Virginia could soon have more than 2,500 MW of solar. We just need customers.

Photo by Activ Solar via Wikimedia Commons.

A review of the Virginia Department of Environmental Quality website reveals developers have at least started the permitting process for 64 solar farms across 40 jurisdictions, representing over 2,400 megawatts (MW) of solar capacity.

This includes projects that are already in operation, like the thousand-acre, 80 MW Amazon Web Services farm in Accomack that kicked off the solar gold rush here in 2015. Amazon also has another 5 projects in development. By the end of 2017, Amazon will have 260 MW of solar in Virginia, accounting for more than half the solar in the state.

The DEQ total only includes projects above 5 MW. It also omits another 94 MW of Dominion Energy projects permitted by the State Corporation Commission, all of which will be in operation by late fall. (Under legislation passed this year, Dominion’s projects will now also follow the DEQ Permit By Rule process, which applies to projects between 5 and 150 MW.)

In all, Virginia would have over 2,550 MW of utility-scale solar if all the projects were to be completed, at the maximum size for which they are seeking permits. But a closer look at the DEQ “notices of intent” suggests that so far the projects seem to have attracted only a limited number of customers: Amazon, our utilities, and the Commonwealth of Virginia itself.

Governor McAuliffe pledged that the Commonwealth would buy 110 MW of solar, enough to meet 8% of its electrical demand, split between onsite and offsite arrays. Announced deals include 18 MW at Naval Station Oceana and two projects totaling 32 MW that will serve the University of Virginia. The Commonwealth is also the off-taker of a project that provides Microsoft with RECs, to date the only announced deal involving a corporation other than Amazon.

Dominion Energy Virginia committed to 400 MW in 2015, and the utility’s 2017 integrated resource plan proposes a continuous build-out of 240 MW per year for the next 25 years. Old Dominion Electric Cooperative has also contracted for 30 MW of solar at two locations, with Dominion Energy owning the projects. Most recently, Central Virginia Electric Cooperative contracted for the output of two 5-MW solar farms. (These do not appear on the DEQ site.)

Where can we find more customers?

This leaves most proposed solar farms in Virginia without identified customers. Certainly, Dominion will prove to be the buyer for many, and there is no good reason it should stop at 240 MW per year. Appalachian Power is also considering sites in Virginia and West Virginia, but its appetite appears limited to 25 MW. The Commonwealth probably has a couple more deals in the works to complete McAuliffe’s pledge, and the next governor could up the ante—especially now we know that purchases by public colleges and universities count.

But for renewable energy to make a serious contribution to our energy supply, new customers have to commit. Fortunately they don’t need to sign onto Dominion’s half-baked green tariff proposal; they can contract directly with developers, as Amazon did initially. When Dominion Energy bought the first Amazon project from its from developer, the parties negotiated a special rate. Industry members say that deal is too complicated to serve as a model for others, but Dominion has indicated an interest in finding a solution.

Dominion’s participation was not necessary for Amazon to move forward, and it would not be required for other large customers to follow suit. In particular, a financial model known as a “virtual PPA” may offer an attractive option. In this arrangement, a large user contracts for the output of a solar or wind farm, but does not actually take delivery of the electricity. Instead, the power is sold into the wholesale market while the customer buys electricity from its utility as usual. The sale of electricity in the wholesale market offsets the cost of power purchased from the utility, acting as a hedge against rising energy prices. The customer gets the renewable energy certificates (RECs) to legally “green” its electricity supply.

A virtual PPA avoids treading on the monopoly power of a utility because it does not require a customer to take delivery of energy from the solar farm. According to Niels Crone of Customer First Renewables, a company that helps large businesses and institutions maximize the value of renewables, virtual PPAs could be a good option for customers located in Virginia.

Crone says that although virtual PPAs (as well as physical PPAs) deliver the greatest bottom-line benefit with larger projects, smaller customers can aggregate their demand to take advantage of economies of scale. That means the benefits don’t have to be limited to the Amazons of the world. Smaller corporations, universities, hospitals and even local government can band together to lower their energy costs—and make a positive impact on Virginia’s environment and economy.

A Candidate’s Guide to Clean Energy and the Pipelines

Anti-pipeline activists gather at an event called Hands Across the Appalachian Trail on August 19. Photo courtesy of Chris Tandy.

Recently I attended a forum where a candidate for statewide office discussed his energy policies and voiced his support for wind and solar. He embraced a goal of Virginia reaching at least 30% renewable energy by 2030, which was roundly applauded. But then he added that we couldn’t get started on it without advances in battery storage, because, he said, without storage there is no way to put surplus wind and solar on the grid.

People around the room look dumbfounded. They weren’t energy experts, but they knew that was flat-out wrong. Later he made other statements that showed he misunderstood facts about energy, climate change and the grid, hadn’t questioned what he’d been told by utility lobbyists, or just hadn’t been paying much attention.

Maybe you are a candidate yourself (or you work for one), and you don’t want to embarrass yourself by saying so, but you frankly don’t understand what was wrong with that statement about wind and solar. Or perhaps you are an activist and you’d like to help your local candidate for office bone up on some of the most important issues he or she will have to vote on while in office.

Allow me to help. Here is what you need to know about the hot-button energy issues in Virginia today. I’ll also offer my opinion about where you should stand on those issues, but that part is up to you.

Solar is coming on strong—and it is the cheapest energy in Virginia today. This astounds people who don’t keep up with energy trends, but it’s what Dominion Energy Virginia’s latest integrated resource plan (IRP) reveals. Utility-scale solar farms, 20 megawatts (MW) and up, can produce electricity at a cost that beats coal, gas and nuclear. That’s why Dominion’s IRP proposes a build-out of 240 MW of solar per year. It’s why Amazon Web Services has been building 260 MW of solar in five Virginia counties to supply its data centers. It’s why, over the past year, developers have proposed more than 1,600 MW of additional solar capacity in counties across the state. It’s also why today, solar already employs more Virginians than coal.

None of the solar under development includes battery storage. It doesn’t have to, because electricity from solar all goes into one big grid.

The grid is HUGE. If you’re from around here, you probably remember the earthquake of August 2011. It was centered in Mineral, Virginia, but did damage all the way to Washington, D.C. It also caused an immediate shutdown of Dominion’s two nuclear reactors at North Anna that lasted for more than three months. That meant 1,790 megawatts (MW) of generating capacity, enough to power 750,000 homes, suddenly went offline. Do you remember what happened to your power supply at home? You probably don’t. Why not? Because your power didn’t go out.

That’s because the North Anna nuclear plants are only two out of more than 1,300 generating units (power plants) feeding a 13-state portion of the transmission grid managed by independent operator PJM Interconnection. When one unit fails, PJM calls on others. PJM’s job is to balance all this generation to meet demand reliably at the lowest cost.

The grid has no problem with solar. While solar makes up less than 1% of its electricity supply currently, a PJM study concluded the grid could handle up to 20% solar right now, without any new battery storage. Wind and solar together could make up as much as 30% of our electricity with no significant issues. The result would be less coal, less gas, and less carbon pollution—and $15.6 billion in energy savings.

Virginia already has energy storage. You could even say we are swimming in it. Bath County, Virginia is home to the world’s largest “battery” in the form of “pumped storage.” A pair of reservoirs provide over 3,000 megawatts of hydropower generating capacity that PJM uses to balance out supply and demand.

Actual batteries are also an option today, not sometime in the future. The price has dropped by half since 2014, to the point where solar-plus-storage combinations compete with new gas peaker plants. Batteries are also being paired with solar today to form microgrids that can power emergency shelters and other critical functions during widespread outages.

If Virginia goes totally gangbusters with solar, a day will come when there is so much electricity being generated from the sun in some areas that we’d need batteries. But, sadly, we aren’t anywhere near there yet.

So, you should definitely get on board with battery storage; just don’t make the mistake of thinking we can’t ramp up renewable energy today without it.

Make renewable energy your BFF. It probably polls better than you do. Renewable energy has favorability ratings most politicians only dream about. A Gallup poll last year showed 73% of Americans prefer alternative energy to oil and gas, a number that rises to 89% among Democrats. Republicans love it, too; North Carolina-based Conservatives for Clean Energy found that 79% of registered Republicans in their state are more likely to support lawmakers who back renewable energy options.

Distributed renewable energy—think rooftop solar—is especially popular with the greenies on the left and the libertarians on the right, and pretty much everyone in between. It offers benefits that utility solar does not. The policy that makes it affordable is called net metering. It gives solar owners credit for the excess solar electricity they put on the grid in the daytime, to be applied against the power they draw from the grid at night. If you want to support your constituents’ ability to power their own homes with solar, you should protect and expand their right to net meter their electricity.

People who understand Dominion’s pipeline hate Dominion’s pipeline. The proposed Atlantic Coast Pipeline would carry fracked gas 600 miles from inside West Virginia through the heart of Virginia and into North Carolina. Instead of following highways, it cuts across mountains, rivers, forests and farms, and requires land clearing 150 feet wide the whole way. Landowners along the route are furious, as are lovers of the national forests and the Appalachian Trail, people who care about water quality, people who care about climate change, and fans of caves, bats and other wildlife.

The gas it will carry is extracted from shale formations deep underground using hydraulic fracturing, or fracking, a loud, dirty and dangerous practice that doesn’t poll well in Virginia. More quietly (but in many ways worse), leaking wells, pipes, and storage reservoirs are estimated to emit enough greenhouse gases to cancel out the climate advantages of burning gas over coal, and increase smog. An analysis using industry data found that building the ACP and a second controversial pipeline project, the Mountain Valley Pipeline, would more than double the carbon footprint of Virginia’s power sector.

Sea level rise is already taking a toll in Virginia with “sunny day” flooding regularly crippling low-lying areas of Hampton Roads. If you’ve pledged to address climate change, you need to understand how building gas pipelines will undermine the very efforts to reduce such threats.

Now, if you don’t want to oppose Dominion, you might be inclined to minimize all these issues, or to tell voters the destruction of all we hold dear is just the price we pay for cheap energy. I’m sure you can phrase it better than that.

Before you do, though, you should also spend a few minutes to understand why critics say the ACP will raise energy prices, not lower them. That’s because Dominion’s gas-burning electric generating plants already have long-term contracts to use another company’s pipeline, for less money. Using the ACP instead of cheaper alternatives means raising costs to consumers.

Dominion also plans to build more gas-fired power plants so it can fill the pipeline. Gas plants are built to last 30 years or more, pipelines 50 years. Locking us into gas infrastructure for decades when solar is already cheaper than gas now is a seriously bad bet.

And if you think Dominion is going to shoulder the loss of a bad bet, better think again. That’s what its captive ratepayers are for.

Another name for those people is “voters.”

Virginia utilities and advocates square off over net metered solar

Solar now employs more Virginians than coal, but utility efforts to roll back net metering threaten Virginia businesses that install rooftop solar. Here, staff of Mountain View Solar (in high-visibility clothing) and Secure Futures conduct commissioning tests for Albermarle High School’s solar installation. Photo courtesy of Secure Futures LLC.

Advocates of distributed solar energy in Virginia are watching nervously this summer as electric utilities and the solar industry negotiate the future of net metering, the policy that makes rooftop solar economically viable in a state with no other incentives.

Virginia utilities finally see the value of solar to themselves, which is good news for the solar businesses that build large projects. But the utilities’ enthusiasm does not extend to solar owned by their customers. Dominion Energy Virginia and its fellows see rooftop solar as a threat to their monopoly power that needs to be curtailed, not a contribution to our energy security that they should encourage. But by attacking net metering, they endanger the many small businesses whose bread-and-butter comes from the residential and commercial sector.

The utilities’ own solar plans are fairly modest compared to national trends, but they are practically revolutionary for a state with deep ties to fossil fuels. Dominion Energy Virginia proposes to add 240 MW of solar annually, presumably in addition to projects supplying corporate customers like Amazon. Appalachian Power is looking to add 25 MW of solar in Virginia or West Virginia by the end of 2019. Old Dominion Electric Cooperative (ODEC), which serves most of Virginia’s rural electric cooperatives, announced contracts for two projects totaling 30 MW. (Dominion Energy immediately bought the projects.)

All this activity has helped to fuel a rapid rise in the number of solar jobs in Virginia. (In case you missed it, solar employs more Virginians than coal.) But utility projects represent only part of the potential market in Virginia, especially if residents and businesses are encouraged to invest in solar themselves.

The utilities’ hostility to customers generating their own electricity has led to barriers that hold back the market for distributed solar. These barriers include limits on system sizes, standby charges, program caps and challenges to third-party power purchase agreements (PPAs). (For a full discussion of these barriers, see my 2017 guide to Virginia wind and solar policy.)

Utilities would particularly like to do away with net metering, a program that allows solar owners to feed excess solar power to the grid during the day and then draw power from the grid when the sun isn’t shining, paying only for the net of the power drawn from the grid. Utilities say net metering results in solar owners not paying their fair share of grid upkeep. Solar advocates say everyone benefits when customers invest in solar.

“Value of solar” studies from other states largely support the advocates’ contention that solar owners provide more value to the grid and to their fellow customers than they get in return. Three years ago the Virginia Department of Environmental Quality facilitated the beginnings of a value of solar analysis for Virginia, but the utilities walked away when they didn’t like where it was headed. Without this kind of valuation, utilities and advocates are left talking past each other.

The future of net metering is now a subject for discussion by the Rubin Group, an informal, by-invitation-only committee formed by the utilities and solar industry members in 2016. The project is named for its moderator, Mark Rubin. Although barely a year old and lacking full stakeholder representation, the Rubin Group has achieved almost a quasi-legislative status with the blessing of the chairmen of the House and Senate Commerce and Labor Committees. Last year these committees passed only solar bills that had been negotiated through the Rubin Group (or in one case, that the House chairman himself had introduced), and committee members were discouraged from offering amendments.

But the Group’s lack of transparency and limited input was a mistake, Rubin has since acknowledged. This year the Group expanded to include the Southern Environmental Law Center (SELC) and the Virginia Manufacturer’s Association. In addition, outsiders have been invited to participate in occasional conference calls and meetings.

At the first such meeting in June, Rubin said the Group would work on four other topics besides net metering: implementation of last year’s “community solar” legislation; addressing barriers to large utility-scale projects; meeting the needs of corporate purchasers; and land use issues.

But net metering was the hot-button concern, with most of the attendees urging action to expand opportunities for rooftop solar and remove current limits on net metering. By contrast, utility interests expressed a desire for “alternatives.”

A second stakeholder meeting in July further increased advocates’ concern. Participants report Rubin began the discussion of net metering by saying the Group believed “net metering as it is now operating in Virginia is unsustainable.” Such an assertion prejudges the issue, says Aaron Sutch of VA-SUN, and implies the existence of supporting data that the utilities simply don’t have. “Nearly every every study shows that net metered solar benefits all users of the electric grid by providing power when and where it’s needed most.”

In fact, he pointed out to Rubin in a later email, a 2016 Navigant study commissioned by Dominion “concludes that up to 2,000 MW of distributed solar can be integrated into the [Virginia] grid without major upgrades or system-wide issues,” and with cost savings to ratepayers of $75 per MWh.

Sierra Club volunteer Susan Stillman, who runs the Solarize program for the Town of Vienna, also wrote to the Rubin Group to express her concern that the entire discussion seems to be focused on limiting net metering as a way to discourage distributed solar. “No one ever said what aspect of net metering is not sustainable.  How do you solve a problem that you’ve not defined? Net metered solar in Virginia is minuscule so I’m hard pressed to understand that this is a technical issue and that the grid is being harmed.”

Virginia law caps net metered solar at 1% of a utility’s overall electric utility sales. There is no website to tell the public how much net metered solar currently exists—which in itself is a problem—but industry members say we are nowhere near the 1% limit today.

Stillman says net metering is critical to keeping the program simple enough for the average homeowner to understand. “The calculation that every prospective solar customer makes is ‘when will my system be paid off?’  Solar companies know how to approximate this payoff now to a reasonable level of accuracy, and net metering helps with this calculation.  When you change net metering so that customers don’t get full retail, a whole new level of FUD (fear, uncertainty and doubt) is introduced making prospective solar customers more uncomfortable and less likely to move forward with the purchase.​”

Sutch and Stillman are members of the Virginia Distributed Solar Alliance, a group of solar industry members and advocates who are seeking to expand opportunities for residents and businesses to install solar. Alliance members have made protecting and expanding net metering their top priority this year. Unfortunately, they were not offered a seat at the Rubin Group table.

The Rubin Group is supposed to act only by consensus, and at least two of the members say they are committed to protecting the interests of the distributed solar community. SELC attorney Will Cleveland and Scott Thomasson of the advocacy group Vote Solar, who is also a board member of the solar industry trade group MDV-SEIA, have both said they disagreed with Rubin’s characterization of net metering as unsustainable. Indeed, says Cleveland, the problem with the net metering law is that it is too restrictive.

Utilities like Dominion Energy are used to getting what they want, and no doubt they see the Rubin Group as one more way to achieve their aims. But they’ve been doing very well with it. Last year the Rubin Group helped them expand their ability to build more utility scale solar at lower cost to themselves, for which they gave up nothing in return. This year, the Rubin Group is trying to help them some more through the work of the other subgroups. It seems reasonable that in exchange for all this help, they should return the favor and give small solar companies a chance to expand their businesses, too.

2017 guide to Virginia wind and solar policy

You can tell this picture wasn’t taken in Virginia because it has wind turbines in it. But at least the solar farm will look familiar to many Virginians these days. Photo credit Dennis Schroeder, NREL.

After several years of writing this annual update and often finding little to cheer about, I can finally share some good news. The nationwide boom in utility-scale solar has hit Virginia full force, juiced by low panel prices, corporate and state government demand, favorable tax policy and an abundance of good sites near transmission lines. We are a long way from unleashing our full potential; a lack of incentives, utility-inspired barriers, and a legislature still in thrall to fossil fuel interests continue to hold us back. In spite of this, Virginia is now attracting hundreds of millions of dollars in solar energy investments, and today the solar industry employs more of our residents than the coal industry.

The same cannot be said for wind energy; we are alone among all neighboring states in having no operating wind farms. Distributed generation like rooftop solar also remains a weak spot, even as customer interest continues to grow.

This survey of current policy is intended to help decision-makers, industry, advocates and consumers understand where we are today, who the players are, and where we could be going in the coming year. A few disclaimers: I don’t cover everything, the opinions expressed are purely my own, and as legal advice it is worth exactly what you’re paying for it.

  1. Overview: Virginia still lags, but we’ve now got some mo’

Even last summer it was clear utility-scale solar was on a roll in the commonwealth, leading me to predict Virginia would hit 200 megawatts (MW) by the end of 2016, up from 22 MW at the end of 2015. According to the Solar Energy Industries Association, we beat that number and then some.

Maryland North Carolina W. Virginia Tennessee Virginia
Solar* 637.8 3,015.8 3.4 171.1 238.3
Wind** 191 208 686 29 0
Total 828.8 3,223.8 689.4 200.1 238.3

Installed capacity measured in megawatts (MW) at the end of 2016. One megawatt is equal to 1,000 kilowatts (kW). Note that SEIA does not provide 2016 numbers for W. Virginia; shown are 2015.

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

The big numbers, however, still lie ahead. At the May event where Governor McAuliffe announced his directive to the Department of Environmental Quality (DEQ) to develop a carbon limit for Virginia, he also reported that Virginia has a total of more than 1,800 MW of solar installed or under development.

Several developments are driving these numbers:

  • Once the federal investment tax credit is factored in, the levelized cost of energy from solar is now below that of coal, nuclear, and natural gas.
  • Dominion committed to 400 MW of solar as part of 2015 legislation, and now indicates in its IRP an intent to build 240 MW per year through at least 2032.
  • Governor McAuliffe committed the state to getting 8% of its electricity from solar, a total of 110 MW.
  • Corporations, led by Amazon, are using new approaches to procure renewable energy on favorable terms, including indirect and virtual PPAs; this forces utilities to cooperate or be cut out of the action.
  • Other customers have stepped up pressure on their utilities to provide renewable energy.

You can find the list of projects that have submitted permit applications on the DEQ website. The list currently does not include regulated utility-owned projects, which until this year received permits from the State Corporation Commission (SCC). Under legislation passed in 2017, however, these projects will also be governed by the DEQ permit-by-rule process.

Industry experts caution that not all of these solar projects will get built; we may even be seeing a speculative bubble of sorts, reflecting a scramble to lock up the good sites now and worry about customers later.

You will find only one wind project on the DEQ list: Apex Clean Energy’s 75 MW Rocky Forge wind farm, which received its permit earlier this year but has not yet begun construction.

And in spite of Dominion Virginia Power having won the right to develop an estimated 2,000 MW of wind power offshore of Virginia Beach, there is still no timeline for offshore wind in Virginia. Dominion continues to include its two-turbine, 12 MW pilot project in its 2017 Integrated Resource Plan, with a projected in-service date of 2021. It does not include the larger resource as an option.

  1. Most customers still can’t buy renewable energy from Virginia utilities

Currently, the average Virginia resident can’t pick up the phone and call their utility to buy electricity generated by wind and solar farms (unless they are members of some rural electric cooperatives—see below). Worse, they can’t buy renewable energy elsewhere, either.

Virginia law is not the problem. 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, our two big investor-owned utilities, Dominion Energy Virginia (formerly Dominion Virginia Power) and Appalachian Power Company (APCo), have not done this. Instead, the 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.

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 don’t displace any fossil fuel burning in Virginia. For a fuller discussion of the Dominion Green Power Program, see What’s wrong with Dominion’s Green Power Program.

Since RECs are not energy, Dominion customers are free to buy RECs from other providers, such as Arcadia. If you’re considering this route, read this post first so you understand what you are getting. Personally, I recommend instead making monthly tax-deductible donations to GRID Alternatives to put solar on low-income homes.

Appalachian Power’s “green pricing” program is worse than Dominion’s, consisting only of RECs from an 80 MW hydroelectric dam in West Virginia. In April of 2016 APCo filed a proposal with the SCC for a true renewable energy tariff under of §56-577(A)(6) that would combine wind, solar and hydro. None of the power would come from new projects; partly as a result, the tariff will cost more. That led a hearing examiner to recommend that the SCC reject the tariff as not in the public interest. A ruling by the SCC is expected this summer or fall.

Can you go elsewhere? Since the State Corporation Commission has ruled that REC-based programs do not qualify as selling renewable energy, 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.”

That means you should be able to go elsewhere to buy wind and solar. But Virginia utilities claim that the statute’s words should be read as requiring not only that another licensed supplier provide 100% renewable energy, but that it 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.

In August of 2016, a hearing examiner for the SCC rejected this reading in favor of the plain language of the statute. Unfortunately, the case was terminated without the commissioners themselves ruling on the issue.

In spite of the roadblocks, an independent power seller called Direct Energy announced plans last year to sell a renewable energy product to Virginia residents in Dominion’s territory. (The company described the product as a combination of wind and municipal waste biomass.) This spring the SCC confirmed Direct Energy’s right to enter the Virginia market, but also ruled that Direct Energy will have to stop signing up customers once Dominion has its own approved renewable energy tariff. As of this writing, Direct Energy has not decided whether to proceed.

Within a few weeks of the ruling, Dominion filed plans for several new 100% renewable energy tariffs for large commercial customers, and indicated it expected to offer a residential renewable energy tariff as well. Until we see the details, it is hard to know whether this should be viewed as a genuinely positive step for customers or is merely intended to scare off competitors like Direct Energy. Because Dominion’s tariff is designed to meet the company’s “100% of the time” interpretation of the statute, it will include sources like forest biomass, which counts as renewable under the Virginia code but is highly polluting and doesn’t meet many national standards for sustainability. That makes it questionable whether anyone will want to pay extra for its product. If the SCC confirms its hearing examiner’s report rejecting the similar APCo tariff, Dominion may be forced back to the drawing board. (Note to Dominion CEO Robert Blue: Bob, you have the nation’s largest pumped storage facility. Wind, solar and pumped hydro would combine beautifully. You do not need to foist biomass on customers to meet your notion of 100% renewable.)

A new solar option is in the works. For both APCo and Dominion customers, another option is on the way. Under legislation passed this year under the misleading banner of “community solar,” both utilities will contract for power from solar farms to sell to consumers. Details—including price—still have to be worked out in a rulemaking proceeding at the State Corporation Commission. The new programs explicitly do not count as ones selling “electric energy provided 100 percent from renewable energy,” though ironically, they may be the first programs from Dominion and APCo to do exactly that for residential consumers.

Some coop members do have wind and solar options. Recently I learned that there are good green power programs in place in Virginia, available to members of some rural electric cooperatives. Old Dominion Electric Cooperative (ODEC), which supplies power to member cooperatives, buys the output of three wind farms in Maryland and Pennsylvania, and has contracted for two solar farms in Virginia that are slated to come online this year. Not all coops participate; ODEC has the list of those that do on its website.

  1. Community solar

Dominion loves the name “community solar.” The reality, not so much. The solar tariff discussed in section 2 uses that name but keeps the utility in control and gives customers no ownership interest. Dominion opposed true community solar legislation this year (as in past years) that would have put consumers in the driver’s seat.

This is not the first time Dominion has used the name “community solar” for a program that isn’t. In 2015 Dominion received SCC approval for a program it billed as an offer to sell electricity from solar panels. Unfortunately it turned out the “Dominion Community Solar” program would have involved customers paying extra so Dominion could sell solar energy to other people. Reading the details, it seemed clear it would attract customers only to the extent they didn’t understand it. Fortunately the company still hasn’t launched the program, but I’ve seen no formal withdrawal.

As for true community solar, only one Virginia utility offers it: a member-owned rural electric cooperative in southwestern Virginia called BARC.

  1. The miserable sham that is Virginia’s Renewable Portfolio Standard (RPS)

Many renewable energy advocates focus on an RPS as a vehicle for inducing demand. In Virginia, that’s a non-starter. Virginia has only a voluntary RPS, which means utilities have the option of participating but don’t have to. And unfortunately, 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 SCC also insists that utilities take a least-cost approach to meeting the RPS, which means they use RECs from trash incinerators, wood burning, and old out-of-state hydro projects built prior to World War II. If utilities build wind and solar, they are required to sell the high-value RECs from these projects and buy low-cost junky ones instead. Thus, no matter how much solar Dominion builds, the RPS operates to ensure customers will never see solar as part of their energy mix.

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%.

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 and other 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.

  1. Customer-owned generation 

Given the lack of wind or solar options from utilities, people who want renewable energy generally have to build it themselves. Low panel prices and the federal 30% tax credit make it cost-effective for most customers. The emergence of bulk purchasing coops, sometimes also called “solarize” programs, such as those offered through nonprofits VA-SUN and LEAP, makes the process easy for homeowners and businesses and further reduces costs.

Virginia allows net energy metering at the retail rate, though with limits (see section 6). Large commercial customers should also consider the advantages of solar in reducing high demand charges.

In 2016 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. Arlington County received a federal grant to develop a PACE program that is expected to launch this year and be a model for other jurisdictions. A bill to extend PACE authorization to residential customers did not get out of committee last year.

Virginia offers no cash incentives or tax credits for wind or solar. 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 or to brokers who sell to voluntary purchasers.

  1. Limits on retail net metering

Section 56-594 of the Virginia code allows utility customers with wind and solar projects to net energy meter at the retail rate. 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.

Residential customers can net meter systems up to 20 kW, although standby charges will apply to those between 10 and 20 kW (see section 8). Commercial customers can net meter up to 1,000 kW (1 MW). There is an overall cap of 1% of a utility’s peak demand that can be supplied by net metered systems (as measured at their rated capacity).

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 about 12 cents. This effectively stops most people from installing larger systems than they can use themselves.

In 2015, the definition of “eligible customer-generator” was tightened 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 limitation presents a new barrier to current customers who want to expand their solar arrays because their business is expanding or they plan to buy an electric car. Why should they have to wait twelve months? 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 for avoided cost, why would you stop them from performing this service to society?

  1. Progress on meter aggregation derailed by agricultural solar bill

Under a bill 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 (e.g., the farmhouse and other outbuildings). This is referred to as “agricultural net metering.” Unfortunately, there have been complaints from installers about a lack of cooperation from utilities in actually using this provision.

Advocates had hoped that agricultural net metering would be a first step towards broader meter aggregation options, but 2017 legislation instead took agricultural customers in a new direction. Beginning this year, farmers can elect to devote up to a quarter of their acreage to solar panels, up to 1.5 MW or 150% of their own electricity demand. The electricity must be sold to the utility at its avoided cost, while the farmer must buy all its electricity from the utility at retail. A farmer who chooses to do this cannot also use agricultural net metering. Agricultural net metering will be terminated entirely in 2019 in territory served by electric cooperatives, though existing customers are grandfathered.

The change would seem to give farmers no rights they did not already have under federal law, but industry sources I trust say some farmers will indeed be able to make money this way. However, taking away the agricultural net metering option is a backward step for farmers who want to use the solar they produce and aggregate meters.

  1. Standby charges on larger home systems

The current system capacity limit for net-metered residential solar installations is 20 kW. 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. Both Dominion and APCo have approval from the SCC to impose standby charges so high that solar installers say the larger systems often don’t make economic sense.

Utilities argue that customers with solar panels don’t pay their fair share of the upkeep of the grid, shifting costs to those who don’t own solar. A range of “value of solar” studies in other states have generally found the reverse, concluding that distributed solar provides a net benefit to the grid and to society at large. A stakeholder group in Virginia completed the initial phase of a value of solar study in 2014 but got no further after the utilities pulled out of the process.

Standby charges and other net metering issues will be a major focus of attention this year as a topic in the “Rubin Group” discussion. See section 19.

  1. Homeowner associations cannot ban solar

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.

  1. Third-party ownership

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. . . “ (emphasis added).

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.

(Note that PPAs are sometimes referred to as “leases,” but they are distinct legally. Leasing solar equipment is like renting a generator; both provide power but don’t involve the sale of the electricity itself. I have never heard of a utility objecting to a true lease.)

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 was a lousy program and because she, too, read the Code to allow PPAs currently, making a utility alternative unnecessary. Before the commission itself could confirm the ruling, APCo withdrew its application.

In 2017, the legislature passed a bill to allow private colleges and universities—but no one else—in APCo territory to use PPAs to install a maximum of 7 MW of renewable energy.

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. This allows the company to install larger projects in more parts of Virginia (including most recently a 1.3 MW solar array to be installed at Carilion New River Valley Medical Center in Southwest Virginia, which I have to mention here because the project combines solar and sheep farming and therefore will make for cute photos). Currently Secure Futures is the only solar provider offering this option, which it calls a Customer Self-Generation Agreement.

  1. Tax exemption for third-party owned solar

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.

  1. Dominion-owned distributed solar

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 demonstration program was intended to help Dominion learn about grid integration. 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 “Solar Partnership Program” resulted in several commercial-scale projects on university campuses and corporate buildings, but the program did not offer any economic advantages, and it seems to have fizzled out. The new Dominion Energy web page still mentions it, but currently the link does not lead to more information.

  1. Dominion Solar Purchase Program

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 is 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 a hefty markup. It is not clear whether the program continues to be available; the links on the new Dominion Energy website don’t lead anywhere helpful.

I ripped this program from the perspective of the Green Power Program buyers, but many installers also feel it is a bad deal for customers, given the costs involved and the likelihood that the payments represent taxable income. Finally, selling the electricity may make new system owners ineligible for the 30% federal tax credit on the purchase of the system.

  1. Utility renewable energy tariffs for large customers

In May of this year, Dominion applied to the SCC for permission to offer six new voluntary schedules for customers with a peak demand of at least 1,000 kW (1 MW). The tariff would use a mix of sources that count as renewable under the Virginia Code but still pollute, including biomass—making it only sort-of green.

For large customers that want wind and solar, the options are more limited. In 2013, Dominion Power introduced a Renewable Generation Tariff to allow customers to buy renewable power from providers, with the utility acting as a go-between and collecting a monthly administrative fee. The program was poorly designed and got no takers.

In 2015, Amazon Web Services made Dominion’s RG 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 (the merchant 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 now offers to customers with a peak demand of 5 MW or more, with a program cap of 200 MW.

Since that first deal, Dominion and Amazon have followed up with contracts for an additional 180 MW of solar in five Virginia counties.

Dominion used a different model for a deal 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 also entered into a contract to sell the output of a 17 MW solar facility to the University of Virginia and the Darden School of Business.

Dominion has a strong incentive to make deals with large institutions 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.

Some observers caution that the process is still not easy. One of the tasks the Rubin Group says it plans to take on this year is considering further changes to help large customers.

  1. Dominion continues to add utility-scale solar for its own portfolio

Even 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, 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 got off to a rocky start when the SCC rejected the company’s plan to charge ratepayers for its first project, a 20 MW solar farm in Remington, Virginia 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. Further projects fared better, however, and Dominion is now so enthusiastic about solar that its latest Integrated Resource Plan (IRP) calls for it to engage in a continuous build-out at a rate of 240 MW per year, all for the benefit of its regular ratepayers.

Although Dominion will be able to charge ratepayers for these projects, the SCC will probably insist 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. If this happens, the result will be that Dominion still won’t use solar to meet the Virginia RPS, and ordinary customers will still not have solar as part of the electricity they pay for. That’s the weird world of RECs for you.

  1. Governor McAuliffe initiates program to 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.) A 17 MW solar farm supplying the University of Virginia will also count towards the 8%, according to Deputy Secretary of Commerce and Trade Hayes Framme.

  1. Still waiting for wind

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. The current web page omits mention of these projects.

On the other hand, Appalachian Power’s most recent 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 has obtained a permit to develop a 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, once planned for this year, is now slated for 2018.

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 began generating electricity in the waters off Rhode Island last year. Dominion won the federal auction for the right to develop about 2,000 MW of wind power off Virginia Beach in 2013, and the company has completed a Site Assessment Plan (SAP) that is awaiting approval.

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 little interest in seeing the project through. Its 2017 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 two 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 last spring it could not commit to construction even by 2020, upon which DOE pulled funding. Dominion executives have not declared the project dead, however, and while there has been no public discussion of reviving it, the 2017 IRP suggests an in-service date of 2021.

[Update: on July 10, 2017, Dominion announced it had signed a memorandum of understanding with Denmark-based DONG Energy, one of the largest offshore wind developers in Europe, to complete the two pilot turbines. According to a Dominion press release, the MOU also gives DONG “the exclusive rights to discuss a strategic partnership with Dominion Energy about developing the commercial site based on successful deployment of the initial test turbines.”]

  1. The EPA Clean Power Plan is (probably) dead; long live the McAuliffe clean energy plan!

The Trump administration’s pullback on the Paris accord and the Clean Power Plan are depressing evidence that the Koch brothers have more influence on government than the American people do. Yet the practical effect in Virginia is small. The Clean Power Plan’s targets for Virginia were modest to a fault, and the state could have written an implementation plan that complied with the federal law while still allowing construction of an unlimited number of new gas-burning plants, sending total carbon emissions soaring.

Governor McAuliffe’s recent Executive Directive 11, on the other hand, ties emissions reductions from Virginia power plants to those in other states that have committed to reducing carbon emissions, leaving somewhat less room for mischief in implementation. There are still plenty of pitfalls ahead, and some Republican leaders have vowed to prevent it from ever taking effect. But any constraints on greenhouse gas emissions would serve to increase the value of emissions-free sources like wind and solar. The DEQ web page will show public participation opportunities.

  1. Solar initiatives underway ahead of the 2018 Session

The legislative initiatives that passed in 2017 dealt primarily with utility-scale solar. Since then, the solar industry has announced plans to focus more on removing barriers to distributed generation, a decided challenge given the utilities’ determination to curtail net metering.

The utilities and the solar industry have reconvened solar policy discussions via the Rubin Group, named for its moderator, Mark Rubin. Steering committee members this year include the electric cooperatives, Dominion, APCo, the solar industry trade group MDV-SEIA, the farm advocate Powered by Facts, the environmental group Southern Environmental Law Center, and the Virginia Manufacturer’s Association. The Rubin Group held a meeting on June 19 to get input from other stakeholders, and a follow-up email announced plans for the following subgroups:

  • Large Customer  (Convener: Katharine Bond, Dominion Energy, with Advanced Energy Economy, Ceres, and World Wildlife Fund as Key Participants)
  • Large Developer/Utility-Scale Solar (Convener: Francis Hodsoll, SolUnesco & MDV-SEIA Board Member)
  • Net Metering (Co-Conveners: Sam Brumberg, Virginia’s Electric Cooperatives & Scott Thomasson, Vote Solar & MDV-SEIA Board Member)
  • Land Use (Convener: Karen Schaufeld, Powered by Facts)
  • Community Solar Implementation for Dominion Energy (Conveners: Katharine Bond & Nate Frost, Dominion Energy)

The Rubin Group will accept comments at RubinGroup2017@gmail.com. [Update: Although this was the email address given out at the public meeting, we have learned it goes to Sam Brumberg, attorney for the electric cooperatives, who says he checks it only a few times per month. He recommends contacting Mark Rubin directly at rubin.mark3@gmail.com.]

A separate initiative is the Virginia Distributed Solar Alliance, which includes solar companies, environmental groups, consumers and solar advocates, but not utilities. As its name suggests, it focuses on removing barriers to smaller-scale, customer-sited projects, defending net metering and educating the public about the added benefits distributed solar bring to the grid and the community. The VA-DSA recently launched its website and is welcoming members.

 

 

Shareholder vote shows growing unease over Dominion’s role in climate change

Dominion 2017 Ped Bridge

Black curtains are visible inside the pedestrian bridge over Marshall Street leading to the Richmond Convention Center (background on the left). They were installed to block shareholders’ view of protesters lining the sidewalk outside Dominion Resources’ 2017 shareholder meeting last week. Photo credit: Chesapeake Climate Action Network.

A stunning development occurred during Dominion Resources’ annual shareholder meeting in Richmond last Wednesday. But as shareholders, board members, and company officials left the meeting, no one yet knew about it. What’s more, the Richmond Times-Dispatch’s coverage also missed it, focusing instead on the company’s name change to Dominion Energy. (To its credit, the Norfolk Virginian-Pilot did break the story two days later.) Dominion’s hometown newspaper didn’t just bury the lede; it overlooked it altogether. And therein lies an interesting tale.

What was so stunning? Simply this—some 48 percent of Dominion shares that were voted supported the resolution of a major shareholder, the New York State Common Retirement fund, calling on the company’s board of directors to report on how the company will deal in coming years with the fact that the world needs to reduce greenhouse-gas emissions to an extent consistent with limiting global warming to 2 degrees Celsius. The resolution’s full text is available on p. 60 of Dominion’s 2017 proxy statement.

Understanding why the vote on this resolution is stunning requires some context.

Shareholders have been submitting resolutions for at least eight years urging Dominion’s board to face up to global warming and the company’s role as a major carbon polluter contributing to that warming. In the past, some resolutions have gotten favorable votes as high as 24 percent, while others have been in single digits. Many large investors routinely follow the company board’s advice, and Dominion’s board always recommends a “no” vote on any environment- or climate-related resolution. Getting favorable votes is an uphill battle when a company’s powerful board is working against you.

That’s why the 48 percent vote for the retirement fund’s resolution this year is so huge. The total value of the nearly 198 million shares voting for the resolution was $15.5 billion, based on Dominion’s May 9 closing stock price.

“The vote by Dominion’s shareholders speaks volumes,” said New York State comptroller Thomas P. DiNapoli, trustee of the state’s retirement fund. “This is a wake-up call for the company to be responsive and explain how the Paris Agreement’s worldwide effort to rein in global warming will impact its business. Shareholders need to know what steps Dominion is prepared to take to address climate risk.”

But there’s still more to the tale. The stunning vote spike didn’t become known until hours after the meeting, and even then only to those who knew where to find the results and had a calculator handy to compute the vote percentages. That delay was no accident, but the result of Dominion’s efforts to keep the news from coming out during the meeting.

Until a few years ago, Dominion announced vote totals on shareholder resolutions during each meeting. That’s easy enough to do, since virtually all votes are cast in advance, and literally just a handful are cast on paper ballots collected during the meeting. But as favorable vote percentages on shareholder resolutions crept upwards over the years, Dominion discontinued the practice of announcing vote counts during the meeting. Instead it now reports only whether the resolutions got more than 50 percent of the vote. So this year it was simply announced during the meeting that the four shareholder resolutions on the ballot failed to get a majority of votes. End of story; nothing more to see here, folks.

By law, however, Dominion must report the actual shareholder vote totals to the Securities and Exchange Commission for public disclosure. It did so in the afternoon following the meeting, and put its SEC filing on the company’s website. Those who thought to look for them and knew where to look could find the vote results. Then, with a calculator or spreadsheet they could compute the vote percentages.

Dominion’s quiet move to prevent shareholders (and reporters) attending the meeting from learning the vote totals until later in the day is part of a pattern of subtle and not-so-subtle company efforts to tightly control messaging at its shareholder meetings. The control efforts have evolved each year as more shareholders have questioned the company’s environmental and climate record during meetings, and as demonstrators have begun to appear regularly outside to protest.

The company’s control effort reached somewhat absurd levels this year, as shareholders had to show their drivers’ licenses and admission tickets at four separate checkpoints before gaining entry to the meeting. As shareholders crossed an elevated pedestrian bridge across Marshall Street from the parking garage to the Richmond Convention Center, they found black curtains temporarily set up on floor stands to line the glass walls of the bridge, serving no purpose but to block any views of demonstrators on the street below. Then, when shareholders descended an escalator to the hallway outside the first-floor meeting room, they also found a long line of temporary stands of more black curtains. They were about eight feet high—just enough to block views through the wall of windows facing Marshall Street, where protesters had gathered on the sidewalk. This served to cast a bit of a funereal pall over the hallway, as shareholders drank coffee and ate Virginia ham biscuits before the meeting.

But enough about the voting process and window curtains. Understanding the true significance of the big vote spike for the retirement fund’s climate resolution requires a brief look at how Dominion addresses, and fails to address, the climate crisis. Dominion occasionally talks up its reductions in carbon intensity in electricity generation over the years. That’s the amount of carbon dioxide emitted per unit of electricity. And the company touts new solar projects, which are growing, but not nearly fast enough to catch up with Virginia’s neighboring states or to reduce carbon emissions on the needed timetable.

But Dominion has plans to increase its total carbon-dioxide emissions over the next fifteen years. And what the company never, ever does, is link its plans and its planned future greenhouse-gas emissions to what climate science tells us is needed to keep global warming to no more than 2 degrees Celsius. Indeed, as I wrote last year, Dominion executives studiously avoid even mentioning climate change in public, even when the topic is right in front of them, begging for attention. George Mason University climate-communication expert Edward Maibach and coauthors reported last year that silence on climate change can lead to more silence, in what they call a “climate spiral of silence.”

Meanwhile, while publicly silent about climate, Dominion still belongs to and supports the American Legislative Exchange Council (ALEC), which has a long track record of misinforming state legislators about climate science and working to block meaningful action to reduce greenhouse-gas emissions.

That’s why the 48 percent vote for the retirement fund’s resolution is so huge. Shareholders owning nearly half of the Dominion shares that were voted last week told the company’s board of directors and management that they need to start publicly talking and seriously thinking about climate change, and to explain how they will operate a business that is consistent with the need to keep global warming under 2 degrees.

Perhaps Dominion’s board believes, as at least one Dominion executive does, that climate change is an overblown issue that is pushed by “warmists,” that there’s been no global warming for fifteen years, and that global warming (which by the way isn’t happening) may not be human-caused. Such a belief would allow the board to ignore this shareholder vote, and assume that in future years the resolution will never get a majority vote because climate change concerns will go away as more people see climate change as a hoax. But maybe Dominion’s board, or at least a majority of its members, know better and will listen to the wake-up call delivered to them last week.

As I left the meeting I passed again by the black curtains in the convention hall windows and on the pedestrian bridge over Marshall Street. Just as Dominion used curtains to block views of protesters, its executives seemingly wear blinders to avoid looking at (and talking about) climate change. It’s past time for the blinders to come off and for Dominion’s management and board to look around at the wider world out there.

On May 22, Seth Heald will receive a master of science degree in energy policy and climate from Johns Hopkins University. His final paper in the program was about climate silence and moral disengagement. He is a Dominion Energy shareholder, and chair of the Sierra Club’s Virginia Chapter.

Dominion Power promises huge solar investments and a lower carbon footprint—or does it?

Dominion Virginia Power says energy from solar farms is now a low-cost option. Photo credit Kanadaurlauber.

Dominion Virginia Power released its updated Integrated Resource Plan (IRP) this week with a press release that promised thousands of megawatts (MW) of new solar power and a dramatically lower carbon footprint. In a remarkable turnabout, the Executive Summary declares, “The Company must now prepare for a future in which solar PV generation can become a major contributor to the Company’s overall energy mix.”

Alas, a closer look reveals Dominion will actually increase its carbon emissions over the period studied. Meanwhile, the solar would be built at a rate of only 240 MW per year over the 15-year period covered by the IRP, about the same amount being installed in Virginia this year. (Over 25 years, Dominion says its solar could reach 5,200 MW, which means the pace of installation would actually drop in the out years.) That should elicit yawns, not excitement.

The solar numbers pale in comparison to the more than 4,600 MW of new natural gas combined-cycle plants Dominion has been building just in this decade. (Remember that solar farms generate electricity at about 20-25% of “nameplate” capacity on average, while combined-cycle gas plants nationally average 50-60%, and can achieve 70% or higher.*) And even come 2032, the new solar will make up only a tiny fraction of a generation portfolio that consists almost entirely of coal, gas and nuclear.

I’ll be interested to see the numbers analyzed, but my guess is that all the renewable energy Dominion proposes to build over the next 15 years represents no more than 5-10% of its total electric generation. That’s too little, too late, in a state that can do so much better.

So the more things change, the more Dominion stays the same. Behind the hype being offered to the press stands a utility that is still committed to fossil fuels and nuclear power.

Virginia utilities file IRPs with the State Corporation Commission (SCC) every year. The plans are supposed to reflect the utilities’ best sense of how they will meet consumers’ needs for electricity while complying with state and federal laws and policies. This involves some guesswork about the direction of future regulations, including regulations of CO2 emissions.

In spite of President Trump’s determination to roll back climate protections while he is in office, Dominion’s IRP assumes an eventual price on carbon. Most utilities nationwide are doing the same thing. But given the uncertainties, Dominion has chosen (as it did last year) to model different scenarios instead of committing to a single plan.

Even the low-cost plan that wouldn’t comply with the EPA Clean Power Plan contains just as much solar as the other plans, reflecting the company’s assessment (on page 3) that solar is now “cost-competitive with other more traditional forms of generation, such as combined-cycle natural gas.”

Yet the carbon reductions Dominion promises in its press release appear to be something of a sleight-of-hand. For one thing, Dominion has chosen to compare its CO2 output in 2032 to its output in 2007, not 2017. CO2 emissions were markedly higher in 2007 than now, with the shale gas boom and the rise of renewables leading to massive coal retirements in the interim.

Moreover, a careful reading of the press release reveals the reductions Dominion promises are per-capita, not overall. A chart on page 115 of Dominion’s IRP shows every one of the scenarios Dominion studied will actually increase the company’s total CO2 emissions between now and 2042.

That reality exasperates climate activists. Glen Besa, former Director of the Virginia Chapter of the Sierra Club, comments, “The only impression you could have reading Dominion’s release was that it was making dramatic reductions in carbon pollution, which obviously is not the case.”

CO2 emissions would not increase if Dominion were simply shutting down coal and building more solar. But all of the alternative scenarios Dominion models for its IRP contain more gas plants: at least another 1,374 MW of gas combustion turbines in all plans, and 1,591 MW of combined cycle gas in some scenarios. Combustion turbines are more flexible than combined-cycle plants and so are better for meeting spikes in demand and integrating renewable energy like solar, but while they run less often, they are typically higher-polluting. Many utilities are using demand response or installing battery storage instead; Dominion appears to prefer gas.

All this gas means higher CO2 output. Not incidentally, burning more gas also means more business for Dominion’s parent corporation, Dominion Resources (soon to be known as Dominion Energy), which is heavily invested in gas transmission. And crucially, Dominion Energy needs more gas power plants to justify building the Atlantic Coast Pipeline. So building more gas plants serves the interests of Dominion’s affiliates, not its customers.

The problem with building new gas plants is that it lowers carbon only so far compared to coal, and then you’re stuck at that level for the life of the gas plants, unless you’re willing to abandon them early. That’s why any utility that’s serious about protecting ratepayers from stranded costs has to invest in wind, solar, energy efficiency and storage, not natural gas.

Speaking of wind, the IRP includes the 12 MW pilot project known as VOWTAP in all of the plans, even though Dominion lost millions of dollars in federal funding when it would not commit to building the two test turbines by 2020, three years past the original deadline. But none of the scenarios studied include any land-based wind, and none include a build-out of the federal offshore wind energy area Dominion bought the rights to, which could support at least 2,000 MW of offshore wind power. This is a strange omission given that Dominion continues to include a scenario in which it would build the world’s most expensive nuclear reactor, known as North Anna 3.

Polls consistently show overwhelming public support for renewable energy. Yet right now, ordinary Virginia ratepayers have no access to renewable energy unless they put solar on their own rooftop. Corporations like Amazon Web Services and Microsoft account for the bulk of the solar energy being installed in Virginia, with most of the remaining going to the military, state government, universities, and schools.

So 3,200 MW over 15 years won’t even begin to satisfy consumer demand. North Carolina installed almost 1,000 MW last year; I’d like to see Dominion set that as an annual target, bringing it up to the 15,000 MW over 15 years it modeled for last year’s IRP (before hiding the encouraging results from pubic view). Round out the solar with other cost-effective clean energy options, and we will see the kind of carbon reductions that don’t have to be fudged in a press release.


*On page 88 of the IRP, Dominion provides it own capacity factor forecasts: solar 25%, combined cycle gas 70%, gas combustion turbines 10%, nuclear 96%, onshore wind 42%, offshore wind 42%. The chart does not include a number for coal.

Arlington Creates Legal Authority for Solar-on-Schools Power Purchase Agreements; Plans October RFP

By Will Driscoll

Clearing a legal hurdle that may affect other Virginia school systems, Arlington Public Schools has created a new type of purchasing authority so it may enter into power purchase agreements (PPAs) for solar power.

Arlington’s School Board created that authority by amending its purchasing resolution at its April 20, 2017 meeting, by unanimous vote.  The school system staff plans to issue a request for proposals (RFP) for solar power in October, and complete its first PPA project by September 2018, according to a draft timetable.

 
The Arlington School Board voted unanimously to create the authority to enter into solar power purchasing agreements, on April 20, 2017.  From left: Tannia Talento, Barbara Kanninen, Nancy Van Doren, James Lander, and Reid Goldstein.  (Photo credit: author)

Arlington officials concluded that the previous version of its purchasing resolution, which satisfied the requirements of the Virginia Public Procurement Act, did not permit procuring construction or capital projects through “alternate methods” such as power purchase agreements (PPAs).

Arlington Public Schools (APS) officials determined that such alternate methods of procurement must meet the requirements of Virginia’s Public-Private Educational Facilities and Infrastructure Act of 2002 (PPEA).

Specifically, according to the approved amendment, “Section 56-575.16 of the PPEA requires that APS may not consider any Unsolicited PPEA Proposal nor solicit PPEA Bids or Proposals for a Qualifying Project until APS has adopted and made publicly available guidelines that are sufficient to enable APS to comply with the PPEA.  These Guidelines are adopted by the [School] Board for the purpose of satisfying that requirement.”

APS purchasing office staff and legal counsel prepared the proposed amendment, modeling it on procedures outlined in the PPEA.  The new provisions, now incorporated in the APS Purchasing Resolution, call for competitive bidding on any PPA project, and require School Board approval before any PPA agreement is signed.

“This is a really big deal for us,” said school board member Barbara Kanninen.  “We are opening up the opportunity to have solar power for Arlington Public Schools.  That’s really forward thinking, it’s smart energy use and I’m fully supportive of this.”

School board member James Lander noted the opportunity “to walk the walk that we talk when we talk about being a progressive environment, a forward-thinking community.” He added that solar on schools “will allow instructional opportunities for our students.”

In public comments prior to the vote, Tim Whitehouse, executive director of Chesapeake Physicians for Social Responsibility, said that the group’s 150 members in Arlington “strongly support the effort of the Arlington School Board to enter into power purchase agreements for solar.”  He added, “We’ve seen in schools where this happens, children get interested in renewable energy and the school systems develop programs that help educate the kids.”  Will Driscoll (author of this article) of Arlington 350 noted that prices for installed commercial solar declined 20 percent in 2016, creating an opportunity for the school district to save money with solar.  Noting that the school board must approve any PPA agreement before it may be signed, and could reject any agreement they find unsatisfactory, he said “we have nothing to lose, and much to gain.”

The new provisions provide an opportunity for solar contractors to submit an unsolicited proposal to APS, along with a proposal review fee of $2,500.  Any such proposal may prompt the school district to undertake a solar project, in which case the school district would solicit competing bids, in accordance with PPEA guidelines.

The provisions call for APS to hire “qualified professionals” from outside the APS staff to review all solicited proposals.  These professionals may include an architect, professional engineer, or certified public accountant.  APS will also hold a public hearing prior to entering into any PPA agreement.

To date, Arlington has installed a 497 kilowatt solar system on Discovery Elementary School and a 90 kilowatt system on Wakefield High School, both through outright purchase during the construction phase for each school.