What’s not to like about biomass? Deforestation, pollution and overpriced power.

What if you could get your electricity from a fuel that destroys forests, produces more air pollution than coal, and is priced higher than alternatives?

“Wow, sign me up!” you would not say, because as a sane person you don’t like deforestation, pollution and overpriced power.

Also, because you are not Dominion Energy Virginia. Dominion burned wood at one power plant from 1994 until last year; converted three small coal plants to wood-burning in 2013; and burns wood along with coal at its Virginia City coal plant. This “biomass” energy makes up about one percent of the electricity Dominion sells to Virginia ratepayers, according to its most recent IRP.

Biomass counts as renewable under the Virginia Code, so in theory it can also be used to supply customers who are willing to pay extra for renewable energy. Lots of people want renewable energy these days. Unfortunately for Dominion, they want clean, non-polluting renewables like wind and solar. No one is clamoring for biomass.

That’s especially true because biomass costs more than wind or solar, not to mention more than fossil sources. Who’s going to buy dirty energy when they can get clean energy for less money?

We recently learned just how much more expensive biomass is when the State Corporation Commission held a hearing on Dominion’s latest effort to get a renewable energy tariff approved. Rider TRG combines wind, solar and hydro with biomass, originally including biomass burned at the Virginia City coal plant.

Pretty much everyone hates the proposed tariff, as the Virginia Mercury reported. Counties looking to buy renewable energy objected. Corporate customers said they wouldn’t buy it.

So, in a halfway step meant to mollify opponents, Dominion offered to remove the Virginia City coal plant from the list of sources, while leaving in the rest of the biomass facilities.

Here’s the interesting part: taking Virginia City out made the program more affordable. Having biomass as part of the renewable energy mix, it turns out, doesn’t save money for participants; it costs extra.

In that case, you might say (again, you being a sane person), Dominion ought to remove all the biomass from Rider TRG and save participants even more money, while making it a program people might actually want.

And indeed, the SCC staff calculated that if all the biomass were to be removed, it would reduce the cost by almost two-thirds. For average residential customers using 1,000 kilowatt-hours per month, removing biomass from Rider TRG would mean the added cost of making all their power renewable would fall from $4.21 per month to $1.78.

A no-brainer, right? Making the program both cleaner and more affordable would make it more popular and spur construction of new renewable energy facilities.

Dominion refused. Having the program be successful, you see, is not the point. As I wrote this summer, the purpose of Rider TRG isn’t to offer a product people want to buy, it’s to prevent anyone else from selling renewable energy. If the commission approves Dominion’s tariff, under state law competitors will be locked out of the Virginia market.

If the biomass turns out to be a kind of poison pill for the program, so that no one signs up, that really doesn’t matter to Dominion because, again, the whole point of Rider TRG isn’t to attract customers, it’s to kill competition.

The SCC hasn’t ruled on the program yet. Post-hearing briefs are due Dec, 20, so we can expect an order in the case early next year.

But why biomass?

At this point you may be asking yourself why Dominion chose to invest in all those biomass plants in the first place. The answer is subsidies. During its early years, Virginia’s voluntary renewable portfolio standard rewarded Dominion with tens of millions of dollars annually as a bonus for meeting the renewable energy goals set out in the law. Section 56-576 of the Virginia Code very helpfully defines renewable energy to include “biomass, sustainable or otherwise, (the definitions of which shall be liberally construed).”

Fun fact: as recently as 2008, only “sustainable biomass” qualified as renewable energy. The definition was altered in 2009, at the same time it was expanded to cover biomass burned in a coal-fired power plant such as the one Dominion had just announced it would build.

The RPS bonus money boondoggle came to an end in 2013 when public outrage reached a fever pitch. Then-Attorney General Ken Cuccinelli reached a deal on legislation to repeal the bonus money provisions of the statute. (Utilities could still recover the costs of the RPS program from ratepayers.) Left intact was everything else, including defining renewable energy as “biomass, sustainable or otherwise.”

Liberally construing “sustainable or otherwise” has not been good for southeastern forests. Dogwood Alliance and Southern Environmental Law Center document widespread clear-cutting, loss of forests, and replacement of mixed hardwood forests with pine plantations. As these groups and others have also pointed out, burning wood produces more pollution than coal and isn’t carbon-neutral in the time frame that matters for the climate pickle we’re in.

Dominion is not the worst offender; pride of place belongs to wood pellet manufacturer and exporter Enviva, which just received a permit to expand its Virginia facility in Southampton.

Dominion also isn’t the only Virginia utility to have invested in burning trees. Northern Virginia Electric Cooperative provides its customers with electricity from a biomass plant in South Boston. NOVEC doesn’t have an RPS to meet, so it sells renewable energy certificates to Maryland utilities. It’s a lousy deal for the Maryland residents who get higher bills and no clean energy to show for it, but meanwhile NOVEC brags about its “environmentally friendly” plant.

So now what?

There are really two questions when it comes to burning trees for fuel: one, should government give it preferential treatment; and two, should an electric utility be doing it at all?

The General Assembly will almost certainly consider legislation this year requiring utilities to increase the proportion of electricity they sell that comes from renewable energy. If biomass is allowed to qualify, the result will be less new wind and solar and less progress towards a carbon-free grid. The lesson from other states that have renewable energy mandates is simple: states that allow junk get junk. (Here’s looking at you, Maryland.)

But as we’ve seen, biomass can’t compete with other energy sources on cost if it doesn’t get subsidies. Dominion can follow NOVEC’s lead in selling RECs to Maryland or other states that haven’t wised up yet, but REC payments won’t make up the cost difference between biomass and other fuels.

Worse—or better, depending on your point of view—other states may decide not to support the biomass racket. Maybe Dominion could still sell the renewable energy certificates (RECs) to the ultra-cheap Green Power for Suckers program that the SCC approved a couple weeks back. But selling cheap RECs to chumps would net the company only—ahem—chump change.

In fact, the SCC should take a hard look at biomass when Dominion files its next Integrated Resource Plan. Requiring the utility to get out of the wood-burning business wouldn’t just clean the air and protect forests, it could be a smart way to save money for customers.

 

This article originally appeared in the Virginia Mercury on December 2, 2019. 

It’s time for the General Assembly to side with customers, not utilities, on solar

Solar canopy over a parking lot

Solar panels on parking lots, landfills, rooftops and other sites could provide a lot of clean electricity if policy barriers are removed.

Last winter, the Virginia General Assembly passed legislation giving utilities the green light to develop 5,500 megawatts (MW) of wind and solar energy. This marks a milestone for Virginia, offering the possibility for an amount of solar equal in output to Dominion Energy’s newest gas-fired power plant in Greensville.*

Amid the general celebration of this support for utility solar and wind, few legislators noticed that the bill did nothing to help residents and businesses that want to build renewable energy for their own use. Private investment drives most of the solar market in many other states, so leaving it out of the picture means squandering an opportunity.

Customers—and the solar companies who depend on small-scale solar— hope it’s their turn this year. They’d like to see the General Assembly give customer-built solar the same level of love in 2019 that it gave utility solar in 2018.

Unfortunately, that doesn’t square with the agenda of our utilities, which want to protect their monopolies on electric generation. Over the past few years, Dominion Energy and its fellow utilities have blocked dozens of bills aimed at removing some of the policy barriers stifling the market.

Just one example: Fairfax County, like many jurisdictions across the state, owns a closed landfill. It can’t be used for most purposes, but it could hold a solar array large enough to power multiple county buildings.

Yet no fewer than four different provisions of Virginia’s net metering law keep a cost-effective project from moving forward: a 1 MW limit on commercial solar arrays; a requirement that electricity from a solar facility must be used onsite; a rule that a solar facility can’t be larger than needed to meet the site’s electric demand over the preceding year; and a prohibition on meter aggregation that keeps a customer with solar on one building from sharing it with another building.

These would all be simple legislative fixes, but for years now Dominion and the other utilities have opposed the reforms.

Other reforms are needed, too. The solar industry faces a ceiling on the total amount of solar customers can own under the net metering program; utilities killed bills that would raise the ceiling. Businesses tried to lift restrictions on third-party financing using power purchase agreements. Utilities killed the bills. Homeowners tried to get out from under the oppressive fees called standby charges that utilities impose to keep customers from putting up more than 10 kilowatts (kW) of solar panels. Utilities killed the bills.

Killing bills clearly must get tedious. So, this year, Dominion is using the occasion of a report to the General Assembly on solar energy last month to launch a propaganda campaign against the whole radical idea of customers producing their own energy supply.

The 44-page, glossy brochure boasts photographs of sunlight slanting across solar panels nestled in fields of dandelions. Much of it is devoted to touting Dominion’s own progress in installing solar. Dominion claims its 1,600 MW of solar make it a national leader, though that might have to be taken with a grain of salt given that the U.S. now has more than 58,000 MW of solar.

And of course, most of Dominion’s solar is in other states; and of the solar in Virginia, most is being built in response to demand from the state government and corporate customers. Only a few of the solar farms Dominion includes will actually serve ordinary ratepayers.

The achievements amount to even less for Dominion’s customer-sited projects. The company’s Solar Partnership Program for commercial customers built only 7.7 MW out of the 30 MW the SCC approved five years ago. The Solar Purchase Program that Dominion once hoped might replace net metering has produced a grand total of 2 MW.

And then there are the 18 schools across the commonwealth that are the lucky recipients of solar panels in Dominion’s “Solar for Students” program. Each school gets 1.2 kW worth of solar panels, or roughly enough to run an old refrigerator. (In fairness, those old refrigerators are electricity hogs. If you have one, replace it.)

If these programs demonstrate Dominion’s level of competence building rooftop solar, that seems like reason enough to open up the private market.

It’s also worth keeping in mind that the reason customers are trying so hard to remove Virginia’s policy barriers is that they don’t just want electricity, they want solar. Yet absolutely none of the solar energy from any project Dominion builds or buys, even those paid for by Virginia ratepayers, will stay in Virginia to meet our voluntary renewable portfolio standard (RPS).

If that surprises you, check out a different document Dominion filed last month, with significantly less fanfare than it gave the solar report. The other filing, Dominion’s annual report to the State Corporation Commission (SCC) on renewable energy, confirms that Dominion sells the “renewable attributes” of solar energy produced here to utilities in other states in the form of renewable energy certificates (RECs).

Then, for the Virginia RPS, Dominion buys cheaper RECs from facilities like out-of-state, century-old hydro dams, biomass (wood) burners, trash incinerators, and a large but mysterious category called “thermal” that is nowhere defined but definitely has nothing to do with solar. So other states get the bragging rights to our solar, and we get dams, trash and wood, plus a mystery ingredient.

But regardless of who gets to claim it, all solar is good solar in a world threatened by climate change. That’s my attitude, anyway, and I only wish Dominion shared it. But, returning our attention to the glossy solar brochure, we find Dominion instead doing its darnedest to undermine the idea of solar built by anyone but the lovable monopoly itself.

The report offers up a poll that concludes: “Solar power is the most popular energy source of all those tested in this polling (Nuclear, Wind, Solar, Natural Gas, and Coal).” But then it goes on to suggest customers don’t understand solar, don’t want to spend much money on it, and don’t really value it very highly after all.

For example, the report follows news of solar’s 82% positive rating with this caveat: “However, when asked to choose what is most important to them regarding their own electricity provider . . .customers chose as follows: dependability and reliability 53%; affordability 28%; investing in renewable energy 16%.”

The poll apparently didn’t give respondents the option of choosing solar andreliability andaffordability. Pollsters must not have told folks that customers in other states enjoy all three at once, or that solar actually has a positive effect on grid reliability and customer savings.

If the question had been, “How biased is this poll?” I bet they could have scored 100%.

After delivering a few more similarly manipulated polling results, the report goes on to discuss the results of last summer’s solar stakeholder process. Readers may recall that Dominion hired consultant Meridian Institute to convene a series of meetings to get feedback on renewable energy policy questions. Hundreds of Virginians took the trouble to attend in person or by phone to share their expertise and opinions.

The result, presented in an 18-page appendix to Dominion’s report, is impressive only for how completely inane it is.

Here, for example, is how Meridian opens its summary of stakeholder feedback:

Most stakeholders who expressed a general opinion about the expansion of renewable energy in Virginia indicated that they support such expansion. Others indicated that their support for renewable energy was dependent on a variety of factors. Some stakeholders did not express a general opinion about the expansion of renewable energy in Virginia.

I am sorry to say it goes on like that for pages.

If you persist in reading the Meridian summary, the most you will get out of it is what we all knew going into it: utilities disagree with customers and the solar industry about whether existing restrictions on customer solar are good or bad.

Except, the report does not even say that. It only says the “participants” in the solar stakeholder process disagreed on these questions. Putting it that way leaves open the possibility that some customer, somewhere, in one of those meetings, might have taken the utilities’ side.

If so, the customer’s name was Tooth Fairy.

I have little doubt Dominion provided a copy of its pretty solar report to every legislator in Richmond, and is already using it in its fight against expanding the rights of customers in Virginia to go solar. Dominion will point to its report as proof that customers are too stupid and too conflicted to be allowed to make their own decisions. Ergo, Dominion should control all solar in Virginia, on rooftops as well as elsewhere.

Legislators should indeed read the report. And then after they’ve had a good laugh, they should tell Dominion no.

——————

*That equivalence is because Dominion projects its 1,588 MW Greensville plant will run at 80% of its full capacity. Solar farms, generating only during daylight hours, achieve capacity factors in the range of 25%, while rooftop solar comes in a little less.


This post originally appeared in the Virginia Mercury on December 7, 2018.

Solar map locates Northern Virginia on the dark side of the metro region

people standing by solar panels on a high school.

The 90 kW of solar panels on the roof of Wakefield High School represent almost 5% of Arlington’s solar total. Arlington schools have been a bright spot in Northern Virginia’s otherwise lackluster solar performance. Photo credit Phil Duncan.

Those of us who’ve lately become bullish on Virginia solar got a rude wake-up call this week when the Northern Virginia Regional Commission (NVRC) updated its map showing the amount of solar installed in every locality in Northern Virginia and the greater Washington region. Stunningly, every single suburban Maryland jurisdiction did better than every single Virginia jurisdiction. So did Washington, DC.

The map reveals that as of the end of 2017, Fairfax County had the most solar of any Virginia locality measured, reflecting its status as Virginia’s most populous county. Fairfax boasted a cumulative capacity of 2,104 kilowatts (kW) of solar, edging out Virginia’s richest county, Loudoun, which came in with 1,878 kW, as well as much smaller but more liberal Arlington with 1,785 kW.

All the Northern Virginia jurisdictions together (which also included Prince William, Manassas, Alexandria, and Falls Church) boasted a total of 8,443 kW, spread across 1,112 systems. That’s an average of about 7.5 kW per system, meaning these are overwhelmingly rooftop solar installations on homes and businesses. (An average home solar system is about 5 or 6 kW. Using solar for all of a home’s electricity needs might require 8-10 kW or more, especially if the home is heated with electricity or includes an electric vehicle.)

NoVa’s 8,443 kW is about as much as Prince George’s County, Maryland alone had five years ago. Today, PG County leads the region with 136,507 kW. Added together, the Maryland suburban localities finished the year with 272,688 kW of solar, over 32 times the suburban Virginia total. Washington, with 40,954 kW, beat all of suburban Virginia almost five times over.

So what do Maryland and DC have that Virginia doesn’t have? One answer is incentives. Maryland and DC have mandatory renewable portfolio standards (RPS) that require utilities to buy a certain percentage of their electricity from solar generated in state, including from their own customers. As the percentage requirement increases year after year, the forces of supply and demand set prices for solar renewable energy certificates (SRECs) that make solar a profitable investment for consumers. In DC, the value of SRECs is currently so high that a home solar installation can pay for itself in less than four years. In Virginia, with the federal 30% tax credit but no RPS or SREC market, payback may take ten years.

Ten years is still not a bad payoff for solar panels that can produce free electricity for 40 years or more. That points to the other advantage Maryland and DC have over Virginia: pro-solar policies. Virginia law does provide for net metering, the policy that lets a solar customer put surplus power onto the grid during the day and receive a credit for it that is used against the same amount of power drawn from the grid at night. Without net metering, we would have very little rooftop solar at all.

But a whole host of restrictions apply to net metering in Virginia. Homeowners are limited to a 20 kW system, and utilities can (and do) apply punitive fees known as “standby charges” to residential systems over 10 kW. Commercial customers are limited to 1,000 kW, no matter how much space they have or how much electricity they use. Sharing solar arrays among customers is prohibited. A building owner cannot install solar and sell the electricity to tenants. A local government cannot install solar on a vacant lot and use it to power a building across the street. Only certain customers can use third-party ownership financing.

And if the market flourishes anyway, Virginia law puts a ceiling on the total capacity of net-metered systems. Once the total reaches 1% of a utility’s sales, the program will come to a screeching halt. Think of it as an anti-RPS.

This year the Virginia General Assembly passed legislation that encourages Virginia utilities to develop solar, but the bill failed to address the barriers holding back private investments in solar. Other bills that would have opened up the market failed in the Republican-controlled (and utility-friendly) Commerce and Labor committees.

Barrier-busting bills will certainly be back again next year, and local governments that want more solar in their communities should make sure these reforms are part of their legislative wish list. Meanwhile, there is room under current law for local governments and schools to install a lot more solar than they have to date. Leading by example is a powerful tool to capture the attention of the public, educate residents on the benefits of solar, and instill pride in the community.

Localities can also help residents and businesses go solar by promoting solar coops like Solarize NoVa, offering low-cost financing via commercial PACE loans(as Arlington is doing), and setting expectations for developers.

Maryland and DC may still beat Virginia on solar over the next few years, but it shouldn’t happen without a fight.

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

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.

Virginia legislators face a flood of new solar bills

Photo courtesy of Department of Energy, via Wikimedia Commons.

It’s true that Republicans remain in control of the General Assembly, and the way things run in Richmond, having only the narrowest of margins diminishes the majority’s power remarkably little. Yet the Blue Wave swept in a set of younger, more diverse, and more progressive delegates, many of whom are as interested in reforming energy policy as they are in social and economic issues.

As a result, I count more than 50 bills dealing with solar, energy efficiency, electric vehicles and battery storage; several more that affect clean energy by addressing carbon emissions; and still others that deal with utility regulation in ways that have implications for renewables and storage. And bills are still being filed.

In this post, I cover just the renewable energy bills of general interest filed to date, saving energy efficiency, storage, EVs and climate for later.

Most of these bills cover renewable energy generally. Bills submitted by the Rubin Group (the private negotiating group consisting mostly of utilities and solar industry members) are limited to solar.

One bill this year takes a new run at a mandatory renewable portfolio standard (RPS). This is Delegate Sullivan’s HB 436, which narrows the kind of resources eligible for the program (now mostly wind, solar and hydro) as well as making it mandatory. As currently drafted it is so ambitious that it would likely mean utilities would have to buy a lot of Renewable Energy Certificates from out of state to meet the early year targets, but changes to the bill may be in the works.

Delegate Sullivan has also proposed HB 54, which would provide a state tax credit of 35% of the cost of installing certain kinds of renewable energy property, up to a maximum credit of $15,000.

Several bills enable community solar programs, to provide options beyond the utility-controlled program passed last year that more closely resembles a green tariff. SB 313 (Edwards) SB 311 (Edwards) offer two different customer-controlled models. SB 586 (Gooditis) would authorize, but not require, utilities to set up utility-controlled programs; it differs from last year’s bill in that customers would have a direct connection with a specific renewable energy project. Since it would not be limited to solar, it could open a new option for community wind.

The Rubin Group drafted three pieces of legislation. The centerpiece bill, SB 284 (Saslaw) and HB 1215 (Hugo) raises from 500 megawatts (MW) to 4,000 MW (by 2024) the amount of large-scale solar utilities can build or buy that is deemed to be “in the public interest,” a designation that takes this determination away from the State Corporation Commission. The bill also makes it in the public interest for utilities to own or buy up to 500 MW of small-scale solar projects (under 1 MW each). These will be distributed projects, but utility-controlled, along the lines of Dominion’s not-very-successful Solar Partnership Program.

SB 284 and HB 1215 don’t actually require the utilities to do anything, but the legislation is widely seen as signaling their intent to move forward with additional solar development. While a very welcome signal, legislators should keep in mind that a Solar Foundation analysis earlier this year noted it would take as much as 15,000 MW of solar to provide just 10% of Virginia’s electricity supply.

Recognizing this reality, Delegate Mark Keam has introduced HB 392, which declares it in the public interest for the Commonwealth to get 10% of its electricity from solar, and raises to 15,000 MW the amount of utility solar in the public interest.

The two other Rubin Group bills deal with land use, putting language into the code giving people the right to put up solar panels on their own property for their own use, except where local ordinances specifically prohibit it, and subject to setback requirements, historic districts, etc. The bills are SB 429 (Stanley), its companion bill HB 508 (Hodges), SB 179 (Stanley) and companion bill HB 509 (Hodges).

The Rubin Group tried and failed to negotiate changes to Virginia’s net metering program, which affects most customer-sited solar projects, including residential rooftop solar. This is hardly a surprise; a group that works on consensus gives every member veto power. With utilities hostile to any perceived incursion on their monopoly power, and solar advocates pledged to protect the rights of residents, there aren’t a whole lot of opportunities for consensus here.

With the Rubin Group out of the net metering space, legislative champions have stepped into the vacuum to propose a host of bills that would support customers who install solar for their own use:

  • HB 393 (Keam) removes the 1% cap on net metered projects, and provides that when net metered projects reach 1% of a utility’s electric load, the SCC will conduct a study of the impact of net metering and make recommendations to the General Assembly about the future of the program. HB 1060 (Tran) simply removes the cap.
  • SB 191 (Favola) provides that Virginia customers who wish to self-generate electricity with renewable energy using the net metering provisions of the Code may install up to 125% of their previous 12 months’ electric demand, or in the case of new construction, of the electric demand of similar buildings. A 2015 law currently limits customers to 100% of previous demand.
  • HB 421 (Sullivan) allows owners of multifamily residential buildings to install renewable energy facilities and sell the output to occupants. This bill does not provide for the electricity to be net metered.
  • HB 930 (Lopez) requires the SCC to establish a net metering program for multifamily customer-generators, such as condominiums, apartment buildings, and homeowner associations.
  • HB 978 (Guzman) requires utilities to justify standby charges with a value of solar study. As currently written, the bill does not appear to have retroactive effect, so it might not repeal the existing, much-hated standby charges already approved by the SCC.
  • SB 82 (Edwards) expands the agricultural net metering program, increasing the project size limit from 500 kW to 1 MW, providing that the electricity can be attributed to meters on multiple parcels of land, and repealing the 2017 law ending agricultural net metering in coop territory.

Finally, several bills once again tackle third-party power purchase agreements (PPAs), which the Virginia Code appears to make legal, but which utilities have consistently maintained are a violation of their monopoly on the sale of electricity. HB 1155 (Simon) reaffirms the legality of PPAs. SB 83 (Edwards) replaces the existing PPA pilot program that dates from 2013 and directs the SCC to establish a broader program.

HB 1252 (Kilgore) replaces the existing pilot, which has different rules for Dominion and APCo, with a new program renamed “net metering power purchase agreements” that would be consistent for both utilities. It would open up APCo territory more than at present, by allowing any tax-exempt entity to participate rather than just the private colleges and universities that won inclusion last year. However, as currently drafted, it would narrow the program as it exists in Dominion territory by eliminating the eligibility of for-profit customers. Although it is the least customer-friendly option among the PPA bills, Kilgore’s position as chairman of House Commerce and Labor, which will hear the bill, gives it the strongest chance of passage.

Note that most of the renewable energy bills (other than those dealing with tax credits and land use) will go to the Commerce and Labor committees. In the House, a subcommittee usually meets once to hear all the bills (and typically to kill all but the ones anointed by chairman Terry Kilgore). While the schedule is not set, in the past the subcommittee meeting has been held in early February.


Important dates:

First Day of Session: Wednesday, January 10

Bill filing Deadline: Friday, January 19

Crossover (last day on which bills passed in one chamber can go to be heard in the other): Wednesday, February 14

Sine Die (end of Session): Saturday, March 10 

How to research a bill:

I’ve hot-linked the bills discussed here, but you can also find them all online pretty easily. On the home page of the General Assembly website, you will see options at the lower right that direct you to the Legislative Information Service, or LIS. If you know the number of a bill, you can type it into the first box (omitting spaces), and click “GO.” This will take you to a page with information about the bill, including a summary of the bill, the bill’s sponsor (called a “patron” in Virginia), the committee it has been assigned to, and its current status. Follow links to learn more about the committee, such as who is on it and when it meets. You will also see a link to the full text of a bill as a PDF.

Always read the full text of a bill rather than simply relying on the summary. Summaries sometimes contain errors or omit critical details, and bills can get amended in ways that make them very different from what the summary says. For the same reason, make sure you click on the latest version of the bill’s text.

If you don’t know a bill number, the General Assembly home page also lets you search “2018 Regular Session Tracking.” When you hit “GO,” this button brings you to a page with options for finding a bill, including by the name of the legislator (“member”), the committee hearing it, or the subject.

When you click on the name of a committee, you will see the list of bills referred to that committee, with short descriptions. It also tells you who is on the committee, when the committee meets and where. You can click on “Agendas” to see which bills are scheduled to be heard at the next committee meeting. Unfortunately the agendas are not set until a day or two before the meeting.

 

Want more solar in Virginia? Here’s how to get it.

A Solar Foundation analysis showed Virginia could create 50,000 new jobs by committing to build enough solar to meet 10% of energy demand. Photo credit: Dennis Schroeder, NREL

If there is an energy issue that Republicans and Democrats can agree on, it is support for solar energy. It’s homegrown and clean, it provides local jobs, it lowers our carbon footprint, and it brings important national security and emergency preparedness benefits. Dominion Energy Virginia even says it’s now the cheapest option for new electric generation.

Yet currently Virginia lags far behind Maryland and North Carolina in total solar capacity installed, as well as in solar jobs and the percentage of electricity provided by solar. And at the rate we’re going, we won’t catch up. Dominion’s current Integrated Resource Plan calls for it to build just 240 megawatts (MW) per year for its ratepayers. How can we come from behind and score big?

First, our leaders have to set a serious goal. Virginia could create more than 50,000 new jobs by building enough solar to meet just 10 percent of our electricity demand by 2023. That requires a total of 15,000 MW of solar. Legislators should declare 15,000 MW of solar in the public interest, including solar from distributed resources like rooftop solar.

The General Assembly should consider a utility mandate as well. Our weak, voluntary Renewable Portfolio Standard (RPS) will never be met with wind and solar, and making it mandatory wouldn’t change that. (To understand why, read section 4 of my 2017 guide to Virginia wind and solar policy, here.) Getting solar into the RPS would require 1) making it mandatory; 2) increasing the targets to meaningful levels (including removing the nuclear loophole); 3) including mandatory minimums for solar and wind so they don’t have to compete with cheap renewable energy certificates (RECs) from out-of-state hydroelectric dams; and 4) providing a way for utilities to count the output of customer-owned solar facilities in the total, possibly through a REC purchase program to be set up by the State Corporation Commission.

The other way to frame a utility mandate would be to ignore the RPS and just require each utility to build (or buy the output of) its share of 15,000 MW of solar. Allowing utilities to count privately-owned, customer-sited solar towards the total would make it easier to achieve, and give utilities a reason to embrace customer investments in solar.

Second, the General Assembly has to remove existing barriers to distributed solar. Customers have shown an eagerness to invest private dollars in solar; the government and utilities should get out of the way. That means tackling several existing barriers:

  • Standby charges on residential solar facilities between 10 and 20 kilowatts (kW) should be removed. Larger home systems are growing in popularity to enable charging electric vehicles with solar. That’s a good thing, not something to be punished with a tax.
  • The 1% cap on the amount of electricity that can be supplied by net-metered systems should be repealed.
  • Currently customers cannot install a facility that is larger than needed to serve their previous year’s demand; the limitation should be removed or raised to 125% of demand to accommodate businesses with expansion plans and homeowners who plan to buy electric vehicles.
  • Customers should be allowed to band together to own and operate solar arrays in their communities to meet their electricity requirements. This kind of true community solar (as distinguished from the utility-controlled programs enabled in legislation last year) gives individuals and businesses a way to invest in solar even if they don’t have sunny roofs, and to achieve economies of scale. If community solar is too radical a concept for some (it certainly provokes utility opposition), a more limited approach would allow condominiums to install a solar facility to serve members.
  • Local governments should be allowed to use what is known as municipal net metering, in which the output of a solar array on government property such as a closed landfill could serve nearby government buildings.
  • Third-party power purchase agreements (PPAs) offer a no-money-down approach to solar and have tax advantages that are especially valuable for universities, schools, local governments and non-profits. But while provisions of the Virginia Code clearly contemplate customers using PPAs, Virginia utilities perversely maintain they aren’t legal except under tightly-limited “pilot programs” hammered out in legislation enacted in recent years. The limitations are holding back private investment in solar; the General Assembly should pass legislation expressly legalizing solar third-party PPAs for all customers.

Third, the Commonwealth should provide money to help local governments install solar on municipal facilities. Installing solar on government buildings, schools, libraries and recreation centers lowers energy costs for local government and saves money for taxpayers while creating jobs for local workers and putting dollars into the local economy. That makes it a great investment for the state, while from the taxpayer’s standpoint, it’s a wash.

If the state needs to prioritize among eager localities, I recommend starting with the Coalfields region. The General Assembly rightly discontinued its handouts to coal companies in that region, which were costing taxpayers more than $20 million annually. Investing that kind of money into solar would help both the cash-strapped county governments in the area and develop solar as a clean industry to replace lost coal jobs.

Coupled with the ability to use third-party PPA financing, a state grant of, say, 30% of the cost of a solar facility (either immediately or paid out over several years) would drive significant new investment in solar.

Fourth, a tax credit for renewable energy property would drive installations statewide. One reason North Carolina got the jump on Virginia in solar was it had a robust tax credit (as well as a solar carve-out to its RPS). One bill has already been introduced for Virginia’s 2018 General Assembly session offering a 35% tax credit for renewable energy property, including solar, up to $15,000. (The bill is HB 54.)

Fifth, Virginia should enable microgrids. Unlike some other East Coast states, we’ve been lucky with recent hurricanes. The unlucky states have learned a terrible lesson about the vulnerability of the grid. They are now promoting microgrids as one way to keep the lights on for critical facilities and emergency shelters when the larger grid goes down. A microgrid combines energy sources and battery storage to enable certain buildings to “island” themselves and keep the power on. Solar is a valuable component of a microgrid because it doesn’t rely on fuel supplies that can be lost or suffer interruptions.

The General Assembly should authorize a pilot program for utilities, local governments and the private sector to collaborate on building solar microgrids with on-site batteries as a way to enhance community preparedness, provide power to buildings like schools that also serve as emergency shelters, and provide grid services to the utilities.

One way or another, solar energy is going to play an increasingly large role in our energy future. The technology is ready and the economics are right. The only question is whether Virginia leaders are ready to make the most of it in the coming year.

2017 guide to Virginia wind and solar policy

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

[This is an awesome guide, isn’t it? But you don’t want to bother with it, because the 2018 update is now available here.]

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

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

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

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

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

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

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

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

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

Several developments are driving these numbers:

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

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

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

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

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

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

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

Virginia law is not the problem. Section 56-577(A)(6) of the Virginia code allows utilities to offer “green power” tariffs, and if they don’t, customers are supposed to be able to go elsewhere for it. Ideally, a utility would use money from voluntary green power programs to build or buy renewable energy for these customers. However, our two big investor-owned utilities, Dominion Energy Virginia (formerly Dominion Virginia Power) and Appalachian Power Company (APCo), have not done this. Instead, the utilities pay brokers to buy renewable energy certificates (RECs) on behalf of the participants. Participation by consumers is voluntary. Participants sign up and agree to be billed extra on their power bills for the service. Meanwhile, they still run their homes and businesses on regular “brown” power.

In Dominion’s case, these RECs meet a recognized national standard, and some of them originate with wind turbines, but they primarily represent power produced and consumed out of state, and thus don’t displace any fossil fuel burning in Virginia. For a fuller discussion of the Dominion Green Power Program, see What’s wrong with Dominion’s Green Power Program.

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

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

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

That means you should be able to go elsewhere to buy wind and solar. But Virginia utilities claim that the statute’s words should be read as requiring not only that another licensed supplier provide 100% renewable energy, but that it also supply 100% of the customer’s demand, all the time. Obviously, the owner of a wind farm or solar facility cannot do that. Ergo, say the utilities, a customer cannot go elsewhere.

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

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

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

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

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

  1. Community solar

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

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

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

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

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

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

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

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

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

  1. Customer-owned generation 

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

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

In 2016 the GA passed legislation enabling Property Assessed Clean Energy (PACE) loans for commercial customers. Localities now have an option to offer low-cost financing for energy efficiency and renewable energy projects at the commercial level. Arlington County received a federal grant to develop a PACE program that is expected to launch this year and be a model for other jurisdictions. A bill to extend PACE authorization to residential customers did not get out of committee last year.

Virginia offers no cash incentives or tax credits for wind or solar. The lack of a true RPS in Virginia means Virginia utilities generally will not buy solar renewable energy certificates (SRECs) from customers. SRECs generated here can sometimes be sold to utilities in other states or to brokers who sell to voluntary purchasers.

  1. Limits on retail net metering

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

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

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

In 2015, the definition of “eligible customer-generator” was tightened to limit system sizes to no larger than needed to meet the customers demand, based on the previous 12 months of billing history. The SCC wrote implementing regulations (see 20VAC5-315-10 et seq.) but failed to address what happens with new construction.

The limitation presents a new barrier to current customers who want to expand their solar arrays because their business is expanding or they plan to buy an electric car. Why should they have to wait twelve months? But the limitation is also stupid. If customers want to install more clean, renewable energy than they need and are willing to sell the surplus electricity for avoided cost, why would you stop them from performing this service to society?

  1. Progress on meter aggregation derailed by agricultural solar bill

Under a bill passed in 2013, owners of Virginia farms with more than one electric meter are permitted to attribute the electricity produced by a system that serves one meter (say, on a barn) to other meters on the property (e.g., the farmhouse and other outbuildings). This is referred to as “agricultural net metering.” Unfortunately, there have been complaints from installers about a lack of cooperation from utilities in actually using this provision.

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

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

  1. Standby charges on larger home systems

The current system capacity limit for net-metered residential solar installations is 20 kW. However, for residential systems between 10 kW and 20 kW, a utility is allowed to apply to the State Corporation Commission to impose a “standby” charge on those customers. Both Dominion and APCo have approval from the SCC to impose standby charges so high that solar installers say the larger systems often don’t make economic sense.

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

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

  1. Homeowner associations cannot ban solar

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

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

  1. Third-party ownership

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

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

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

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

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

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

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

Almost a year later, on August 31, 2016, the hearing examiner finally issued her report, recommending that APCo’s application be rejected, both because it was a lousy program and because she, too, read the Code to allow PPAs currently, making a utility alternative unnecessary. Before the commission itself could confirm the ruling, APCo withdrew its application.

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

Meanwhile, Secure Futures has developed a third-party-ownership business model that it says works like a PPA for tax purposes but does not include the sale of electricity. This allows the company to install larger projects in more parts of Virginia (including most recently a 1.3 MW solar array to be installed at Carilion New River Valley Medical Center in Southwest Virginia, which I have to mention here because the project combines solar and sheep farming and therefore will make for cute photos). Currently Secure Futures is the only solar provider offering this option, which it calls a Customer Self-Generation Agreement.

  1. Tax exemption for third-party owned solar

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

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

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

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

  1. Dominion-owned distributed solar

In 2011, the General Assembly passed a law allowing Dominion to build up to 30 MW of solar energy on leased property, such as roof space on a college or commercial establishment. The demonstration program was intended to help Dominion learn about grid integration. The SCC approved $80 million of spending, to be partially offset by selling the RECs (meaning the solar energy would not be used to meet Virginia’s RPS goals). The “Solar Partnership Program” resulted in several commercial-scale projects on university campuses and corporate buildings, but the program did not offer any economic advantages, and it seems to have fizzled out. The new Dominion Energy web page still mentions it, but currently the link does not lead to more information.

  1. Dominion Solar Purchase Program

The same legislation that enabled the “Solar Partnership” initiative also authorized Dominion to establish “an alternative to net metering” as part of the demonstration program. The alternative is a buy-all, sell-all deal for up to 3 MW of customer-owned solar. As approved by the SCC, the program allows owners of small solar systems on homes and businesses to sell the power and the associated RECs to Dominion at 15 cents/kWh, while buying regular grid power at retail for their own use. Dominion then sells the power to the Green Power Program at a hefty markup. It is not clear whether the program continues to be available; the links on the new Dominion Energy website don’t lead anywhere helpful.

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

  1. Utility renewable energy tariffs for large customers

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

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

In 2015, Amazon Web Services made Dominion’s RG tariff irrelevant. Amazon contracted directly with a developer for an 80 MW solar farm, avoiding Dominion’s monopoly restrictions with a plan to sell the electricity directly into the PJM (wholesale) market. Dominion Energy (the merchant affiliate of Dominion Virginia Power) then bought the project, and Dominion Virginia Power negotiated a special rate with Amazon for the power. This contract became the basis for an “experimental” tariff that Dominion now offers to customers with a peak demand of 5 MW or more, with a program cap of 200 MW.

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

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

Dominion has also entered into a contract to sell the output of a 17 MW solar facility to the University of Virginia and the Darden School of Business.

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

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

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

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

Dominion got off to a rocky start when the SCC rejected the company’s plan to charge ratepayers for its first project, a 20 MW solar farm in Remington, Virginia because the company had not considered cheaper third-party alternatives. Governor McAuliffe helped save the project by working out a deal with Microsoft, as discussed above. Further projects fared better, however, and Dominion is now so enthusiastic about solar that its latest Integrated Resource Plan (IRP) calls for it to engage in a continuous build-out at a rate of 240 MW per year, all for the benefit of its regular ratepayers.

Although Dominion will be able to charge ratepayers for these projects, the SCC will probably insist that the RECs be sold—whether to utilities in other states that have RPS obligations, or to customers who want them for their own sustainability goals, or perhaps even to voluntary green power customers. If this happens, the result will be that Dominion still won’t use solar to meet the Virginia RPS, and ordinary customers will still not have solar as part of the electricity they pay for. That’s the weird world of RECs for you.

  1. Governor McAuliffe initiates program to purchase 110 MW of solar

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

The first deal that will count towards this goal is an 18 MW project at Naval Station Oceana, announced on August 2, 2016. The Commonwealth will buy the power and the RECs. (The Remington Project did not count, because as the buyer of the RECs, only Microsoft can claim the right to be buying solar power.) A 17 MW solar farm supplying the University of Virginia will also count towards the 8%, according to Deputy Secretary of Commerce and Trade Hayes Framme.

  1. Still waiting for wind

No Virginia utility is actively moving forward with a wind farm on land. Dominion Power’s website used to list 248 MW of land-based wind in Virginia as “under development,” without any noticeable progress. The current web page omits mention of these projects.

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

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

Nonetheless, Apex Clean Energy has obtained a permit to develop a 75-MW Rocky Forge wind farm in Botetourt County. No customer has been announced, but the company believes the project can produce electricity at a competitive price, given its good location and improved turbine technology. Construction, once planned for this year, is now slated for 2018.

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

We had originally been told the federal government’s timeline would lead to wind turbines being built off Virginia Beach around 2020. Now, however, the Bureau of Ocean Energy Management says Dominion has five years from approval of the SAP to submit its construction and operations plan, after which we’ll have to wait for review and approval. Presumably the project will also require an environmental impact statement. So the whole process would be quite slow even if Dominion were committed to moving forward expeditiously.

But in fact, it seems increasingly clear that Dominion is just going through the motions and has little interest in seeing the project through. Its 2017 Integrated Resource Plan (IRP) does not even include offshore wind in any of its scenarios for the next 15 years, except for the 12 MW that would be produced by the two test turbines of its VOWTAP project.

Yes, so what about VOWTAP? Dominion had been part of a Department of Energy-funded team to try out new technology, with two pilot turbines due to be installed in 2017. After a second round of bids to build the project still came in higher than expected, Dominion told DOE last spring it could not commit to construction even by 2020, upon which DOE pulled funding. Dominion executives have not declared the project dead, however, and while there has been no public discussion of reviving it, the 2017 IRP suggests an in-service date of 2021.

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

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

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

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

  1. Solar initiatives underway ahead of the 2018 Session

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

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

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

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

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