Tag Archives: solar

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More bills to watch

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photo credit: Amadeus

photo credit: Amadeus

The bills keep coming. Again, this is hardly a comprehensive list, just the ones I’ve had a chance to think about. By the way, renewable energy fans may want to head to Richmond on January 30, when many of the House bills will be taken up in a long afternoon session of the House subcommittee on energy. Members of the public are usually permitted to testify.

Another renewable energy tax credit bill. Senator Norment has now filed SB 653, a companion bill to HB 910. This caps the overall total of tax credits that can be claimed at $10 million annually. As previously noted, it’s encouraging to have powerful Republicans supporting this bill. One complication, however, is that Senate Finance, which will hear Norment’s bill, has adopted a policy that makes it very difficult to pass new tax credit legislation, preferring grants instead. Tax breaks for renewable energy have proven extremely effective in other states and at the federal level in building the industry and creating jobs, but I wouldn’t object to grants. With Norment one of the leading senators on the Finance committee, we will hope he navigates this wisely.

Crowdfunding. Currently securities laws prevent private companies from accepting investments from people who are not “accredited” investors, otherwise known as rich folks. The purpose is to protect unsophisticated investors from hucksters, but it has the effect of preventing companies from engaging in creative crowdsourced financing for things like solar projects. An “invest in Virginia” bill, HB 880 (Yost) and SB 351 (Edwards), would loosen the rules for Virginia citizens investing in Virginia companies.

Ending HOA bans on solar. Since 2008, homeowner associations haven’t been able to impose new bans on solar panels, though they can impose restrictions on size and placement. However, HOA rules that were adopted prior to 2008 can still include total bans. SB 222 (Petersen) would nullify these bans. A similar bill passed the General Assembly two years ago, only to be vetoed by Governor McDonnell in the belief that it interfered with existing contracts. But many other states have overridden HOA solar bans as a matter of public policy; Virginia should do likewise. So far, Senate Commerce and Labor agrees, as the bill was passed out of committee today on a unanimous vote. (One caveat: what passed was a substitute, and I haven’t seen the changed language.)

Solar gardens. HB 1158 (Surovell) would allow “virtual” net metering of solar energy, making it possible for someone to subscribe to part of the output of a solar project and get credit on their utility bill for that amount. This approach would support huge growth in the solar market and has tremendous grassroots appeal; not surprisingly, the utilities are completely opposed to it.

Advantaging natural gas. Appalachian Power seems to want to build a new natural gas plant in Virginia at customer expense, and doesn’t want the State Corporation Commission to scrutinize the plan too carefully. HB 1224 (O’Quinn) makes an end run around the SCC’s standard operating procedures by declaring such a plant in the public interest and telling the SCC to “liberally construe” the provisions of the law to approve it. You have to wonder: if a natural gas plant is such a great idea, why does the SCC have to be coerced into approving it? And why shouldn’t a wind farm get the same treatment?

Fracking public lands. HB 915 provides that no permit or lease for oil and gas exploration or drilling on public lands can prohibit the use of fracturing. Really? Why would you prevent a state agency and the Governor from determining the scope of a permit? If the agencies are doing their job protecting public lands (I know, a big if), surely this prohibition ought to make it less likely, not more likely, that permits would be issued. That makes this bill a bad idea no matter whose side you’re on.

Attempts to nullify federal law. Two bills from Bob Marshall, HB 140 (multi-state coal compact) and HB 155 (interstate offshore energy compact) would replace existing federal laws and regulations with state control. Only the first bill is blatantly unconstitutional. The second, an attempt to supplant federal authority over waters beyond three miles out from shore, wouldn’t take effect without “consent” of Congress, so it might be merely a total waste of everyone’s time and an affront to our good sense. Delegate Marshall evidently regards the Constitution as a mistake. The rest of us can only be embarrassed for his constituents.

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Energy bills to watch in 2014

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photo credit: Amadeust

photo credit: Amadeust

Every year, hundreds of energy bills are fed into Virginia’s sausage-making machine, but little of interest to clean energy advocates makes it out the other end. Utilities and coal companies largely control the outcome, thanks to their generosity in funding legislators’ campaigns, and they do not share our desire for change.

Yet the start of each new Session, like the new year itself, always produces hope and excitement about the possibilities at hand. 2014 is no exception. There are a lot of bills here worth watching, and even rooting for. The list below is not comprehensive, and new bills keep coming in while existing ones get amended faster than I can keep up with, so take this summary only for what it’s worth today.

One point worth noting is that many of the most promising bills come from Republicans. Renewable energy and energy efficiency, once identified with progressives, seem to have gone mainstream in Virginia. Well, why not? In addition to lowering our carbon footprint and helping residents save money, they make business sense and create jobs.

How to look up a bill: The links in this article will take you to the summary page for a bill on the website of Virginia’s Legislative Information Service. The bill summary is not guaranteed accurate and does not change even if the bill language changes substantially, so always follow the links to the latest version of the bill to read the text. The summary page also shows what committee the bill has been assigned to; following the links will show you who is on the committee, when it meets, and what other bills have been assigned.

Investment tax credit. The bill with the potential to do most for renewable energy in Virginia is HB 910 (Villanueva), which would provide tax credits for renewable energy projects. The top priority this year for the solar industry, the bill would go a long way towards helping renewable energy compete in a state that still shells out millions of dollars every year in coal subsidies. A companion bill from a Senate Republican is also expected but has not been filed as of the time of this posting. The combination would be a powerful statement of support from a party that has not always been a friend to renewable energy.

In a bid to create broad support, HB 910 is not limited to emission-free projects like wind and solar. It would be hugely unfortunate if a few large biomass projects were to gobble up the credits, so we hope the patrons will commit to making any necessary fixes in future years if that happens.

Expanding net metering. Three-quarters of utility customers can’t take advantage of solar energy because their property isn’t suitable for solar panels. HB 879 (Yost), HB 906 (Krupicka) and SB 350 (Edwards) would allow customers in multifamily housing to participate in shared renewable energy systems, a limited form of community net metering. The bills would also allow something called “municipal net metering,” under which local governments could build a single renewable energy facility and attribute the energy from it to multiple meters on property owned by the locality. In addition to solar, these projects could include wind, landfill gas or gas from aerobic or anaerobic digesters.

Although these three bills look to be the same right now, I’m told they may be changed so that one House bill deals with multifamily housing and the other with municipal net metering.

Defining solar panels as pollution control equipment. SB 418 (Hangar) is primarily a useful workaround to address a tax problem that is holding back solar power purchase agreements. Odd as this sounds, currently third-party-owned solar systems are subject to local tax as manufacturing equipment. In many jurisdictions where solar PPAs have the most potential to help churches, schools, and other non-profits go solar, the tax is so high as to make the projects impossible to finance. Many localities want to help solar but are paralyzed by fear of opening a Pandora’s Box of unintended consequences. To solve the problem, SB 418 would extend to solar panels a tax exemption currently available to landfill gas projects and wood mulching equipment. Beyond helping PPAs, the legislation would also exempt solar equipment from state sales tax, which would make solar systems more affordable to all solar customers.

RPS bills. Several bills seek to improve Virginia’s pathetic voluntary renewable portfolio standard law by restricting the kinds of energy or credits that can be used to meet it. None of them would make the RPS mandatory, so they can’t deliver the kind of robust market in renewable energy credits (RECs) that supports the wind and solar industries in other states. For the most part, they aim for small fixes that could cue up stronger bills in future years, and reduce the consumer rip-off that characterizes the current RPS.

Of these, HB 1061 (Surovell) is the solar industry favorite. It would create the beginnings of a solar REC market here even within the framework of the voluntary RPS. This “Made in Virginia” bill would require Dominion Virginia Power to meet a portion of its voluntary target with renewable energy certificates representing distributed generation produced in Virginia, or by contributions to the state’s voluntary solar resource fund, which provides loans for solar projects. The State Corporation Commission would be tasked with the job of creating a system for registering and trading Virginia-based renewable energy certificates (RECs).

HB 881 (Yost) similarly sets up a system of renewable energy certificate registration and tracking at the SCC. It also eliminates the double and triple credits that the RPS currently gives to certain types of energy, only grandfathering in some wind RECs that Appalachian Power had already contracted for.

SB 498 (McEachin) makes a number of changes to the voluntary RPS to put it on a stronger footing going forward. It limits a utility’s ability to satisfy the goals with purchases of low-quality RECs like those from old hydroelectric dams and landfill gas, and ensures that most future purchases of energy and RECs will represent high-quality resources like wind and solar. It does not, however, include a carve-out for Virginia distributed generation. A similar bill last year received the blessing of Dominion but died in the face of opposition from the Virginia Alternative and Renewable Energy Association, arguing for the interests of the producers of crappy RECs.

Delegate Alfonso Lopez spent much time and effort over the past year trying to broker a deal between the utilities, environmental groups and renewable energy companies to produce a modest consensus bill. The result, HB 822, would seem to be a testament to how little consensus there is; it includes only a two-year limit on banking RECs for use in future years and the elimination of double credit for energy from animal waste. (I’m guessing the animal waste people weren’t at the table.) It also strengthens existing wording about the RPS serving the public interest, which may help utilities get SCC approval for expenditures to meet the targets.

On-bill financing for energy efficiency. Advocates of clean energy say the best way to get homeowners and businesses to weatherize buildings and install efficiency upgrades is to let customers pay the cost through their utility bills, often out of the energy savings they reap.  HB 1001 (Yancey) would require electric utilities to offer on-bill financing for energy efficiency measures. The bill would be stronger if it included gas utilities and did not insist on a five-year payback period, which is too short a time for many weatherization measures, but it’s still a great start.

Service districts. HB 766 (Bulova) adds energy and water conservation management services to the list of items that can be owned and maintained by local service districts. This adds a new tool for local governments to finance energy efficiency and renewable energy projects, allowing payments to be made via local property tax bills.

Virginia Commission on Energy and the Environment. The Virginia Energy Plan is due to be updated in 2014, and boy, does it need it. Anyone who has ever tried to make sense of the plan has probably given it up as a hopeless hodgepodge of contradictory ideas. Anything you like, it’s in there. Anything you don’t like is in there, too, and none of it means anything because the provisions for the most part have no teeth. HB 818 (Lopez) hopes to turn this mishmash into a coherent plan for Virginia’s energy future by creating a new legislative commission to perform a comprehensive review of the energy landscape.

Price stability. HB 808 (Lopez) adds consideration of long-term price stability to the factors that utilities and the State Corporation Commission must look at when evaluating a proposed new electric generating facility. This would help to level the field for renewable energy, since fuel prices for fossil fuels are highly volatile and largely unpredictable over the full 30-year design life of a facility, whereas wind and solar are famously price stable.

Consideration of the environment. In a case decided last summer (PUE-2012-00128), the State Corporation Commission essentially interpreted the Virginia code to eliminate its own role in protecting the environment when it approves electric generating facilities. HB 363 (Kory) beefs up the code just enough to make it clear the SCC still has a job to do even when state agencies have issued all the relevant permits. The bill requires the SCC to consider matters not covered by permits, such as carbon emissions and the overall effect of electric generation facilities on the health and welfare of residents.

Dealing with climate change. Hampton Roads is facing a crisis as sea level rise combines with sinking land to swamp low-lying coastal areas with every major storm, a problem predicted to get steadily worse over the course of the century. SJ 3 (Locke) and HJ 16 (Stolle) establish a Recurrent Flooding Planning Committee to examine ways to respond. It’s a good bill, but really, it’s weird to address recurrent flooding with no mention of what’s causing it. Dealing with recurrent flooding in Hampton Roads without talking about climate change is like addressing the obesity epidemic without mentioning diet and exercise. Why kid ourselves?

Carbon Dioxide Emission Control Plan. Speaking of kidding ourselves, SB 615 (Carrico) would establish a commission with the job of limiting carbon emissions without limiting the sources of those emissions. Indeed, the bill would be more accurately titled the Carbon Pollution Continuance Plan. It’s too bad to see legislators fighting to keep coal plants running full-tilt when we have better, cleaner, and cheaper options—ones that don’t put us on a course to make “recurrent flooding” a daily occurrence.

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Why standby charges are bogus

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Utilities want solar owners to pay for grid access. Photo credit: NREL.

Utilities want solar owners to pay for grid access. Photo credit: NREL.

Rooftop solar energy makes up a tiny fraction of the total electricity produced in America, but already utilities worry about a day when large numbers of their customers won’t need them any more. As renewable energy costs continue to tumble and the technology of battery storage improves, many residents and businesses may abandon their power utility to go it alone or form microgrids within their communities to control their own power.

Some utilities understand that this is the future and are looking for ways to turn these trends to their advantage. Others are doing everything they can to protect their turf, and progress (and the environment) be damned. They figure they can’t wind up on the wrong side of history if they stop history from happening.

Hence the attempt to throttle solar while it’s still little. Caps on system sizes, caps on total amounts of distributed generation, prohibitions against third-party power purchase agreements, restrictions on net metering: all of these are efforts to keep solar too small to matter, and too small to achieve the economies of scale that could lead to an upending of the central utility model.

The latest effort to squelch solar is through standby charges: fees imposed on net metering customers that compensate the utility for “standing by,” ready to sell grid-produced energy at night and on cloudy days. In 2012 in Virginia, Dominion Virginia Power won the right to charge customers with large residential systems (10-20 kilowatts) up to $60 per month—a charge that destroyed this market segment. This summer Dominion pressed its advantage, indicating in a submission to regulators that it will likely seek more standby charges on a broader class of solar customers.

Note that Virginia has less than 15 megawatts (MW) of solar installed across the state. Dominion Power alone has around 19,000 MW of coal, gas and nuclear. So the notion that net metering by solar customers has any perceptible effect on the grid or other customers is silly. The point of Dominion’s stand-by charges is to stifle the solar market, not cover costs.

This same debate played out this year in Arizona, which saw its solar industry install 719 MW in 2012—still a tiny percentage of that state’s total energy supply, but one that is growing fast enough to warrant the discussion. Last week the public utilities commission agreed to allow Arizona Public Service Company (APS) to charge its residential solar customers an average of $5 per month. The utility treated the ruling as a win, and indeed the charges might eventually add up to enough to cover APS’s attorney fees in the case. That’s more than can be said about Dominion’s standby charges.

Meanwhile the conservative American Legislative Exchange Council (ALEC) has gotten into the act, drafting a model resolution insisting that net metering customers should have to pay their “fair share” of utility costs through measures like standby charges. Not incidentally, Dominion Power is a member of ALEC and sits on the energy and environment task force next to the fossil fuel shills from Heartland Institute.

But the “fair share” argument is bogus. Utilities weren’t set up to ensure Americans all paid their “fair share” of the costs of the electric grid. If they were, there would still be mountain communities without power today. Residents of cities and towns subsidized the cost of running power lines to far-flung rural homes inhabited by people who could never have afforded their “fair share” of this infrastructure.

Even today, city dwellers pay more than their “fair share” of transmission costs to subsidize people like me who live in leafy, sprawling suburbs and less-populated parts of the state. Anybody voting for an ALEC-style resolution about “fair shares” had better be willing to stick it to suburban and rural consumers.

There are other ways electricity rates aren’t “fair.” Dominion’s residential rates are structured so people who use less electricity pay more per kilowatt hour than those who use more—again, making it roughly a transfer of wealth from urban apartment dwellers to those with larger or less efficient homes elsewhere. The utility’s goal is to encourage the use of electricity, and compete more effectively with the gas company for heating. People paying their “fair share” just doesn’t enter into it.

And while we’re at it, if we were serious about subsidies we’d slap a tax on electricity made from fossil fuels to reflect the costs they impose on society. Asthma, heart disease, mercury poisoning, groundwater contamination, and of course, the dumping of carbon into the atmosphere—these are all costs of fossil fuel that ought to be included in power bills to make sure everyone is paying their “fair share.” People who install solar panels deserve a thank-you for their service to society, not standby charges based on bogus “fair share” claims.

The argument for standby charges is, pure and simple, an attempt by entrenched monopolies to block competition. The “fair share” argument is a red herring from utilities that don’t want a fair fight. And with good reason: they’re going to lose.

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What’s wrong with Dominion’s Green Power Program

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Better than Green Power: installing a solar system yourself. Photo credit: NREL

Better than Green Power: installing a solar system yourself. Photo credit: NREL

Renewable energy advocates in Virginia were astonished to learn a few weeks ago that the U.S. Environmental Protection Agency has given Dominion Virginia Power an award for its Green Power Program.

Dominion’s program is not, to put it mildly, a good one. Half of the money its customers contribute is siphoned off for overhead and “education.” The rest goes to buy renewable energy certificates from out of state. Over the years Dominion has collected millions of dollars in these voluntary contributions without building a single wind or solar facility to supply the program. Surely the only green award this merits is one for greenwashing.

So I called the EPA to find out what criteria they use in determining who gets an award. It turns out the agency only measures the growth of a green power program, and Dominion has signed up more customers than other utility programs have.

I had to laugh. Customers of utilities in most other states have real options to buy wind and solar. If you can buy wind energy from an alternative supplier or participate in a community solar project, or if your utility is aggressively incorporating renewables into its power supply, you don’t need a green power program.

But Dominion has never built more than token amounts of renewable energy, and it continues to use its monopoly position to erect barriers to competition from others. The utility has signed up 19,000 Green Power participants only because it has effectively denied its Virginia customers any meaningful way of participating in the renewable energy market.

News of this award will surely lure more people in. Yet even if every one of Dominion’s customers signed up for the program, it wouldn’t shrink Virginia’s carbon footprint. Instead, Dominion’s latest integrated resource plan reveals plans for more fossil fuel generation and increasing greenhouse gas emissions over the next fifteen years.

And it’s worse than that. As of this year, Dominion is actually using the Green Power Program to bankroll an attack on renewable energy—one the State Corporation Commission shamefully endorsed when it approved the company’s 3-megawatt “solar purchase program.”

In this charade, Dominion buys solar power from homeowners and businesses to resell to the Green Power Program. The deal nets sellers a few cents over the retail price of electricity, but costs the Green Power Program almost three times as much. This overcharging of the Green Power Program would be bad enough. But the more insidious problem lies in Dominion’s justification for the high charge. It claims that rooftop solar energy is no more valuable than power from fossil fuels that it can buy at wholesale.

Dominion’s position flies in the face of recent studies demonstrating the benefits of solar energy to the grid, including generating power where demand is, providing power during peak hours when energy is most expensive, avoiding the need for transmission upgrades, eliminating line losses, and reducing the need for new generation.

It also runs counter to trends in states like Georgia, where Georgia Power has put a higher–than-retail value on the solar distributed generation it plans to buy, and says that paying the extra won’t put upward pressure on rates.

This makes it especially difficult to understand why Virginia’s State Corporation Commission approved Dominion’s Green Power rip-off. And predictably, Dominion has followed up its win with a deeply flawed study it plans to use as a basis for a new round of standby charges on customers who net meter. (The case is PUE-2012-00064, available on the SCC web site.)

So what is a dedicated renewable energy advocate to do?

There are options. If you are determined to buy RECs, you don’t have to go through Dominion. Buy from another source. But better yet, install solar yourself if you can. The price of solar panels has dropped so precipitously over the past few years (down 60% since the start of 2011) that you may find it worth taking out a home equity loan.

If you don’t have a sunny roof yourself or can’t afford the whole upfront cost, you can work with your school, community center or place of worship to install solar panels in your neighborhood. Interest in solar is very high among Virginia faith congregations, driving large turnouts for presentations on the topic given by Sierra Club and others in cooperation with the solar industry.

Or you can take the money you were spending on Dominion’s program and give it to a charity that will use it to install renewable energy here in Virginia; this may even get you a tax deduction. Low-income housing providers like Richmond’s Better Housing Coalition now put solar panels on many of their facilities, and will accept donations specifically for that purpose.

The Virginia Center for Wind Energy at James Madison University accepts donations to its Wind for Schools program, which helps public schools across the commonwealth install wind turbines for educational purposes.

A new non-profit, Three Birds Foundation, is working to put solar on public schools that serve low-income children in Virginia and elsewhere.

All these charities are committed to doing what Dominion, apparently, doesn’t want to do: install solar and wind energy in Virginia.

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Workshops on renewable energy for Virginia non-profits draw large crowds

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Photo credit: Corrina Beall

Photo credit: Corrina Beall

Over 90 people packed the fellowship hall of the Mount Vernon Unitarian Church in Alexandria on the evening of June 23d for a presentation on solar power opportunities for houses of worship and other non-profits. Later in the week, more than 50 people attended a similar workshop at Virginia Union University in Richmond, designed primarily for colleges and universities.

In both places, the audience was there to learn about an opportunity provided by a new law that took effect in Virginia July 1. The law allows non-profits to use what are known as “third-party power purchase agreements,” or PPAs, to finance solar and wind installations. The PPAs let customers use clean, renewable energy for the same price—or even less-–as grid-delivered power produced from dirty fossil fuels. PPAs have been the driving force behind most small solar installations nationwide in recent years, and advocates hope they will now do the same in Virginia.

For-profit entities will also be able to use the new law, but only if they install a project of at least 50 kilowatts in size. Residential systems, which are typically in the 4-8 kilowatt range, are excluded. The law applies only within the territory of Dominion Virginia Power, and projects must be installed within the next two years, unless the program is extended.

The groups that organized the workshops—the Sierra Club, Interfaith Power & Light, National Wildlife Federation and the Virginia Conservation Network—view the new law as an opportunity for Virginia to begin ramping up its tiny solar and wind industries.

The Sierra Club has worked closely with the solar industry nationwide as a way to increase the use of renewable energy in the U.S., largely as a way to combat climate disruption. The club’s Beyond Coal Campaign seeks to ensure that as the dirtiest coal plants are retired, America’s energy needs can be met with clean energy rather than fossil fuels.

For the church workshop, Sierra Club partnered with Interfaith Power & Light (MD.DC.NoVa) because of its experience with congregations in Maryland and DC, helping them to go solar. Interfaith Power & Light has been a vigorous advocate for clean energy within area faith communities. Similarly, Sierra Club chose to partner with National Wildlife Federation for the college workshop because of its ongoing “green campuses” initiative nationwide.

Photo credit: Corrina Beall

Photo credit: Corrina Beall

Getting solar projects done in Virginia poses a challenge. Many states have encouraged the growth of solar and wind power through aggressive targets for renewable energy backed up by incentives and utility mandates, but Virginia offers neither. The state’s wind industry is essentially nonexistent, and with less than 10 megawatts (10,000 kilowatts) of solar installed statewide to date, Virginia produces less than one percent of the solar energy that New Jersey does. It also remains far behind neighboring states like Maryland and North Carolina, which both have solar policies and incentives that Virginia lacks.

Yet the price of solar has declined so steeply in recent years that it can now make economic sense in Virginia, especially for nonprofits. Nonprofits often can access low-interest loans or bring in investors from the community to help them prepay some of the PPA, allowing them to achieve greater overall savings. And churches, colleges, schools and other nonprofits typically own their buildings for many decades, so they are able to view energy savings over a longer time horizon than do many residential and commercial building owners.

For communities of faith, payback may not even be the top consideration. More and more congregations see addressing climate change and being better stewards of the earth as part of their core mission.

Educational institutions similarly see benefits beyond energy savings. Putting solar panels in a prominent location can be a symbol of an institution’s commitment to sustainability. When Eastern Mennonite University installed its solar array, enrollment increased ten percent, according to Tony Smith of Secure Futures LLC, the company that financed the system.

Smith, who also represents the solar industry trade group MDV-SEIA in Virginia, spoke at both the Alexandria and Richmond workshops. In Richmond he was joined by Jeff Ryan of Abakus Solar and Dave Stets of Richmond BySolar for a panel discussion about how PPAs can benefit nonprofits. A number of other solar and wind providers, as well as leaders from government and academia, also attended and contributed to the discussion.

Attendance at both workshops far exceeded organizers’ expectations. The audiences included a broad cross-section of faiths as well as representatives from eight universities and community colleges. Some attendees have already begun discussions with solar providers as a result of the workshops, leading many to hope that Virginia’s solar industry is at last poised to take off.

Additional workshops will likely be held in September; contact Corrina Beall at Corrina.Beall@sierraclub.org for more information.

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Non-profits can go solar, save money under new Virginia law

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photo credit Dietrich Krieger

A church in Germany displays both its faith and its solar panels. Photo credit Dietrich Krieger.

Faith communities, colleges, schools, local governments and non-profits will find it easier to “go solar” under a law that takes effect in Virginia on July 1. Eligible customers will be able to install solar panels or wind turbines with little or no upfront cost, paying only for the electricity the systems provide. This arrangement, known as a third-party power purchase agreement (PPA), has been the driver for most of the solar projects in the U.S. in recent years, but prior to this year utilities had blocked its use in most of Virginia.

The new law creates a two-year pilot program allowing customers of Dominion Virginia Power to install projects as large as 1 megawatt (1,000 kilowatts) using PPAs financed by private companies. Projects must have a minimum size of 50 kilowatts, so the program can be used by many commercial customers but excludes homeowners, whose solar PV systems more typically fall in the 4-to-8 kilowatt size.

Importantly, however, the 50-kilowatt minimum does not apply to tax-exempt entities. PPAs are one of the only ways available for tax-exempt entities to benefit from the federal 30% tax credit for renewable energy systems; a tax-paying investor actually owns the system and uses the credits, passing along the savings to the customer. Thus the program could open up a new solar market in Virginia focused on what might be considered a natural vanguard for renewable energy: houses of worship, colleges, schools and nonprofits.

PPAs also offer an advantage over buying solar panels outright: even though the solar system is on the customer’s roof, someone else actually installs, owns and maintains it. That means less hassle for the customer and no upfront capital cost. The customer only has to pay for the solar power that’s produced. With prices for solar systems having fallen dramatically in recent years, customers will generally be able to buy solar energy under a PPA for no more than they now pay for power from non-renewable sources.

In states with incentive programs, including Maryland and DC, customers actually save money on their utility bills with solar PPAs. Virginia customers may not save money at first. Depending on the contract terms, however, customers may save money in future years, and can end up owning the solar system outright eventually, which will allow them to save quite a bit of money on electricity in the long run.

PPAs are the most common financing method for rooftop solar systems across the country. Companies like Solar City and Sungevity have created a profitable business model around financing and owning solar systems on customers’ property. Given the lack of state incentives in Virginia, Solar City isn’t expected to enter the market here. Financing PPAs in Virginia can still be profitable, but it presents challenges. Still, for people with cash sitting in CDs and bank accounts earning less than 1% interest, financing a solar project at their neighborhood church or school can be rewarding financially as well as spiritually.

One of the few companies with experience in Virginia PPAs is Secure Futures, LLC of Staunton, Virginia. CEO Tony Smith says his company’s business model is to “work with tax exempt entities to met their environmental, educational and thought leadership goals through solar installations that we own and operate in ways that deliver immediate operational savings and solid long term returns.”

The new law will involve rulemaking by Virginia’s regulatory body, the State Corporation Commission, to settle the details–including how the pilot program is tracked and how a qualifying customer applies for the limited kilowatts available over the two-year period. The SCC should be issuing a docket for a public hearing in the near future.  Since many customers need months of lead-time, it’s not too soon to start the planning process.

Free workshops will offer information about solar PPAs beginning in June

On June 23 at 7 p.m., Greater Washington Interfaith Power and Light (GWIPL) and the Sierra Club will hold a free workshop for faith congregations at Mount Vernon Unitarian Church in Alexandria, one of the first Virginia churches to install solar panels. Representatives of solar companies including Secure Futures and Abakus Solar of Richmond, Virginia will be on hand to answer questions.

GWIPL has worked extensively with DC and Maryland congregations on similar solar projects and has compiled an informative booklet that can be downloaded from the gwipl.org website.

The Virginia Chapter of the Sierra Club supported the solar industry in its quest to open up the Virginia market for solar PPAs and believes churches and other faith communities can play a big role in making the benefits of renewable energy available to everyone.

Sierra Club and Virginia Interfaith Power and Light are also planning a June workshop for Richmond-area congregations. Similarly, Sierra Club and National Wildlife Federation, which has been working with community colleges on “green campus” projects, are planning a workshop designed especially for colleges and universities.

In addition to their target audiences, all workshops will be open to anyone who wants to learn more about the solar opportunity. For information, contact corrinabeall@sierraclub.org.

New law an imperfect compromise

The PPA legislation was a compromise between the solar industry and Dominion Power, which had sparred over the question of whether PPAs are legal in Virginia. When Secure Futures tried to install a system at Washington & Lee University in 2011 under a PPA, Dominion sent cease and desist letters claiming the arrangement was illegal. Eventually Secure Futures and the university used a different financing approach so the project could move forward.

Dominion also blocked a 2012 bill in the General Assembly that would have expressly allowed PPAs; that bill would have included private homes and smaller commercial systems. The issue was popular with legislators and the public and became a priority for many local governments during the 2013 legislative session.

Eventually this year Dominion agreed to a narrower bill as a temporary pilot project. In exchange, the bill gives Dominion legal certainty by prohibiting PPAs in its territory that fall outside the pilot project.

Other Virginia utilities refused to participate in the pilot program. As a result, the program and its rules apply only in Dominion Virginia Power’s service territory.

The pilot project will run for two years, after which Virginia regulators will evaluate it to determine whether it should be continued and expanded. The total size of all the systems installed under the legislation is capped at 50 megawatts. Although this is a tiny amount compared to states like New Jersey, which already has more than 1,000 megawatts of solar installed, it would mark a significant step forward for Virginia, which to date has installed less than 10 megawatts.

In addition to the 50 megawatts that can be installed under PPAs, another 30 megawatts of solar will be installed by Dominion itself under a program it refers to, somewhat confusingly, as “community solar.” Under that program, the utility plans to install and own solar systems on leased rooftops in select locations. The program includes no provision for selling the solar output to the building owners.

Wind systems also covered

The pilot project includes wind turbines as well as solar systems. Dominion’s service territory includes relatively few areas with wind resources good enough to make wind power economically attractive, but the Virginia Wind Center at James Madison University has been evaluating the possibilities under the pilot program and believes it may be useful for some customers interested in installing wind turbines.

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Virginia doesn’t need another gas plant

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On April 24, Virginia’s State Corporation Commission (SCC) will consider a proposal from Dominion Virginia Power to build a new natural gas-fueled generating plant, the second of three it wants to add to its holdings. Its first plant, now under construction in Warren County, generated little opposition because it will replace old coal boilers that Dominion needs to retire.

But the latest proposal for a plant in Brunswick has come in for fierce criticism, and for good reason: we don’t need another gas plant. Dominion has exaggerated the growth in demand that it says justifies the plant, and the company could more cheaply meet its actual needs with energy efficiency and renewable energy.

Moreover, the world is changing, and the energy model of big utilities running big baseload power plants is becoming outdated. If Dominion builds another of these, Virginia could end up stuck with a giant concrete paperweight.  The SCC owes it to customers not to let this happen.

Every year Dominion tells regulators it expects demand to increase by 1.5% to 2% per year indefinitely, but its actual energy sales have been essentially flat since 2006. Sure, the recent recession threw everyone a curveball, but Dominion’s tendency to overstate future demand goes back decades. The company seems not to have anticipated widespread changes like more efficient appliances and better building codes that let consumers use less electricity even while we’re buying more gadgets.

With a little effort, we could save even more energy. Virginia ranks in the bottom half of states for energy efficiency, and Dominion is not on track to meet even the modest efficiency goals of the Virginia Energy Plan. Some of the fault for this lies with the SCC itself, which has often rejected energy efficiency programs. But nor has Dominion tried very hard. Even their rate structure is designed to encourage energy use. Greater efficiency would mean lower electricity sales, and who wants that? Not a company that makes its money building plants and selling electricity.

And this is a shame, because the cheapest energy is the energy that isn’t used. Virginians use 20% more electricity per person as our neighbors in Maryland, so we have a lot of low-hanging fruit we should pick before we build another power plant.

Even if we needed more power, though, building another baseload natural gas plant is a bad plan. A “baseload” plant is one designed to run continuously, unlike a “peaker” plant that fills in when needed. The price of natural gas fluctuates wildly, so building a baseload plant means committing customers to paying whatever the going rate happens to be, all day, every day, for the 30-year life of a gas plant. With about a third of Dominion’s power mix already coming from natural gas, surely adding more baseload gas is a reckless gamble when alternatives are available. Even Dominion CEO Tom Farrell has warned against an over-reliance on natural gas for this very reason.

It used to be that alternatives to fossil fuels weren’t much available, so a 30-year gamble was normal, and regulators didn’t trouble themselves by asking what the world would be like in 20 years. Wind and solar have changed that. When you build a wind farm or a solar facility, you know exactly what you will be paying for energy 20 years down the road, because your “fuel” is free. Building wind or solar is like locking in a fixed-rate mortgage instead of gambling on an adjustable rate mortgage with a low teaser rate. With that as an option, why should Virginians commit themselves to 30 years of buying gas at whatever the market decides is the price?

With prices dropping rapidly, wind and solar are today’s fastest growing energy technologies, and wind is second only to gas as a source of new electric generation. Of course, Virginia can’t boast a single wind farm today, and the smattering of solar across the state totals less than 1% of what New Jersey has. But even here, time and economics are on the side of renewable energy. Citigroup recently issued a report projecting that renewable energy will reach grid parity across the U.S. within the next few years and will gradually relegate all other fuels to back-up status.

This makes it an even worse idea for Dominion to invest in a plant that cannot easily adjust its output when the wind picks up or the sun comes out. Other options exist. Gas turbines are now being designed to integrate with renewable energy, combining high efficiency with the ability to ramp up and down quickly. Companies like General Electric are making big bets that this is the future of gas turbines.

Dominion, meanwhile, seems to be looking at the future as if we were back in the 20th century, and without even taking advantage of hindsight. Its plan is a bad deal for its customers, and the State Corporation Commission should reject it.

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Tom Farrell’s nuclear fantasy

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Tom Farrell doesn’t get it. Dominion Power, the utility of which he is CEO, has been all about building natural gas plants for the past couple of years, as it rushes to take advantage of cheap fracked gas. Out with the aging coal plants that had been its first love, in with the next cheap thing, and never mind the pollution! Then suddenly two weeks ago, faced with a question about climate change, Farrell told reporters the answer is more nuclear plants.

Mother Earth to Tom Farrell: The correct answer is “renewable energy.”

Most of the rest of the country gets this. Wind supplied more new electric generation than natural gas did in 2012. More people work in solar energy than in coal mining. Renewable energy has overtaken nuclear worldwide. Almost no one is building nuclear plants, partly because—here’s an inconvenient truth for you, Tom—they cost too much. Almost three years ago a Duke University study found that power from new nuclear plants is more expensive than solar energy, and the cost of solar has only gone down since then.

But Farrell is convinced wind and solar can’t provide reliable electricity to power the whole grid. You’d think he’d been reading propaganda from the Koch Brothers and had come to believe that if there are solar panels somewhere and a cloud crosses the sun, the whole grid crashes.

Can I just point out here that Dominion’s own North Anna nuclear reactors shut down suddenly in 2011 following an earthquake in Virginia, and the grid did not crash? Even though nuclear is one-third of Dominion’s Virginia portfolio, and North Anna represents more than half of that? And even though, while weather forecasters are pretty good at predicting regional cloud cover, no one can yet predict an earthquake?

The reason the grid didn’t crash is that grid operators make sure there is enough surplus generation available to keep supplying power even at times of catastrophic failure. And note that the nuclear plants didn’t come back online when the clouds cleared off, either. They were down for four months.

If nuclear power is more expensive than renewables, and it has to be backed up 100% with other forms of energy, for much longer time periods, where is the place for new nuclear?

As the CEO of a utility, Tom Farrell should know better. He should also know about the new study demonstrating that renewable energy alone—onshore wind, offshore wind, and solar energy—can power the entire grid 99.9% of the time. The study authors show that doing this would actually cost less than conventional sources of electricity, assuming you include in the price the “external” cost society pays for the use of fossil fuels. That is, if you factor in the cost of climate change, it’s cheaper to build renewable energy than new fossil fuel plants.

Climate aside, there’s other evidence for the superior value of renewable energy in providing price stability for customers and a whole range of benefits for the grid. And of course, for meeting demand at the cheapest possible cost, you can’t beat energy efficiency.

It’s time to face reality, Tom Farrell. If all you care about is making money for Dominion today, your natural gas strategy probably makes sense. But if you care about tomorrow—or even about the big picture today—it doesn’t. Either way, there’s no room in the picture for expensive new nuclear plants.

And if you’re sincerely concerned about climate change, now would be a good time for Dominion to invest in energy efficiency, wind and solar.

*    *    *

Note to readers: Willett Kempton, one of the authors of the study cited above on powering the grid with renewable energy, will be speaking at a townhall meeting sponsored by Sierra Club and Environment America this Wednesday, March 13, at the MetroStage Theatre, 1201 North Royal St., Alexandria, VA. The meeting is open to the public (Tom Farrell is especially invited). To RSVP, contact Phillip Ellis at phillip.ellis@sierraclub.org or 571-970-0275.

 

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Dominion takes the wrong way on solar

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On February 12, Virginia’s State Corporation Commission held a public hearing to decide whether to approve Dominion Virginia Power’s plan to buy 3 megawatts of solar power from Virginia residents and businesses to sell to the company’s voluntary Green Power Program. Sound like a good idea? It’s not.

Yes, Virginians want solar power. Investing in solar means stably priced electricity, cleaner air and lower greenhouse gas emissions. Solar power is now cost-effective in Virginia even in the absence of state incentives, thanks to federal tax credits and a steep decline in the price of solar panels. But a high upfront cost still limits who can afford to install it.

Utilities and the SCC have a role to play in bringing new solar power onto the grid. Dominion’s program to install 30 megawatts of solar on leased rooftops, which the SCC approved this fall, provides an example of how utilities can strengthen the grid, diversify their power sources, supply valuable peak-demand electricity, and contribute to their own learning curve on integrating renewable energy, all while meeting a portion of their customers’ demand for clean power.

The 3-megawatt program, on the other hand, gets nothing right. Under the program, customers who have solar panels would sell all their solar power to Dominion for 15 cents per kilowatt-hour (kWh), and buy regular fossil-fuel electricity (known as “brown power”) from Dominion at the normal retail rate of about 11 cents. Cost to Dominion: 4 cents/kWh.

Dominion would then resell the solar power to the participants in its Green Power Program, not for the 4 cents it costs the company, but for 11 cents. Dominion would keep 7 cents/kWh.

Dominion tells us that the 7 cents would go to its rate base, not its own bottom line. But it’s clear who loses. The do-gooders who pay extra on their utility bills for the Green Power Program would pay 11 cents for something Dominion bought for 4 cents. They are being played for chumps.

Last year the Green Power Program bought Virginia solar power directly for 4 cents/kWh through the purchase of renewable energy certificates. So why should the program pay 11 cents for something it can get for 4?

Since Dominion administers the program, it will be up to the SCC to prevent this misuse of its funds.

This is only part of the problem. The reason Dominion wants to shift the cost of the solar purchase onto the Green Power Program is its insistence that the value of solar energy isn’t the retail rate of electricity, but is the utility’s “avoided cost”—roughly, the price at which it can buy brown power on the wholesale market, which is around 4 cents/kWh.

Of course, if the current wholesale price were the only thing that mattered, you’d have to question why Dominion ever builds its own electric generation, including its new coal-fired plant that delivers power at 9.3 cents/kWh.

The SCC allows Dominion to build its own generation in Virginia for a host of other reasons, all of which apply equally to Virginia solar. Rooftop solar also provides significant additional benefits to the utility and the electric grid that utility-supplied brown power does not. A number of recent studies have quantified these benefits to prove that net-metered solar (where customers sell solar power to the grid at the retail rate) lowers costs for everyone.

Yet Dominion wants to shift costs onto a voluntary program, while keeping the benefits. This is bad for the Green Power Program, and it sets a terrible precedent for valuing solar that could retard its growth in Virginia. And that would be bad for all of us.

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Renewable energy makes small gains in Virginia’s 2013 legislative session

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The Virginia General Assembly will soon wrap up its work on the 2013 legislative session. Renewable energy advocates began the session with high hopes for a series of bills that promised to reform our renewable energy law, expand net-metering, and open up new opportunities for financing solar systems and small wind turbines.

So how did we do? Well, this is Virginia. Progress is slow, the utilities are powerful, and half the legislature doesn’t believe in climate change. On the other hand, they do believe in business. Under the circumstances, we did okay.

Renewable Portfolio Standards: bye-bye, bonuses

Readers of this blog already know the long, miserable tale of Virginia’s weak and ineffective, voluntary renewable portfolio standard (RPS), which has enriched utilities with tens of millions of dollars in incentives without bringing any new renewable energy projects to Virginia. This year the legislature went halfway to fixing the problem. Legislation negotiated between the office of the Attorney General and the utilities will deprive utilities of future ill-gotten gains for meeting the RPS law, but won’t change the pathetic nature of the law itself.

Stripping out the RPS incentives was only part of a bigger, more complex bill that sweetens the deal for utilities in other ways, so it’s hard to judge whether the legislation as a whole marks a victory for consumers. Skeptics will note that Dominion’s stock price has actually gone up several percentage points since the deal was announced, which you wouldn’t expect if the AG were correct that the bill will save consumers close to a billion dollars over time.

What is clear is that the RPS remains as voluntary and as crummy as it ever was, but the utilities can no longer use it to rip off ratepayers while pretending to be good citizens. Some environmental groups consider stripping out the incentives a bad thing, on the theory that only by giving utilities a bonus can we expect them to meet the goals. Other groups (including the Sierra Club) believe Dominion, at least, will want to maintain its greenwashed public image by continuing to meet the RPS goals, and that ending the consumer rip-off is worth celebrating.

Sure, if the goals had brought wind and solar to Virginia, the Sierra Club would have considered the incentives a tolerable price to pay. As it happened, Dominion and the other utilities continuously rebuffed efforts over the years to improve the RPS. Had Dominion approached the RPS as an opportunity to bring real renewable energy to Virginia rather than as a cash cow to be milked for its own advantage, the company would have saved itself a public relations fiasco and likely kept its bonuses, too. Surely, someone at HQ should be out of a job right now.

Taking the long view, it is also worth noting that getting rid of the free money is a necessary first step towards a mandatory RPS in Virginia, which would unleash market forces for renewable energy that don’t emerge with a voluntary law. Utilities would oppose such a move more vigorously if they still had incentives to protect that were available only under the voluntary program.

. . . but reform efforts fail again

These views all assume the legislature will someday pass a bill to improve the goals and bring wind and solar projects to Virginia, without which the RPS is meaningless anyway. Surely legislators must recognize how pointless it is to have an RPS that can be met with out-of-state, pre-World War II hydro, plus some trash and wood-burning and a few assorted projects that put no power on the grid. (Even without the performance incentives, utilities remain entitled to pass along to customers the cost of meeting the RPS goals.)

Bills to improve the goals should have passed the legislature this year as part of the reform package. HB 1946 (Lopez) and SB 1269  (McEachin) even received the support of Dominion Power for provisions that would limit most future purchases for the RPS to high-quality projects like wind and solar. What killed the bills seems to have been a combination of opposition from vested interests and sheer cussedness on the part of some Republicans, who were engaged in partisan maneuvers that had nothing at all to do with renewable energy.

As usual, we are left hoping for better luck next year.  Meanwhile, however, a couple of other RPS bills made incremental progress. Most notably, HB 1917 (Surovell) adds solar thermal energy to the definition of renewable energy; as of this writing it has passed the House and is on the Senate floor.

A loss for more honest competition among fuels

There are more ways to support renewable energy than through an RPS, of course. One of my favorite bills would have required utilities and the State Corporation Commission to consider the long-term price stability of fuels used in electric power generation. HB 1943 (Lopez) would have helped price-stable wind and solar compete against notoriously price-volatile natural gas. It’s an idea that should appeal to fair-minded conservatives, so it’s a shame it hasn’t gained traction since first being introduced in 2012. However, it died in committee in the face of opposition from Dominion Power, which doesn’t want any interference with its plans for new natural gas plants.

Power Purchase Agreements get a “pilot”

Two bills passed the legislature to allow some third-party power purchase agreements (PPAs) for wind and solar within Dominion’s territory. Under a PPA, an installer retains ownership of the solar equipment, with the customer buying the electricity that is generated. This arrangement has two primary advantages: the customer can “go solar” with no money down and no responsibility for the equipment; and in the case of a tax-exempt entity like a church or a university, it provides a way to access federal tax credits worth 30% of the system cost.

The bills were designed to prevent a recurrence of a dispute that erupted in 2011 when a Staunton-based solar company, Secure Futures, installed a large solar system at Washington & Lee University under a PPA. Dominion issued “cease and desist” letters insisting that only it could sell electricity in its assigned territory. Although Virginia law is unclear on this point, the university and the solar company capitulated in the face of massive litigation costs. Since then Dominion’s army of lawyers has proven as effective as any statute in stopping further efforts to use PPAs in Virginia.

This year’s bills, SB 1023 (Edwards) and HB 2334 (Yancey), were originally written to allow third-party PPAs wherever customers can currently install renewable energy systems that they own themselves. They were significantly scaled back to win acceptance from Dominion Power. (AEP and the coops wouldn’t play at all, so legal ambiguity remains the rule in their territories.)

The bills allow up to 50 megawatts’ worth of solar and wind installations using PPAs, in Dominion territory only, as a pilot program.  Whether net-metered or not, they will be counted against the current net-metering cap of 1% of the utility’s generation. Tax-exempt entities can have a facility of any size up to 1 megawatt (500 kW if they net meter); taxable entities must have a minimum size of at least 50 kW (so no homeowner need apply). PPAs that do not meet the requirements are expressly prohibited in Dominion territory.

Agricultural net metering, yes; community net metering, no

A bill to allow agricultural net metering also passed this year. HB 1695 (Minchew) allows the electricity from a single solar, wind, or digester gas facility to be attributed to two or more electricity meters as long as they are all on the same property and have the same owner. Thus, for example, a farmhouse, barn and other out-buildings can all share in the benefits of solar panels on one of the buildings, even if each building is separately metered.

Originally the bill would also have enabled community net metering, sometimes known as solar gardens, but the utilities opposed it. Bowing to political reality, Delegate Minchew scaled it back. The bill is notable, however, for making progress without including any provisions that seem capable of doing mischief.

A note about all the bills: In Virginia, the governor can sign a bill, veto it, or send it back to the legislature with amendments of his own, so none of these bills are final as of this writing.