Virginia’s 2024 legislative session wrapped up last month without any action to avert the energy crisis that is hurtling towards us.
Crisis is not too strong a word to describe the unchecked proliferation of power-hungry data centers in Northern Virginia and around the state. Virginia utilities do not have the energy or transmission capacity to handle the enormous increases in energy consumption. Dominion Energy projects a doubling of CO2 and a new fossil fuel buildout. Drinking water sources are imperiled.
The governor is unfazed. Legislators are going to study the matter.
Source: PJM
According to data gathered by regional grid operator PJM, half of the coming surge will occur in parts of Virginia served by Dominion Energy. In its 2023 Integrated Resource Plan (IRP), Dominion said it would meet the higher demand by increasing its use of expensive and highly polluting fossil fuels and building new methane gas-fired generating plants. Dominion admitted this will push up carbon emissions at a time when the Virginia Clean Economy Act requires the utility to build renewable energy and cut carbon.
PJM projects equally huge data center growth in areas served by Virginia electric cooperatives, especially Northern Virginia Electric Cooperative (NOVEC). The cooperatives are exempt from most VCEA requirements, and NOVEC buys the bulk of its power from PJM’s fossil fuel-heavy wholesale market. NOVEC’s latest annual report cites load growth of 12% per year, almost entirely from data centers, but fails to even mention the increase in carbon emissions that will accompany that growth.
Undeterred by these alarming statistics, the General Assembly put the growth on steroids with a new round of tax breaks in 2023, while beating back any conditions that might have slowed the onslaught. This year it turned away every bill that would have placed limits on the industry or protected ordinary consumers from the inevitable cost increases.
At the same time, legislators rejected a host of bills that would have enabled more renewable energy development in Virginia and given customers a greater ability to secure their own electricity supply. Together these bills could have brought thousands of megawatts of new solar projects online, lowered demand growth through increased energy efficiency, and prevented the increases in carbon pollution that now appear inevitable.
Legislators did greenlight Dominion Energy and Appalachian Power’s ability to spend their customers’ money on initial development efforts for two nuclear reactors of up to 500 megawatts (MW), one for each utility.
This is not a fix. It is like scheduling knee surgery for next year when you are having a heart attack today.
There is, famously, much doubt about whether small modular reactors (SMRs) will prove viable in the coming decades, but there is no doubt whatsoever that the surge in data center development is happening right now. Virginia’s hoped-for nuclear renaissance would be both too little and too late to meet a data center demand that Dominion says grew by 933 MW in 2023 alone. It’s expected to reach almost 20,000 MW by 2034, the year Dominion’s IRP shows its first small nuclear reactor delivering power.
In rejecting every serious measure to address data center demand, General Assembly leaders said they wanted to wait for a study being conducted this year by the Joint Legislative Audit and Review Commission (JLARC). What the General Assembly didn’t do was defer new data center development until the study is complete. Another year has to pass before lawmakers will even consider bills addressing land use, power and water concerns around data centers or make it easier for renewable energy to come online.
The consequences of inaction could be deadly. It was only a year ago that Virginia’s Department of Environmental Quality (DEQ) proposed allowing certain Northern Virginia data centers to violate their air quality permits by running more than 4,000 highly-polluting diesel generators during periods of grid stress. It doesn’t take much imagination to picture the public health disaster we’d have had if 4,000 diesel generators kicked into operation last summer when smoke from Canadian wildfires had already made Virginia air quality hazardous.
DEQ backed off its proposal after a massive public outcry, but the idea is likely still percolating at the agency and might reemerge as an emergency demand-response measure. Even without allowing the generators to provide grid support, more data centers with more diesel generators will worsen air quality with every power outage and every round of equipment testing.
As I argued at the time, the diesel generator fiasco could have been avoided in the first place if data centers had been equipped with renewable energy microgrids and battery storage. DEQ’s decision not to require battery storage as the first line of defense against power outages deprived Dominion of a demand-response option that would have been far cleaner and more useful than diesel generators.
One of the bills the General Assembly rejected this year would have prohibited the use of backup diesel generators by data centers that receive state tax subsidies, and would have required greater energy efficiency. It was a missed opportunity that means the problem can only get worse in the coming year.
The governor, however, could still avert the crisis by imposing a pause in data center development while the JLARC study is underway. He could accomplish this through an executive order directing the Virginia Economic Development Partnership (VEDP) not to enter a memorandum of understanding (MOU) with any data center operator until the JLARC study is complete and legislators have had the opportunity to act on it. These MOUs are a requirement for data center operators to access Virginia’s generous tax exemptions. Without the tax subsidies, most data center developers would likely choose not to pursue development here.
This is not a novel idea. Last spring, data center reform advocates asked VEDP to include stringent efficiency and siting conditions in MOUs it entered with Amazon Web Services. They never got an answer.
Down in Georgia, however, legislators just passed a Republican-led bill to suspend that state’s data center tax subsidies for two years pending the results of a study of grid capacity. Legislators expressed concern about Georgia Power’s ability to provide electricity to all the data centers that want to come to the state. And as Republican Sen. John Albers also noted, “The reality is these do not create many jobs. They create big buildings, but they do not create jobs.”
The Georgia tax subsidies were modeled on the ones Virginia implemented in 2010, which pushed our data center growth into overdrive. Isn’t it interesting that Georgia lawmakers so quickly learned a lesson that Virginia leaders refuse to even acknowledge?
This article was originally published in the Virginia Mercury on April 3, 2024.
For the third year in a row, a tug-of-war is going on in the General Assembly over whether Virginia stays the course of the energy transition laid out in 2020 and 2021, or rolls it back hard.
Democrats remain committed to a renewable energy future to address pollution, high electricity costs and the causes of catastrophic climate change. Gov. Glenn Youngkin and most Republican legislators cling to the familiar (dis)comfort of fossil fuels. Republicans are still lobbing grenades at the Virginia Clean Economy Act (VCEA) and the Clean Car Standard; Democrats are holding the line on those advances.
Last year House Republicans used small subcommittees to kill Democrats’ energy bills, even those that passed the Senate on a bipartisan basis. This year the Democrats’ slim majority in both chambers will let more bills get to the governor’s desk. But with the threat of a veto tempering expectations, the party of clean energy is not running big, ambitious bills, but is instead focused on solving problems that have popped up along the march to zero carbon.
Committees have already begun work on the hundreds of energy bills filed in past days. That’s too many for even the Mercury’s dedicated readers to review without more caffeine than is good for you, so let’s focus on just some that would have the most consequence for the clean energy transition.
To be: Democrats work to further the clean economy
Many of the Democratic bills contain small fixes to existing law that add up to big gains for clean energy. One of these is HB 638, from Del. Rip Sullivan, D-Fairfax, and SB 230, from Sen. Ghazala Hashmi, D-Richmond. Most of its provisions are tweaks to the VCEA. Among them are increasing from 1% to 5% the percentage of Dominion Energy Virginia and Appalachian Power’s renewable energy purchasing that must come from small projects like rooftop solar; streamlining the State Corporation Commission’s review of energy efficiency programs by creating a single cost-effectiveness test; and supporting competition in the development of renewable energy and energy storage facilities by specifying that “at least”35% of projects must come from third-party developers, instead of the simple 35% number currently in the law.
The bill also contains a provision that goes beyond the VCEA. It states that the SCC has an “affirmative duty” to implement the Commonwealth Energy Policy at “lowest reasonable cost.” (Two other bills, one from Sen. Jennifer Carroll Foy, D-Fairfax, and the other from Del. Phil Hernandez, D-Norfolk, contain only this provision.) The energy policy is separate from the VCEA, and it sets ambitious goals for the decarbonization of Virginia’s whole economy, including a faster timeline for achieving net zero in the electricity sector. The catch is that the policy does not have teeth, and for that reason it is routinely ignored. Requiring the SCC not just to take account of it, but also to implement it, is a step towards broader decarbonization, though it is not clear how it would actually play out at the SCC.
Legislation from Sen. Scott Surovell, D-Fairfax and Sullivan would resolve problems with the shared solar program in Dominion territory (including putting restraints on the minimum bill that the utility can charge) and expand it to Appalachian Power territory.
SB 79, from Sen. Barbara Favola, D-Arlington, would save taxpayers money by requiring new or substantially renovated (over 50%) public buildings to have solar-ready roofs or, if solar is deemed impractical, to meet one of two high-efficiency alternatives. New or substantially renovated schools would have to be designed and built to net-zero energy standards, unless the locality determines that to be impractical or the school is a historic building.
Sullivan and Sen. Suhas Subramanyam, D-Loudoun, have introduced legislation to resolve the interconnection problem that has stalled commercial solar projects across Dominion territory. The House and Senate bills specify that customers are responsible for costs on their side of the meter, while the utility pays for costs on its side, including upgrades to the distribution grid.
A few bills seek to break through the local-level gridlock that has bedeviled utility-scale solar and wind projects. The most significant of these is HB 636from Sullivan and SB 567 from Sen. Creigh Deeds, D-Charlottesville, which provides an alternative permitting process for larger utility solar (50 MW or more), wind (100 MW or more) and renewable energy storage projects (at least 50 MW nameplate and discharge capacity of 200 MWh or more) that go through the local permitting process but end up without permits. Developers get a second chance at the SCC if they meet a list of requirements. These include safeguards for farmland protection, stormwater, setbacks, wetlands, wildlife corridors, etc. Applicants are also charged $75,000 to cover the locality’s cost of participating in the SCC proceeding. (There is some irony here that small projects, which have less impact, are left at the mercy of local whims, while the most impactful projects have what amounts to a right of appeal.)
Vehicle electrification would also get support from Democratic legislation. One bill of particular interest is Sullivan’s HB 118, which requires Dominion and Appalachian Power to take charge of upgrades to the distribution grid needed to support EV charging by non-residential customers. The utilities are also tasked with filing detailed plans to “accelerate widespread transportation electrification across the Commonwealth in a manner designed to lower total ratepayer costs.”
Regardless of the fate of these bills, Virginia’s efforts to transition to a zero-carbon economy will be swamped by new demand from the fast-growing data center industry, unless the industry itself can be made part of the solution. A dozen or so bills seek to put conditions on the industry in one way or another, but one takes on the energy demand directly. HB116, from Sullivan, and SB192, from Subramanyam, condition data center operators’ receipt of tax credits on demonstrating compliance with minimum standards for energy efficiency and renewable energy procurement, as well as not using diesel generators for backup power.
Not to be: Republicans try out arguments against the energy transition
Many of the Republican anti-clean energy transition bills are blunt instruments that are more about campaigning in Trump country than low-cost energy. For example, HB 397, from freshman Del. Tim Griffin, R-Bedford, would repeal most of the important provisions of the VCEA, while declaring that development of new nuclear is “in the public interest” (a phrase that pretty much means “watch your wallet”).
Similarly, five bills seek to repeal outright the Advanced Clean Cars law passed in 2021, which effectively put Virginia among the states that follow California’s path to vehicle electrification. The law does not kick in until 2025, but trying to repeal it has become a Republican standby. A more subtle bill from Del. Lee Ware, R-Powhatan, would condition repeal on the Virginia Automobile Dealers certifying that Virginia is not meeting its annual EV sales targets.
Some anti-EV bills are merely performative. One non-starter, from Griffin again, would provide a tax credit for purchases of vehicles with internal combustion engines. A bill from Sen. William Stanley, R-Franklin, would require any business selling an EV or any EV component to a public body to provide a sworn declaration that there was no child labor involved not just in the manufacturing but at any point anywhere along the supply chain, starting with mining minerals abroad.
If Stanley were truly concerned about child labor violations, of course, he would seek to apply this sworn declaration requirement to all industries. He could start with the domestic meatpacking industry, where child labor violations are rife, including in Virginia. Ah, if only that were the point.
It’s not just state-level decarbonization that comes in for a brute-force attack. A bill from another new delegate, Eric Zehr, R-Lynchburg, makes its target any federal regulations that “may threaten the production or supply of affordable, reliable, and secure energy within the Commonwealth.” If alerted to such a threat by a utility or the SCC, the Attorney General’s office would be required to intervene. This sort of bill is not intended to survive its first committee hearing, if it even gets a hearing. Its only purpose is to show off the patron’s hard right bona-fides.
To be fair, there are Republicans who are actually trying to solve real problems in the energy sector. As one example, take SB562 from Sen. Travis Hackworth, R-Tazewell. His bill would create a ratepayer-funded pilot program for utilities to figure out a way to use coalbed methane for electricity without burning it (perhaps with fuel cells?). The problem is, he proposes to make this electricity eligible for Virginia’s renewable portfolio standard (RPS). It’s a creative, if expensive-sounding, response to the real climate problem of methane leaking from old and often abandoned coal mines, part of the true cost of coal. But calling fossil methane renewable is, shall we say, counterfactual. Some problems are more effectively tackled head-on, using tax dollars or tax credits, rather than being used to undermine the integrity of the RPS.
To be: somewhere else entirely
The reality of renewable energy is that we have to build a great many wind, solar and storage projects, each one taking months or years of design, permitting and construction work and requiring acreage we would rather use for something else. Yes, it means economic activity, investment and jobs, but it’s also something of a slog. Wouldn’t it be nice if we had a magic solution that could just provide carbon-free electricity without all that bother?
That’s the dream that continues to attract both Democrats and Republicans to nuclear energy. Opinion is divided on whether small modular reactors (SMRs) could hold the answer to all our energy woes, or are just the latest con from an industry looking to attract a new set of deep-pocketed suckers.
Three things are clear at this point. One, SMRs are still many years away from commercialization, coming too late to solve the climate problem that is here and now. Second, SMRs are going to cost a lot. Not only is there no free nuclear lunch, there isn’t even a low-priced breakfast. And third, Dominion is frothing at the bit to build an SMR – but only if customers have to pay for it.
Some legislators are happy to oblige, even with all these drawbacks. The most concerning of the bills are HB 1323 from Del. Danny Marshall, R-Danville, and SB 454 from Sen. David Marsden, D-Fairfax. The legislation would allow Dominion or Appalachian Power to charge ratepayers “at any time” to recover development costs of a small modular nuclear reactor, defined as a nuclear reactor not larger than 500 MW. Not only is that not small, but by the language of the bill it need not even be modular or use advanced technology. Heck, it doesn’t even have to be in Virginia. Dominion could build any kind of nuclear plant, anywhere it chooses, and satisfy the terms of the bill.
But it’s that “at any time” language that should be a red flag for lawmakers. Charging customers for a nuclear plant before and during construction, including cost overruns and with no guarantee of completion, is precisely how residents of South Carolina got stuck paying billions of dollars for a hole in the ground.
That amount of money buys a lot of low-cost renewable energy and storage, right in the here and now. Virginia needs to be a clean energy state for the sake of ratepayers, the economy and the climate, and there is no time to waste.
This article was first published on January 21, 2024 in the VIrginia Mercury.
Data centers increasingly dot the landscape of Northern Virginia, like this one sandwiched between a housing community and the W&OD bike path in Ashburn. Photo by Hugh Kenny, Piedmont Environmental Council.
None of the sessions at last month’s Virginia Clean Energy Summit(VACES) in Richmond were devoted to data centers, but data centers were what everyone was talking about. Explosive growth in that energy-hungry industry has everyone — utilities, the grid operator, and the industry itself — scrambling to figure out how Virginia will provide enough new power generation and transmission. And, worryingly, no one seems to have an answer.
Or rather, lots of people have answers, but none of them achieve the trifecta of providing data centers the energy they need while continuing the explosive growth trajectory that state leaders seem to want, and at the same time keeping Virginia’s transition to zero-carbon energy on track. Something has to give. Which will it be?
With no action, the “give” comes from the people of Virginia. Residents will see growth they don’t want, pay for infrastructure that doesn’t serve them, suffer from pollution that is not of their making, and see their tax dollars subsidize an industry that employs almost no one.
The no-action option isn’t a solution
But first, a quick recap. Northern Virginia already has the largest concentration of data centers in the world. As of late 2022, data center electricity demand had grown to 21% of Dominion Energy Virginia’s entire load, and likely an even larger percentage of the load of Northern Virginia Electric Cooperative (NOVEC), which serves much of Data Center Alley.
Worse, the industry is just getting started. Grid operator PJM’s grid forecast projects Dominion’s data center load will quadruple over the next 15 years, while NOVEC’s will rise to ten times what it is today. Other rural electric cooperatives in Virginia told PJM they also expect a huge demand from data centers, a prediction confirmed by news that Amazon Web Services expects to spend $11 billion on data centers in Louisa County, in the territory of Rappahannock Electric Cooperative.
In its Integrated Resource Plan (IRP) filing in May of this year, Dominion told the State Corporation Commission (SCC) that due to data center demand, it plans to ignore Virginia’s commitment to achieving a zero-carbon economy. Instead of increasing the pace of renewable energy and storage construction, it wants to keep coal plants running past their mandatory retirement dates and even build new gas combustion turbines as well as billions of dollars’ worth of new transmission infrastructure. The result will be higher costs for consumers and massive increases in carbon emissions, violating the carbon-cutting mandate of the Virginia Clean Economy Act.
Bill Murray, Dominion senior vice president for corporate affairs and communications, seems to have tried for a more conciliatory tone in talking to Senate Finance Committee members last week about the challenge of meeting data center load. Murray is quoted in the Richmond Times-Dispatch telling members, “We have worked through these challenges before.” Isn’t that reassuring? If only it were true.
If Dominion’s response has been less than adequate, others have not done better. PJM, already woefully behind on approving new renewable energy generation interconnection requests, blames states for wanting clean energy rather than doing its own job to help the market provide it. A PJM representative told the VACES audience utilities should just keep their fossil fuel plants running until it can work its way through the backlog, hopefully by 2026.
Virginia’s Data Center Coalition doesn’t see energy as its problem to solve, and its members seem strangely content to run on fossil fuels. Others in the industry are trying to do better, though. Whole conferences are devoted to the subject of lowering the carbon footprint of data centers. In addition to a pledge to use renewable energy 24/7, Google has achieved remarkable levels of energy efficiency (for you nerds, they claim an average PUE of 1.1). Google, however, has only a small footprint in Virginia.
Amazon Web Services, the biggest data center company in Virginia, buys renewable energy but is not striving for the 24/7 standard. AWS’ senior manager for energy and environment public policy, Craig Sundstrom, told a panel at VACES that by 2025, AWS will have offset its use of grid power with purchases of renewable energy on the PJM grid, and he pointed to 16 solar projects the company has in operation or under development in Virginia. That’s a great start, but it’s only a start. With no battery storage in the mix, AWS will still be using grid power from fossil fuels most of the time.
Wishful thinking will not solve this
So what should data centers do? Or, since most of the industry doesn’t want to do anything, what should Virginia utilities and policymakers do?
VACES conference attendees had a few suggestions. The nuclear energy true believers were there, touting small modular reactors (SMRs). Gov. Youngkin and many Virginia legislators are fans of nuclear, but the timing was unfortunate. A few weeks after VACES, the first SMR in development — the one that’s supposed to prove how great the technology is — lost its customers due to increasing cost projections. The chances of SMRs ever outcompeting solar paired with storage seems more remote than ever.
Green hydrogen, a vital part of our energy future, has cost and availability problems right now, too. Microgrids powered by hydrogen fuel cells would be a fantastic solution. I’ll set my alarm for 2030 to check on how that’s going.
Meanwhile, representatives of Washington Gas and Roanoke Gas earnestly tried to sell the VACES audience on the virtues of methane captured from wastewater treatment plants and hog waste cesspools like those at Smithfield Farms’ concentrated animal feeding operations (CAFOs).
Some of this so-called renewable natural gas (RNG) may be available now, but it is exceedingly hard to imagine there would ever be enough to supply even the back-up generators at Virginia data centers, to say nothing of meeting 21% (and growing!) of Dominion’s total load. North Carolina has incentivized pig waste biogas for many years, but it still makes up only a fraction of a percentage point of that state’s energy supply.
To hear the gas folks tell it, though, RNG is not just carbon-neutral but carbon-negative, achieving this Holy Grail status by capturing and burning methane that would otherwise escape into the air. They assert that mixing a mere 5% of this biogas into ordinary fossil methane will effectively decarbonize the entire pipeline. In other words, we should be glad CAFOs are such an environmental disaster.
That dog won’t hunt. If gas companies get to claim the virtues of pig waste biogas, they also have to account for its vices, including the greenhouse gas emissions and other pollution associated with methane capture and leakage throughout collection and delivery.
Also, if factory farming is the answer to the needs of data centers, God help us. Maybe the tech industry should move to Iowa.
A better approach
One of the better ideas coming out of VACES was a simple one: if clean energy can’t come to the load, the load should go to clean energy. Iowa, in fact, is just one of several states that get more than half their electricity from wind and solar. And indeed, some large tech companies are looking at separating their operations between those that are time-critical and need to be next to load centers and those that don’t, with the latter able to take advantage of better climates and greener energy.
Tech companies don’t necessarily have to look beyond Virginia to take their operations to clean energy. Nothing prevents them from locating in rural counties where they can surround their data centers with fields of solar panels and banks of batteries. For that matter, a large operator like AWS could buy offshore wind, starting with the Kitty Hawk project that is still seeking a customer.
Many Virginia data center operators, though, will still need to access the PJM market. They should be expected to follow Google and buy renewable energy and storage to meet at least most of their electricity needs on a 24/7, hourly matching basis. Given the PJM bottleneck, they will need a grace period of two or three years. After that: no renewable energy, no tax subsidy.
That’s point one of our data center strategy. Point two: data centers that have to source their own renewable energy will be motivated to use less energy, but Virginia can also set an energy efficiency minimum they should meet to qualify for Virginia’s tax subsidies. They need not match Google’s success, but they should come close.
Point three: Dominion claimed in its IRP that it could not build enough solar itself to meet the soaring data center demand; this was its excuse for keeping expensive coal plants running beyond their planned retirement dates. If Dominion can’t build it, let others do it. The General Assembly should remove the 35% limit on the amount of solar and storage capacity that third-party developers can provide. A little free-market competition never hurt anyone.
Point four: If the growth of data centers requires utilities to invest more for energy generation and power lines, the data centers should be the ones paying the extra cost, not residential customers.
Point five: Leaders should not separate the joy they feel in attracting data centers from the pain their constituents feel in living with data centers and transmission lines, breathing pollution from diesel back-up generators and having the quality and quantity of their freshwater resources threatened. Data center developers and revenue-hungry local governments are not the appropriate decision makers for development at this scale. The administration should convene a task force with the job and power to do comprehensive planning for data center siting, development and resource use.
Adopting these five points will not stop data centers from locating in Virginia, and that isn’t the goal. What it will ensure is that the development is well planned out, fair and equitable to everyone.
This article appeared in the Virginia Mercury on November 21, 2023.
Virginia’s first commercial offshore wind farm is on track to start construction next year and to be fully operational in 2026. The Coastal Virginia Offshore Wind (CVOW) project being developed by Dominion Energy will be the single largest offshore wind farm in the U.S. and among the first full-scale commercial wind projects built in U.S. waters.
Yet it has taken us 10 years to get this far. Future projects will have shorter timelines now that the industry is gaining its footing and government bodies have figured out how to regulate it. Even so, the complexity of planning, permitting and building giant wind turbines 25 miles out in the ocean means Virginia needs to start planning the next project now to ensure that the supply chain businesses that have located here, and the workers we are training to build CVOW, still have reason to remain in Virginia come 2027.
For most Virginians, offshore wind may still feel experimental because it has produced only two small projects in the U.S.: a 5-turbine wind farm off of Rhode Island’s Block Island built in 2016 and a two-turbine pilot project 27 miles out from Virginia Beach that started generating power in 2020. But at least 30 other projects are underway up and down the East Coast, including one currently under construction off Massachusetts and another off of New York that will begin construction this year. Plans are also underway for wind farms in the Great Lakes, off the West Coast and in the Gulf of Mexico.
Together these projects add up to more than 53,000 megawatts (MW), exceeding the Biden Administration’s 30,000 MW by 2030 goal – enough to power 10 million homes with clean, renewable energy. According to the U.S. Department of Energy, independent forecasts show that goal to be solidly realistic. The U.S. offshore wind industry itself recently announced a longer-term target of 110,000 MW, reflecting the business community’s expectations for growth.
The industry is also far more mature in other parts of the world. Global capacity passed the 50,000 MW milestone last year, and the global pipeline stands at more than 368,000 MW. (Surprise, surprise: China is eating our lunch, installing 13,790 MW in 2021 alone.)
Perhaps the most compelling evidence for the promise of the offshore wind industry in the U.S. is the size of industry events. In the course of a dozen years, U.S. offshore wind conferences have gone from gatherings of a few hundred academics, environmentalists and entrepreneurs in a hotel ballroom to the nearly 4,000 business people and hundreds of exhibitors who packed the Baltimore convention center at the end of March for the Business Network for Offshore Wind’s International Offshore Wind Partnering Forum (IPF).
Often the governor of a state hosting one of these annual conferences uses the occasion to unveil new goals or infrastructure investments; Maryland Gov. Wes Moore did not miss his chance this year. He announced that Maryland plans to develop 8,500 MW once the federal Bureau of Ocean Energy Management makes new lease areas available, a goal behind only New Jersey’s 11,000 MW target and New York’s 9,000 MW. Virginia’s goal begins to look cautious by comparison.
The industry does face challenges. Inflation and supply chain issues have disrupted timelines and threatened profitability. There aren’t enough workers. Transmission constraints hinder the ability to get power to customers. Permitting is a pain in the neck. Here in the mid-Atlantic, it’s hard to identify new areas of the ocean suitable for wind farms, in large part because the Department of Defense wants it all for itself.
Other challenges are more of the good kind, such as the fact that wind turbine sizes are increasing faster than ships capable of transporting and installing them can be built. Larger turbines mean more power at less cost, and no one is quite sure what the upper size limit might be. On land, the difficulty of transporting blades that can be the length of a football field means turbines are limited to about 3 MW. Fabricating parts at coastal facilities allows turbines to scale up as far as physics and advanced material manufacturing allow.
Dominion installed 6-MW turbines for its pilot project, which was seen as the new standard a few years ago. Today the company plans to use 15-MW turbines. Each one of these massive turbines is said to produce enough energy to power 20,000 European households. I have not seen that figure translated into U.S. suburban McMansions, but it is still an eye-popping amount of emissions-free power from a single structure.
Oh, and Dominion handled the installation ship issue by building its own vessel, which it will rent out for the Massachusetts and New York projects until it is needed for Virginia’s and others in the queue. Problem solved, at least for Virginia, though the industry needs many more ships.
Will the cost of energy come down?
Virginia’s CVOW project has been criticized for its high overall cost, largely the result of our immature domestic industry. The Biden Administration has set a goal to lower costs by one-third by 2030. If history is any indication, this should be readily achievable. A National Renewable Energy Laboratory (NREL) analysis shows costs have fallen by more than half since 2016, and projects that by 2030, the levelized cost of energy from offshore wind turbines will fall by another third.
Scaling up turbines to capture more wind energy is one approach to bringing the per-kilowatt-hour price down. Economies of scale, a U.S. supply chain, and a range of innovative technologies are all expected to contribute. And of course, the Inflation Reduction Act, with its tax credits for domestic manufacturing and renewable energy, is creating a gold rush of sorts, as companies compete to get a piece of the action.
Another significant factor in reducing costs is automation and machine learning. Some of the gains are incremental, such as optimizing turbine operation and improving turbine siting through improved wind and wake modeling. Other advances seem like windows into a future where robots take charge. Multiple exhibitor booths at IPF displayed crewless, self-piloting survey and depth-monitoring vessels and underwater robots capable of doing more tasks than humans can. Biologists and geologists stay comfortably ashore while on-board computers collect information at sea around the clock and send the data back.
Today’s innovation will inform the next great leap forward for the industry: floating wind turbines that open deep water to energy production. Right now, floating turbines must be tethered to the seafloor and connected to cables to bring power to shore. For various reasons this technology is more expensive than fixed-foundation turbines, but here, too, the industry expects to become competitive in the future.
Some people are thinking much bigger. Walt Musial, a principal engineer at NREL who is one of the top researchers in the field, gave an IPF audience a look into the future. There, automation and AI could make it possible for unmoored, cableless turbines to pilot themselves around the oceans, chasing the best winds, avoiding hurricanes and turning electricity into liquid fuels like ammonia to drop off at ports of call or offshore “energy islands.” Musial even referred to these turbines as “vessels,” evoking a whole new kind of wind-powered transportation.
A display at the Business Network for Offshore Wind’s IPF conference exhibits an autonomous wind turbine that could contribute to the nation’s future wind energy capacity. (Ivy Main/The Virginia Mercury)
It’s a great time for workers entering the industry — if you can find them
Though un-crewed, AI-directed traveling wind turbines may be the future, the present still requires foundations, cables, service vessels and, especially, a large workforce. Attracting and training an offshore wind workforce has become such an urgent issue that the topic earned its own track at IPF.
To its credit, this heavily male, heavily white-dominated industry says it is committed to recruiting a diverse workforce and ensuring equitable development of offshore wind, also a goal of the Biden Administration. It will have to; right now, no one has enough workers, so finding them means recruiting from overlooked communities and addressing the social and economic barriers that have kept many people out of the skilled labor force.
While not new to other large infrastructure projects, Community Benefit Agreements with detailed commitments covering local job creation and other investments, are new for offshore wind. Dominion has not entered any such agreement in Virginia, but as part of its case before the State Corporation Commission last fall in which it received permission to proceed with CVOW, the company signed a stipulation agreeing to an extensive and diverse community outreach program. Eileen Woll, Offshore Energy Program Director for the Sierra Club’s Virginia Chapter, told me Dominion is following through on this pledge.
Woll is also part of a task force made up of academic and community groups from the Hampton Roads area that has developed a plan for community engagement and outreach to identify potential workers from harder-to-reach demographic groups. She told me the “Breaking Barriers” project team has applied for a $500,000 grant from the U.S. Department of Energy to fund their work.
The Virginia booth at IPF. (Ivy Main)
Halting steps towards Virginia’s next project
The Virginia Clean Economy Act made special provision for Dominion’s CVOW project as part of an overall target of 5,200 MW. If CVOW makes up 2,600 MW, where will the rest come from? A project under development off Kitty Hawk, North Carolina, would connect to the grid in Virginia Beach, but Dominion has shown no interest in buying the power; nor has Duke Energy. Dominion makes more money acting as its own developer. Huge energy users like the data centers operated by Amazon Web Services in Virginia could absorb all the energy from several Kitty Hawks, but Amazon hasn’t stepped up either.
Meanwhile, the federal Bureau of Ocean Energy Management (BOEM) has identified 1.7 million acres offshore North Carolina, Virginia, Maryland and Delaware with potential for new leasing. The challenge is to make space for wind in an area already claimed by fishing interests, the Coast Guard, and the Department of Defense. If Virginia leaders are serious about building an enduring offshore wind industry here, they will have to engage in some tough negotiations.
For his part, Gov. Glenn Youngkin seems to be trying to ensure that the next Virginia project will be subject to competitive bidding to avoid a repeat of the process that made Dominion Energy the sole developer and holder of the only Virginia lease area. The governor amended an offshore wind bill from Sen. Mamie Locke, D-Hampton, that was something of a nothingburger as passed by the General Assembly. Youngkin’s amendment turns the legislation into a plan requiring Dominion to work with the State Corporation Commission and other government agencies on a competitive solicitation process for the next offshore wind project.
There is no guarantee that this will work, given that BOEM awards leases to high bidders. But if BOEM offers multiple wind energy areas for lease near Virginia, and awards the leases to multiple developers, then an SCC-led competitive process seems feasible, with a better result for consumers.
The governor’s language may have been inspired by a House bill from Del. Suhas Subramanyam, D-Loudoun, that would have had the SCC study the ownership structure of offshore wind projects and report on how to achieve the best outcome for consumers. Republicans killed that bill, but presumably they will be more open to promoting competition when the idea comes from their own party.
The General Assembly will consider the governor’s amendment when it reconvenes on April 12. Let’s hope his amendment indicates that Youngkin is ready and willing to start the next phase of Virginia’s offshore wind industry.
This article was originally published in the Virginia Mercury on April 10, 2023.
At the heart of the political fight over Virginia’s participation in the Regional Greenhouse Gas Initiative (RGGI) is a seemingly simple question: does a requirement that Virginia power plants pay for the right to spew CO2 actually lower CO2 emissions? Critics argue no; supporters say yes. There is evidence for both, but in the long run, the benefits of RGGI for both Virginia and the climate are clear.
RGGI operates as a carbon cap-and-trade agreement between 12 northeastern states. Carbon-emitting power plants must buy allowances through an auction process. This makes high-carbon fossil fuel electricity more expensive relative to zero-carbon sources like wind, solar and nuclear. The result, in theory, is that utilities are incentivized to buy less of the former and more of the latter. In states like Virginia, where utilities own generating plants, RGGI provides an incentive for them to abandon coal plants and build more zero-carbon sources.
RGGI administrators say it has succeeded in lowering carbon emissions in member states by more than 50%, twice as fast as the nation as a whole. RGGI states typically spend at least some of the money raised in the carbon allowance auctions on energy efficiency improvements that allow people to use less electricity, further reducing emissions.
But RGGI doesn’t operate in isolation. Several RGGI states are members of the PJM regional grid, comprising 13 states, including some that don’t participate in RGGI. Critics point out that, instead of building or buying renewable energy, a utility in a RGGI state can buy electricity produced in a state that doesn’t participate in RGGI. Fossil fuel plants in a non-RGGI state like West Virginia don’t have to pay to pollute, giving them a competitive edge over similar Virginia plants.
This is known as “leakage,” a loophole that lets fossil fuel energy “leak” into RGGI states. If there were enough leakage, lower carbon emissions in RGGI could be offset by the higher emissions elsewhere in PJM, leaving overall emissions unchanged.
Stephen Haner, a respected advocate for low energy rates at the conservative Thomas Jefferson Institute for Public Policy, says this is what’s happening in Virginia. He cites data to show a big jump in electricity imports from 2020 to 2022. According to this calculation, CO2 emissions actually increased under RGGI, when they were supposed to be decreasing.
But there are problems with this analysis, starting with the fact that Virginia entered RGGI in 2020, at the onset of the pandemic. That year saw energy demand — and emissions — plummet. It would be strange indeed if Virginia emissions did not rise when the economy rebounded.
Energy demand is also increasing in Virginia due to the boom in data center construction. Data centers are huge energy hogs, and they are being built faster than our utilities can build new electricity generation to serve them. The new generation will be zero-emission solar and, soon, offshore wind; meanwhile the electricity has to be imported from elsewhere in PJM.
Bill Shobe, an economist with the Weldon Cooper Center at the University of Virginia who has done extensive work in support of Virginia’s energy transition, told me in an email there are other reasons to be skeptical of the conclusion that RGGI caused Virginia’s carbon emissions to increase. I’ll spare you the weedy details, but among other things, Virginia’s nuclear production decreased significantly from 2020 to 2021, which has nothing to do with RGGI. And as Shobe notes, the data centers would get built somewhere, if not here, so perhaps they should not be counted against us.
I am not as forgiving of data centers as Shobe is. Tech companies have chosen Virginia for its fiber optic network and generous tax incentives, and they point to Virginia’s climate laws as progress in meeting their own sustainability commitments. Data centers are taking our money and busting our carbon cap; they owe it to us to procure their own renewable energy, if not in Virginia, then within PJM.
Data centers notwithstanding, Shobe’s own calculations show leakage to be much less than Haner’s data suggests. “It is abundantly clear that emission leakage is relatively modest,” he told me. “In the end, the other advantages of RGGI (lowering compliance costs, revenue for efficiency and flood resilience, etc.) will swamp the small leakage margin.”
For RGGI critics like Haner and Gov. Glenn Youngkin, of course, effects on CO2 emissions are really beside the point anyway. They would gladly accept higher emissions if it meant lower rates.
This is analogous to what happens when American manufacturers move operations to countries with cheaper labor and lax environmental laws. One way to stem the tide would be to lower our own environmental standards and suppress wages in the U.S., removing the incentive to offshore operations by making life equally miserable everywhere.
The better alternative is to raise the bar everywhere so that everyone benefits. That’s not just the right thing to do; it actually works. In the international arena, American leadership on clean energy investment is already forcing other countries to discuss upping their game. Here in the U.S., RGGI has attracted new member states — like Virginia — and prompted discussions within PJM about creating a region-wide clean energy market.
Of course, Virginia alone doesn’t have the market power to force other states to change. Fortunately for us and for the climate, leakage will become less of an issue over time as renewable energy outcompetes fossil fuel power everywhere. PJM’s carbon emissions have trended steadily lower, first as methane displaced coal, and more recently as renewable energy displaces all fossil fuels. That displacement will accelerate with federal clean energy incentives in place and innovation continuing to drive renewable energy costs lower.
Meanwhile, Virginia crafted its energy transition framework with an eye for ensuring our economy gains, no matter what other states do. As Shobe noted, lowering carbon emissions is just one benefit of RGGI membership; carbon auctions fund energy efficiency and flood control projects here, and the switch away from high-emission coal plants means our residents breathe cleaner air.
Our RGGI law is also part of a larger package designed to create jobs and economic development here at home. The Virginia Clean Economy Act provides for utilities to procure electricity from solar and wind generating facilities and battery storage located in Virginia, which will reduce leakage over time. It also requires an increasing percentage of Dominion and Appalachian Power’s electricity to come from renewable energy. After 2025, most of that must come from in-state facilities.
As I’ve shown before, building low-cost wind and solar helps to lower rates and provides price stability when fossil fuel costs spike. Virginia’s energy transition is just getting underway, but it will deliver benefits for years to come.
This article was originally published in the Virginia Mercury on March 29, 2023.
Solar schools, climate resiliency, energy efficiency: Local governments are now involved in energy planning – whether they feel ready for it or not. Some localities have adopted climate goals that require them to look for ways to lower carbon emissions; others just want to save money on high energy bills.
Virginia has chipped away at the barriers to renewable energy and started putting hundreds of millions of dollars into energy efficiency programs, thanks to laws like Solar Freedom, the Virginia Clean Economy Act (VCEA) and the Clean Energy and Community Flood Preparedness Act, which made Virginia part of the Regional Greenhouse Gas Initiative (RGGI).
But even a positive policy environment doesn’t flatten all barriers. At all levels of government — and for that matter, in homes and businesses — energy-saving projects get stalled by confusing information, lack of money or financing, layers of opaque bureaucracy or fear of uncertain outcomes.
Attacks on Virginia’s clean energy transition framework and utility reform get most of the ink during this legislative session, but some less-noticed bills are focused on moving ahead by removing stumbling blocks to clean energy and identifying funding.
I made a brief mention of some of these in my bill round-up last week, including House Joint Resolution 545 from Briana Sewell, D-Prince William, asking the Department of Energy to recommend ways to overcome barriers that keep local governments and their constituents from purchasing clean energy. There is also Senate Bill 1333 from Ghazala Hashmi, D-Richmond, to facilitate local clean energy projects for low- and moderate-income residents. Senate Bill 1419 from David Suetterlein, R-Roanoke, would allow retail choice in renewable energy purchasing, and Senate Bill 949 from Chap Petersen, D-Fairfax, would allow residents to access low-cost public financing of clean energy.
The shared solar bills I covered last week also allow local governments to participate. And although I’m not tracking them myself, there are other bills that encourage local resiliency planning, give localities authority to require electric vehicle charging infrastructure or support transit solutions.
Overwhelmingly — but not exclusively! — the bills this year that try to move the ball forward on clean energy come from Democrats, a bad sign when the House and governor are Republican. I have seen many bills die in committee for reasons that have little to do with the bill, and Gov. Youngkin notoriously vetoed bills last year seemingly as a “personal and political move” against the bills’ patron senator. It’s also a short session this year, so if a bill is complicated or has opposition from favored industries, it goes into committee with a strike against it.
But many of these bills support private investments or save money for taxpayers, which are thankfully still bipartisan priorities. And some energy innovations are now mainstream across Virginia, in red counties as well as blue. Among these are solar schools.
So let’s take a deeper look at one piece of legislation, the solar school roofs study at the center of Senate Bill 848 from Barbara Favola, D-Arlington, and House Bill 1852 from Suhas Subramanyam, D-Loudoun.
Wilson Middle School, Augusta County. Photo courtesy of Secure Futures.
I wish they all could be solar schools
In the summer of 2021, I was dismayed to learn that the school board for the city of Norfolk had been told none of their brand-new schools could be outfitted with solar panels because the roofs weren’t designed to take the extra weight. As a result, Norfolk could not do what dozens of school districts across Virginia have been doing: installing solar arrays to provide some or all of the energy the school consumed, saving money for taxpayers and giving students hands-on exposure to a fast-growing technology with terrific career potential.
What a missed opportunity, and yet, Norfolk wasn’t alone. I soon learned about a new school in Richmond where educators were eager for solar, but the steep pitch of the roof on the main part of the building wasn’t suitable. That left only a flat-roofed side wing that couldn’t hold enough panels to meet more than a fraction of the school’s needs.
From conversations with architects and solar developers, I know that building a school with a roof that can hold solar panels doesn’t have to be an added expense; mainly, you just have to plan for it. Wyck Knox, the architect who designed Arlington’s two net-zero energy schools (among others), says even building a school that can produce as much energy as it uses doesn’t have to cost more, if you simply approach the design process with that goal.
Designing a school with a solar-ready roof pays off when the school district enters a power purchase agreement (PPA) with a solar company that installs and owns the solar array. The school pays just for the electricity it produces, typically at a rate lower than what the utility charges.
As of this year, the financing options have expanded. The Inflation Reduction Act allows tax-exempt entities like local governments and schools to claim federal tax credits for renewable energy and batteries directly.
So why aren’t all schools solar schools? The answers might differ from one school district to the next, but generally it’s because nobody thought of it at the right time, or they don’t know how to go about it, or the right people aren’t on board. One stubborn facilities manager can stall a project indefinitely.
The U.S. Department of Energy says energy is the second largest expensefor schools, after teacher salaries. Taxpayers should be able to expect their school districts will pursue strategies like onsite solar that reduce energy costs.
Personally, I support requiring school districts to, at the very least, analyze whether they could save money with solar roofs before they lock in designs that don’t include them. However, House Republicans killed an effort last year to impose such a requirement. And some school officials say it isn’t needed because they want to do solar; they just need help with the process.
The commission itself recommended several pieces of legislation that are now before the General Assembly, including some around construction funding. That should make it easier to integrate solar recommendations into their other work.
Favola said, “I am extraordinarily excited about the possibility of providing school systems with technical assistance on how to incorporate solar and other renewable energy components in their renovations and new buildings.”
You and me both, Senator. You and me both.
This article was originally published in the Virginia Mercury on January 26, 2023.
Update January 27: I may have given Republicans too much credit, at least those in the House. Although Senator Favola’s bill sailed through a Senate committee and is headed for a floor vote, a House subcommittee killed Delegate Subramanyam’s companion bill–in spite of a long line of speakers in support and no opposition.It was a bad meeting for Subramanyam; his shared solar bill also died in that committee.Senator Sutterlein’s retail competition bill has also been killed in a bipartisan vote in Senate Commerce and Labor, a Dominion-friendly committee.
When the Virginia General Assembly convenes this week for the 2023 session, Republicans will once again try to undo the commonwealth’s framework for a transition to renewable energy. Led by Gov. Glenn Youngkin, they will attack Virginia’s participation in the Regional Greenhouse Gas Initiative and the Virginia Clean Economy Act (VCEA) and continue seeking ways to keep a money-losing coal plant in Wise County in operation.
Meanwhile, Virginia’s largest utility has already decided that renewable energy, especially solar, is the future. Dominion Energy’s just-released Climate Report 2022 projects that under every set of assumptions modeled, solar energy will become the mainstay of its electricity generation fleet no later than 2040.
As for coal, it disappears from the energy mix by 2030 even in a scenario that assumes no change from present policy, in spite of the fact that the VCEA allows the Wise County coal plant to operate until 2045. As for fracked gas, it hangs on longer but in ever-smaller amounts, mostly to help meet winter peak demand.
Dominion modeled three scenarios for this report. The “current policy” scenario assumes the policy landscape and technology options stay the same as they are presently, and that Dominion does its part in driving a global temperature increase of 2.1°C by 2050. That’s in keeping with Virginia’s climate law, and also with Dominion’s internal commitment to achieve net-zero emissions by 2050.
That much warming is not a good outcome, considering the climate chaos the planet is experiencing today with barely over 1 degree of warming. Yet even under a 2.1°C scenario, Dominion’s model predicts solar energy will provide 40% of the electricity supply by 2040, followed by nuclear at 30% and (offshore) wind at 19%.
The “emerging technologies” scenario also assumes a temperature increase of 2.1°C by 2050, but adjusts for the likelihood that technological change will lead to “advanced dispatchable zero-carbon technology” options that could displace much of the need for energy storage. These might include hydrogen, carbon sequestration and storage, and methane gas produced as the result of poor animal waste disposal practices at factory farms — what Dominion calls renewable natural gas, or RNG.
Small modular reactors, SMRs, are not included in this scenario (and are hardly mentioned at all in the report), perhaps because operating them as peaker plants would be crazy expensive. Even without SMRs, though, the report says overall cost savings would be slight for this scenario, and solar would still be the leading source of electricity by 2040.
Finally, the report models an “accelerated transition” scenario that reduces emissions more aggressively, in line with an effort to keep the global temperature increase to 1.5°C by 2050. This is the upper bound of warming considered tolerable by many climate scientists, but it would require Dominion’s electricity business to reach net zero by 2035. Dominion’s model shows solar would make up nearly two-thirds of the electric supply in that scenario. Offshore wind would be held to just 17%, apparently because at that point more wouldn’t be needed.
I’d argue that offshore wind should carry more of the load to create a more balanced portfolio, but it’s a moot point: The report writers clearly think this scenario is just a thought exercise. The scenario consistent with keeping global warming to 1.5°C is described in a way that seems intended to discourage anyone from pursuing the matter.
“The heavier reliance on renewable capacity in this scenario,” it warns, “would require significantly greater capital investment at a much more rapid pace in preparation for a net zero mix by 2035. … Achieving such a rapid pace of emissions reductions would require predictable, dependable, and rapid wholesale shifts in public policy and technology advancements capable of maintaining system reliability and customer affordability. Also necessary would be supportive regulatory treatment and timely permitting for significant near-term zero-carbon infrastructure development and transmission system enhancements.”
In other words, the report seems to say, fuggedaboutit. It’s just too hard.
If that feels defeatist, it’s worth remembering how far Dominion has come to reach a point where it is even writing climate reports, not to mention declaring on page 1 that “climate change presents one of the greatest challenges of our time, and we take seriously our leadership role in helping to mitigate it.”
This is new, and you have to look back only a decade to appreciate how radical this declaration is. When 2013 opened, Dominion had just completed construction of that regrettable coal plant in Wise County and had begun a fracked gas plant building spree that would continue even after solar emerged as the cheapest source of new electricity in Virginia. Climate activists like myself were dismissed when we warned that new gas plants would be reduced to giant concrete paperweights well before the end of their design life, leaving ratepayers paying off stranded assets.
Even in 2016, when now-CEO Bob Blue was president of Dominion Virginia Power, Blue was proclaiming natural gas “the new default fuel” for electric generation. As late as the spring of 2020, the company’s integrated resource plan still called for building more gas plants. That plan acknowledged the strategy would violate Virginia’s new climate law, so it argued against the law.
Yet I suspect Blue may deserve credit for the remarkable about-face at Dominion beginning in 2020. That summer Dominion Energy began significantly reducing its investments in fossil gas outside of the electric sector, scrapping plans for the Atlantic Coast Pipeline and selling off its gas transmission and storage assets. That year it also sold half of its interest in the Cove Point liquified natural gas export facility. It is reportedly considering selling the other half now as part of what Blue called in November “a ‘top-to-bottom’ business review aimed at ensuring that it is best positioned to generate substantial long-term value for shareholders.”
Maybe Blue got religion on climate, maybe he’s just a savvy businessman. It’s a really good sign of the times that you can’t always tell the difference.
But of course, Dominion is stuck with a heck of a lot of gas generating plants that it has to justify post hoc, which helps to explain its lack of enthusiasm for the 1.5°C scenario. Another part of the explanation lies in Dominion’s remaining gas investments outside the electric sector. Although Dominion Energy Virginia is solely an electric utility and does not supply gas to retail customers in Virginia, a separate Dominion Energy subsidiary sells gas in other states. So far these assets don’t seem to be going the way of the gas transmission business and Cove Point.
Dominion’s climate report tries valiantly to justify holding onto its retail gas business. The report declares, “Natural gas is also part of our long-term vision and consistent with our Net Zero commitment.”
Sure, and the Tooth Fairy is real. Of the greenhouse gas reduction approaches cited — fixing leaks, making “renewable” methane from waste products, blending hydrogen into pipelines, and using creative carbon accounting with “offsets” — none make sense either economically or from a climate standpoint.
Maybe he cares about climate, but apparently Blue doesn’t want to give up yet on a profitable business. Fortunately, at least for the planet, the retail gas business is about to enter a terminal decline as homes and businesses electrify. Getting out now would be the smart move from both the business and climate perspective.
Because what will eventually power all these homes, no matter which scenario you choose? Renewable energy, and especially solar.
This article was originally published in the Virginia Mercury on January 6, 2023.
Protesters outside the Virginia Clean Energy Summit on October 21.
Governor Glenn Youngkin issued a press release on October 3 presenting what he says is his energy plan. Accompanying the press release was 26 pages labeled “2022 Virginia Energy Plan,” but that can’t be what he’s referring to. I mean, the Virginia Code is pretty specific about what makes up an energy plan, and this isn’t it.
Under Virginia law, the energy plan must identify steps the state will take over the next 10 years consistent with the Commonwealth Clean Energy Policy’s goal of a net-zero carbon economy by 2045 “in all sectors, including the electric power, transportation, industrial, agricultural, building, and infrastructure sectors.” Not only does Youngkin’s document not do that, it doesn’t even mention the policy it’s supposed to implement.
It’s also missing critical pieces. The plan is supposed to include a statewide inventory of greenhouse gas emissions, but it’s nowhere to be found. The inventory is the responsibility of the Department of Environmental Quality, which reports previous inventories on its website from 2005, 2010 and 2018. The one specifically required to be completed by October 1, 2022 isn’t there, nor is there any indication it’s in the works and just unfortunately delayed. Did I miss some fine print about how the requirement doesn’t apply if the governor is a Republican?
In fact, there is no discussion about climate change in Youngkin’s energy plan. The word “climate” appears nowhere. He simply ignores the problem: a modern Nero, fiddling while the planet burns.
Instead, Youngkin’s document mostly attacks the laws Virginia has passed in recent years to implement its decarbonization goals, including the Virginia Clean Economy Act, legislation allowing the state to participate in the Regional Greenhouse Gas Initiative and the Clean Cars law. In their place he offers a bunch of random ideas — some with merit, some without, some spinning off on tangents.
I did not really expect a conservative Republican with presidential aspirations to embrace all the recommendations for the energy plan that I laid out last month, or those from the many environmental, faith and consumer groups that support Virginia’s clean energy transition. Going further and faster down the road to decarbonization is a tall order for politicians beholden to fossil fuel interests, no matter how much it would benefit the public.
Yet Youngkin doesn’t have a lot of ammunition to use against the switch to renewable energy. With soaring coal and natural gas prices, it’s hard to keep pretending that fossil fuels are low-cost. The insistence that we need them for reliability is the only straw left to grasp at.
And indeed, underlying Younkin’s attack on the VCEA is a misunderstanding of how grid operators manage electricity. The critique boils down to “baseload good, intermittent bad.” But baseload is not the point; meeting demand is the point. Demand fluctuates hugely by day and hour. If grid operators had nothing to work with but slow-ramping coal plants or on/off nuclear reactors and no storage, they’d have as much trouble matching demand as if they had nothing but renewable energy and no storage. Pairing low-cost wind and solar with batteries makes them dispatchable — that is, better than baseload.
That’s not to say there aren’t good reasons to invest in higher-cost resources, but “baseload” is a red herring that stinks up Youngkin’s entire argument.
To his credit — and notwithstanding his “baseload” fixation — Youngkin supports Virginia’s move into offshore wind energy even with the high cost of the Coastal Virginia Offshore Wind project and other early U.S. developments. (The plan notes that Virginia’s project will be the largest “in the Free World,” a weirdly retro way to tell us China has leapt far ahead in installing offshore wind.)
The plan also supports removing barriers to customer purchases of solar energy, including shared solar and a greater ability for renewable energy suppliers to compete with utilities for retail sales. This is all phrased as a consumer choice issue rather than an endorsement of greater utility investments in solar; regardless, these would be welcome moves.
It’s also good to see the governor’s endorsement of rate reform. Republicans have been at least as much to blame as Democrats for Dominion Energy’s success in getting laws passed that let it bilk ratepayers. It will be interesting to see if Youngkin actually pursues the reforms he touts.
Less encouraging are Youngkin’s desires to jump into hydrogen (I’m guessing not the green kind, since we hardly have an excess of renewable energy) and, worse, to deploy “the nation’s first” commercial small modular nuclear reactor (SMR) in Southwest Virginia within 10 years.
You know what will happen there, right? Ratepayers will foot the bill, and it will be very expensive.
But unlike offshore wind, SMRs aren’t proven technology; they remain firmly in the research phase. The U.S. Department of Energy is hoping for a demonstration project “this decade.” If successful, the industry believes SMRs will eventually be able to produce electricity at a price that’s only two or three times that of solar and wind energy. Which begs an obvious question: Is there a reason to build SMRs?
Nor has anyone figured out the nagging problem of what to do with the radioactive waste, including the waste piling up at today’s nuclear plants because it’s too dangerous to move and there’s no place to put it. So Youngkin’s plan also “calls for developing spent nuclear fuel recycling technologies that offer the promise of a zero-carbon emission energy system with minimal waste and a closed-loop supply chain.” Great idea! But how about focusing on that first, Governor?
That’s not where Younkin is putting his focus, though. Last week, he proposed spending $10 million on a Virginia Power Innovation Fund, with half of that earmarked for SMR research and development. The announcement said nothing about waste.
Look, I happen to know some earnest climate advocates who believe SMRs are the silver bullet we’ve been waiting for. I follow the research with an open mind while also noting the astonishing advances in renewable energy technology announced almost daily. But the climate crisis is here and now. We can’t afford to press pause on known carbon-free technologies for 10 years in the hope that something even better will pan out.
Investing in research and development of new technologies is an important role for government, but kicking the climate can down the road isn’t an option. Rather than attacking our energy transition, Youngkin would have done more for Virginia by using his plan to build on it.
This article appeared first in the Virginia Mercury on October 18, 2022.
Virginia residents who buy electricity from Appalachian Power will see a rate increase of almost 16% this year if the State Corporation Commission approves the utility’s request to recover more than $361 million it has spent on higher-than-expected coal and natural gas prices. APCo proposes to recover the excess over two years, meaning rates will remain elevated even if fossil fuel prices drop. According to the filing, a customer who uses 1,000 kWh per month would see an increase of $20.17.
The SCC is likely to approve the request because it has little room to do otherwise. Virginia law allows utilities to recover their spending on fuel dollar-for-dollar, though they cannot tack on a profit for themselves. Last month, the SCC approved Dominion’s request to increase rates by an average of nearly $15 per month for the next three years to cover past excess fuel costs.
The good news, says APCo, is that Virginia customers will see lower bills in the future because the utility is investing in renewable energy. “Incorporating more renewable sources of power into the company’s energy mix is another step in reducing customer fuel costs,” declares the company’s press release, issued the same day as its SCC filing. “As Appalachian Power adds more renewables, there is less need for coal and natural gas to generate power.”
Well, yes, but wouldn’t it have been nice if APCo had come to this conclusion before now? The current situation was entirely predictable. A supply glut kept natural gas prices low for almost a decade, but drilling companies weren’t making money. Today’s higher prices make it profitable to drill for gas, but oil and gas companies don’t trust that the market will stay strong, so they are returning profits to shareholders rather than investing in new wells. So tight supplies may keep prices high. Or not! Nobody knows. (As for coal, natural gas generation and coal are ready substitutes for each other, so coal prices track natural gas prices.)
For years clean energy advocates like me have been urging utilities and the SCC to value price stability in generation planning, only to be ignored. Other states took the lead in installing price-stable renewable energy, while Virginia added more gas plants. When I dug into the data this summer, it became clear that the great majority of states with lower rates than Virginia also had higher amounts of renewable energy in their generation mix. I’ve reprinted a summary table here.
I compiled this table in July, using then-current Energy Information Agency data. Now EIA has updated its data, and Virginia’s position is worse than ever. As of July 2022, Virginia’s average residential electricity rate has now hit 14.42 cents/kWh. This puts us above every state in the South Atlantic except Georgia. (Poor Georgia comes in at 16.02, but that’s what building nuclear plants will do for your rates.) Meanwhile, the states whose rates increased the least are those with high levels of wind, solar and hydro.
This isn’t rocket science, folks. Wind and solar have lower levelized costs than coal and gas, and they insulate consumers from the volatility of the world oil and gas markets. You don’t have to be a climate advocate to understand this, but apparently it helps.
On Sunday the U.S. Senate passed the historic climate legislation package hammered out between Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin. The House is expected to follow suit this week, giving President Joe Biden a huge win on one of his administration’s priorities and finally making good on his pledge to tackle climate change.
The bill is titled the Inflation Reduction Act (IRA), apparently because the senators think inflation is the only thing most Americans care about right now. But whether it reduces inflation is beside the point. The IRA marks the federal government’s most significant investment in clean energy and transportation ever. Its $370 billion of climate spending will cut U.S. emissions roughly 42% below 2005 levels by 2030, only slightly less than the reductions that would have been achieved through Biden’s signature Build Back Better bill.
This is a huge piece of legislation, though, and some of the compromises Schumer was forced to make are not climate-friendly. Manchin, after all, is a coal baron representing a state so dominated by the extraction industries that it has lost sight of any other future. Climate hawks have to hold their noses (beaks?) to accept some noxious provisions, such as the bill’s requirement for new offshore drilling lease sales. No doubt that one will cheer motorists who wrongly assume the government could lower gasoline prices just by turning on a spigot, if only it wanted to.
The bill also comes with a side deal meant to ensure completion of the Mountain Valley Pipeline, which starts in Manchin’s home state. That news promptly soured many activists in Virginia on the whole package.
Hang in there, people. The pipeline deal isn’t actually part of the IRA, and Manchin knows better than anyone that a promise of some second bill to be voted on in the future is a castle in the air. Maybe he’ll get it, maybe he won’t. Meanwhile, the IRA’s incentives for renewable energy, energy storage, energy efficiency, building electrification and electric vehicles are overwhelmingly more impactful than provisions designed to increase oil and gas production. The business case for new pipelines will only get worse.
Three recurring themes stand out in the IRA. One is the attention paid to ensuring benefits flow to low- and moderate-income residents and communities impacted by fossil fuel extraction. A second is the effort to incentivize manufacturing and supply chain companies to bring operations back to the U.S., using tax credits for manufacturing and requirements for U.S.-made components. The third is job creation and training for career jobs that pay well. The combined effect is that the law will benefit former coal workers in Southwest Virginia looking for employment at least as much as Northern Virginia suburbanites jonesing for Teslas.
Every state will see clean energy investments soar if the bill becomes law, but Virginia is especially well positioned. Though we have embarrassingly little wind and solar in our energy mix today, we have huge potential for both, a strong tech sector and a well-educated workforce.
Just as important, laws passed by the General Assembly in the past few years already provide the framework for our energy transition. Among them, the Virginia Clean Economy Act and participation in the Regional Greenhouse Gas Initiative are pushing our utilities to decarbonize, including through investments in energy efficiency, solar and offshore wind. Solar Freedom removed barriers to private investments in distributed solar, while the Grid Modernization Act authorized upgrades to the distribution grid, and the Clean Cars Act started us down the road to vehicle electrification. For all of these, the IRA’s incentives make compliance easier and less expensive for both utilities and customers.
Renewable energy tax credits with an emphasis on equity and jobs
Photo courtesy of NREL
The IRA is a big bill with a lot of fine print detailing incentives for a wide range of technologies, mostly clean but with a few clunkers. (Hydrogen made from fracked gas, anyone?) Still, the largest share of the renewable energy tax credits will go to companies involved in the wind and solar industries. The credits will remain fixed for 10 years before ramping down, finally providing the business certainty and long planning window that clean tech companies have been begging for.
The more utilities take advantage of the law to install renewable energy, the greater the benefit to electricity customers. Renewable energy helps stabilize electricity costs, dampening the impact of high fossil fuel prices. The IRA’s tax credits will lower the cost of building wind and solar, saving money for Virginia customers as our utilities meet and exceed the VCEA’s targets for solar, storage and wind. (So, yes, the Inflation Reduction Act will live up to its name when it comes to electricity prices.)
For utility-scale projects like solar farms and offshore wind, obtaining the maximum tax credit requires that a steadily increasing percentage of the equipment used be American made. Credits available to manufacturers are intended to draw the supply chain back to the U.S. and will help those parts be cost-competitive. New prevailing wage and apprenticeship program requirements favor union labor and middle-class incomes for careers in green energy.
While large renewable energy facilities will contribute most to decarbonizing the grid, the most generous incentives in the IRA are reserved for distributed generation facilities under 1,000 kilowatts AC (1,300 kW DC), a category that includes most rooftop solar. For these projects, the investment tax credit will return to 30% for the next 10 years, with adders available if the facility is located on a brownfield or in an “energy community” (10%), uses domestic content (10%) or serves low-income residents (10-20%). The credits can be combined, making it entirely possible for a solar project on low-income housing in Virginia’s coalfields, built using American-made equipment, to qualify for tax credits of up to 70% of the cost.
Not only that, but taxpayers will be allowed to sell the credits, so people with no tax liability can still take advantage of the discounts. This feature will make solar affordable for homeowners who don’t owe enough in federal taxes to use the tax credits themselves. It will also make it possible for installers to discount the upfront cost of a solar array by the amount of the tax credit so customers don’t have to wait months for a tax refund.
A final feature is that the tax credits will now also be available as direct payments to tax-exempt entities like local governments, schools and churches. Direct pay will have the biggest impact in states that don’t allow third-party power purchase agreements (PPAs), but it’s a great option anywhere.
The “adder” for brownfields will be of interest to many Virginia localities that want to find ways to safely use closed landfills and old industrial sites, while Virginia’s government has already identified brownfields as a great opportunity for solar.
But the biggest market opportunities would seem to be for solar on low-income housing and in areas impacted by fossil fuel extraction. Carrie Hearne, associate director for renewable energy and energy efficiency at Virginia’s Department of Energy, said the many federal funding programs laid out in the IRA “would provide great opportunities for energy infrastructure investments in communities that are most in need, and in turn, help to lower energy bills. These federal funds could also contribute to the commonwealth’s goal of competitive rates, reliable and responsible delivery of energy alongside rural economic development.”
To understand how the solar industry sees these opportunities, I called the leaders of three solar companies that develop onsite solar in low-income areas and in the coalfields: Dan Conant of West Virginia-based Solar Holler, Tony Smith of Staunton-based Secure Futures and Ruth Amundsen of Norfolk Solar. Not surprisingly, they all predicted stunning growth in both distributed solar and jobs as a result of the IRA.
Solar has made fewer inroads in Southwest Virginia than in other parts of the state, which Conant sees as an opportunity. One of the few unionized solar companies in the area, and the only one I know of focused exclusively on Appalachia, Solar Holler has been expanding into Southwest Virginia and hiring workers at a steady clip. (Disclosure: I own a tiny stake in Solar Holler.)
The company already uses American-made components, so Conant said coalfields residents will be able to take advantage of two of the adders to install solar on their homes and businesses at half price, with low-income residents paying even less. The IRA’s manufacturing tax credits for American solar companies will further reduce the cost of the projects.
Conant was especially excited about the IRA’s impact on jobs in Appalachia. He expects to ramp up hiring significantly once the IRA becomes law. It took no prodding from me for him to add, “I truly believe this bill will let us get to 100% clean energy in 15 years.”
Secure Futures also has projects underway in Southwest Virginia as well as elsewhere across the state. The company uses third-party PPAs to allow tax-exempt customers like schools and nonprofits to go solar with no money down, paying just for the electricity produced by the panels. Although the IRA allows these customers to get the tax benefits without a PPA, Secure Futures president Tony Smith said tax-exempt entities will still do better using PPAs to take advantage of accelerated depreciation.
Smith said the IRA will make an already strong solar market in Virginia even stronger, as the higher tax credits will push down prices and the transferability of the credits will make it easier to attract more investors to solar. At the same time, a provision of the VCEA requiring Dominion Energy Virginia to acquire renewable energy certificates (RECs) from distributed generation facilities has created a strong market for these certificates, helping to finance projects and making solar even more affordable for institutional customers that sell their solar RECs.
On the other side of the commonwealth, Norfolk Solar also installs solar in low-income communities, offering PPAs to both commercial customers and low-income residents in economically distressed areas that qualify for special tax treatment as Qualified Opportunity Zones. (Under Virginia law, residential PPAs are available only to low-income customers.) Amundsen pointed out that the 10-year time horizon of the tax credits is an added benefit of the IRA to both her customers and potential investors because it allows for long-range planning and multi-year projects.
Energy storage will stand on its own
The VCEA established one of the most ambitious goals for energy storage development in the nation. But current federal law offers tax credits for energy storage only when it is part of a renewable energy project. The limitation has led to the proliferation of solar-plus-batteries projects around the country. It’s an ideal combination because it allows solar energy to be used when it is needed, unshackled from the time of day that it’s produced.
But uncoupling storage from renewable energy projects is a more efficient way to manage the grid, said Steve Donches, a Loudoun County attorney who represents battery storage companies and recently served on the Virginia Energy Storage Task Force.
“In many instances, the best location for storage supporting the grid is not where the renewables are located but rather near grid chokepoints or inside load pockets,” he said. “Moreover, site selection flexibility can often be important from a zoning permitting perspective. The new approach allows developers to be more nimble and locate where it is most useful and cost efficient.”
Recognizing this, the IRA provides a tax credit of up to 30% for energy storage whether or not it is part of a renewable energy facility.
This will make grid storage less expensive and easier for our utilities to install, and it will also benefit customers who want to put batteries in their buildings for back-up power. Amundsen noted that her customers sometimes can’t afford to include a battery at the time they install solar; the IRA will let them take the tax credit for storage even if they buy the battery later. This is especially important, she said, for resilience in low-income neighborhoods, where adding a battery to a solar-powered church or community center allows it to “island” during a power outage and provide a refuge for neighbors.
Homeowners will see huge benefits from building electrification
A cleaner electricity grid makes it possible to decarbonize other sectors of the economy by substituting electricity for fossil fuels in transportation and buildings; hence the climate advocates’ mantra “Electrify everything.” Yet while new electric appliances have become more energy efficient and attractive to consumers than the ones they replace, the switch comes with a price tag.
Under the new law, price will no longer be a barrier. The IRA offers rebates to residents to upgrade their homes with new electric technology such as heat pumps for heating and cooling (up to $8,000), electric induction stoves ($840), heat pump water heaters ($1,750) and upgrades to home electrical systems to support all the new load ($4,000). The rebates phase out for higher-income earners. Lower-income families replacing old and inefficient appliances will see the greatest energy savings as well as the highest rebates.
The federal rebates are a fantastic complement to existing Virginia programs for low-income energy efficiency upgrades. A major attraction of Virginia’s participation in the Regional Greenhouse Gas Initiative is the hundreds of millions of dollars it raises for low-income efficiency programs such as those devoted to upgrading multifamily housing like apartment buildings. Coordinating the state programs with the new federal rebates should be an urgent priority to ensure the broadest possible benefits to low-income Virginians.
Meanwhile, gas utilities had better start planning for the end of their business. There is no longer any reason to expand and upgrade gas distribution pipelines, because from here on in their customer base will be shrinking, not growing, resulting in stranded assets.
Electric vehicles aren’t just for the rich any more
Santeri Viinamäki, CC BY-SA 4.0 , via Wikimedia Commons
The IRA provides a $7,500 EV tax credit for new vehicles, including those made by manufacturers like Tesla and Toyota that had reached volume caps in previous law. Restrictions apply, including income limits, vehicle price caps and supply chain sourcing rules. The act also now adds a credit of up to $4,000 for used vehicles, making ownership possible for more people at all income levels.
Virginia is committed to vehicle electrification through its adoption of clean cars legislation in 2021 and a 2022 law requiring state agencies to buy electric light-duty vehicles whenever the total cost of ownership is less than it would be for a vehicle with an internal combustion engines. But further speeding up the transition to EVs will create ripple effects requiring careful planning. Electricity demand will increase and do so unevenly, requiring load management programs and upgrades to parts of the distribution grid.
Charging all these vehicles will also be an issue. Many would-be EV customers lack the ability to charge at home, either because they don’t own the space where they park or because their homes aren’t wired for easy installation of a charger. The problem is especially acute for people who rent apartments in buildings that lack charging stations.
No matter how generous the credits, people won’t buy EVs if they can’t charge them. Virginia must require multifamily buildings to include enough charging stations for all the residents who want them, ensure public charging stations are plentiful and convenient in low-income neighborhoods and improve its residential housing code to ensure new homes are wired to facilitate installation of chargers.
For best results, lean in
Photo credit iid.com
Virginia law requires each new governor to produce an energy plan in October of the first year in office, so Virginia’s Department of Energy is currently in the process of writing a plan that will have Gov. Glenn Youngkin’s stamp on it. The plan must be one that “identifies actions over a 10-year period consistent with the goal of the Commonwealth Clean Energy Policy set forth in § 45.2-1706.1 to achieve, no later than 2045, a net-zero carbon energy economy for all sectors, including the electricity, transportation, building, agricultural, and industrial sectors.”
Governor Youngkin hasn’t shown much enthusiasm for Virginia’s energy transition to date, having tried to gut the VCEA and repeal RGGI. Yet with the IRA making so many incentives available for clean energy and electric vehicles, leaning in to the energy transition now will allow the commonwealth to reap huge rewards in the form of economic development, job growth, cleaner air and lower energy bills.
The opportunities for Virginia are enormous; the governor should make the most of them.
This article originally ran in the Virginia Mercury on August 9, 2022.
Dear readers: Many of you know that although I write independently of any organization, I also volunteer for the Sierra Club and serve on its legislative committee. The Sierra Club’s Virginia Chapter urgently needs funds to support its legislative and political work towards a clean energy transition. So this summer I’m passing the hat and asking you to make a donation to our “Ten Wild Weekends” fundraising campaign. Thanks!
Power for the People VA 