Your 2016 guide to Virginia wind and solar policy

September 14, 2016 by Ivy Main

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

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

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

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

The further we go, the behinder we get

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Community solar? Not hardly

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Limits to net metering hamper growth

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

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

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

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

Aggregated net metering allowed for farms only

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dominion “Solar Partnership” Program encounters limited success

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

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

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

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

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

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

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

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

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

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

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

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

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

Dominion moves into utility-scale solar

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

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

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

Governor McAuliffe promises the state will purchase 110 MW of solar

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

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

Will a Solar Development Authority help?

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

Any wind energy yet? Nope, still waiting

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

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

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

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

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

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

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

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

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

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

Surprise endings to a week of bad news on energy and climate bills

February 6, 2015 by Ivy Main

The fourth annual Clean Energy Lobby Day on February 3d brought representatives from businesses across the state to Richmond. Photo courtesy of MDV-SEIA.

More than a hundred representatives of energy efficiency and renewable energy businesses descended on Richmond Tuesday for Clean Energy Lobby Day. After meetings with legislators, many of them stayed to attend a critical subcommittee meeting where most of this year’s clean energy bills came up for votes. And they came away with one overpowering impression: the only bills that can make it out of committee are the ones supported by the state’s utilities, especially Dominion Power.

But that wasn’t quite the end of the story. Because by the end of the week, they also found that the groundwork they had laid with their lobbing, and their tenaciousness before the subcommittee, created an opening they would not otherwise have had.

First, the bad news, and plenty of it

Things started bleakly. The House Commerce and Labor Subcommittee on Energy turned back multiple proposals that would have benefited Virginia’s small renewable energy and energy efficiency businesses, as well as their customers. Going down to defeat were bills to improve the renewable portfolio standard (HB 1913), create an energy efficiency resource standard (HB 1730), require a more rigorous study before utilities can impose standby charges (HB 1911), make third-party PPAs legal across the state (HB 1925), and enable an innovative vehicle-to-grid (V2G) project (HB 2073).

Left in limbo for the day was Delegate Minchew’s community solar bill, HB 1636. Minchew wasn’t ready to give up on it, but he had not found a way to get the utilities to back off their opposition. It went without saying that, without Dominion’s buy-in, the subcommittee members wanted nothing to do with it. Out of respect for a fellow Republican, however, they were willing to give him a couple of days’ grace. (On Thursday they killed the bill off.)

One small success was the raising of the cap for individual commercial renewable energy projects from the current 500 kilowatts to 1 megawatt (MW) (HB 1950). Bills to increase it to 2 MW were discarded. The bill was also passed out of the full committee on Thursday.

Also reported out was HB 2267, creating the Virginia Solar Development Authority. It passed in the full committee on Thursday but was then referred to the Committee on Appropriations.

With a few exceptions, the good bills lost on party-line voice votes following testimony from utilities in opposition to the measures. Republican committee members repeatedly expressed their concern about the potential impact on other ratepayers of bills that would make it easier for utility customers to generate their own power, or that would require utilities to buy a smidgeon more renewable energy.

Indeed, anyone who thinks Republicans don’t care about poor people should have been in that room. The outpouring of concern for struggling families was tremendously affecting. These brave souls made it abundantly clear that nothing that could be construed as a subsidy would sneak by on their watch.

Those of us who had seen some of the same delegates vote just last week to continue giving tens of millions of dollars annually in subsidies to coal companies, could not help noting the inconsistency.

Then a funny thing happened on the way to rubber-stamping Dominion’s solar bill

The anti-subsidy rhetoric was further undercut when, a few minutes later, the subcommittee unanimously approved Delegate Yancey’s bill (HB 2237) declaring it in the public interest for the state’s largest utility to install up to 500 MW of solar and offshore wind projects. Chairman Terry Kilgore did ask Dominion Power’s lobbyist if it would raise rates, but he was easily satisfied with the assurance that it would not—even though solar was “marginally more expensive.”

This was all the committee wanted to hear, and a motion had already been made to report the bill when the members were suddenly treated to an earful from the solar industry—not in support of the bill, but in opposition. Francis Hodsoll of Virginia Advances Energy Industries and Jon Hillis of MDV-SIEA, the solar industry trade association, praised the goal but urged that the bill be amended to open up competition for building the solar projects. Utilities might prefer to build the projects themselves to earn their guaranteed return on investment, said Hodsoll, but ratepayers would benefit from lower costs and in-state jobs if independent companies were eligible to bid.

Tony Smith of Secure Futures, LLC, further explained that federal tax incentives strongly favor independent companies developing projects instead of the utilities doing it themselves. He said an independent firm that develops a 20 MW project can sell solar for 5 cents per kilowatt-hour, a far better price than a utility can achieve building the same project itself.

Andy Bidea of Sigora Solar put the case most simply. “This is America. Let’s give capitalism a chance, right?”

Catchy idea. The committee proceeded to report the bill without changes, but Kilgore encouraged the patron to work with the solar industry on possible amendments prior to the full committee meeting on Thursday.

The industry’s stand had an effect. When the bill was taken up on Thursday, it included an amendment allowing utilities to buy power from a third-party developer before purchasing the project itself. This should be significant because the SCC would presumably insist on the lowest-cost approach. In an email, Francis Hodsoll told me the industry now supports the bill, which passed the full committee.

With Dominion’s recent announcements of its plans to move forward with as much as 400 MW of large-scale solar projects in Virginia, this is a hopeful sign for utility solar in the state. Only one project has actually been announced, a 20 MW project in Remington, Virginia. It should also make it easier for Dominion to move forward on offshore wind, a major plus.

Admittedly, the struggle for distributed solar continues. The happy ending on the Yancey bill means little to members of the industry struggling to make a living doing residential and small commercial projects. They had pinned a lot of hope on the grant program that passed with such fanfare a year ago, only to sink like a stone in a House subcommittee this session.

On the other hand, those who take the long view believe that once Virginians get familiar with the benefits of solar, it will become an unstoppable force. The indicators point to success in coming years whether utilities like it or not.

Climate? What climate?

In addition to the clean energy bills, the subcommittee also took action on two climate bills Tuesday. It rejected Delegate Villanueva’s HB 2205, which would have had Virginia join the Regional Greenhouse Gas Initiative as a vehicle to reduce carbon emissions. (The Senate companion bill died on a party-line vote last week.) It was the only legislation this year that would have taken positive action to address climate change and raise some of the enormous sums of money that will be needed to address the consequences of sea level rise.

Instead, it passed HB 2291 (O’Quinn), a bill that would require the Department of Environmental Quality (DEQ) to get approval from the General Assembly before submitting to the U.S. EPA a plan to implement the Clean Power Plan. Since the Republican majority has made its hostility to the Clean Power Plan clear, this is widely seen as a way to keep the state from acting at all. The bill also passed the full committee Thursday on a straight party-line vote, a clear indication that it is about party politics and anti-Obama Administration sentiment, not climate change.

Over in the Senate, however, saner heads prevailed. Senator Watkins amended his companion bill, SB 1365, simply to give DEQ direction on what to consider in developing the plan, and to require it to consult with the SCC and to meet with General Assembly members. The substitute bill passed Senate Agriculture unanimously.

Dominion’s Ratepayer Rip-off Act hits a bump in the road

Meanwhile, Senator Wagner’s bill to protect utility profits and shield Dominion (and now APCo too) from SCC scrutiny through the end of the decade sailed through Senate Commerce and Labor in spite of sparking the kind of outrage and condemnation in the press usually reserved for bills on guns and abortion. Editorial boards excoriated the legislation; Wagner was forced to sell his Dominion stock. Environmental groups, which had first sounded the alarm, staged a protest outside the General Assembly on Thursday morning and spurred thousands of constituents to write letters opposing the ratepayer rip-off.

As a consequence, SB 1349 ran into trouble on the Senate floor Thursday afternoon, and a substitute was introduced consisting of two pages of such dense regulatory detail that I cannot possibly tell you what it means. Anyone with the gumption to try to understand it may be wasting their time anyway, because I hear it remains in flux, with negotiations underway right now. Senator Donald McEachin reportedly is working to make it less objectionable. One thing seems certain: the senators who will be asked to vote on this will have no chance to review the language and reach their own conclusions.

It’s a lousy way to make sausage, but it’s ours.

McAuliffe’s Energy Plan has a little something for (almost) everyone

October 14, 2014 by Ivy Main

On October 1, the Virginia Department of Mines, Minerals and Energy released the McAuliffe administration’s rewrite of the Virginia Energy Plan. Tomorrow, on October 14, Governor McAuliffe is scheduled to speak about the plan at an “executive briefing” to be held at the Science Museum of Virginia in Richmond. Will he talk most about fossil fuels, or clean energy? Chances are, we’ll hear a lot about both.

Like the versions written by previous governors, McAuliffe’s plan boasts of an “all of the above” approach. But don’t let that put you off. In spite of major lapses of the drill-baby-drill variety, this plan has more about solar energy, offshore wind, and energy efficiency, and less about coal, than we are used to seeing from a Virginia governor.

Keep in mind that although the Virginia Code requires an energy plan rewrite every four years, the plan does not have the force of law. It is intended to lay out principles, to be the governor’s platform and a basis for action, not the action itself. This is why they tend to look like such a hodge-podge: it’s just so easy to promise every constituency what it wants. The fights come in the General Assembly, when the various interests look for follow-through.

Here’s my take on some of the major recommendations:

Renewable energy. Advocates and energy libertarians will like the barrier-busting approach called for in the Energy Plan, including raising the cap on customer-owned solar and other renewables from the current 1% of a utility’s peak load to 3%; allowing neighborhoods and office parks to develop and share renewable energy projects; allowing third-party power purchase agreements (PPAs) statewide and doubling both the size of projects allowed and the overall program limit; and increasing the size limits on both residential (to 40 kW) and commercial (to 1 MW) net metered projects, with standby charges allowed only for projects over 20 kW (up from the current 10 kW for residential, but seemingly now to be applied to all systems).

It also proposes a program that would allow utilities to build off-site solar facilities on behalf of subscribers and provide on-bill financing to pay for it. This sounds rather like a true green power program, but here the customers would pay to build and own the project instead of simply buying electricity from renewable energy projects.

Elsewhere in the recommendations, the plan calls for “flexible financing mechanisms” that would support both energy projects and energy efficiency.

In case unleashing the power of customers doesn’t do enough for solar, the plan also calls for the establishment of a Virginia Solar Energy Development Authority tasked with the development of 15 megawatts (MW) of solar energy at state and local government facilities by June 30, 2017, and another 15 MW of private sector solar by the same date. Though extremely modest by the standards of Maryland and North Carolina, these goals, if met, would about triple Virginia’s current total. I do like the fact that these are near-term goals designed to boost the industry quickly. But let’s face it: these drops don’t even wet the bucket. We need gigawatts of solar over the next few decades, so let’s set some serious long-term goals for this Authority, and give it the tools to achieve them.

Finally, the plan reiterates the governor’s enthusiasm for building offshore wind, using lots of exciting words (“full,” “swift,” “with vigor”), but neglecting how to make it happen. Offshore wind is this governor’s Big Idea. I’d have expected more of a plan.

And while we’re in “I’d have expected more” territory, you have to wonder whatever happened to the mandatory Renewable Portfolio Standard that McAuliffe championed when running for office. Maybe our RPS is too hopeless even for a hopeless optimist.

Energy Efficiency. Reducing energy consumption and saving money for consumers and government are no-brainer concepts that have led to ratepayers in many other states paying lower electricity bills than we do, even in the face of higher rates. Everyone can get behind energy efficiency, with the exception of utilities that make money selling more electricity. (Oh, wait—those would be our utilities.) The Energy Plan calls for establishing a Virginia Board on Energy Efficiency, tasked with getting us to the state’s goal of 10% savings two years ahead of schedule. But glaringly absent is any mention of the role of building codes. Recall that Governor McDonnell bowed to the home builders and allowed a weakened version of the residential building code to take effect. So far Governor McAuliffe hasn’t reversed that decision. If he is serious about energy efficiency, this is an obvious, easy step. Where is it?

Natural Gas. Did I say offshore wind was the governor’s Big Idea? Well, now he’s got a bigger one: that 500-mile long natural gas pipeline Dominion wants to build from West Virginia through the middle of Virginia and down to North Carolina. Governor McAuliffe gets starry-eyed talking about fracked gas powering a new industrial age in Virginia. So it’s not surprising that the Energy Plan includes support for gas pipelines among other infrastructure projects. As for fracking itself, though, the recommendations have nothing to say. A curious omission, surely? And while we are on the subject of natural gas, this plan is a real testament to the lobbying prowess of the folks pushing for natural gas vehicles. Given how little appetite the public has shown for this niche market, it’s remarkable to see more than a page of recommendations for subsidies and mandates. Some of these would apply to electric vehicles as well. But if we really want to reduce energy use in transportation, shouldn’t we give people more alternatives to vehicles? It’s too bad sidewalks, bicycles and mass transit (however fueled) get no mention in the plan.

Photo credit Ed Brown, Wikimedia Commons.

Coal. Coal has fallen on hard times, indeed, when even Virginia’s energy plan makes no recommendations involving it. Oh, there’s a whole section about creating export markets for coal technology, as in, helping people who currently sell equipment to American coal companies find a living in other ways. These might be Chinese coal mining companies; but then again, they might be companies that mine metals in Eastern Europe, or build tunnels, or do something totally different. The Energy Plan seems to be saying that coal may be on its way out, but there’s no reason it should drag the whole supply chain down with it. Good thinking.

Nuclear. If you think the coal industry has taken a beating these past few years, consider nuclear. Nationwide, the few new projects that haven’t been canceled are behind schedule and over budget, going forward at all only thanks to the liberality of Uncle Sam and the gullibility of state lawmakers. But there it is in the Energy Plan: we’re going to be “a national and global leader in nuclear energy.” Watch your wallets, people. Dominion already raided them for $300 million worth of development costs for a third plant at North Anna. That was just a down payment.

Photo: U.S. Coast Guard

Offshore drilling. As with nuclear, favoring offshore oil drilling seems to be some kind of perverse obsession for many Virginia politicians. Sure enough, the energy plan says we should “fully support” it. As for the downside potential for a massive spill of crude oil fouling beaches, ruining fishing grounds, destroying the coastal tourism economy, and killing vast numbers of marine animals, the plan says we must be prepared “to provide a timely and comprehensive response.” I bet Louisiana was at least equally prepared.

American Wind Energy Association to highlight Virginia potential at June conference

April 21, 2014 by Ivy Main

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.

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

March 10, 2014 by Ivy Main

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 6^th(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.

Time to get serious about offshore wind

December 16, 2013 by Ivy Main

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.

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

November 1, 2013 by Ivy Main

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.

Dominion wins Virginia offshore wind lease: well, duh

September 6, 2013 by Ivy Main

And the winner is . . . Dominion Power!

Okay, you knew that. Dominion had the deck so stacked in its favor for Wednesday’s Virginia offshore wind lease auction that the question everyone was asking at the end wasn’t “who won?” but “who bid against Dominion, and why did they bother?”

The answer to the first question proved to be Charlottesville-based Apex Energy, a far more experienced player in the wind industry—but one without Dominion’s lock on the Virginia power market.

There was much to criticize about the auction format and the process that led inevitably to Dominion’s win, but this historic step is still hugely exciting for offshore wind advocates. If Dominion follows through on the commitment it just made to develop offshore wind, Virginia will be a winner, too.

That “if” has a lot of people worried, given that Dominion is both a participant in the offshore wind industry and one of its loudest detractors. Company executives talk about their desire to develop the lease area, and also their opinion that offshore wind energy is way too expensive to succeed. Often they make both points in the same conversation.

Observers can’t help wondering why a company would pour money into a venture if it doesn’t believe it can sell its own product. Two possible reasons come to mind: one, because it is willing to gamble on political and market changes that will make its venture successful after all; or two, because by spending the money to win the lease, the company prevents any competitor from occupying the space. One is gutsy, the other is evil. It is possible for both to be true.

So what did Dominion win? The lease area, a 112,800-acre swath of ocean beginning more than 23 miles off Virginia Beach, is expected to support at least 2,000 megawatts of wind turbines—enough to power about 700,000 homes. It’s the second Wind Energy Area to be auctioned off in the U.S.; the first lies off Rhode Island and Massachusetts, and was auctioned off in August.

Under rules set by the Bureau of Ocean Energy Management (BOEM), the entire Virginia area was treated as one tract (a bad idea, in the view of advocates and industry members who aren’t Dominion, because it further reduced competition). Dominion won with a high bid of $1.6 million.

A formal announcement of the winning bid is expected in October, following federal antitrust review. As the winning bidder, Dominion will have five years to conduct the studies required for development of the area, with interim deadlines including submission of a Site Assessment Plan next summer.

After the five years is up, Dominion could decide not to proceed, releasing the area for BOEM to offer in a new auction. That result would be an unqualified disaster for Virginia’s ability to develop an offshore wind industry here. With states to the north proceeding, we would lose not just construction jobs, but the entire supply chain, and likely the marine services as well. Many thousands of jobs now ride on Dominion following through.

If Dominion decides to proceed, it will have to submit a Construction and Operations Plan at least six months before the expiration of the five-year site assessment period—that is, by the summer of 2018. BOEM will then evaluate the plan in accordance with the National Environmental Policy Act, producing an Environmental Impact Statement in 18-24 months, before construction can begin. That timeline puts construction underway no later than 2020, with electricity from the first turbines flowing by 2022.

The process doesn’t have to take as long as this; Deepwater Wind, which won the two leases in the Rhode Island/Massachusetts area last month, says construction there “could begin as early as 2017, with commercial operations by 2018.”

But Dominion had previously indicated its preference for the slowest possible approach. The company’s original idea was to build some wind turbines, think about it for a while, and five years later start all over again. Then five years later, round three. Another five years, round four. So 20 years on, if Dominion liked what it saw each time, Virginia would finally have its 2,000 megawatts.

In accordance with this plan, Dominion’s surrogate, the Virginia government, asked BOEM to make the lease term for Virginia’s Wind Energy Area 45 years instead of 25.

Other developers and the environmental community cried foul, pointing out that such an approach would mean a generation would be born, grow up and go off to college before we had all our wind turbines—hardly the way to build an industry or stave off climate change.

BOEM conceded half a loaf and agreed to a 33-year term that allows time for a phased approach, but a faster one. The agency expects the construction plan will consist of four, two-year phases, ensuring completion of the build-out in 8 years—or by 2028, to be followed by 25 years of operation.

We can only hope that BOEM’s confidence is not misplaced. Dominion employees have said candidly that right now, under current market conditions, the company has no intention of actually building offshore wind turbines.

What will it take to change its mind? The company talks about costs and the difficulty of getting approval from Virginia regulators. It seems likely that the company will follow through with construction only if some combination of events happens in the next few years:

Continuing advancements in technology bring the cost of offshore wind energy down. Already the latest cost estimates put offshore wind power well below the sky-high figures Dominion cites.
Congress or the EPA tackles climate change through incentives for renewable energy (or disincentives for fossil fuels);
The Virginia government passes legislation to create a market in Virginia for offshore wind power;
Virginia’s State Corporation Commission (SCC), which regulates utilities, alters the way it views renewable energy.

Of these contingencies, the last might be the hardest. The SCC seems to believe the public interest is served only by providing the cheapest possible electricity available today. It shows no interest in climate change, or the pollution costs of fossil fuels, or long-term price stability, or job creation, or asthma rates. Ignoring the actual language of the Virginia Code, it declared this summer that Virginia law doesn’t require it to consider the environment in evaluating a new electric generation facility.

But the offshore wind industry is now off and running in the U.S., and the only question is whether Virginia wants to be part of it. On that answer depend thousands of jobs for our residents, an abundant source of stably-priced energy, and Virginia’s ability to move beyond fossil fuels in the face of climate change.

Virginians overwhelmingly want to move forward on offshore wind; now our challenge will be to make it happen.

For electric power generation, the end of fossil fuels is in sight

February 4, 2013 by Ivy Main

The rap on renewable energy is that it’s too variable to meet society’s demand for a constant supply of electricity. The answer to the problem turns out to be: More renewables.

Climate change is acting like an ever-tightening vise on our energy options. Each year that passes without dramatic decreases in our use of carbon-emitting fuels means the cuts we have to make simply get more drastic. By 2030, say experts, we must entirely replace coal with efficiency and renewable energy, or fry. Even the most intrepid environmentalists wonder if it can be done without huge price hikes and wholesale changes in how we live and use energy–changes that society may not accept.

A new study out of the University of Delaware shows it is possible to power the grid 99.9% of the time with only solar and wind energy, at a cost comparable to what we are paying today. This counters the conventional wisdom that we will always need large amounts of fossil fuel as a backup when the wind doesn’t blow and the sun doesn’t shine. It also means the goal of getting largely beyond fossil fuels by 2030 is not just achievable, but practical.

The study focused on a regional transmission grid known as PJM, which encompasses parts or all of fourteen states, mostly in the Mid-Atlantic. Researchers ran 28 billion computer simulations to find the most cost-effective combinations of wind and solar that could power the entire grid, at the least possible cost and with minimal amounts of energy storage. The winning combination relied on natural gas turbines for backup on only five days out of the four years modeled.

The study authors looked for the least cost taking account of carbon and other external costs of fossil fuels, which are not being accounted for today, but they also assumed no technology improvements over time, making their cost estimates conservative overall. All the least-cost combinations used much more storage than we have today, but needed it for only 9 to 72 hours to get through the entire four years modeled.

The secret to dealing with the inherent variability of wind and solar, it turns out, is to build even more wind and solar. One wind turbine is unreliable, but tens of thousands spread across a dozen states greatly reduces the variability problem, and tens of thousands of wind turbines balanced with millions of solar panels is better still. To get to 99.9% renewables, you keep adding wind turbines and solar panels until you are producing three times the electricity that you actually need to meet demand. To power the grid with renewables just 90% of the time, you would have to produce “only” 1.8 times the electricity needed. (And yes, we have the windy sites and the sunny places to support all those projects.)

While it may sound strange to build more generation than you need, that is already the way grid operators ensure reliability. To take one example, if you were in Virginia when the “Big One” struck in 2011, you will recall that the earthquake caused the North Anna nuclear plant to shut down for four months. Nuclear energy provides a third of the electricity in Dominion Virginia Power’s service territory, and yet the lights stayed on. That’s because the grid wizards at PJM simply called on other power sources that had been idle or that had spare capacity.

The other component of reliability is the ability to match demand for power, which rises and falls with the time of day, weather, and other factors. So-called “baseload” plants like nuclear, coal, and some natural gas turbines don’t offer that flexibility and must be supplemented with other sources or stored energy. PJM currently uses more than 1,300 different generating sources, as well as about 4% storage in the form of pumped hydro. The right combination of other sources can replace baseload plants entirely.

Pairing wind and solar improves their ability to meet demand reliably. Onshore wind tends to blow most strongly at night, while solar energy provides power during the peak demand times of the day. Offshore wind power is also expected to match demand well. Combining them all reduces the need for back-up power.

But until now policy makers have assumed that solar and wind won’t be able to power the grid reliably, even when combined and spread out over PJM’s more than 200,000 square miles, and with the addition of wind farms off the coast. Critics have insisted that renewable energy requires lots of back-up generating capacity, especially from some natural gas turbines that can ramp up and down quickly. New gas turbines have even been designed specifically to integrate with renewables in anticipation of increasing amounts of wind and solar coming onto the grid.

This makes the work of the U. Delaware researchers a game-changer by showing that wind and solar can be backed up primarily by more wind and solar. And so we can begin planning for a future entirely without fossil fuels, knowing that when we get there, the lights will still be on.

Is offshore wind in Virginia’s future?

September 16, 2012 by Ivy Main

The past couple of years have been tough ones for the offshore wind industry, which is still struggling to launch. The recession has made states reluctant to invest, even when the payoff looks huge. Cheap natural gas is hurting the market for renewable energy just as wind and solar have started hitting their stride. Congressional dysfunction has prevented the renewal of critical tax credits that the wind industry still needs to compete.

A few other states are making fitful progress towards building offshore wind farms, but they have conditions Virginia doesn’t: higher energy prices that make offshore wind more competitive with fossil fuels, renewable energy standards that push utilities to become buyers for the electricity, and congested transmission grids that favor local generation.

But of course, Virginia has its own advantages, including possibly the best wind resources in the mid-Atlantic, skilled workers, and extremely competitive port facilities. And the enthusiasm of our legislators and public for the idea of offshore wind matches that of any state.

At the same time, though, our governor and our major utility give decidedly mixed signals, extolling our offshore wind potential at one moment, and in the next opining that no one would actually want to pay for it. And yet Dominion Power hopes to buy up all the Virginia-area offshore wind leases that are offered for bid this fall. So what gives with Dominion and offshore wind?

One answer comes from Guy Chapman, Dominion’s Director of Renewable Energy Research and Program Development, who spoke at a wind conference held at James Madison University this past June. He said that right now with natural gas so cheap, the company doesn’t expect to build any wind at all, on land or at sea. But if conditions improve, the company wants to be in a position to change its mind, and that means buying up the offshore leases and doing site surveys, technical and environmental studies, and other planning that will add up to $40 or 50 million. Dominion would rather lose the money than be locked out of a potential new growth area.

What this means for the rest of us is that when we read somewhere that Dominion has “plans” for offshore wind, or that it has two wind farms in Virginia’s mountains “under development,” we should realize it defines those terms to mean, “Don’t hold your breath, honey.”

This presents something of a puzzle for decision-makers at the federal Department of Interior. If they let Dominion buy up the leases for the whole Virginia wind energy area, knowing the company isn’t actually planning to build a wind farm, then they aren’t advancing the cause of offshore wind any. By contrast, the other bidders include companies like Apex Wind and Fishermen’s Energy that make their money by building wind farms, so they are highly motivated to follow through.

Selling the lease to Dominion might mean no one builds a wind farm off Virginia. That would be okay with Dominion—for a monopoly, keeping out competition is an end in itself—but it wouldn’t serve the public interest.

On the other hand, if something happened to make Dominion actually want to build, the fact that it’s a regulated utility means they could probably do it more cheaply than Apex or Fishermen’s. That would benefit ratepayers and make the energy more competitive with other fuels, like natural gas.

What might make Dominion want to build? Some combination of the following factors would likely play a part:

The cost of offshore wind might come down relative to fossil fuels. With no offshore wind farms operating in the U.S. yet, cost projections are still speculative. The first projects here will be expensive, as all “firsts” are, but industry members are confident that prices will come down dramatically as the industry matures. Dominion and other companies and researchers, using federal grants, are currently studying opportunities to slash costs.

Virginia might grow bolder. It’s conceivable, though not really likely, that Virginia will take a decisive step towards offshore wind by enacting an effective renewable energy standard or offshore wind mandate, to replace the sham that is our current renewable energy law. This wouldn’t happen under Bob McDonnell’s leadership; in spite of his “all of the above” rhetoric, he is adamantly opposed to real change in state policies that favor coal. Chances would improve in 2014 under Terry McAuliffe or possibly Bill Bolling (but not Ken Cuccinnelli).

Congress might finally take action to deal with climate change. Sure, and pigs might fly. But drought and heat waves are changing minds across the country about the reality of global warming. Even skeptics may decide to hedge their bets. And even if not, the economic and national security case for renewable energy has already swayed some conservatives, and may bring more on board as other countries outpace us. A carbon tax, a national renewable electricity standard, or some other incentive would do for offshore wind in Virginia what Virginia isn’t likely to do itself.

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Tag Archives: offshore wind

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Dominion wins Virginia offshore wind lease: well, duh

For electric power generation, the end of fossil fuels is in sight

Is offshore wind in Virginia’s future?

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