium. RECs are really cheap nationally, because supply exceeds demand.[ii] Another driver of the premium is that wind energy was more expensive back in 2007-2010, when these projects were built. Falling wind prices and a natural gas glut have pushed overall energy prices down since then. APCo customers are still paying off the cost of its wind farms (or in the case of two of them, are still paying on power purchase contracts). APCo proposes to shift the burden of paying for those wind farms onto the customers it believes are willing to pay more. At least theoretically, this means it will also reduce the price it charges the rest of its customers, who (it assumes) don’t care where their power comes from.

APCo says if demand is high enough, it will invest in new renewable energy facilities to add supply, which might decrease the cost of the tariff in the future. Cost declines have made new wind competitive with fossil fuels, so a tariff based on new facilities would have lower pricing.

Page 37 of APCo’s filing shows the effect of the accounting change on a customer’s bill for a residential customer using 120 kWh/month:

100% RE: $160, non-RE customers: $135

or an extra $25/month, $300/year

By my math that comes out to:

100% RE: 13.3 cents/kWh, non-RE customers: 11.3 cents/kWh

No doubt APCo is responding to consumer demand in proposing this renewable energy tariff. Virginians have become much more vocal, and much less patient, about wanting their utilities to invest in clean energy. But APCo has less virtuous motives as well. Offering electricity generated by 100% renewable energy closes off one avenue under which solar developers currently argue that third-party power purchase agreements (PPAs) are legal. PPAs are a common tool for financing solar projects, and are the only way some customers can afford to buy renewable energy. They are not being used today in APCo territory because of the risk that the utility will sue, claiming a violation of its monopoly on electricity sales.

The Virginia Code contains an exception to utilities’ exclusive monopoly in their territory: if a utility doesn’t sell 100% renewable energy to its customers, anyone else can. The SCC previously ruled that selling RECs doesn’t count, so APCo and Dominion’s own green power programs (consisting mostly of overpriced RECs) do not close the loophole. I have always wondered why they didn’t just do what APCo now proposes, if for no other reason than to close the loophole. The Code says nothing about the green power having to be reasonably priced.

Recall that we are still waiting for the SCC to rule on APCo’s terrible PPA-alternative proposal. The solar industry and environmental groups opposed the proposal not just because it was expensive, convoluted and certain to fail, but also because the Code’s renewable energy exception appears to allow PPAs already, making the APCo program unnecessary.[iii]

APCo and Dominion argue that the Code exception applies only where the seller supplies 100% of the customer’s demand, 100% of the time, with 100% renewable energy. A single wind farm can’t guarantee around-the-clock output, so APCo has combined wind energy with some hydro. That’s something a wind or solar developer can’t do, especially when the developer is merely putting solar panels on a customer’s roof.

These are nice legal arguments guaranteed to keep lawyers employed and the market in limbo. From the public policy point of view, though, there is nothing to be gained by suppressing the renewable energy market. Why squelch private investment and deny customers the right to use a popular financing tool to install wind and solar? For customers willing to pay a premium, why limit them to APCo’s product? If a company wants only wind power or solar power, why not let them contract with any willing provider?

The SCC should definitively declare in favor of PPAs, open the market to competition, and let the free market get to work. If the SCC won’t do it, the legislature should. If customers want APCo’s renewable energy product, terrific. If they can do better elsewhere, let them. We all win by creating new clean energy jobs, having carbon-free electricity displace fossil fuels, and giving customers the products they want.

[i] Page 6 of APCo’s Petition states: “Initially, the Company will assign to Rider REO the output of its renewable generators that are currently under long-term Purchased Power Agreements (the ‘Renewable PPAs’): the Summerville hydro-electric facility, and the Camp Grove, Fowler Ridge, Beech Ridge, and Grand Ridge wind facilities.” The Summersville dam, in West Virginia, was built in 2001. The Camp Grove Wind farm is in Illinois and began operation in 2007. Fowler Ridge, in Indiana, was commissioned in 2008. Beech Ridge, in West Virginia, became operational in 2010. Grand Ridge, in Illinois, was built in 2009.

[ii] It appears from APCo’s filing that its wind RECs sell for $18/MWh, or 1.8 cents/kWh. I don’t see a price stated for hydro RECs in APCO’s filing, but they typically have little value.

[iii] A second basis for believing that PPAs are legal does not rely on the Code exception. Rulings from Iowa and New Hampshire have recognized that PPAs involving rooftop solar are not the kind of electricity sales covered by public utility regulations. APCo’s new offering does not undercut that argument.

Update: on June 21, 2017, a Hearing Examiner recommended that the SCC reject APCo’s application, finding it not in the public interest. See my discussion of that ruling here. The SCC commissioners will have the final say, however.

Virginia legislators named to review clean energy bills

May 6, 2016 by Ivy Main

Workers install solar panels at the University of Richmond.

Virginia’s 2016 legislative session began with a host of worthy bills promoting energy efficiency, wind and solar, but ended with almost none of the legislation even having been considered in committee. The Republican chairmen of the Senate and House Commerce and Labor committees instead “carried over” the bulk of the bills, announcing plans for a new subcommittee to study them and make recommendations for 2017.

Members of the subcommittee have now been named. Senator Frank Wagner has tapped Senators Black, Cosgrove, Stuart and Dance to serve. This information is now on the General Assembly website. Delegate Terry Kilgore has named Delegates Ware, Hugo, Ransome, Miller and Keam.

No meeting schedule has been announced, but lobbyists for the utilities and the solar industry trade association, MDV-SEIA, have begun meeting in private to discuss potential compromises. This can’t be called a stakeholder process; the meetings are not open to the public, and they have not invited participation by environmentalists or, with one exception, anyone on the consumer side representing the interests of local government, colleges and universities, churches, eco-friendly businesses or residential customers.

(The exception is a lobbyist for Loudoun County landowner Karen Schaufeld, a newcomer to energy issues who formed a group called Powered by Facts and hired lobbyists to advocate for expanded agricultural net metering and other pro-solar reforms.)

Anything that emerges from these meetings will likely have a significant impact on the subcommittee. Yet, given the importance of this issue to the commonwealth, the subcommittee should ensure it hears from all solar stakeholders. More importantly, committee members should explicitly adopt as their measure of progress a simple test: whether the language of a bill will lead to greater private investment in solar in Virginia. Wagner and Kilgore have said they want to see the growth of solar here, and all of the legislators publicly subscribe to the values of free market competition and consumer choice. But without a guidepost, we are likely to see the utilities bully the solar industry into a “compromise” that shifts the ground a bit but continues to strangle the private market–and leaves us further than ever behind other states.

Who’s who on the committee

All of the legislators named to the study committee are Commerce and Labor committee members, but beyond that, many of these appointments are surprising, as they don’t necessarily reflect demonstrated interest in the subject. It is also disturbing that only one Democrat was named from each side. (Dance is the Senate Democrat, Keam the House Democrat. They are also the only minorities represented.) There is no reason energy efficiency and renewable energy should be partisan issues, but in the past, party affiliation has been the single most powerful predictor of votes on clean energy.

To gage how these legislators approach the issues, I took a look at the Sierra Club’s Climate and Energy Scorecard for 2014 and 2015. Scores for 2016 are not yet available. It is important to note that in the House, most renewable energy legislation has been killed by unrecorded voice votes in the Commerce and Labor subcommittee, preventing the votes from being scored. So the scorecard is only a starting point.

The Senators

Frank Wagner himself earned a D in 2015, with a voting percentage of 60%. This was up from an F in 2014. The Virginia Beach Republican is the only member on this subcommittee to have exhibited a serious interest in energy issues, having shaped many of Virginia’s current policies. Unfortunately, he is closely allied with Dominion Power, voted for tax subsidies for the coal industry, tends to doubt the reality of climate change, and has been sharply critical of the EPA Clean Power Plan. On the plus side, he believes renewable energy should play an important role and was instrumental in launching the state’s bid for offshore wind. He also genuinely welcomes input from the public at meetings he runs.

That makes his committee choices all the more peculiar. Dick Black is better known as a social crusader who lines up with the far right wing of his party, most notably in opposition to abortion, gay rights and gun limits. Most recently, he made headlines by meeting with Syrian president Bashar Assad and urging the U.S. to lift economics sanctions against the Assad regime.

Black is a climate denier of the delusional variety, insisting at an event last August that global temperatures have not risen in 17 years and that no major hurricanes have hit the American mainland in 9 years. (2014 was the hottest year on record until 2015 seized the trophy. Superstorm Sandy, the largest Atlantic hurricane on record, struck in 2012.)

The forum was an “American for Prosperity grassroots event” (sic). The “crowd of about 18 people” included former Senator Ken Cuccinelli, no slouch himself in the climate denial department. Black compared EPA employees to “Bolshevik communists.” He and Cuccinelli used the event to criticize the Clean Power Plan as “part of a government scheme to send billions in taxpayer funds to ‘wind and solar scams’ and ‘billionaire liberals.’”

He received a grade of F from the Sierra Club in both 2014 and 2015. With a voting percentage of just 14% last year, he had the worst record in the Senate on climate and energy bills. In sum, the appointment of Dick Black to this committee can’t be called an effort to seek out thoughtful voices on the issues.

John Cosgrove is a solid conservative on name-brand issues like guns and abortion, though decidedly lacking Black’s flair for headlines. With a 67% score, he received a grade of D from the Sierra Club in 2015, up from an F in 2014. A review of the bills he has introduced in the last two years showed none related to climate or energy, again raising the question of why he was chosen for this particular subcommittee.

Richard Stuart’s voting record of 50% earned him an F in 2015, down from a C in 2014. However, he earned an award from the Sierra Club in 2014 for introducing a bill to regulate fracking; the bill did not pass. Senator Stuart also received “extra credit” on the 2015 scorecard for introducing the bill that established the Virginia Solar Energy Development Authority. In 2016, he also introduced one of the more ambitious renewable energy bills, working with Schaufeld’s Powered by Facts.

Roslyn Dance is the lone Democrat and only woman selected from the Senate. She has consistently voted on the side of clean energy, and was the patron of 2015 legislation raising the size limit on net-metered projects from 500 kW to 1 megawatt. This work earned her an award from the Sierra Club that year.

Dance scored 100% on both the 2014 scorecard (when she was a delegate) and the 2015 scorecard, for a grade of A+ each year. However, she came in for intense criticism in the 2016 session for abstaining on Senator Surovell’s coal ash bill, knowing it would fail in committee without her vote. The bill would have required Dominion Virginia Power to move stored coal ash out of unlined ponds along rivers for disposal in lined facilities away from water sources. Dance’s abstention was widely thought to be a favor to Dominion Power, saving the company from what might have been a nasty fight on the Senate floor.

The Delegates

Terry Kilgore, Chairman of House Commerce and Labor, represents part of rural southwest Virginia, and has close ties to Appalachian Power Company and the coal industry, both of which contribute generously to his campaigns. Bills opposed by utilities have little chance in his committee. In 2015, he earned an F on the energy and climate scorecard, with a 50% score, down from a D (63%) in 2014.

Lee Ware represents a suburban and rural area west of Richmond, stretching from the western side of Chesterfield County. He earned a C (75%) in 2014 and an F (50%) in 2015. In spite of these scores, he has shown an independent, thoughtful approach to energy legislation, and has demonstrated a serious interest in promoting energy efficiency. His bill to change how the State Corporation Commission evaluates utility efficiency programs is one of the pieces of legislation to be considered this summer.

Tim Hugo represents a suburban Northern Virginia district. He earned a D (67%) in 2014, with extra credit for introducing a bill that reclassified solar equipment as “pollution control equipment,” earning it a critical exemption from a local business property tax known as a “machinery and tools” tax. In 2015 his score dropped to an F (56%), in spite of an extra credit bump from introducing the House version of the Solar Development Authority bill.

As Majority Caucus Chair, Hugo’s poor scores reflect the leadership’s pro-coal, anti-regulation platform. He is nonetheless keenly interested in promoting solar energy, at least where he can do so without running into utility opposition. His close ties to Dominion have often meant he led the opposition to pro-solar net metering reforms, keeping them from moving out of the committee.

Margaret Ransone is the only woman named to the House subcommittee. She received an F (57%) in 2015, down from a C (71%) in 2014. She represents counties along the Northern Neck, near Richmond. She is not on the Commerce and Labor energy subcommittee, and has shown no particular interest in the subject. Her website suggests a mix of the ideological (pro-gun, anti-abortion) and the practical (high speed internet for rural areas).

Jackson Miller received an F (44%) in 2015, down from a D (63%) in 2014. His district is close to Hugo’s, covering the City of Manassas and part of Prince William County in the outer suburbs of Northern Virginia. Miller is Majority Whip for the House. He has consistently voted against expanding net metering options.

Mark Keam is the only Democrat on the House subcommittee as well as the only ethnic minority (he is Korean). He received an A+ (100%) in 2015, up from an A (88%) in 2014. He has generally supported expanded opportunities for renewable energy.

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Power for the People VA

Virginia energy policy made interesting

Category Archives: Renewable energy

Even Appalachian Power doesn’t like its third-party solar option

Your 2016 guide to Virginia wind and solar policy

Virginia hearing examiner says renewable energy PPAs are legal, but will the ruling stick?

The “fuel” that’s helping America fight climate change isn’t natural gas

Yay, Dominion is building solar! Just not for you.

Sierra Club scorecard plumbs divisions among Virginia legislators

Northern Virginia activists are ready for 100% renewable energy future

Virginia’s energy future is up for discussion this Wednesday in Arlington

Charging green customers more without doing more: Appalachian Power discovers the beauty of market segmentation, and moves to block competition

Virginia legislators named to review clean energy bills

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