Virginia is poised to see hundreds of megawatts of new solar built in 2016, an enormous acceleration from today’s 20-or-so. Some of this is the result of recent utility commitments, but the rest represents demand from the private market. And there’s a catch: many of these projects could be tripped up or squelched altogether by unnecessary policy barriers.
The list of projects shows just how broad the appeal of solar has become, and how all parts of the Commonwealth will benefit. On the utility side, Dominion Virginia Power’s solar plans include the 20 MW Remington project, another 56 MW from three projects it plans to buy from developers, and 47 MW worth of power purchase agreements with third-party developers.* Old Dominion Electric Cooperative is building two projects totaling 30 MW to serve its member cooperatives, and Appalachian Power has put out a request for proposals for 10 MW of solar.
Projects not initiated by utilities include Amazon’s 80 MW solar farm in Accomack County, which has now been purchased by Dominion’s parent company, Dominion Resources, along with with the contract for the sale of the power. (Dominion Resources will own the project through its “merchant” arm, so it will not come under the banner of Dominion Virginia Power.)
More recently, the Council of Independent Colleges of Virginia (CICV) issued a request for proposals for up to 38 MW of solar spread among its fourteen members statewide.
Beyond these projects, grid operator PJM Interconnection lists hundreds of MW of Virginia solar in its “queue”—projects mostly still on the drawing board, but reflecting the desire of developers to build and sell solar in Virginia.
The new-found popularity of Virginia solar is not limited to multi-megawatt projects like these. Residential solar is also growing rapidly, in part due to the discount “solarize” programs popping up all across the state. In addition, projects on low-income housing and on schools in Albermarle, Lexington, Arlington and elsewhere have turned civic leaders into proponents.
While customers like the social and environmental benefits of solar, virtue isn’t bankable; the real driving force here is economics. The price of solar panels has declined so much that Dominion Power touted savings on electric bills as the reason residents should support its plans for a Louisa County solar farm.
Yet what’s holding back the market is a list of policies in place because Virginia utilities opposed the growth of solar for so long. At first utilities said they wanted to protect the grid from the unknown effects of intermittent generation. Now, having gotten into the act themselves, they are more concerned with protecting their monopolies from the known effects of competition. The result is years of projects going to other states, and a very damaging level of market uncertainty today.
For example, some of the CICV members won’t be able to proceed unless the State Corporation Commission rejects the utilities’ contention that third party power purchase agreements (PPAs) violate Virginia law outside the narrow confines of a pilot project Dominion negotiated in 2013, or the General Assembly acts to bring clarity to the law. And all of the colleges are constrained by legal limits on the size of the projects they can install.
In addition, Virginia limits the size of net-metered renewable energy projects to 1 megawatt (up from 500 kilowatts last year, but still below the 2 MW limit that the industry sought), and places an overall cap on these projects of 1% of a utility’s overall sales. Residential projects are limited to 20 kilowatts, with systems sized between 10 and 20 kW subject to punitive standby charges. Commercial and residential projects are limited to just the size required to meet a customer’s demand based on the previous year’s electricity usage, unfairly constraining customers who plan to expand or buy electric vehicles.
With so much interest in the Virginia solar market, these barriers only hurt the state in its efforts to attract new businesses and development. Even two years ago, more than 60% of Fortune 100 companies had adopted renewable energy procurement and greenhouse gas reduction goals. Household names like Walmart, Johnson & Johnson, Proctor & Gamble and Goldman Sachs have pledged to source 100% of their electricity from renewable energy. More companies are expected to join them, creating opportunities in states that want to accommodate them.
Yet the only reason Amazon could proceed with its Virginia project was because the developer arranged to sell the power into the grid in Maryland, beyond Dominion’s reach. The fact that Dominion’s parent corporation then bought the project and the PPA for its own investment portfolio underscores the hypocrisy of our utilities in opposing other companies’ right to enter PPAs.
Writing last week, energy consultant and developer Francis Hodsoll argues that Dominion Virginia Power actually needs a thriving private market to help it establish the market price of solar, which it can use to justify its own projects to regulators.
Utility-owned solar and private investments are not an either/or proposition. Virginia is at the bare beginning of the clean energy transition, and there are plenty of opportunities for all—if our leaders will take down the walls.
*The State Corporation Commission’s rejection of Dominion’s plan to build and own the Remington plant means a cloud still hangs over plans for that project as well as the three projects making up the 56 MW package. But apparently the clever legal minds at Dominion have a plan. The gist of it is that they will use pricing from the 47 MW of PPA solar to demonstrate the company isn’t overspending, which will meet the requirement that the company consider market alternatives. Now all that remains is to get the blessing of the IRS to allow them to use the federal tax credits as effectively as a third-party developer could.
I seem to be the only one to regard that last detail as a hitch. Other than that, though, I’m impressed. Dominion ratepayers can be proud that their money pays the salaries of people so skilled in manipulating energy laws and tax codes. Just imagine what could be achieved if all that talent were put to work improving Dominion’s abysmal record on energy efficiency and renewable energy.