Category Archives: Renewable energy

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American Wind Energy Association to highlight Virginia potential at June conference

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Works of art, attractively priced. Photo credit: Andy Beecroft

Works of art, attractively priced.
Photo credit: Andy Beecroft

The American Wind Energy Association (AWEA) will be sponsoring a one-day forum on wind energy in Harrisonburg, Virginia on June 3. The Virginia Wind Center at James Madison University will host; others partners include the Department of Environmental Quality, the Sierra Club and the Southeastern Coastal Wind Coalition.

Virginia currently has only a handful of small wind turbines statewide, putting us far behind neighboring states like Maryland and West Virginia. But AWEA’s Larry Flowers, who leads the team organizing the event, says his trade association sees great potential in the Commonwealth.

With good sites for about 2,000 megawatts (MW) of land-based wind farms, and at least another 2,000 MW already slated for development offshore, Virginia could experience a wind boom in coming years.

“With Virginia’s good on- and offshore wind resource, significant load, and proximity to the PJM market, AWEA’s wind developers see Virginia as an important wind energy market,” says Flowers. “Wind has been an important diversification strategy with utilities all over the country with its fuel price and carbon risk avoidance features, while providing significant long-term local economic development benefits.”

Achieving this development will be no easy feat. Virginia does not have a Renewable Portfolio Standard requiring utilities to buy wind power, a standard policy feature in northeastern states. Nor do we offer the kind of economic incentives developers need to make wind power cost-competitive with our old, fully-depreciated coal and nuclear plants, or with electricity from natural gas at today’s low prices. (Wind power is the cheapest form of energy in some prairie states, but it is costs more to build in our mountains and offshore.) Wind is endlessly renewable and emission-free, but until we put a value on that, our utilities and regulators see little point in paying for it

Yet that calculus may be changing as wind costs continue to decline, coal grows increasingly expensive, and natural gas prices show their historic volatility. At least as significantly, wind energy could be a means of helping Virginia comply with the EPA’s carbon regulations under Section 111(d) of the Clean Air Act. The regulations for existing sources have not been proposed yet, but may allow states to reduce their overall carbon emissions by adding renewable energy to their electric generation mix.

Certainly, wind development would be a huge economic opportunity here. Offshore wind development is projected to create ten thousand career-length jobs in Virginia and bring millions of dollars in new economic activity to the state, especially to the Hampton Roads region. Land-based wind would be a boon to the economically hard-hit counties of southwest Virginia, where coal jobs have been disappearing steadily for more than twenty years. In addition to jobs and payments to landowners, wind farms would provide critical local tax revenue.

These policy issues will be featured topics at the AWEA forum, along with practical issues including siting, wildlife impacts, and small wind applications.

Registration for the Virginia wind energy forum is available here. Early bird discount pricing is available until May 13.

 

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Dominion Power buys California solar, and Virginians wonder, “Why not us?”

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solar installation public domainThe news broke on April Fools’ Day, making Virginians feel we were the victims of a bad joke: Dominion Power announced it had bought six California solar projects, for a total capacity of 139 megawatts (MW). “This investment is another important step forward for Dominion as we expand our renewable energy portfolio,” said Dominion Chairman, President and Chief Executive Officer Thomas F. Farrell II. “These projects fit well within our portfolio of regulated and long-term contracted assets,” which also include 41 MW of solar in Georgia, Connecticut and Indiana.

Don’t get excited, Virginia: this solar investor is not Dominion Virginia Power but Dominion Resources, the parent company. You can be sure executives will take every opportunity to brag about the company’s stake in the national solar market, but none of this power will reach us here in the Commonwealth.

Here, Dominion owns a grand total of one solar array at a university, all of 132 kilowatts. That’s about 14 houses’ worth, out of a customer base of 2.4 million. A 500-kilowatt array on an industrial building is set to deploy soon. That will bring the grand total to maybe 70 houses’ worth, if the owners don’t leave the lights on too much. Dominion is supposed to be developing a total of 30 MW of solar under a law passed in 2012, but the glacial pace of deployment is discouraging. Oh, and neither of its first two projects employed Virginia solar companies, further minimizing their impact in the state.

Why isn’t Dominion investing in Virginia? “The cost of large solar projects such as this are still too high for a regulated market in Virginia,” Dominion spokesman Dan Genest told the Richmond Times-Dispatch.

You might ask, if the costs of solar power are too high for a regulated market, perhaps it is time to deregulate the market? Somehow I don’t think that’s what Genest meant. More likely he meant that Virginia’s regulatory scheme is so skewed in favor of fossil fuels that there’s no space for utility-scale solar. Not that he would put it quite so bluntly—or admit to his employer’s role in creating this problem.

But let’s review the facts: Dominion has lavished $6.6 million over the last ten years on Virginia lawmakers, ensuring the company’s dominance in our political process. Dominion writes our energy laws and shepherds them through the legislative committees it controls. It has molded both the rules of the game and the way Virginia regulators apply them: favoring fossil fuel generation such as the expensive Wise County coal plant, ignoring costs to the public from air and water pollution, and blocking all attempts at reform.

Dominion has so shaped Virginia’s energy policy that it wouldn’t get permission from the State Corporation Commission to add a utility-scale solar project to its generation mix today. The company now finds itself a captive within the very walls it built to protect its profit and defend itself from competition, and just at a time when the world outside its walls is offering all kinds of interesting opportunities.

But there are ways out. Dominion could support a solar mandate in the General Assembly, on grounds that range from energy security to fuel diversity to preparing for a major natural disaster. Solar on gas station roofs can keep the pumps working when the electric grid fails; solar on hospitals and police stations can power essential services even when supply disruptions idle fossil-fueled generators. The more legislators understand the unique potential of solar, the easier it will be for Dominion to overcome the bias against renewable energy that it helped instill in the first place.

Or Dominion could support the value-of-solar methodology recently adopted in Minnesota that rewards solar development instead of penalizing it. Minnesota is not much known for sunshine, but its analysis of the costs and benefits of solar energy demonstrated a value for solar that exceeds even the full retail price of fossil-fired electricity. Adopting this analysis would be an about-face for Dominion; the company only recently won the right to levy punitive standby charges on some solar customers, and it has signalled a desire to impose them on the rest of the solar market as well, all on the theory that solar is of no more value than dirty power bought wholesale off the grid.

So okay, my suggestion has Tom Farrell spitting out his coffee, but bear with me. There is money to be made here.

Solar energy is no longer a marginal energy source for niche markets. Its price is going down; its market share is going up. Dominion’s own forays into solar show the company knows it has to play in this market or get left behind. So it makes more sense for Dominion to support a market in Virginia, where its influence will ensure the company profits handsomely, than to try to hold back the tide, as it is doing now. Sure, success would also mean independent rooftop solar installers would flourish in Virginia, but that’s a small price to pay for creating a whole new market in utility-scale solar that Dominion would own.

And then there’s the attraction of a carbon-free energy source in a climate-change world. A major foray into the Virginia solar market will help Dominion comply with the federal carbon rule the EPA is expected to announce in June. After all, no matter how you feel about federal rules, there are only two ways to deal with them: comply, or throw a tantrum and then comply.

It’s a fact that Dominion’s initial forays into developing solar have not inspired confidence. Dominion spends too much and takes too long to do something the private sector does better and cheaper. But Virginia has a solar industry that is champing at the bit to develop these projects and put Virginians to work in the process. Dominion may as well take advantage of other companies’ expertise here, the way it has in California.

As the saying goes: Lead, follow or get out of the way. I would settle for any one of the three. And any of them are better than what we have now in Virginia, with Dominion standing in the middle of the road, going nowhere, and blocking progress.

.   .   .   .   .

UPDATE: Installation of Dominion’s second solar array is now complete, reports the Associated Press. The story says that the more than 2,000 panels on the Canon Environmental Technology plant in Gloucester, VA make this the biggest rooftop array in Virginia. However, that honor would seem to remain with the Ikea store in Woodbridge, which has 2,100 panels providing 504 kW. The Ikea array, dedicated in 2012, is outside of Dominion’s territory, so the Dominion array may be the largest in its own territory.

Alert readers will notice that Ikea uses a government calculator to compute that its 504 kW is enough to power 55 homes, while Dominion claims its 500 kW could power 125 homes. Ikea’s calculation fits with normal industry assumptions. But perhaps Dominion is predicting 120% more sunshine?

 

 

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A new business model for non-profits brings solar into hostile territory

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Solar panels over the entrance to the First Congregational Christian United Church of Christ. Photo credit: Matt Ruscio

Solar panels over the entrance to the First Congregational Christian United Church of Christ. Photo credit: Matt Ruscio

Fourteen solar panels crown the entrance to the First Congregational Christian United Church of Christ in Chesterfield, Virginia. The small array generates 10% or so of the church’s electricity, but the project is notable for a different reason: it was the first solar system installed anywhere under a new kind of contract called a Customer Self-Generation Agreement. The agreement allowed the church go solar with no money down, and without increasing its electricity costs.

The Customer Self-Generation Agreement (CSGA) is the brainchild of Tony Smith, founder and CEO of Secure Futures LLC, a solar developer based in Staunton, Virginia. Under its agreement with the church, Secure Futures owns the solar panels and reaps the federal tax benefits that make solar affordable. The church gets the electrical output of the system over the twenty-year life of the contract. Neither a lease (which would bar the church from getting the tax benefits) nor a third-party power purchase agreement (which the incumbent utility would have opposed), the CSGA occupies a financing niche all of its own.

For Secure Futures, the CSGA was born of necessity. In 2011, the company was blocked from completing a solar array at Washington and Lee University when Dominion Virginia Power sent “cease and desist” letters claiming the parties’ use of a third-party power purchase agreement (PPA) violated the utility’s monopoly on the sale of electricity. Although convinced it had the law on its side, Secure Futures backed down in the face of expensive litigation. The solar installation was only completed by turning the PPA into a lease and losing some of the tax benefits.

Tony Smith. Courtesy of Secure Futures.

Tony Smith. Courtesy of Secure Futures.

Secure Futures had been building a place for itself in the nonprofit world, appealing especially to colleges and universities that want solar power as part of their sustainability goals. The company’s 104-kW solar array at Eastern Mennonite University in Harrisonburg, Virginia, completed in 2010, was the first PPA in Virginia and, at the time, the largest solar array in the state. But that project was not in Dominion’s territory.

For a state like Virginia with few policies to support solar, accessing the federal tax credits is critical to financing a solar project. Tax-exempt entities like municipalities, schools and churches are a natural customer base for solar, but because they cannot use the federal tax credits themselves, they must partner with a tax-paying company that can own the project. Third-party PPAs have been the answer in states that allow them. PPAs also frequently offer a no-money-down option, which has proven a huge market driver in recent years for homes and businesses as well as non-profits.

Solar array installed by Secure Futures for the Harrisonburg Redevelopment and Housing Authority using a CSGA. Photo courtesy of Secure Futures.

Solar array installed by Secure Futures for the Harrisonburg Redevelopment and Housing Authority using a CSGA. Photo courtesy of Secure Futures.

But after the Washington and Lee experience demonstrated both Dominion’s hostility to PPAs and its willingness to use its legal firepower, Tony Smith decided to seek another way through the legal thicket. Working with regulatory lawyer Eric Hurlocker and tax specialists at Hunton and Williams, Secure Futures developed an innovative contract model that could provide the tax benefits of a PPA without running afoul of utility monopoly claims. CSGAs are contracts for solar services but, crucially, don’t involve the sale of electricity.

Although Dominion Power eventually relented enough to cooperate on a bill passed in 2013 that allows a small number of PPAs within its territory on a “pilot project” basis, Secure Futures has continued to use the CSGA model in subsequent projects because it offers features that a standard PPA does not.

Perhaps more importantly, neither Dominion nor any other utility has signaled opposition to CSGAs. Suddenly, Secure Futures’ niche looks huge. The ability to use CSGAs wherever PPAs would make financial sense opens up new opportunities among non-profits not just in Virginia, but in all of the 28 states where PPAs are currently either illegal or of uncertain status. As Smith notes, no state bars customers from generating electricity for their own use.

While Smith is eager to see his company grow, he says his larger goal has always been to open the floodgates for solar projects across the country where they are held back now only by outdated laws and flawed policies. He hopes to license the CSGA approach, ideally to a non-profit that could work with developers across the South to make this contract model widely available.

Virginia has always been a hard place to do business for solar companies, so much so that Smith refers to it as a ”dark state.” Knocking down the PPA barrier won’t bring the sunshine in all by itself, but it does create an opening.

 

 

 

 

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2014 legislative session ends with modest progress on solar, not much else to brag about

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photo credit: Amadeus

photo credit: Amadeus

The 2014 Virginia legislative session wrapped up this weekend, sort of. Legislators still have to return to work out a budget deal, and in six weeks they will be back again to consider any bills vetoed or amended by the governor. But it’s still a good time to survey the battlefield.

Advocates of enlightened energy policy march into session every January bright-eyed and optimistic, only to become mired in the slough of despond. We watch the best bills die, while bills we thought too backward to survive the light of day flourish like an invasive species. Yet even in Virginia, the past few years have produced glimmers of hope that suggest a slowly shifting mindset among legislators.

There is, for example, a growing movement in favor of solar energy that is as strong on the Republican right as it is on the Democratic left. They haven’t quite formed a Solar Caucus yet, but you might say we are beginning to see a Solar Consensus.

Last year, after a long battle, this consensus produced a law specifically allowing some third-party-owned solar and wind projects, a critical step for nonprofits to install solar economically. This year, the legislature removed the second major hurdle to these projects, local “machinery and tools” taxes on solar equipment that would have made third-party-owned projects impossible in most Virginia jurisdictions.  Assuming the Governor signs, SB 418 and HB 1239 take effect January 1, 2015.

In a near-rerun of two years ago, Senator Chap Petersen’s SB 222, nullifying homeowner bans on solar, passed the House and Senate. Back then Governor McDonnell surprised us all by vetoing similar legislation, an action not expected from Governor McAuliffe.

This year, too, the legislature voted to establish a grant program to help fund renewable energy projects. Originally conceived as an ambitious, $100 million tax credit, the legislation was quickly scaled back to $10 million and turned into a grant, causing it to run into trouble when money couldn’t be found in the budget to fund it. (Sorry, we spent it all on coal.) So SB 653 won’t take effect until fiscal year 2015-2016, and even for that to happen the bill must be reenacted in 2015. Too many contingencies, you say? Well, yes. But passing the bill at all is a remarkable milestone for this legislature. Let’s appreciate this moment.

Solar advocates also tried for a second year to pass a bill that would require the State Corporation Commission to set up a registration system for Virginia renewable energy certificates. While the bill did not pass, the SCC has agreed to examine whether it can do the job administratively, and if legislation is required, to suggest the necessary language for the 2015 session. Again, it’s a small victory, but it reflects an increasing acceptance of solar energy as an inevitable part of our energy mix.

Okay, sure, the defeats were far more numerous. Reforms to our farcical Renewable Portfolio Standard were whittled down to why-bother status before passage (SB 498 and HB 822). Efforts to ensure that both utilities and regulators take account of the long-term costs of fossil fuels (HB 808) and their climate change impacts (HB 363) never made it out of House subcommittee. Every effort to expand residents’ access to solar energy by opening up net-metering failed (SB 350, HB 879, HB 1158, HB 906 and SB 350).

One of the net-metering champions, Senator John Edwards, put in a resolution in the final days of the session to organize a study of the value that distributed solar generation provides to utilities and the grid. The bill was introduced on March 3d and scuttled on the 6th (surely some kind of record), but advocates expect the study to go forward administratively. The study will make use of the Small Solar Working Group that formed last year, facilitated by the Department of Environmental Quality and consisting of solar advocates, utilities, local governments and others.

This value-of-solar issue is at the heart of the national battle over the expansion of distributed solar and the effort by utilities to nip it in the bud to preserve their monopolies. We expect Virginia utilities to continue their push for a very low valuation, one that would justify the barriers currently in place and add new ones like standby charges.

There were other disappointments, too, like the failure of HB 766, a bill that would have allowed localities to form service districts for energy projects, just as they do for things like trash collection, and HB 1001, which would have required electric utilities to offer on-bill financing of energy efficiency improvements.

But as I wrote in my last post, the worst news for consumers this year was the passage of SB 459, a bill allowing Dominion to write off hundreds of millions of dollars it has spent developing plans for a third nuclear reactor at Lake Anna. Last week we spoke with lawyers at the Attorney General’s office about this boondoggle, which they also oppose, and received confirmation that our reading of the bill is correct. In spite of the propaganda coming from Dominion about “no ratepayer impact,” customers of the utility will indeed pay these costs.

Worse, while we know Dominion has spent $570 million so far, the company has not disclosed how much more it intends to spend—and charge us for—in the future. The AG’s office told us Dominion has this estimate but won’t disclose it publicly, insisting the figure is confidential. Apparently it is not for the likes of us customers to know such things.

Legislators not only signed us up for this open-ended boondoggle, they specifically rejected an amendment offered by Delegate Ware that would have ensured we got our money back if Dominion doesn’t build the nuclear plant.

Given the lopsided vote tally, the Governor is not likely to veto the bill. Knowing this, the AG’s office is recommending amendments that would allow the State Corporation Commission to review the money spent (the bill as written jettisons even that minor consumer protection), but isn’t suggesting a wholesale rewrite.

Looking for a silver lining? There are two. First, Dominion may have pursued this legislation not because it wants to build North Anna 3, but because it intends to abandon the project and figures it might as well get ratepayers to cover the sunk costs while it’s still possible to pretend everything is full-speed-ahead. That would actually come as a relief; not building a financially uncompetitive nuclear plant on an earthquake fault line is way better than building it.

Second, the bitter pill of this legislation comes with a little chaser of sugar in the form of a second bill, SB 643, that provides the same treatment for the costs of developing an offshore wind farm. So far these costs have been tiny in comparison to what’s been spent on North Anna 3, but putting them into the rate base will lower the cost of building turbines offshore.

Some people have suggested it’s inconsistent to like the wind bill while hating the nuclear bill, but surely it’s only reasonable to fish a pearl out of a dung heap. There are good reasons to distinguish the bills, beyond the dangers of nuclear and the planet-friendly qualities of wind power. Most obvious is that there is real doubt whether the federal government will approve a nuclear plant with the serious siting issues confronting Lake Anna, while it has already approved the site of the offshore wind farm and given Dominion a lease.

Since my last update, a few other bills have seen action. Senator Stuart’s bill to control fracking in the Tidewater area, SB 48, died in the killing fields of House Commerce and Labor.  SJ3 and HJ16, Virginia’s first bills to deal with the effects of climate change, had to go to conference on the question of who would be part of the subcommittee studying “recurrent flooding” and how much power they would have. The compromise calls for three senators and five delegates to be part of the 11-member subcommittee. Absurdly, it gives the majority of either the senators or the delegates veto power over any recommendation. Senators Locke, McWaters and Watkins, and Delegates Stolle, Knight and Hester have already been appointed.

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Energy and climate bills get hearings in Richmond

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photo credit: Amadeus

photo credit: Amadeus

This week Virginia’s General Assembly took action on a good many of the bills we are following. For a fuller description of the bills and information on how to access the bill language, refer to my previous posts. At the end I’ve also added comments on a few additional bills you may have read about.

Solar panels on their way to being redefined as pollution control equipment. SB 418 (Hanger) passed the Senate. HB 1239 (Hugo) passed a House Finance Subcommittee Thursday and is expected to pass the full committee next week. Following the subcommittee hearing, proponents agreed to add a 20-megawatt limitation on the size of projects that can qualify for the tax-free treatment. Obviously, this project size won’t stop any projects in Virginia, but the amendment satisfied the only opposition the bill had encountered, from the Virginia Municipal League.

HOA bans on solar may soon be a thing of the past. SB 222 (Petersen) passed the Senate unanimously and now moves the House. Petersen added an amendment sought by HOA interests that would preserve solar bans if they were included in the underlying deeds, as opposed to in HOA contracts. As no one knows of any deeds prohibiting solar, this seems to have removed the only opposition to the bill without actually limiting its effectiveness.

Investment tax credit/grant facing headwinds. HB 910 (Villanueva) was heard Friday morning in a 5-member subcommittee of House Finance, which voted to table the bill.  Usually this is fatal to a bill, but advocates who were there say in this case they do expect the bill to come before the full committee on Wednesday, and the tabling is a temporary measure while $10 million is found in the budget to cover the cost. The Senate companion bill, SB 653 (Norment) remains in Senate Finance and has not been heard yet. It has been converted to a $10 million grant in accordance with the committee’s policy to reject most new tax credits but consider grants instead.

Two RPS bills rendered almost meaningless (but they pass!), one killed unceremoniously. Both SB 498 (McEachin) and HB 822 (Lopez) originally would have made modest improvements to Virginia’s sad, toothless, voluntary, RPS. Facing utility opposition, the bills were made even more modest, amended down to consist of nothing more than 5-year “banking” limits on the length of time utilities can hold onto RECs. States with real RPS laws generally have 2-year limits. Virginia currently has no limit at all, which not-just-theoretically allows utilities to stock up on enough pre-world-war II, out-of-state hydro RECs to last through 2025. So any limit at all is an improvement. And the bills seem set to pass both chambers, so you should thank Dominion for its generosity in allowing this to happen.

Meanwhile, HB 1061, Delegate Surovell’s “Made in Virginia” bill, was killed in Thursday’s House energy subcommittee.

Efforts to expand net metering fail in the House, will be heard in Senate Monday. Solar advocates and industry members successfully beat back Dominion Power’s bid to hijack the multi-family net metering provisions of HB 879 (Yost) and HB 906 (Krupicka). Alas, Dominion got its revenge Thursday in the House Commerce & Labor energy subcommittee, where the Republican majority had clearly come prepared to kill the bills. The two bills, plus Delegate Surovell’s solar gardens bill, HB 1158, were tabled with little debate, though with dissenting votes from the subcommittee’s three Democrats.

(We interrupt this blogpost for an observation about the workings of the General Assembly, which you can skip if your interest extends only to the sausage and not the sausage-making. Sitting in the audience of the House energy subcommittee on Thursday, I couldn’t help noticing the three Democrats appeared to be entirely irrelevant. They were seated way off to one side by themselves, and took no part in any of the discussions during the three hours that I was there. Even their dissenting votes were cast by silent little waves of their hands. It is tough to be a Democrat in the House.)

Meanwhile over in the Senate, SB 350 (Edwards) is scheduled to be heard in Commerce & Labor on Monday afternoon. Like the House bills, the Senate bill as drafted addresses both multi-family and municipal net metering.

House energy subcommittee kills effort to add price stability to factors to be considered in new generation. HB 808 (Lopez) was tabled Thursday in the House energy subcommittee.

And don’t go considering the environment, either. HB 363 (Kory) was also killed in the House energy subcommittee Thursday.

On-bill financing effort fails for the year. HB 1001 (Yancey) was continued to 2015 at the request of the patron, a face-saving way to withdraw your bill when you find it really isn’t ready for prime time. The bill faced utility opposition, but also had flaws that the delegate wants to work on. “Continuing” it rather than withdrawing it signals that we can expect another effort next year.

Adding energy and water conservation projects to the powers of local service districts fails. HB 766 (Bulova) was tabled in a subcommittee of the House Counties, Cities and Towns committee.

Crowdfunding bills fail. Both HB 880 and SB 351 failed in committee.

All right, time for some good news.

Bill to impose a new gas plant on AEP fails. My understanding of HB 1224 turned out to be mistaken; AEP did not seek this legislation. Instead the proponent of a new gas plant in AEP territory is the would-be developer, which resorted to legislation when its efforts to sell the utility on its proposal failed. Following a far more spirited and extensive debate than was afforded to far better bills, HB 1224 failed to get a vote to move it out of the House energy subcommittee.

Hampton Roads “recurrent flooding” study passes Senate, moving through House. SJ3 passed the Senate, while HJ16 was reported from House Rules subcommittee with an amendment shrinking the size of the commission doing the study. Still no mention of why recurrent flooding is happening.

Some protections from fracking pass Senate Ag. SB 48 (Stuart) passed the Senate Agriculture committee unanimously. The bill provides some protections for drinking water from impacts related to oil or gas operations proposed in Tidewater Virginia. I haven’t analyzed this bill; for more information, contact the Southern Environmental Law Center, which supports the bill.

Attempts to nullify federal law (said to) fail. I’m told Bob Marshall’s HB 140 and HB 155 both died in a subcommittee of House Privileges and Elections, although the website still shows them in committee. Possibly they simply failed to gain a vote, which is one way bills die.

Saner heads prevail (mostly) on anti-EPA bills. SB 615 (Carrico), the “Carbon Dioxide Emission Control Plan” designed to ensure the continuation of carbon dioxide emissions, was in trouble even before Democrats took control of the Senate. The senator changed the bill to conform it to HB 1261 (Chafin), which called for a study with the same purpose. Under pressure from the governor’s office, the bill was amended to study not just the costs to industry and ratepayers of complying with EPA regulations, but also the benefits. In Senate Ag Thursday, still facing heavy opposition to the bill from the environmental community, Carrico accepted an amendment from Chap Petersen that took out the worst remaining provision, one that would have restricted the state from proposing any standards more stringent than the EPA required. The bill then passed unanimously. Later in the afternoon, HB 1261 was conformed to the amended language of SB 615 and passed handily. The bill remains weighted towards findings favorable to the fossil fuel industry, but it is hugely better than it was.

But lest we feel progress is being made in Virginia . . .

Dominion’s rate boondoggle shows excellent prospects. Really, you have to admire the way Dominion Power pushes through bills it wants and kills the ones it doesn’t. Dominion is the single biggest contributor to Virginia’s politicians, after the Republican and Democratic parties, and the company gets its money’s worth. But it’s not just the way it kills smart energy policies that impresses.

Take HB 1059 (Kilgore), which would allow—nay, require!—Dominion to begin charging customers for $570 million it has spent towards a new nuclear plant, plus a couple million towards offshore wind, money it would ordinarily recover only when the projects are built.

Stephen Haner, a lobbyist for Newport News Shipbuilding, delivered a valiant and spirited defense of ratepayers in opposing the bill during the meeting of Thursday’s House subcommittee on energy. The real reason for the bill, he explained, is to prevent Dominion from having to give its customers hundreds of millions of dollars in rebates as a result of having earned too much money these past two years. Two years of over-earning would also lead to a reduction in rates for consumers going forward, threatening the bottom line still further. Dominion has figured out it can avoid that result by adding the money spent on nuclear to the balance sheet, thereby canceling out that pesky excess revenue and avoiding a rate decrease. For more on this, see the article in the Richmond Times-Dispatch.

Separate bills in the Senate–one for nuclear, one for wind—also empower the boondoggle. SB 643, the offshore wind bill, remains in Senate Commerce and Labor and is not on the docket yet. But the nuclear bill, SB 459, has already passed the Senate unanimously, a testament to Dominion’s charm if there ever was one. In addition to requiring our utility monopoly to charge us for its costs in planning and developing a new nuclear facility, it states as a matter of law that this development is in the public interest. Really, guys? How do you think the public would vote?

Science “education.” Last, I bring you a dispatch from guest blogger Seth Heald, who has been following Delegate Dickie Bell’s anti-science bill. Seth attended the House education subcommittee on Thursday. He reports:

HB 207 science education bill referred to Courts Committee. The bill purports to encourage open discussion and “critical thinking” as to purported “scientific controversies.” Last week the Hampton Daily Press and Washington Post nicely described the anti-science creationist and climate-denial history of the bill’s statutory language here and here. More detail is on the National Center for Science Education website. The bill came before the House Subcommittee on Elementary and Secondary Education on January 30, where Rita Dunaway of the Virginia Christian Alliance was the sole member of the public speaking in favor of it. Ten or so people spoke in opposition to the bill, including representatives of teacher and education groups, the Sierra Club, and the Jewish Community Relations Council. At week’s end WRIC TV in Richmond reported that the bill’s sponsor, Delegate Dickie Bell, said he introduced HB 207 after being “approached by” the Virginia Christian Alliance. The subcommittee approved Delegate Peter Farrell’s motion to refer the bill to the Courts of Justice Committee to consider its constitutionality.  Delegate Bell’s hometown newspaper, The Staunton News Leader, opined in a Feb 1 editorial titled “Bell introduces an unnecessary bill” that HB 207 is “unworthy of legislative attention.” The paper noted that Bell “has been down this road before, sponsoring other controversial bills drafted by ultraconservatives.”

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More bills to watch

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photo credit: Amadeus

photo credit: Amadeus

The bills keep coming. Again, this is hardly a comprehensive list, just the ones I’ve had a chance to think about. By the way, renewable energy fans may want to head to Richmond on January 30, when many of the House bills will be taken up in a long afternoon session of the House subcommittee on energy. Members of the public are usually permitted to testify.

Another renewable energy tax credit bill. Senator Norment has now filed SB 653, a companion bill to HB 910. This caps the overall total of tax credits that can be claimed at $10 million annually. As previously noted, it’s encouraging to have powerful Republicans supporting this bill. One complication, however, is that Senate Finance, which will hear Norment’s bill, has adopted a policy that makes it very difficult to pass new tax credit legislation, preferring grants instead. Tax breaks for renewable energy have proven extremely effective in other states and at the federal level in building the industry and creating jobs, but I wouldn’t object to grants. With Norment one of the leading senators on the Finance committee, we will hope he navigates this wisely.

Crowdfunding. Currently securities laws prevent private companies from accepting investments from people who are not “accredited” investors, otherwise known as rich folks. The purpose is to protect unsophisticated investors from hucksters, but it has the effect of preventing companies from engaging in creative crowdsourced financing for things like solar projects. An “invest in Virginia” bill, HB 880 (Yost) and SB 351 (Edwards), would loosen the rules for Virginia citizens investing in Virginia companies.

Ending HOA bans on solar. Since 2008, homeowner associations haven’t been able to impose new bans on solar panels, though they can impose restrictions on size and placement. However, HOA rules that were adopted prior to 2008 can still include total bans. SB 222 (Petersen) would nullify these bans. A similar bill passed the General Assembly two years ago, only to be vetoed by Governor McDonnell in the belief that it interfered with existing contracts. But many other states have overridden HOA solar bans as a matter of public policy; Virginia should do likewise. So far, Senate Commerce and Labor agrees, as the bill was passed out of committee today on a unanimous vote. (One caveat: what passed was a substitute, and I haven’t seen the changed language.)

Solar gardens. HB 1158 (Surovell) would allow “virtual” net metering of solar energy, making it possible for someone to subscribe to part of the output of a solar project and get credit on their utility bill for that amount. This approach would support huge growth in the solar market and has tremendous grassroots appeal; not surprisingly, the utilities are completely opposed to it.

Advantaging natural gas. Appalachian Power seems to want to build a new natural gas plant in Virginia at customer expense, and doesn’t want the State Corporation Commission to scrutinize the plan too carefully. HB 1224 (O’Quinn) makes an end run around the SCC’s standard operating procedures by declaring such a plant in the public interest and telling the SCC to “liberally construe” the provisions of the law to approve it. You have to wonder: if a natural gas plant is such a great idea, why does the SCC have to be coerced into approving it? And why shouldn’t a wind farm get the same treatment?

Fracking public lands. HB 915 provides that no permit or lease for oil and gas exploration or drilling on public lands can prohibit the use of fracturing. Really? Why would you prevent a state agency and the Governor from determining the scope of a permit? If the agencies are doing their job protecting public lands (I know, a big if), surely this prohibition ought to make it less likely, not more likely, that permits would be issued. That makes this bill a bad idea no matter whose side you’re on.

Attempts to nullify federal law. Two bills from Bob Marshall, HB 140 (multi-state coal compact) and HB 155 (interstate offshore energy compact) would replace existing federal laws and regulations with state control. Only the first bill is blatantly unconstitutional. The second, an attempt to supplant federal authority over waters beyond three miles out from shore, wouldn’t take effect without “consent” of Congress, so it might be merely a total waste of everyone’s time and an affront to our good sense. Delegate Marshall evidently regards the Constitution as a mistake. The rest of us can only be embarrassed for his constituents.

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Energy bills to watch in 2014

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photo credit: Amadeust

photo credit: Amadeust

Every year, hundreds of energy bills are fed into Virginia’s sausage-making machine, but little of interest to clean energy advocates makes it out the other end. Utilities and coal companies largely control the outcome, thanks to their generosity in funding legislators’ campaigns, and they do not share our desire for change.

Yet the start of each new Session, like the new year itself, always produces hope and excitement about the possibilities at hand. 2014 is no exception. There are a lot of bills here worth watching, and even rooting for. The list below is not comprehensive, and new bills keep coming in while existing ones get amended faster than I can keep up with, so take this summary only for what it’s worth today.

One point worth noting is that many of the most promising bills come from Republicans. Renewable energy and energy efficiency, once identified with progressives, seem to have gone mainstream in Virginia. Well, why not? In addition to lowering our carbon footprint and helping residents save money, they make business sense and create jobs.

How to look up a bill: The links in this article will take you to the summary page for a bill on the website of Virginia’s Legislative Information Service. The bill summary is not guaranteed accurate and does not change even if the bill language changes substantially, so always follow the links to the latest version of the bill to read the text. The summary page also shows what committee the bill has been assigned to; following the links will show you who is on the committee, when it meets, and what other bills have been assigned.

Investment tax credit. The bill with the potential to do most for renewable energy in Virginia is HB 910 (Villanueva), which would provide tax credits for renewable energy projects. The top priority this year for the solar industry, the bill would go a long way towards helping renewable energy compete in a state that still shells out millions of dollars every year in coal subsidies. A companion bill from a Senate Republican is also expected but has not been filed as of the time of this posting. The combination would be a powerful statement of support from a party that has not always been a friend to renewable energy.

In a bid to create broad support, HB 910 is not limited to emission-free projects like wind and solar. It would be hugely unfortunate if a few large biomass projects were to gobble up the credits, so we hope the patrons will commit to making any necessary fixes in future years if that happens.

Expanding net metering. Three-quarters of utility customers can’t take advantage of solar energy because their property isn’t suitable for solar panels. HB 879 (Yost), HB 906 (Krupicka) and SB 350 (Edwards) would allow customers in multifamily housing to participate in shared renewable energy systems, a limited form of community net metering. The bills would also allow something called “municipal net metering,” under which local governments could build a single renewable energy facility and attribute the energy from it to multiple meters on property owned by the locality. In addition to solar, these projects could include wind, landfill gas or gas from aerobic or anaerobic digesters.

Although these three bills look to be the same right now, I’m told they may be changed so that one House bill deals with multifamily housing and the other with municipal net metering.

Defining solar panels as pollution control equipment. SB 418 (Hangar) is primarily a useful workaround to address a tax problem that is holding back solar power purchase agreements. Odd as this sounds, currently third-party-owned solar systems are subject to local tax as manufacturing equipment. In many jurisdictions where solar PPAs have the most potential to help churches, schools, and other non-profits go solar, the tax is so high as to make the projects impossible to finance. Many localities want to help solar but are paralyzed by fear of opening a Pandora’s Box of unintended consequences. To solve the problem, SB 418 would extend to solar panels a tax exemption currently available to landfill gas projects and wood mulching equipment. Beyond helping PPAs, the legislation would also exempt solar equipment from state sales tax, which would make solar systems more affordable to all solar customers.

RPS bills. Several bills seek to improve Virginia’s pathetic voluntary renewable portfolio standard law by restricting the kinds of energy or credits that can be used to meet it. None of them would make the RPS mandatory, so they can’t deliver the kind of robust market in renewable energy credits (RECs) that supports the wind and solar industries in other states. For the most part, they aim for small fixes that could cue up stronger bills in future years, and reduce the consumer rip-off that characterizes the current RPS.

Of these, HB 1061 (Surovell) is the solar industry favorite. It would create the beginnings of a solar REC market here even within the framework of the voluntary RPS. This “Made in Virginia” bill would require Dominion Virginia Power to meet a portion of its voluntary target with renewable energy certificates representing distributed generation produced in Virginia, or by contributions to the state’s voluntary solar resource fund, which provides loans for solar projects. The State Corporation Commission would be tasked with the job of creating a system for registering and trading Virginia-based renewable energy certificates (RECs).

HB 881 (Yost) similarly sets up a system of renewable energy certificate registration and tracking at the SCC. It also eliminates the double and triple credits that the RPS currently gives to certain types of energy, only grandfathering in some wind RECs that Appalachian Power had already contracted for.

SB 498 (McEachin) makes a number of changes to the voluntary RPS to put it on a stronger footing going forward. It limits a utility’s ability to satisfy the goals with purchases of low-quality RECs like those from old hydroelectric dams and landfill gas, and ensures that most future purchases of energy and RECs will represent high-quality resources like wind and solar. It does not, however, include a carve-out for Virginia distributed generation. A similar bill last year received the blessing of Dominion but died in the face of opposition from the Virginia Alternative and Renewable Energy Association, arguing for the interests of the producers of crappy RECs.

Delegate Alfonso Lopez spent much time and effort over the past year trying to broker a deal between the utilities, environmental groups and renewable energy companies to produce a modest consensus bill. The result, HB 822, would seem to be a testament to how little consensus there is; it includes only a two-year limit on banking RECs for use in future years and the elimination of double credit for energy from animal waste. (I’m guessing the animal waste people weren’t at the table.) It also strengthens existing wording about the RPS serving the public interest, which may help utilities get SCC approval for expenditures to meet the targets.

On-bill financing for energy efficiency. Advocates of clean energy say the best way to get homeowners and businesses to weatherize buildings and install efficiency upgrades is to let customers pay the cost through their utility bills, often out of the energy savings they reap.  HB 1001 (Yancey) would require electric utilities to offer on-bill financing for energy efficiency measures. The bill would be stronger if it included gas utilities and did not insist on a five-year payback period, which is too short a time for many weatherization measures, but it’s still a great start.

Service districts. HB 766 (Bulova) adds energy and water conservation management services to the list of items that can be owned and maintained by local service districts. This adds a new tool for local governments to finance energy efficiency and renewable energy projects, allowing payments to be made via local property tax bills.

Virginia Commission on Energy and the Environment. The Virginia Energy Plan is due to be updated in 2014, and boy, does it need it. Anyone who has ever tried to make sense of the plan has probably given it up as a hopeless hodgepodge of contradictory ideas. Anything you like, it’s in there. Anything you don’t like is in there, too, and none of it means anything because the provisions for the most part have no teeth. HB 818 (Lopez) hopes to turn this mishmash into a coherent plan for Virginia’s energy future by creating a new legislative commission to perform a comprehensive review of the energy landscape.

Price stability. HB 808 (Lopez) adds consideration of long-term price stability to the factors that utilities and the State Corporation Commission must look at when evaluating a proposed new electric generating facility. This would help to level the field for renewable energy, since fuel prices for fossil fuels are highly volatile and largely unpredictable over the full 30-year design life of a facility, whereas wind and solar are famously price stable.

Consideration of the environment. In a case decided last summer (PUE-2012-00128), the State Corporation Commission essentially interpreted the Virginia code to eliminate its own role in protecting the environment when it approves electric generating facilities. HB 363 (Kory) beefs up the code just enough to make it clear the SCC still has a job to do even when state agencies have issued all the relevant permits. The bill requires the SCC to consider matters not covered by permits, such as carbon emissions and the overall effect of electric generation facilities on the health and welfare of residents.

Dealing with climate change. Hampton Roads is facing a crisis as sea level rise combines with sinking land to swamp low-lying coastal areas with every major storm, a problem predicted to get steadily worse over the course of the century. SJ 3 (Locke) and HJ 16 (Stolle) establish a Recurrent Flooding Planning Committee to examine ways to respond. It’s a good bill, but really, it’s weird to address recurrent flooding with no mention of what’s causing it. Dealing with recurrent flooding in Hampton Roads without talking about climate change is like addressing the obesity epidemic without mentioning diet and exercise. Why kid ourselves?

Carbon Dioxide Emission Control Plan. Speaking of kidding ourselves, SB 615 (Carrico) would establish a commission with the job of limiting carbon emissions without limiting the sources of those emissions. Indeed, the bill would be more accurately titled the Carbon Pollution Continuance Plan. It’s too bad to see legislators fighting to keep coal plants running full-tilt when we have better, cleaner, and cheaper options—ones that don’t put us on a course to make “recurrent flooding” a daily occurrence.

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Time to get serious about offshore wind

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Photo credit: Phil Holman

Photo credit: Phil Holman

A version of this article originally appeared in the Hampton Roads Virginian-Pilot on Sunday, December 15.

No doubt about it, Virginia is for lovers of offshore wind. It’s hugely popular with the public, and Virginia legislators passed a near-unanimous resolution in its favor. Governor McDonnell talked it up, and even tossed it some bucks. Governor-elect McAuliffe is such a fan that he made television commercials about it way back in 2009.

But all that love won’t get us turbines in the water unless Dominion Virginia Power decides to build them. Dominion is the key player after winning the exclusive right to develop the federal lease area 25 miles off Virginia Beach. The company has five years to study the area and come up with a construction and operations plan—or not. Right now the company is being coy about whether it will move forward come 2018.

Alas, Virginia, getting offshore wind turbines is going to take more than sweet talk: we have to start laying the groundwork now for that trip down the aisle. So here’s a to-do list to help get us there.

Governor McAuliffe should declare offshore wind a priority from the day he takes office. Only two test turbines are likely to be spinning before the end of his term, but he can make it clear he expects Dominion to meet all of the milestones in its federal lease, ensuring the next governor presides over the big buildout.

The governor and the General Assembly can also prove their ardor by funding ocean studies that have to be conducted before construction starts. The developer of Rhode Island’s wind energy area, Deepwater Wind, expects to have its turbines spinning only five years from now thanks to state-sponsored ocean studies that, Deepwater says, translated into a three-year head start. It’s an approach Virginia should emulate. The public will pay for these studies one way or another—either as taxpayers or as ratepayers—and footing the bill now will help us make up time.

The governor can also direct an analysis of workforce and port readiness so we begin to train workers and put in place the infrastructure needed for this huge new industry.

Of course, creating a skilled workforce is hard to do with no wind projects now in Virginia. Building land-based wind here would support the growth of the workforce and the supply chain, and give everyone experience with wind energy here. One project might be the wind farm proposed by Iberdrola in northeastern North Carolina, within commuting distance of Hampton Roads workers. Dominion turned down the chance to buy energy from the project a few years ago, and it hasn’t been built. The General Assembly could turn that around with legislation to require our investor-owned utilities to incorporate wind power into their energy mix.

Why support a project in North Carolina? The simple fact is that offshore wind is too big an industry for any one state to go it alone. Creating scale and keeping costs down demands a regional approach. Cooperation means both states win. In addition to North Carolina, the governor should partner with Maryland and Delaware, which also have federally-designated wind energy areas off their coasts.

Regulators, and the public, also need to see an analysis of what impact this energy will have on our electric bills. Harder to quantify, but just as important, is a full understanding of offshore wind’s benefits. Such a study might begin with a survey to identify those Virginia companies that could participate in the supply chain, what new businesses and jobs the state might attract, and how the economically distressed regions of the state can best participate.

When the time comes, the State Corporation Commission will have to do its part by approving both the two test turbines and, later, the full wind farm. The legislature can help by declaring an offshore wind farm in the public interest—a short step beyond its earlier resolution, but one with actual weight.

Virginia offshore wind may still seem to be off in the future, but now is the time for the incoming McAuliffe Administration and the General Assembly to prove their love. Otherwise, Virginia just might get left at the altar.

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Why standby charges are bogus

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Utilities want solar owners to pay for grid access. Photo credit: NREL.

Utilities want solar owners to pay for grid access. Photo credit: NREL.

Rooftop solar energy makes up a tiny fraction of the total electricity produced in America, but already utilities worry about a day when large numbers of their customers won’t need them any more. As renewable energy costs continue to tumble and the technology of battery storage improves, many residents and businesses may abandon their power utility to go it alone or form microgrids within their communities to control their own power.

Some utilities understand that this is the future and are looking for ways to turn these trends to their advantage. Others are doing everything they can to protect their turf, and progress (and the environment) be damned. They figure they can’t wind up on the wrong side of history if they stop history from happening.

Hence the attempt to throttle solar while it’s still little. Caps on system sizes, caps on total amounts of distributed generation, prohibitions against third-party power purchase agreements, restrictions on net metering: all of these are efforts to keep solar too small to matter, and too small to achieve the economies of scale that could lead to an upending of the central utility model.

The latest effort to squelch solar is through standby charges: fees imposed on net metering customers that compensate the utility for “standing by,” ready to sell grid-produced energy at night and on cloudy days. In 2012 in Virginia, Dominion Virginia Power won the right to charge customers with large residential systems (10-20 kilowatts) up to $60 per month—a charge that destroyed this market segment. This summer Dominion pressed its advantage, indicating in a submission to regulators that it will likely seek more standby charges on a broader class of solar customers.

Note that Virginia has less than 15 megawatts (MW) of solar installed across the state. Dominion Power alone has around 19,000 MW of coal, gas and nuclear. So the notion that net metering by solar customers has any perceptible effect on the grid or other customers is silly. The point of Dominion’s stand-by charges is to stifle the solar market, not cover costs.

This same debate played out this year in Arizona, which saw its solar industry install 719 MW in 2012—still a tiny percentage of that state’s total energy supply, but one that is growing fast enough to warrant the discussion. Last week the public utilities commission agreed to allow Arizona Public Service Company (APS) to charge its residential solar customers an average of $5 per month. The utility treated the ruling as a win, and indeed the charges might eventually add up to enough to cover APS’s attorney fees in the case. That’s more than can be said about Dominion’s standby charges.

Meanwhile the conservative American Legislative Exchange Council (ALEC) has gotten into the act, drafting a model resolution insisting that net metering customers should have to pay their “fair share” of utility costs through measures like standby charges. Not incidentally, Dominion Power is a member of ALEC and sits on the energy and environment task force next to the fossil fuel shills from Heartland Institute.

But the “fair share” argument is bogus. Utilities weren’t set up to ensure Americans all paid their “fair share” of the costs of the electric grid. If they were, there would still be mountain communities without power today. Residents of cities and towns subsidized the cost of running power lines to far-flung rural homes inhabited by people who could never have afforded their “fair share” of this infrastructure.

Even today, city dwellers pay more than their “fair share” of transmission costs to subsidize people like me who live in leafy, sprawling suburbs and less-populated parts of the state. Anybody voting for an ALEC-style resolution about “fair shares” had better be willing to stick it to suburban and rural consumers.

There are other ways electricity rates aren’t “fair.” Dominion’s residential rates are structured so people who use less electricity pay more per kilowatt hour than those who use more—again, making it roughly a transfer of wealth from urban apartment dwellers to those with larger or less efficient homes elsewhere. The utility’s goal is to encourage the use of electricity, and compete more effectively with the gas company for heating. People paying their “fair share” just doesn’t enter into it.

And while we’re at it, if we were serious about subsidies we’d slap a tax on electricity made from fossil fuels to reflect the costs they impose on society. Asthma, heart disease, mercury poisoning, groundwater contamination, and of course, the dumping of carbon into the atmosphere—these are all costs of fossil fuel that ought to be included in power bills to make sure everyone is paying their “fair share.” People who install solar panels deserve a thank-you for their service to society, not standby charges based on bogus “fair share” claims.

The argument for standby charges is, pure and simple, an attempt by entrenched monopolies to block competition. The “fair share” argument is a red herring from utilities that don’t want a fair fight. And with good reason: they’re going to lose.

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From Massachusetts to New York, offshore wind energy now ready to deliver

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Interior Secretary Sally Jewell addresses a packed ballroom

Interior Secretary Sally Jewell addresses a packed ballroom at the American Wind Energy Association offshore wind conference

The long-awaited Cape Wind offshore wind farm will finally begin construction off the coast of Massachusetts in 2014. So, too, will the much smaller Block Island Wind Farm off Rhode Island. When completed, Cape Wind’s 130 wind turbines will supply almost 75% of the power needs of Cape Cod, Martha’s Vineyard and Nantucket, while the 5-turbine Block Island Farm will supply enough clean energy to power over 17,000 homes.

2014 also seems likely to see a power purchase agreement for some of the energy to be generated by a 900 MW wind farm off the tip of Long Island that would feed power to a growing and hungry New York market, at a cost that’s economic now.

And with a second round of grants from the Department of Energy expected next spring, demonstration projects of 12-25 MW will also go forward in three more locations, producing power in 2017 and helping set the stage for rapid growth in the industry. The first-round grants went to projects in Oregon, Texas, Ohio, Maine, New Jersey and Virginia.

These were a few of the highlights from the American Wind Energy Association 2013 offshore wind conference, held October 22 and 23 in Providence, Rhode Island. More than 700 attendees packed a ballroom to hear Secretary of Interior Sally Jewell, Rhode Island Governor Lincoln Chafee, U.S. Senator Sheldon Whitehouse and others make the case for why offshore wind energy will play a growing role in the U.S., starting in the Northeast.

Five years have passed since the American Wind Energy Association, the University of Delaware and the Sierra Club brought together researchers and wind developers for America’s first-ever conference on offshore wind energy, in Dover, Delaware. Since then, the conference has grown in scope and attendance, but the only wind turbine to make it to U.S. waters is a one-eighth-scale test model off the coast of Maine.

While Europe surged ahead and now has more than fifty offshore wind farms, the U.S. has been hampered by a slow federal leasing process, uncertainty about tax credits, and a political process ill-suited to the long-range planning and regional cooperation needed to realize the potential of this industry.

But as this year’s conference showed, the industry is moving ahead. The Obama Administration and several states identify offshore wind as a critical part of the response to climate change, as well as an opportunity to develop jobs. As many speakers explained, there is also a strong business case to be made for it. Given the price spikes that have plagued natural gas in New England and elsewhere, it makes sense to diversify power sources. In addition to providing price stability, wind energy has been shown to suppress wholesale energy prices, saving consumers money.

Perhaps most significantly, offshore wind power is likely to be the least-cost option in locations where demand is high, energy is expensive, and alternatives are few. This describes much of the Northeast, especially the densely populated area from northern New Jersey up to Massachusetts.

An analysis from AWS Truepower showed several factors that make offshore wind energy a good option in these areas:

  • A growing demand for power, driven in part by new data centers;
  • An already-congested transmission grid, coupled with the difficulty of either building new generation close to the load center or adding new transmission lines to bring in power from outside the area;
  • The proximity of offshore wind energy areas to these load centers along the coast;
  • High localized marginal prices for electricity, making offshore wind competitively priced; and
  • The ability of offshore wind to provide power when demand is greatest.

This last element is especially compelling for utilities, which have to meet a demand for power that changes throughout the day. Unlike onshore wind, which blows most strongly at night, and solar energy, which peaks in the middle of the day, offshore wind picks up in the late morning and continues through the evening hours, matching times of highest demand. According to Bruce Bailey, CEO of AWS Truepower, this fact means that in the New York market, the revenues from offshore wind energy will be about two and a half times that of onshore wind energy.

Whitney Wilson, the engineer who conducted the analysis for AWS Truepower, told me that when they looked at all the factors and then at the potential locations for offshore wind farms, one location stood out: a tract of ocean thirty miles off the coast of Montauk Point on Long Island, within the southern section of the Massachusetts/Rhode Island Wind Energy Area. Building wind farms there, her analysis showed, would provide the biggest bang for the buck.

Developer Deepwater Wind, LLC, won the right to develop the lease area last summer in the U.S.’s first-ever offshore wind lease auction. One likely customer may be the Long Island Power Authority, which put out an RFP for 280 MW of renewable energy, specifically mentioning offshore wind.

Lisa Dix, a Senior Campaign Representative with the Sierra Club’s Beyond Coal Campaign in New York who was also at the conference, says offshore wind makes perfect sense for Long Island, and complements the Long Island utility’s recent approval of a feed-in tariff for solar energy.

Other utilities seem likely to follow suit as they assess the benefits of offshore wind for their own customers. A greater understanding of these benefits will lead to the full buildout of the RI/MA area and the soon-to-be-leased New Jersey area.

The experience of Deepwater, Cape Wind, and the developers of the DOE-funded demonstration projects will help build the industry supply chain and workforce, and will produce the kind of learning that leads to lower prices for future projects. One such project involves the 2000 MW of the Virginia Wind Energy Area, which Dominion Power now holds the right to develop. While the economics are not currently as compelling in the cheap-energy South, this would change if the early movers achieve the cost reductions they are aiming for.

If states work together, these cost reductions and the development of a robust, domestic supply chain and workforce will happen better, sooner and smarter. Coordinated regional planning will support rapid growth in the industry while driving down costs in a virtuous cycle.

Given the urgency of climate change and the need to move the electric grid beyond fossil fuels as quickly as possible, Congress also has to make the growth of the offshore wind industry a national priority. Passing a long-term extension of the investment tax credit is a critical first step to support the tremendous renewable resource just off our coast.