Tag Archives: RECs

Why most ‘renewable energy’ options don’t add new wind and solar to the grid

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bucket of green paint with spill
Photo credit: Neep at the English Language Wikipedia.

Virginia residents who want to do right by the planet are confronted with a bewildering array of renewable energy and “green power” options. Unfortunately, few of these programs actually deliver renewable energy. People who want the gold standard — electricity from new wind and solar projects — are completely out of luck if their utility is Dominion Energy Virginia or Appalachian Power. 

To understand how there can be so many options and none of them good, we first have to talk about renewable energy certificates.  RECs are a topic that is way more interesting than it sounds because — well, it would have to be, wouldn’t it? RECs are how we know that some electricity can be attributed to a renewable source. If you want to know what kind of renewable energy your utility is buying, or if you yourself want to buy renewable energy, RECs matter.

RECs are not electricity; they aren’t even real certificates. They were conceived of as an accounting tool enabling a utility to show it is in compliance with a state mandate to include a percentage of renewable energy in its mix. A utility amasses RECs associated with its own renewable generating sources, or buys them from renewable sources it doesn’t own, and then “retires” them to show compliance with the law. Since RECs are separate from the electricity itself, they can be bought and sold independently. There is even an online marketplace for your REC shopping convenience. 

RECs are also how voluntary buyers of renewable energy, like customers of Arcadia or Dominion’s Green Power Program, know they’re actually getting what they pay for —assuming they understand that what they pay for is not actually energy, and may have no relationship to the electricity powering their home or business. If you buy RECs, you are still using whatever electricity your utility provides, but you are also paying a premium on top of your regular bill. 

There is no nationwide, generally accepted definition of “renewable energy,” just as there is no definition of “natural” in food labeling. In Virginia, there is a state law defining what counts as renewable, and it includes not just solar, wind and hydro, but also a range of burnable fuels like biomass and municipal solid waste that foul the air and contribute to climate change. Buyer beware!  

The Virginia Clean Economy Act narrowed the list of sources that Dominion and APCo can use to meet the law’s new renewable portfolio standard, and also limited the locations of qualifying facilities. After 2025, happily, most of the RECs retired by Dominion and APCo under the VCEA will come from Virginia wind and solar facilities. 

But crucially, the VCEA didn’t change the definition of renewable energy in the code. Dominion won’t be able to use RECs from its biomass plants to meet the VCEA, but it can still sell them to anyone else and label the product “renewable” without falling afoul of the law. Anyone buying a renewable energy product from Dominion had better check the list of ingredients. 

It’s not just Dominion. Anyone buying RECs from Arcadia or anywhere else should take a good look at what they are getting, and ask themselves if the money they spend means new renewable energy will be added to the grid. 

The answer is probably no. If the RECs come from a wind farm in Texas or Iowa, the electricity from those turbines doesn’t feed into the grid that serves Virginia, so you can’t even pretend it is powering your house. It also doesn’t mean anyone built a wind farm because of REC buyers like you. Wind energy is already the cheapest form of new energy in the central part of the U.S. People build wind farms because they are profitable, not because they can sell RECs. In fact, those wind farms are swimming in surplus RECs, because states in the center of the country don’t have renewable energy mandates to make their own utilities buy them.  

For that matter, a lot of RECs come from facilities that were built before the idea of RECs even existed. Hundred-year-old hydroelectric dams can sell RECs; so can fifty-year-old paper mills that sell biomass RECs from burning wood. 

With this background, let’s look at the offerings available in Virginia and see which are worth paying more for. 

Dominion Energy Virginia

In theory, Dominion customers will have the ability to buy real solar energy directly from independent providers beginning as early as 2023, thanks to shared solar legislation sponsored by Sen. Scott Surovell and Del. Jay Jones and passed in 2020. The law envisions independent solar developers building solar facilities in Virginia and selling the electricity (and the RECs) to subscribers who are Dominion customers. But the SCC opened a Pandora’s box last fall by allowing Dominion to propose the rules, and in an act of classic Dominion overreach, the utility has now proposed to collect an average of $75 a month as a “minimum bill” from every customer who buys solar energy from someone else. A fee like that would end the program before it ever started.

 The matter is hardly settled. The solar industry has asked for an evidentiary hearing and suggested that the minimum bill should be set at a single dollar. If all else fails, the program may go forward serving only low-income customers, whom the legislation exempts from the minimum bill. 

Dominion customers can hope for the best, but any shared solar option is still at least two years away. 

In the meantime, the utility’s website lists four renewable energy options: two that sell RECs, one that sells actual energy (and retires the RECs for you) and one that doesn’t exist. 

• The REC-based Green Power Program has been around for a decade, and as of 2019 it had more than 31,000 subscribers. Dominion’s “product content label” projected that for 2020 the program would likely consist of 56 percent wind RECs, 34 percent biomass RECs, and 10 percent solar RECs. Facilities are advertised as being “in Virginia and the surrounding region,” but the fine print reveals sources as far away as Mississippi, Georgia, Missouri and Alabama, none of which are part of the PJM transmission grid that serves Virginia.  (Side note: the biomass icon is a cow, not a tree, which is misleading but charming, unless they might be burning cows, in which case it is deeply disturbing.) With the website out of date, I contacted Dominion for current content information: solar is now up to 13 percent, but, sadly, biomass still makes up 35 percent of the mix (but now it has a leaf icon!).

• REC Select. When I say “buyer beware,” I have this offering in mind. Dominion has been authorized to go Dumpster diving to buy the cheapest RECs from around the country and from any facility that meets Virginia’s overly-expansive definition of renewable energy. The website implies that so far the company is only buying wind RECs from Oklahoma and Nebraska, an indication of just how cheap those are. But under the terms of the program, the RECs could come from 50-year-old paper mills in Ohio or hundred-year-old hydroelectric dams. No educated consumer would buy this product, and both Dominion and the SCC should be ashamed of themselves for putting it out there.

• The 100% Renewable Energy Program delivers actual energy from Virginia, and retires RECs on your behalf. That’s the good news. But only a few of the solar farms are new; the rest of the energy comes from old hydro plants and, worse, from biomass plants that are so highly polluting that they don’t qualify for Virginia’s renewable energy mandate under the VCEA. The inclusion of biomass makes the program more expensive than it would be otherwise. So why include biomass when no one wants it? Because Dominion doesn’t really care if you sign up for this program. The company only offers it to close off a provision in the law that allowed customers to buy renewable energy from competitors if their own utility doesn’t offer it.

• Dominion’s website does list one attractive program under the name “community solar.” Like the shared solar program already discussed, it would deliver actual solar energy from new facilities to be built in Virginia, while retiring the RECs on your behalf. This would pass all our tests, except that it doesn’t exist. The SCC gave Dominion the green light to offer the program more than two years ago, and we’ve heard nothing since, even though the enabling legislation appears to make it mandatoryfor both Dominion and APCo. 

Appalachian Power

APCo never developed a community solar program either, and the shared solar program discussed earlier would not be available to APCO customers even if it gets off the ground. But APCo does have two renewable energy offerings. 

• For its Virginia Green Pricing program, APCo put together wind and hydro from its own facilities. That means it’s actual energy and reasonably priced, at less than half a cent per kWh. But these are existing facilities that all its customers had been paying for until APCo figured out how to segment the market and make more money, and the hydro is old. (As with Dominion’s renewable energy program, the real purpose of the new product was to close off competition.) 

• Even cheaper is Alternative Option-REC, the RECs for which “may come from a variety of resources but will likely be associated with energy from waste, solid waste and hydro facilities.” No biomass, anyway, but I still have trouble imagining who would pay extra for (literally) garbage. 

Virginia electric coops

Some electric cooperatives offer real renewable energy to customers, and a couple have community solar programs that are quite attractive.  

• Central Virginia Electric Cooperative and BARC Electric Cooperativeoffer community solar programs that not only deliver actual solar energy, but also let customers lock in a fixed price for 20-25 years. Four other coops also offer a solar energy option, and at least one other is working on it.

• Many coops also sell RECs, of mixed quality. Shenandoah Valley Electric Cooperative offers RECs generated by wind farms owned or contracted byOld Dominion Electric Cooperative, the generation cooperative that supplies power to most Virginia coops. Rappahannock Electric Cooperative, however, sells only biomass RECs.

• Bottom line: if you are a member of an electric cooperative, you may have better options than either Dominion or APCo is offering — and if you don’t, hey, you’re an owner of the coop, so make some noise!

Arcadia

 If you like RECs, you don’t have to buy them from your own utility. The folks at Arcadia have struggled for years to offer products that put new renewable energy on the grid. In states that allow community solar, Arcadia now offers wind and solar from projects in those states. Everywhere else, they just sell RECs. The website provides no information indicating where the facilities are, meaning they could be out in the same central plains states that are awash in surplus wind RECs. Their game plan appears to be for all the nice liberals with climate guilt to throw enough money at red state RECs that eventually the day will come when demand exceeds supply and drives the price up enough to incentivize new projects. The plan sounds self-defeating to me, but in any case, buyers should keep in mind that the RECs bought before that glorious date will have incentivized precisely nothing. 

Other options

Obviously, if you have a sunny roof, you can install solar onsite and net-meter. Of all the programs available today, that’s the one that will save you money instead of making you spend more. 

If you don’t have a sunny roof, but you’d still like to see your money put solar onto the grid, consider contributing to a church, school or non-profit that is going solar, or to an organization that puts solar on low-income homes. Two that operate in Virginia are Give Solar, which puts solar on Habitat for Humanity houses, and GRID Alternatives, which trains workers to install solar on low-income homes here and abroad. If everyone in Virginia who is currently buying RECs were to choose this alternative instead, it would put millions of dollars to work building new solar in Virginia, and lowering the energy bills of people who most need the help.

And that might make it the best option of all.

A version of this article first appeared in the Virginia Mercury on May 21, 2021.

Yeah, I’m not perfect either. Pass the Clean Economy Act.

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People gathered with signs supporting climate action

Grassroots activists gather at the steps of the Virginia Capital on January 14. Photo courtesy Sierra Club.

When it was first introduced, and before the utilities and special interests got their grubby little paws on it, the Clean Economy Act was an ambitious and far-reaching overhaul of Virginia energy policy that turned a little timid when it came to particulars.

Sausage-making ensued.

The bill that emerged from the grinder inevitably allows Dominion Energy to profit more than it should. (Welcome to Virginia, newcomers.) The energy efficiency provisions, which I thought weak, became even weaker, then became stronger, then ended up somewhere in the middle depending on whether you were looking at the House or Senate version. The renewable portfolio standard, complicated to begin with, is now convoluted to the point of farce — and to the extent I understand it, I’m not laughing.

Yet the bill still does what climate advocates set out to do: It creates a sturdy framework for a transition to 100% carbon-free electricity by 2045 (the House bill) or 2050 (the Senate bill).

It’s worth taking a moment to marvel at the very idea of a strong energy transition bill passing in a state that still subsidizes coal mining. Even a year ago, this would not have been possible. That we have come this far is a tribute not just to the Democrats who are making good on their pledge to tackle climate, but to the thousands of grassroots activists who worked to elect them and then stayed on the job to hold them to their promises.

The Clean Economy Act works by tackling the problem from multiple directions in a belt-and-suspenders approach:

• The legislation puts an immediate two-year moratorium on any new carbon-emitting plants. The concept came straight from the grassroots-led Green New Deal, and it creates space for the other provisions to kick in.

• It requires DEQ to implement regulations cutting carbon emissions through participation in the Regional Greenhouse Gas Initiative. RGGI uses market incentives to cut carbon emissions from power plants 30 percent by 2030. The Department of Environmental Quality will auction carbon allowances to power plant owners and use the auction money primarily for coastal resilience projects and energy efficiency projects for low-income residents. The Department of Housing and Community Development will be in charge of this efficiency spending, not Dominion.

• The Clean Economy Act takes RGGI out further, ensuring that Virginia reaches zero emissions by 2045 (House bill) or 2050 (Senate bill).

• It requires the closure of most coal plants in Virginia by the end of 2024. The newest of these, the Virginia City Hybrid coal plant, must close by the end of 2030 unless it achieves 83 percent emission reductions through carbon capture and storage, the technology it was allegedly designed for. Biomass plants have to close by the end of 2028.

• In place of fossil fuels, utilities have to build or buy thousands of megawatts of solar, on-shore wind, offshore wind and energy storage. Yearly solicitations for wind and solar will ensure sustained job creation employing thousands of workers. Thirty-five percent of all this must be competitively procured from third-party developers, a requirement that lowers costs and makes it harder for utilities to overcharge for the projects they build themselves.

• The storage requirement in particular is notable because batteries compete directly with gas combustion turbines to serve peak demand. The more storage a utility builds, the weaker its case for building new gas peakers becomes.

• For the first time, Virginia utilities will have to achieve energy efficiency savings, not just throw money at the problem. Under the stronger House bill, Dominion must achieve 5 percent cumulative energy savings by 2025. Appalachian Power must achieve 2 percent. Starting in 2026, the SCC will set efficiency goals every three years. Achieving savings ought to be easy; a new ranking of progress on efficiency puts Dominion at 50th out of 52 utilities. Low-hanging fruit, anyone? The Clean Economy Act also calls for 15 percent of efficiency spending to be allocated for programs benefiting low-income, elderly, disabled individuals and veterans.

• Also for the first time, the legislation requires the State Corporation Commission to consider the “social cost of carbon.” That puts one more thumb on the scales weighing against fossil fuels.

• If by January of 2028 we are still not on track, the House bill empowers the secretaries of natural resources and commerce and trade to put a second moratorium on new fossil fuel facilities.

One other element of the bill is worth mentioning, given the questions about how much all these new projects and programs will cost. The legislation creates a “percentage of income payment program” for low-income ratepayers to cap electricity costs at 6 percent of household income, or 10 percent if they use electric heat. The program includes provisions for home energy audits and retrofits.

As I said at the outset, the bill is not without its flaws. The cost of offshore wind energy is “capped” in the bill at 1.6 times the cost of energy from a gas peaker plant, though I’m told negotiations continue and the adder may be reduced. Regardless of the number, this makes as much sense as capping the cost of apples at some number above the cost of Cheetos. Why are we comparing a carbon-free source of energy that is getting cheaper every year with one of the dirtiest and most expensive fossil fuel sources? On behalf of the offshore wind industry: Please, I’m insulted.

Virginia will be a leader on offshore wind, but we are not the first, and we know the price of electricity from the other U.S. projects already under contract. Prices are already well below gas peaker plant levels. The CEA ought to cap the cost of the Virginia project at 10 or 20 percent above the lowest-priced comparable offshore wind project, which would allow plenty of room for differences in wind speeds, distance from shore and other variables.

On second thought, as a point of pride, Dominion should reject any adder at all, and insist on capping its costs below those of all the northeastern projects. Have some confidence in yourselves, people!

My other complaint is that the Clean Economy Act’s nearly incomprehensible renewable portfolio standard fails to deliver. Yes, other provisions of the bill require the utilities to build a lot of wind and solar. But nothing requires them to use the renewable energy certificates (RECs) associated with those facilities for the RPS.

If I totally lost you with those acronyms, it’s okay. Just know that RECs are the bragging rights associated with renewable energy, and they can be bought and sold separately from the electricity itself. If Dominion builds a solar farm in Virginia and sells the RECs to Microsoft or the good people of New Jersey, those folks have bought the right to claim the renewable energy regardless of whether they actually get their electrons straight from the solar farm. Virginia would be left with a solar farm, but legally, no solar energy.

RECs also fetch different prices according to the kind of renewable energy they represent and how many are on the market. Everyone wants solar, so solar RECs cost more. RECs from hundred-year-old hydroelectric projects are not in demand, so they are cheap.

As written now, the Clean Economy Act sets up an RPS that doesn’t require any wind or solar RECs at all (excepting a miniscule carve-out for small wind and solar that can also be met with “anaerobic digestion resources,” possibly a reference to pig manure).

The RPS can be met with RECs from several sources less desirable than solar, and therefore cheaper. These include old hydro dams, Virginia-based waste-to-energy and landfill methane facilities and biomass burned by paper companies WestRock and International Paper. As a result, utilities will buy RECs from those sources to meet the requirements.

Only once utilities run out of cheaper RECs from eligible sources will they be forced to apply RECs from any of the wind and solar they are building. Until that time, Dominion and APCo will sell the RECs from the new solar farms to the highest bidder, while Virginia customers shell out potentially hundreds of millions of dollars for RECs no one really wants.

That’s not fair to the Virginians who are paying for the wind and solar projects to be built and who have a right to expect wind and solar will be a part of their energy supply as a result. Legislators can correct this with a very simple requirement that RECs from the new facilities mandated by the law be applied to the RPS.

And, while I am telling legislators what to do, they ought to remove the eligibility of paper company biomass. This provision seems to have been added to the bill (in obscure, coded language) simply because WestRock has talented lobbyists and the political power to demand a cut of the action. But do we ratepayers want to buy their RECs? No, we do not.

WestRock is doubtless unhappy about losing the nice stream of unearned income it’s been getting from selling thermal RECs to Dominion under Virginia’s voluntary RPS. But there is no good reason for electricity customers to subsidize a Fortune 500 corporation whose CEO earned $18 million last year and whose Covington mill, according to EPA data, spews out more toxic air emissions than any other facility in Virginia including Dominion’s Chesterfield coal plant. That’s not clean energy.

Fortunately (I guess), the RPS is not the heart and soul of the Clean Economy Act. For the next several years, its slow ramp-up makes it barely even relevant, and it is the next several years that matter most in our response to the climate crisis.

Joining RGGI, cutting emissions, implementing energy efficiency, building renewable energy and storage, closing coal and biomass plants: those are the mechanisms of the Clean Economy Act that will drive Virginia’s transition to 100% clean energy.

And so, having offered my helpful suggestions to improve the nutritional content of this sausage, I will add just one more thing:

Pass the bill.

This column originally ran in the Virginia Mercury on February 24, 2020. That afternoon, the Senate Commerce and Labor committee conformed the House version of the bill to the weaker Senate version and passed it out of committee. House Labor and Commerce meets today and is expected to conform the Senate bill to the stronger House language. Assuming both chambers pass the bills without further amendments, the bills will then go to a conference committee (three senators, three delegates) to resolve the differences, and the resulting language will go to the Governor. 

The strange case of thermal RECs

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Renewable energy advocates are hoping that 2020 will be the year Virginia finally begins to make wind and solar the centerpiece of its energy planning, rather than a grudging add-on. The General Assembly will consider at least two bills that adopt a mandatory renewable portfolio standard as well as legislation to lower carbon emissions and open the private market to greater investments in renewables.

But good intentions don’t always produce effective legislation. Sloppy drafting causes unanticipated consequences. Minor amendments offered by an opponent produce major consequences only the opponent anticipated.

For a case in point, let’s consider Virginia’s existing, voluntary RPS. Worse than useless, it has enabled all kinds of mischief by defining “renewable energy” to include things that do not contribute carbon-free renewable power to the grid

As currently written, our renewable portfolio standard never has been, and never will be, responsible for a single electron of wind or solar energy. That means that any bill that takes as its starting point the definition that currently exists in the Virginia Code, or even uses the term “renewable energy” without narrowly defining it, risks failing right out of the gate.

Part of the problem is biomass. But a much greater problem is one that has been largely overlooked, mainly because no one understands it. It’s called “thermal” energy, and it is a major piece of mischief all by itself.

Added to the statute in 2015, thermal renewable energy certificates quickly became the primary means for Dominion Energy Virginia to meet its RPS targets, after counting the energy from the utility’s own hydro and biomass facilities and those from which it buys power under contract.

The thing is, no one seems to know where thermal RECs come from. The code offers three possibilities. One is “the proportion of the thermal . . . energy from a facility that results from the co-firing of biomass.” Another is “the thermal energy output from (i) a renewable-fueled combined heat and power generation facility that is (a) constructed, or renovated and improved, after January 1, 2012, (b) located in the Commonwealth, and (c) utilized in industrial processes other than the combined heat and power generation facility.” Finally, there is a tiny (and mainly unused) category for solar hot water systems and swimming pool heating.

The second definition, added to the code in 2015, is so specific that it was clearly written with a particular industrial facility or facilities in mind. From that definition, we can determine that thermal RECs don’t represent renewable electricity added to the grid.

What no one but Dominion seems to have known was that thermal RECs would instantly become the leading category for RECs, and one that would eliminate any chance for wind or solar to ever compete for RPS dollars in Virginia.

The Virginia statute is an oddity. “Thermal” is not a recognized category in the regional registry for purchase and sale of RECs among utilities and voluntary buyers (known as PJM GATS). I also haven’t found another state RPS program that includes thermal in its definition of renewable energy, aside from solar thermal.

A year ago I asked Dominion what kind of industry supplies thermal RECs; I was promised an answer, but none came. So a week ago I asked the staff of the State Corporation Commission. They don’t know either.

Every year in November, Dominion submits a report to the SCC about its renewable energy activities, including information the law requires about a utility’s RPS program. The reports are available on the SCC website.

None of the reports include any discussion of thermal RECs, including the report submitted covering 2015, the first year these RECs were allowed. The reports don’t indicate where thermal RECs come from, what kind of industrial process produces them, or whether there might be a lot more available that could supply Dominion in the future as RPS goals increase.

However, by law Dominion has to provide other information that, read together, allows us to deduce a few bits of information about thermal RECs, and about their role in the RPS:

  • They are generated by one or more Virginia facilities.
  • The facility or facilities were placed in service this decade, confirming that we are talking about that second meaning of thermal.
  • The facilities are not owned by Dominion.

All or almost all the RECs Dominion purchases are thermal RECs. Thermal RECs make up all or nearly all the energy and RECs Dominion has banked to use in future years. (Virginia law allows a utility to hang on to a REC for up to five years after it was generated.) If these were wind and solar RECs instead of thermal RECs, the value of the banked RECs would exceed $40 million, even at the low REC prices currently prevailing in the PJM marketplace.

I compiled the information from these reports into the table below. The 2019 filing, containing information for 2018, also gives us a view into the current year. It states: “The company began 2019 with banked renewable energy and RECs of 4,252,354 MWh and expects to have a bank of approximately 4,113,477 MWh of renewable energy and RECs toward future RPS targets at year-end 2019.”

Source: Virginia State Corporation Commission. (Ivy Main)

As you can see, Dominion has enough RECs banked that, when added to generation from Dominion’s own or contracted renewable energy facilities, Dominion has no need to purchase any RECs from any source until 2022 (when it still won’t need much).

Dominion doesn’t report what it paid for thermal RECs, but they are undoubtedly cheaper than any other qualifying source. One reason: with no competitive market for thermal RECs, Dominion is almost certainly the only buyer. In antitrust parlance, the term for this is “monopsony,” a word I hope you will now want to work into your dinner table conversation.

Monopsony power includes the power to set the price of a product, because the seller has no one else to sell to. In the case of thermal RECs, we don’t know who the seller is, but clearly its primary business is not the production of thermal RECs for sale. In fact, the money it gets for these RECs likely represents a windfall, and it is happy to get anything that covers its administrative cost in documenting its use of thermal energy.

On the other hand, Dominion doesn’t have to be overly stingy, since Virginia law allows the utility to pass on to ratepayers the cost of purchasing RECs for the RPS. One can imagine Dominion CEO Thomas Farrell having a nice dinner with the CEO of the corporation owning the industrial facility that uses the thermal energy, and together deciding what Virginia consumers will pay for these RECs. As long as it is less than the cost of other RECs available to Dominion, who will complain?

Whatever the price is, a monopsony price of thermal RECs will be less than the price of wind and solar RECs in Virginia, because wind and solar have a competitive market and buyers who are willing to pay more.

For years, critics have complained that the voluntary RPS is a failure for every purpose except greenwashing. But with no appetite for reform in the General Assembly, it’s been easy to ignore how the definition of renewable energy was expanding like a slime mold escaping its petri dish.

This year, though, the reformers are on the move. One or more bills requiring utility investments in renewable energy seem likely to gain traction. Advocates will be keeping their fingers crossed—and reading the definitions.

 

This article was originally published in the Virginia Mercury on January 7, 2020.

[Update: Several astute readers pointed me to information indicating that the source of the thermal RECs is WestRock, a Georgia-based multinational paper company that burns wood and black liquor (a toxic byproduct of the pulping process) as a power source. WestRock is the single biggest emitter of air toxics in Virginia, with its facility in Covington topping the ranks as the Commonwealth’s number one air polluter, ahead of even Dominion’s biggest and dirtiest coal plant. So when you are sorting through junk mail or have a cardboard box delivered, take time to savor the moment. Maybe you didn’t actually help make that paper, but you probably contributed your small mite to WestRock CEO Steven Voorhees’ $18 million compensation package.]

Dominion Energy’s new choices are really about limiting choices

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Trees clearcut.

Dominion’s renewable energy products contain copious amounts of biomass, also known as burning trees. Photo by Calibas, Creative Commons.

An annual survey conducted by Yale and George Mason universities shows concern about climate change is surging. Seventy-three percent of Americans think climate change is happening, and 69% are at least somewhat worried about it, the highest percentages since the surveys began in 2011.

Another Yale survey found that “a large majority of registered voters (85%) – including 95% of Democrats and 71% of Republicans – support requiring utilities in their state to produce 100% of their electricity from clean, renewable sources by 2050. Nearly two in three conservative Republicans (64%) support this policy.”

Yet here in Virginia, Dominion Energy expects to reduce carbon emissions less in the future than in the past, and it has no plan to produce 100% of its electricity from clean, renewable sources by 2050. For all the talk here of solar, Virginia still had one-seventh the amount of solar installed as North Carolina at the end of 2018 and no wind energy.

Dominion has developed a few solar projects and new tariffs to serve tech companies and other large customers, but ordinary residents still lack meaningful choices. So this spring, Dominion decided to do something about that.

The wrong thing, of course.

Dominion has asked the State Corporation Commission for permission to market two quasi-environmentally-responsible products. One is for people who are willing to pay a premium for renewable energy, and don’t read labels, and the other is for people who want a bargain on renewable energy, and don’t read labels.

There may be plenty of both kinds of customers out there, but that doesn’t mean the SCC should approve either product. Indeed, while the purpose of the bargain product is to offer a choice nobody wants, the purpose of the premium product is to close off better choices.

Let’s look first at the product for bargain-hunters, a super-cheap version of the utility’s Green Power Program. Dominion is calling it “Rider REC.” A better name for it would be the “You Call This Green? Power Program.”

Rider REC consists of the dregs of the renewable energy category, the stuff that isn’t good enough for the Green Power Program. That’s a low bar already, because the Green Power Program doesn’t sell green power. It sells renewable energy certificates (RECs), the “renewable attributes” of electrons from facilities labeled renewable.

Customers who pay extra for RECs still use whatever mix of energy their utility provides. For Dominion customers, that’s fracked gas, nuclear and coal, plus a tiny percentage of oil, biomass, hydro and solar.

Buying RECs lets good-hearted people feel better about using dirty power by donating money to owners of renewable energy facilities somewhere else. The facilities might be in Virginia, or they might be clear across the country.

For example, say a utility out west builds a wind farm because wind is the cheapest way to generate power. If the state doesn’t have a renewable portfolio standard that requires the utility to use the RECs for compliance (most windy states don’t), the RECs can be sold to buyers in liberal East Coast states, lowering energy prices for the utility’s own customers.

RECs don’t even have to represent clean sources like wind. Some RECs subsidize industries that burn trees (aka biomass), black liquor (a particularly dirty waste product of paper mills) and trash.

Dominion’s Green Power Program uses RECs that meet the standards of a national certification program called Green-e. Green-e requires that facilities be no more than 15 years old and meet minimum environmental standards, such as requirements that woody biomass be sustainably grown and that generators don’t violate state and federal pollution limits.

But Virginia’s definition of renewable energy is, shall we say, more forgiving than Green-e’s. Our law does not discriminate against decades-old facilities like hydroelectric dams, or energy from trees that have been clear-cut. (Nor does it recognize that burning trees produces even more lung-damaging, asthma-inducing pollution than coal, and more climate-warming CO2 as well.) Virginia’s definition of renewable energy even includes a vague category of “thermal” energy that may be another way paper mills profit from the REC racket.

This loose definition of “renewable” creates a business opportunity for anyone unscrupulous enough to seize it. Dominion proposes to package up these otherwise unmarketable RECs from sketchy sources across the continental United States and pawn them off on unsuspecting consumers here in Virginia.

There is always money to be made by suckering well-meaning folks, but that’s not a good enough reason for the SCC to let Dominion do it. The case is PUR-2019-00081. Public comments are due by Aug. 15.

So what about the more expensive quasi-environmentally responsible product? “Rider TRG” consists of real, straight-from-the-facility electricity on the power grid serving Virginia, not RECs from out west. And while it is not dirt-cheap like Rider REC, Rider TRG would cost residential customers a premium of only about $50 per year.

Unfortunately, Virginia’s kitchen-sink definition of renewable energy means the sources still don’t have to be new or carbon-free or sustainable. It appears most of them won’t be.

Dominion’s filing indicates the program will use the energy from the Gaston hydroelectric dam built in 1963; the Roanoke Rapids hydro station built in 1955; the Altavista, Southampton and Hopewell power stations that were converted from coal to wood-burning in 2013; and several solar farms the company has already built or contracted for.

In addition, Dominion proposes to allocate to the program the portion of electricity from its Virginia City coal plant representing the percentage of wood that is burned along with the coal.

That’s right, Dominion intends for renewable energy buyers to subsidize its coal plant. The idea is cynical enough to have come from the Trump administration.

Dominion knows full well that customers who want renewable energy want new wind and solar, so why is its first product for residential customers so loaded with dirty biomass and old hydro?

The answer is that Dominion doesn’t care if no one signs up for Rider TRG. The point isn’t to give customers what they want, it’s to prevent them from shopping elsewhere for better options. Like Appalachian Power before it, Dominion wants to close off the narrow opening provided by Virginia law that allows customers to shop for 100% renewable energy from other providers only if their own utility doesn’t offer it. The SCC approved APCo’s renewable energy tariff some months ago. Dominion is following APCo’s successful strategy.

Yet APCo’s product consists of hydro, wind and solar, so it is nefarious, but not actually bad. Dominion’s is nefarious and bad.

An SCC decision in 2017 confirmed customers’ right to shop for renewable energy as long as the incumbent utility doesn’t offer it. Currently at least two other providers, Direct Energy and Calpine Energy Solutions, offer renewable energy to commercial customers in Dominion territory. Yet according to documents provided by Direct Energy, Dominion is refusing to let its customers transfer to Direct Energy and Calpine, triggering competing petitions to the SCC.

Dominion no doubt hopes to resolve the dispute permanently by terminating its customers’ right to switch providers at all.

The case is PUR-2019-00094. Comments may be submitted until Nov. 14, and a public hearing will be held on Nov. 21.

 

This article first appeared in the Virginia Mercury on July 22, 2019.

 

UPDATE November 5: The SCC approved Dominion’s Rider REC, the Green Power For Suckers program, on October 31, disregarding the recommendation of SCC staff to deny it. It hasn’t yet ruled on Rider TRG. However, the SCC staff has pointed out that if Dominion left the controversial biomass elements out of the program, it would cost less than half as much.

Dominion gets the nod to sell solar energy to us regular folks

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alternative energy building clouds energy

Photo by Pixabay on Pexels.com

The State Corporation Commission (SCC) has approved Dominion Energy Virginia’s so-called Community Solar pilot program, under which the utility will offer its residential and commercial customers the output of solar farms to be built by independent solar developers here in Virginia.

Customers will have the option to meet either all or part of their electric demand with solar. The added cost of the program, at least initially, will be 2.01 cents per kilowatt-hour (kWh). For a customer who uses an average of 1,000 kWh monthly and wants to use only solar, that would add up to a premium of $20.10 per month.

Customers who want to meet just a portion of their total demand with solar will have the option of subscribing to “blocks” consisting of 100 kWh, up to a maximum of 5 blocks for residential customers or 10 blocks for non-residential customers.

The premium cost of the program may surprise customers who have heard that large-scale solar is now one of the cheapest sources of energy in Virginia. But according to Will Cleveland, a staff attorney at the Southern Environmental Law Center who helped to develop the program, cost was not the only consideration in choosing which solar facilities to include in the program.

Facilities were selected to be smaller and distributed around the state, in keeping with the “community” concept, which meant they sometimes came with higher prices. Program costs also include Dominion’s costs of administration and marketing. Cleveland says he consulted experts who advised him these numbers were reasonable.

In addition to selling the electrical output of the solar facilities to customers, Dominion will retire the associated renewable energy certificates (RECs). The RECs represent the legal proof that the energy comes from solar, an important factor for commercial customers that wish to represent they use renewable energy in their business. “Retiring” the RECs guarantees that Dominion isn’t also selling them elsewhere.

The program is a result of legislation passed by the General Assembly in 2017 that authorized a three-year pilot program in Dominion’s territory for up to 40 megawatts (MW) of solar capacity. The legislation also authorized Appalachian Power to develop up to 10 MW for a similar program. To date, Appalachian Power has not submitted a proposal.

Although the program is called “community solar,” customers will not own shares in the solar facilities, and the facilities do not have to be located in the same communities as the customers. Virginia law does not permit the kind of community solar in which customers share in the ownership and output of solar facilities.

Calling Dominion’s program “community solar” is bound to confuse people, and it’s hard not to believe that was a calculated move on the utility’s part. Yet Dominion’s solar offering is a major step forward for the company, and for customers who aren’t able to put solar panels on their own rooftops.

And while it is somewhat more expensive than the company’s Green Power Program, it should prove much more attractive with people who understand the difference between the programs.

Subscribers to the Green Power Program don’t get electricity from renewable energy; Dominion sells them regular “brown” power, then tacks on an added charge to match the dirty energy with renewable energy certificates (RECs). Most of the RECs come from existing wind projects in other states, where wind is already the cheapest power source. By contrast, the solar program provides solar energy (and the RECs) from new Virginia solar farms, ones that would not get built otherwise.

Dominion is expected to begin signing up subscribers for its solar program later this fall, with the program getting underway once the solar projects come online next year. For those of us without the sunny roofs needed to put up our own solar panels, this promises to be—for now—the next best option.

A version of this article first appeared in the Virginia Mercury, a new (and if I do say so, quite excellent) independent online news source dedicated to covering Virginia issues that matter. 

How Virginia could build 5,000 megawatts of wind and solar, and still have no wind or solar

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Pie graph showing Dominion Energy Virginia energy mix 2017

No amount of new solar would enlarge the sliver of renewables in Dominion’s energy mix if it sells the RECs. Graph is from Dominion Energy Virginia’s 2018 Integrated Resource Plan.

With the passage of SB 966 earlier this year, the Virginia General Assembly declared 5,000 megawatts (MW) of utility solar and wind energy in the public interest, spreading optimism that Virginia is beginning its slow transition to a clean energy economy. All indications are that Dominion Energy Virginia, the state’s largest utility, intends to make good on that number. Yet under Virginia law, as interpreted by the State Corporation Commission, Virginia utilities could build all that wind and solar and still not be able to claim it in the energy mix serving Virginia residents.

That peculiar result is possible if Dominion and other utilities sell the renewable energy certificates (RECs) associated with the electricity generated from the wind or solar project, transferring to their buyers the legal right to call it renewable energy. The likely buyers are utilities in other states that need RECs to meet mandates for renewable energy under the laws of those states. If the RECs get sold this way, Dominion Energy can build one solar farm after another in Virginia, without ever adding solar to our electricity mix.

That’s right: if you sell the RECs from a solar facility, you can’t say you are using electricity from solar.

This scenario is not just possible, but likely, based on earlier State Corporation Commission (SCC) rulings. The first time Dominion received permission to develop solar, based on a 2013 law enabling the utility to build up to 33 MW of distributed solar (dubbed the Solar Partnership Program), the SCC insisted that Dominion sell the RECs to reduce the cost of the program to ratepayers.

What about Virginia’s voluntary renewable portfolio standard (RPS), which requires participating utilities to get a portion of their electricity from renewable energy sources, including solar? Dominion continues to meet its annual targets, which gradually rise to 15% of non-nuclear electricity by 2025, measured against 2007 demand.

But here, too, the SCC does not want ratepayers to have to spend a dime more than necessary on meeting the RPS. It requires utilities to sell higher-value RECs and replace them with the cheapest RECs available that still meet the Virginia definition of renewable energy. This practice, known as REC “optimization” or arbitrage (selling high, buying low), is common in states with loose RPS laws, and is sometimes used in the private sector as well.

The use of REC optimization, paired with Virginia’s kitchen-sink approach to what qualifies as renewable energy, renders Virginia’s RPS meaningless. Making it mandatory wouldn’t make it meaningful.

chart showing fuel types used to show RPS compliance by Dominion Energy Virginia

Fuel types used to meet compliance with Virginia RPS. From Dominion’s Annual Report to the SCC on Renewable Energy, November 2017. (MSW=municipal solid waste incineration.)

Dominion’s 2017 Annual Report to the State Corporation Commission on Renewable Energy records the company’s progress on meeting the RPS as well as describing its other renewable energy investments. The report confirms both Dominion’s ongoing use of REC optimization for the RPS and its practice of selling RECs from solar projects to reduce ratepayer costs.

Nothing in the 2018 legislation speaks to RECs generated by the 5,000 MW of utility wind and solar that are now declared to be in the public interest. One might suppose the General Assembly intends for utilities to build those projects for ratepayers, not to sell off the legal right to claim we have wind and solar in our mix. But then again, it is entirely possible most legislators never gave the topic a moment’s thought.

If one were to raise it with them now, some might even prove quite comfortable with the idea. As long as we get the jobs and economic development associated with new energy projects, and we use the clean energy to reduce the burning of fossil fuels, they might say heck yeah, let Maryland or New Jersey buy the bragging rights for their state RPS requirements and subsidize our energy costs.

If taking advantage of the flaws in other state’s laws feels like the wrong way to make progress, there is an alternative. We could reform Virginia’s RPS to make it less like corporate welfare for producers of the least valuable forms of renewable energy, and more like a transition plan to a clean energy economy. Put that together with a plan for true grid transformation, and we will have something to brag about ourselves.