Virginia is all-in on offshore wind, but Dominion’s go-it-alone approach raises questions

John Warren speaking at AWEA

John Warren, Director of Virginia’s Department of Mines, Minerals and Energy, speaks at AWEA about the opportunities for state collaboration on supply chain development.

It’s not every day that the names of a major utility and the nation’s largest grassroots environmental organization share space on a banner. But at the American Wind Energy Association’s (AWEA) annual offshore wind conference on October 22-23 in Boston, Massachusetts, the logos of the Virginia Chapter of the Sierra Club and Dominion Energy bookended those of half a dozen state agencies, educational institutions and business development organizations on a banner proclaiming “Virginia is all-in on offshore wind.”

The banner anchored a large corner booth showcasing the strengths Virginia brings to the growing industry. Broad stakeholder support is one advantage; unlike Massachusetts, Virginia has seen little opposition to its plans for developing the 112,799-acre offshore wind energy area 27 miles out from Virginia Beach.

This broad stakeholder support is the product of more than a decade of work on the part of researchers, environmental organizations, the business community and elected leaders from both parties.

For the Sierra Club and the Northam administration, offshore wind offers carbon-free, renewable energy and a way to position the Virginia as a leader in the green economy. For the Port of Virginia and Virginia Beach Economic Development, it brings new business opportunities. For Old Dominion University and Virginia Tidewater Community College, it’s a chance to train young people and participate in ground-breaking research in ocean science and engineering. And for Dominion Energy, it offers a new avenue for profit and a way to rebrand itself as a clean energy company without having to shed its core investments in fracked gas.

Now at last it is poised to happen. Last month, Governor Ralph Northam signed an executive order targeting the full build-out of the federal offshore wind lease area off Virginia by 2026; two days later, Dominion Energy, which holds the lease, confirmed it plans to build 2,600 MW of offshore wind in three phases in 2024, 2025 and 2026. Once built, the 220 turbines are projected to produce enough electricity to power over 700,000 homes.

This commitment puts Virginia among the states pursuing offshore wind most aggressively. With other states rapidly increasing their own targets and signing contracts with developers, the East Coast could now see over 25,000 MW of offshore wind by 2030, with some conference speakers predicting the total will rise to 30,000 MW by the end of the decade. At the AWEA conference a year ago, that number stood at just 10,000 MW—and attendees were plenty jazzed then.

Virginia will also have the first wind turbines in federal waters when the 2-turbine Coastal Virginia Offshore Wind (CVOW) pilot project reaches completion next summer. Earlier this year CVOW became the first project permitted by the federal Bureau of Ocean Energy Management (BOEM).

Massachusetts hits a snag, and sends a shiver through the industry

The second project in line, the 800-MW Vineyard Wind off Massachusetts, suffered a setback this summer when the Department of Interior (DOI) decided to require an additional layer of review. Bowing to objections from the commercial fishing industry and the National Marine Fisheries Service, DOI is now requiring a supplemental Environmental Impact Statement to look at the cumulative impact of many wind farms instead of limiting review to the one project.

Project developers and advocates wonder whether the move reflects a Trump administration change in attitude towards offshore wind or merely shows the federal government is still figuring out how to balance competing ocean uses. President Trump is famously derisive of wind power, but BOEM Director Walter Cruikshank assured the AWEA audience that the administration remains committed to a successful offshore wind industry.

That may be, but meanwhile the delay in the project timeline is causing heartburn for industry members and anger among advocates. Jack Clarke, Director of Public Policy & Government Relations at Mass Audubon, commented testily that if the National Marine Fisheries Service was really so concerned about protecting fisheries, it should have acted 40 years ago before overfishing led to the collapse of Massachusetts’ cod, haddock and flounder fisheries.

Clarke is a veteran of more than a decade’s worth of battles over offshore wind, beginning with the ill-fated Cape Wind project proposed in 2001. Cape Wind was ultimately abandoned in 2017 in the face of implacable resistance from NIMBYs—but not from Mass Audubon and other wildlife groups, which championed the wind farm as part of the solution to global warming. Now, Clarke says, it is time for the government to put its full weight behind the wind projects.

Fewer conflicts seen for Virginia

Concerns about commercial fishing seem less likely to stall offshore wind plans in Virginia, where years of public engagement helped ensure the Virginia Wind Energy Area is reasonably free of conflicts with the fishing industry, as well as shipping and military operations.

AWEA panelists also agreed that careful siting and construction practices can limit harm to wildlife. Siting wind farms 25 miles or more out to sea puts them beyond the paths of migratory birds; and according to Dr. Stuart Clough, President of environmental consulting firm APEM, European data shows birds tend to avoid wind farms altogether, or keep to shipping channels that transect them.

Yet some impacts are inevitable. Sarah Courbis, Protected Species & Regulatory Specialist at consulting firm Ecology and Environment, Inc., recommended developers follow a practice known as “adaptive management,” which involves continuous monitoring during construction and operations, with contingency plans in case problems arise.

European studies have shown that marine mammals generally adapt well to wind farms, moving out of the area during construction and returning afterwards. That is expected to hold true for the U.S., though conservation groups remain worried about interference with migrating North Atlantic Right Whales, a species already perilously close to extinction. Courbis said, however, that although wind farm construction affects whale behavior, the more serious threat to the species comes from entanglement in fishing gear and ship strikes, which cause most whale fatalities.

Nonetheless, Vineyard Wind committed to curtailing construction when Right Whales are nearby, as Deepwater Wind did when building its Block Island project in 2016. Conservation groups are pressuring other developers to take similar protective measures.

One of the more interesting features of Virginia’s CVOW pilot project is that it will test how well a double “bubble curtain” can muffle construction noise to reduce interference with marine mammals.

Questions of timing and cost

Other important questions remain for the Virginia wind farm, including whether the Administration’s timeline is achievable, who will actually do the work, and—critically—what it will cost.

Completing the first 880 MW of wind turbines off Virginia by 2024 depends on many factors that aren’t entirely under the control of Dominion and state agencies: how fast a supply chain develops; whether Virginia attracts manufacturers; how quickly port facilities can be upgraded; the availability of an installation vessel capable of handling 12-MW turbines (currently there are none); and whether BOEM will be able to expeditiously review the many Construction and Operations Plans (COPs) it will receive from offshore wind developers up and down the East Coast over the next few years.

Then there is the question of who will build Virginia’s first commercial wind farm. Dominion contracted with the Danish wind giant Ørsted for CVOW, but it has not renewed the partnership for the commercial wind farm. A shareholder call on Friday, November 1, indicated that Dominion intends to develop, own and operate the project itself.

If so, that raises questions of competence and cost. Other states have proceeded with competitively-bid contracts that ensure developers are qualified and that consumers pay a fair market price for the electricity produced. The competency issue can be solved through talent acquisition, but without competition or a price guarantee, it will be a challenge for Virginia’s State Corporation Commission (SCC) to ensure electricity customers don’t overpay.

I asked Stephanie McClellan, Director of the Special Initiative on Offshore Wind at the University of Delaware, how the SCC could tackle the problem. McClellan pointed to two offshore wind contracts that had been signed without competitive bidding: the ill-fated Cape Wind, and the (also never built) Bluewater Wind project in Delaware.

In 2007 the Delaware Public Service Commission hired an independent consultant to analyze the factors that determine the cost of electricity from a wind farm. These include the output of the turbines (primarily a factor of turbine size and wind speed), construction cost (CAPEX), operations and maintenance costs (OPEX), and financing costs. On the basis of this analysis Bluewater Wind won an all-source RFP against coal and natural gas, though thereafter it failed to find financing.

Within a year the Great Recession and the fracking boom would combine to delay the offshore wind industry in the U.S. by nearly a decade, while the European build-out gained steam.

But meanwhile, the economic case for offshore wind has only strengthened. Costs have plunged 32% in the past year globally, and conference participants see further price drops ahead as the U.S. builds its own manufacturing and supply chain instead of importing European parts. Dominion is currently floating cost figure of $8 billion for the Virginia wind farm based on European parts, but that figure ought to come down with U.S. parts and technology advances.

Could Virginia emerge a winner?

The conventional wisdom is that higher wind speeds make offshore wind more cost-effective in the Northeast than in Virginia. But members of the Virginia team think we may have offsetting advantages.

John Warren, Director of Virginia’s Department of Mines, Minerals and Energy, says Virginia could see lower prices than the Northeast because of lower labor costs and the proximity of our lease area to the supply chain. He sees regional collaboration with Maryland and North Carolina as the key to a low-cost supply chain. But unlike Maryland, he told conference attendees, Virginia will not impose a local content requirement that might increase costs.

George Hagerman, Senior Project Scientist at Old Dominion University, believes new, gigantic turbines like GE’s 12 MW Haliade-X promise an advantage in the Southeast because they can capture more energy at low wind speeds. The very strong winds that sometimes blow off New England would force a turbine that size to shut down for its own protection, resulting in a lower overall output.

Hagerman has also suggested that as a utility, Dominion’s financing costs will be lower than those of an independent developer, giving it an extra cost advantage.

Hagerman has led the research on the Virginia offshore wind opportunity for over a dozen years now. In 2010 he was the lead researcher for the Virginia Coastal Energy Research Consortium (VCERC), whose report that year concluded a wind farm off Virginia Beach could be built cost-effectively within five to ten years and bring economic development and thousands of jobs to the area.

The timeline has slipped, but, the Virginia stakeholders agree, the opportunity has only gotten better.

 

A version of this article first appeared in the Virginia Mercury on November 4, 2019. 

First solar crowdfunding campaign launches in Virginia

workers complete a rooftop solar array on a warehouse

A Secure Futures project on an InterChange warehouse. Photo courtesy of Secure Futures.

Unless you have a sunny roof or back yard, you probably haven’t found a way to put your money into building local solar facilities. This month, that changed.

Secure Futures, LLC has created a crowdfunding platform to sell solar bonds in support of five projects across Virginia, all for tax-exempt institutions. The financial details, including interest rates and terms, can be found on the crowdfunding website.

The five projects, totaling 1.3 megawatts of solar capacity, involve these customers:

  • The Caritas Center in Richmond, a non-profit that works to break the cycles of homelessness and addiction in the Metro Richmond area, will have a 426.6 kW system to serve a building under construction
  • Eastern Mennonite School, a private K-12 school in Harrisonburg; the 131 kW solar facility will meet 33% of the school’s total electric demand
  • Insurance Institute for Highway Safety, a nonprofit scientific and educational organization with a research center in Ruckersville, where the 200 kW facility will go
  • Shenandoah University, a private university in Winchester; the 467 kW project will provide 10% of the university’s electricity
  • Temple Rodef Shalom, the largest Jewish congregation in the Commonwealth, located in Falls Church; the 115 kW facility will provide 29% of the temple’s electricity

All of the projects will be installed using power purchase agreements or solar services agreements, and all are scheduled for completion in 2019 and 2020.

Although selling bonds to finance solar projects doesn’t sound revolutionary, I’ve found few precedents for the general public to buy into specific projects. Solar City sold corporate bonds directly to the public until the company was bought by Tesla; the bonds financed Solar City’s nationwide portfolio of projects. (Disclosure—I own stock in several renewable energy companies including Tesla, not always to my profit.)

Several years ago another company, Solar Mosaic, raised money from individual investors who could choose to link their investments to specific projects, but the company has since closed the investment side of its business. Other companies have offered investment opportunities only to accredited investors—i.e, people with high incomes or net worth.

Opportunities for regular folks to invest have been slow to emerge since Congress changed the law to allow people to invest through internet crowdfunding back in 2012. But it took the Securities and Exchange Commission until 2016 to implement rules, so it’s early yet. If Secure Futures finds success raising funds for these Virginia projects, perhaps solar bonds will turn out to be the next new thing in project financing.

Energy efficiency in Virginia: talking big while headed the wrong way

map of US shows changes in retail sales of electricity in each state

Data from the Energy Information Agency shows Virginia retail electricity sales increased by 2% year over year, one of the largest increases in the country. Nationwide, electricity sales declined slightly on average.

There’s bad news for Virginians looking to reduce our dependence on fossil fuels: The job just got 2% harder.

That’s the percentage increase in electricity use in Virginia over the past year, according to data from the U.S. Energy Information Agency (EIA).

The increase was driven by the continuation of a three-year upward trend in the commercial sector. (My guess is it’s those data centers.) The somewhat better news is that residential use has stayed basically flat for 10 years.

The thing is, we would expect a 2% decrease in electricity demand every year, if we were among the states with the strongest energy efficiency programs. Needless to say, Virginia is not among them.

Virginia consumers share in the benefits of federal energy-saving programs for lighting, appliances and other equipment (advances that are now under attack from the Trump administration). These national standards, pretty much painless for consumers, have kept residential electricity usage from growing even as the population grows.

Yet Virginia makes little effort to build on these savings, and it shows. The American Council for an Energy-Efficient Economy ranks Virginia 29th in the nation overall in its 2019 State Energy Efficiency Scorecard; in the narrower category of electricity savings, Virginia came in a dismal 47th.

This should concern policy-makers, not least because wasting energy costs money. Recent EIA data reveals that in spite of Virginia having slightly lower electricity rates than the U.S. average, our residential bills are almost $20 per month higher, continuing a long and, especially for low-income residents, painful trend. Virginia residents use more electricity per household than any other state in the nation with the exception of just six southern states (Alabama, Kentucky, Mississippi, Tennessee, Louisiana and Texas).

Lobbyists for our utilities argue it’s the weather here. They say hot summers drive up the use of air conditioning, while cold winters keep electric heat pumps running. We’d like to see their data. The fact is, Virginia residents use more electricity (averaging 1165 kWh per month) and have higher bills (averaging $136.59) than residents of Maryland (1005 kWh, $133.68) and Delaware (977 kWh, $122.43), even though both of those states don’t just have colder winters, they have slightly warmer summers as well.

So if it isn’t weather, what is it? Policy. Both Maryland and Delaware have laws requiring reductions in energy consumption and have programs to make it happen.

It’s worth mentioning that Maryland and Delaware are members of the Regional Greenhouse Gas Initiative, the carbon-cutting compact of northeastern states that Virginia plans to join. Critics of the plan claim it will harm Virginia consumers. That makes it especially telling that of all the RGGI states, only Connecticut has higher residential electricity bills than Virginia.

Most RGGI states appear in the top ranks of the ACEEE scorecard. That’s not a coincidence; those states use money from the auctioning of carbon emission allowances to fund energy efficiency programs. Consumers benefit from the resulting trade-off: their electricity rates go up, but their bills go down.

Shrinking a state’s carbon footprint and reducing reliance on fossil fuels are prime objectives of energy efficiency in the RGGI states, but the lower bills give success that sweet taste that keeps them coming back for more.

Virginia has tackled energy efficiency in fits and starts over the years, with limited programs that tend to expire before they gain traction. That’s supposed to change now with implementation of 2018’s Grid Transformation and Security Act (GTSA). The GTSA requires Dominion Energy Virginia and Appalachian Power together to propose a billion dollars’ worth of energy efficiency programs over 10 years. The State Corporation Commission approved one round of spending from Dominion in May of this year.

The problem is that the GTSA only requires utilities to propose programs; it doesn’t say the programs have to be good ones, and it doesn’t require the SCC to approve them. Even the ongoing participation of a stakeholder group doesn’t change the fact that, as ever, the utilities are in the driver’s seat.

Since they’re spending their customers’ money, Dominion and APCo are happy with this set-up. Alas, they don’t have much incentive to produce really great programs. Quite the reverse: their business model depends on an ever-increasing demand for electricity. Successful energy efficiency programs are bad for business.

By contrast, the states at the top of the ACEEE scorecard all have laws called energy efficiency resource standards (EERS) that require utilities to achieve savings, not just spend money, or that take the job away from utilities entirely and entrust it to a separate entity without a conflict of interest.

More than half of states now have EERS, though not all target—or achieve—energy savings of 2% per year.

How does a good EERS work its magic? As ACEEE explains:

“In states ramping up funding in response to aggressive EERS policies, programs typically shift focus from widget-based approaches (e.g., installing new, more-efficient water heaters) to comprehensive deep-savings approaches that seek to generate greater energy efficiency savings per program participant by conducting whole-building or system retrofits.”

Some deep-savings approaches also draw on complementary efficiency efforts, such as utility support for full implementation of building energy codes. Deep-savings approaches may also promote whole-building retrofits, grid-interactive efficient buildings and comprehensive changes in systems and operations by including behavioral elements that empower customers.

The good news for Virginia is that, having failed to do much of anything on energy efficiency for all these years, we have a lot of low-hanging fruit. The GTSA can’t help but gather up some of it; a real EERS could do much more and at lower expense. We could also follow the lead of other states in adopting state-level appliance efficiency standards, tightening our building codes and allowing localities to go beyond state codes in their jurisdictions.

More and more, Virginia legislators accept the urgency of the climate crisis and the need to transition to renewable energy. It’s a job that requires lowering energy consumption as well as building wind and solar, and we can’t afford to do it wrong. Two years ago, most legislators settled for the flawed approach of the GTSA. In 2020, we should expect them to do better.

After all, to paraphrase Winston Churchill, you can always count on the General Assembly to do the right thing after they have tried everything else.

 

A version of this article appeared in the Virginia Mercury on October 11, 2019. 

Governor Northam’s Executive Order, Dominion Energy’s about-face on offshore wind: is Virginia off to the clean energy races?

Man at podium

Arlington County Board Chair Christian Dorsey speaking to clean energy supporters on September 21, following the Board’s adoption of its new Community Energy Plan. Arlington’s plan would produce a carbon-free grid 15 years earlier than Governor Northam’s plan, while also tackling CO2 emissions from transportation and buildings.

A single week in September brought an unprecedented cascade of clean energy announcements in Virginia. On Tuesday, September 24, Governor Northam issued an Executive Order aimed at achieving 30 percent renewable energy by 2030 and 100 percent carbon-free energy by 2050, and with near-term state procurement targets.

On Thursday, Dominion Energy announced it would fully build out Virginia’s offshore wind energy area by 2026, in line with one of the goals in the Governor’s order.

Then, Saturday morning, the Democratic Party of Virginia unanimously passed resolutions endorsing the Virginia Green New Deal and a goal of net zero carbon emissions for the energy sector by 2050.

Saturday afternoon, Arlington became the first county in Virginia to commit to 100 percent renewable electricity by 2035, and economy-wide carbon neutrality by 2050.

So is Virginia off to the clean energy races? Well, let’s take a closer look at that Executive Order.

The governor’s order sounds great, but how real are its targets?

Executive Order 43, “Expanding access to clean energy and growing the clean energy jobs of the future,” directs the Department of Mines, Minerals and Energy (DMME) and other state agencies to “develop a plan of action to produce 30 percent of Virginia’s electricity from renewable energy sources by 2030 and one hundred percent of Virginia’s electricity from carbon-free sources by 2050.”

The difference between “renewable energy” and “carbon-free” sources is intentional. The latter term is a nod to nuclear energy, which provides about a quarter of Virginia’s electricity today. Keeping Dominion’s four nuclear reactors in service past 2050 may not prove feasible, economical or wise, but the utility wants to keep that option open.

The order also doesn’t define “renewable energy.” It talks about wind and solar, but it doesn’t specifically exclude carbon-intensive and highly-polluting sources like biomass and trash incinerators, which state code treats as renewable. Dominion currently meets Virginia’s voluntary renewable energy goals with a mix of old hydro and dirty renewables, much of it from out of state. Dominion will want to keep these subsidies flowing, especially for its expensive biomass plants, which would undermine the carbon-fighting intent of the order.

Finally, there is the question whether all of the renewable energy has to be produced in Virginia. Old Dominion Electric Cooperative, which supplies electricity to most of the member-owned cooperatives in the state, buys wind energy from outside Virginia. Surely that should count. But what if a Virginia utility just buys renewable energy certificates indicating that someone, somewhere, produced renewable energy, even if it was consumed in, say, Ohio? Those had better not count, or we’ll end up subsidizing states that haven’t committed to climate action.

What will DMME’s plan look like?

In describing what should be in the action plan, Northam’s order largely recites existing goals and works in progress, but it also directs DMME and the other agencies to consider going beyond existing law and policy to achieve specific outcomes:

  • Ensure that utilities meet their existing commitments to solar and onshore wind energy development, including recommending legislation to reduce barriers to achieving these goals. These goals include 500 MW of utility-owned or controlled distributed wind and solar. Customer-owned solar is not mentioned.
  • Make recommendations to ensure the Virginia offshore wind energy area is fully developed with as much as 2,500 MW of offshore wind by 2026.
  • Make recommendations for increased utility investments in energy efficiency, beyond those provided for by the passage of SB 966 in 2018, the Grid Modernization Act.
  • Include integration of storage technologies into the grid and pairing them with renewable generation, including distributed energy resources like rooftop solar.
  • Provide for environmental justice and equity in the planning, including “measures that provide communities of color and low- and moderate-income communities access to clean energy and a reduction in their energy burdens.”

Can the administration do all that?

Nothing in this part of the order has any immediate legal effect; it just kicks off a planning process with a deadline of July 1, 2020. Achieving some of the goals will require new legislation, which would have to wait for the 2021 legislative session.

That doesn’t mean the governor will sit on his hands until then – delay is the enemy of progress — but it could have the effect of slowing momentum for major climate legislation in 2020.

Cynics, if you know any, might even suggest that undercutting more aggressive Green New Deal-type legislation is one reason for the order.

A second part of Northam’s order, however, will have immediate effect, limited but impressive. It establishes a new target for state procurement of solar and wind energy of 30 percent of electricity by 2022, up from an 8 percent goal set by former Governor Terry McAuliffe. This provision will require the Commonwealth to negotiate amendments to the contract by which it buys electricity for state-owned facilities and universities from Dominion. The order also calls for at least 10 MW annually of power purchase agreements (PPAs) for on-site solar at state facilities, and requires agencies to consider distributed solar as part of all new construction.

State facilities will also be subject to new energy savings requirements to reduce state consumption of electricity by 10 percent by 2022, measured against a 2006 baseline, using energy performance contracting.

These provisions do for the state government what the action plan is intended to do for Virginia as a whole, but 8 years faster and without potential loopholes.

Thirty percent by 2030? Gee, where have we heard that before?

Just this spring, Virginia’s Department of Environmental Quality finalized regulations aimed at lowering carbon emissions from Virginia power plants by 30 percent by 2030. These numbers look so similar to Northam’s goal of 30 percent renewable energy by 2030 that it’s reasonable to ask what the order achieves that the carbon rule doesn’t. (This assumes the carbon regulations take effect; Republicans used a budgetary maneuver to stall implementation by at least a year.)

The answer goes back to the reason Dominion opposed the carbon rule. Dominion maintains—wrongly, says DEQ and others—that requiring lower in-state carbon emissions will force it to reduce the output of its coal and gas plants in Virginia and buy more power from out of state. That, says Dominion, would be bad for ratepayers.

As the company’s August update of its Integrated Resource Plan showed, Dominion would much prefer a rule requiring it to build more stuff of its own. As it turns out, that would be even more expensive for ratepayers, but definitely better for Dominion’s profitability.

So legislation to achieve Governor Northam’s renewable energy goals would take the pain out of the carbon regulations for Dominion. Whether it might also lower carbon emissions beyond DEQ’s 30 percent target remains to be seen.

The 2050 carbon-free goal, on the other hand, goes beyond anything on the books yet. Dominion’s corporate goal is 80 percent carbon-free by 2050, and it has no roadmap to achieve even that.

Is there anything in the order about pipelines?

No. In fact, there is no mention of any fossil fuel infrastructure, though shuttering coal and gas plants is the main way you cut carbon from the electricity supply.

That doesn’t mean Northam’s order leaves the Mountain Valley and Atlantic Coast pipelines in the clear. If Dominion joins Duke Energy in its pledge to go to zero carbon by 2050, the use of fracked gas to generate electricity in Virginia and the Carolinas has to go down, not up, over the coming decades (Duke’s own weird logic notwithstanding). As word gets around that Virginia is ditching fossil fuels, pipeline investors must be thinking about pulling out and cutting their losses.

What about Dominion’s offshore wind announcement?

I saved the best for last. For offshore wind advocates like me, Dominion’s announcement was the really big news of the week: it’s the Fourth of July, Christmas and New Years all at once. Offshore wind is Virginia’s largest long-term renewable energy resource opportunity, and we can’t fully decarbonize without it.

Dominion has taken a go-slow approach to offshore wind ever since winning the right to develop the federal lease area in 2013. Until this year, it refused to commit to anything more than a pilot project. The two, 6-MW turbines are currently under construction and will be installed next summer.

Then in March, Dominion CEO Tom Farrell told investors his company planned to build one commercial offshore wind farm, of unspecified size, to be operational in 2024. In its Aug. 28 resource plan update filed with the state regulators, Dominion Energy Virginia included for the first time an 880-MW wind farm, pushed back to 2025.

A mere three weeks later, the plan has changed to three wind farms, a total of 220 turbines with a capacity of 2,600 MW, with the start date moved up again to 2024, and all of them in service by 2026, exactly Northam’s target (except his was 2,500 MW).

Certainly the case for developing the full lease area has been improving at a rapid clip. Costs are falling dramatically, and it appears Dominion expects to maximize production by using massive 12 MW turbines, which did not even exist until this year.

But if the situation has changed that dramatically from August to September, all I can say is, I can’t wait to see what October brings.

Maybe it will bring answers to questions like who will build these wind farms, who will pay for them, and how Dominion expects to meet this accelerated timeline. As Sarah Vogelsong reports, several northeastern states have wind farms slated for development in the early-to-mid-2020s, too. Industry members are already worried about bottlenecks in everything from the supply chain to installation vessels, workforce training and the regulatory approval process.

That is to say, we’re coming to the party pretty late to expect good seats. But hey, it’s going to be a great party, and I’m glad we won’t miss it.

This article originally appeared in the Virginia Mercury on September 27, 2019.

Ignoring state climate rules, Dominion decides what carbon regulations should look like

woman in dinosaur costume holding sign reading clean energy now

Four out of five dinosaurs agree. The fifth, that would be Dominion. Photo courtesy of Sierra Club Virginia Chapter.

For several years now, Dominion Energy Virginia has factored into its plans an assumption that electricity from carbon-emitting power plants will eventually include a cost reflecting CO2’s role as the primary driver of global warming. Dominion says it has even integrated this into its corporate goals, targeting an 80 percent reduction in CO2 emissions by 2050.

That promise may be more propaganda than corporate lodestar, but in any case the utility’s Integrated Resource Plans regularly point to the probability of future carbon regulations as a reason to build new renewable energy facilities and close old coal plants.

Planning for constraints on CO2 emissions proved wise this spring when Virginia’s Department of Environmental Quality finalized a state carbon cap-and-trade program. The DEQ regulations call for Virginia power plant owners to trade carbon allowances with those in the member states of the Regional Greenhouse Gas Initiative (RGGI). A Republican budget maneuver has delayed implementation of the new rules, but once they take effect they are expected to hasten the retirement of expensive old coal plants and support investments in new renewable energy projects.

But it’s not the DEQ regulations that Dominion is planning around. The utility’s 2019 update to its 2018 IRP, filed with the State Corporation Commission on Aug. 29, treats the DEQ regulations as hypothetical. Instead, it posits some unspecified future federal carbon regulations that, apparently, it would like much better.

The update describes three alternative scenarios, down from five in the 2018 IRP. The first is a “base case” that assumes no carbon emission constraints. The second assumes the state carbon limits take effect as well as some future federal regulations, and the third assumes federal (but not state) limits. However, the cover letter makes it clear that only the third scenario actually describes what Dominion intends to do. As it happens, that is the most expensive— and most profitable —plan.

The primary feature of the base case is that it keeps some old coal units running that will be closed in the other scenarios. According to Dominion, this makes it the least-cost approach to meeting electricity demand. Whether that’s true is a matter of dispute; these units hardly run at all any more, and experts for environmental organizations in the IRP hearing testified that retiring them will save money for customers.

It suits Dominion’s political strategy, however, to pretend that coal remains a low-cost option. This fiction makes coalfield legislators happy, and it allows Dominion to blame rising electricity rates on environmental regulations instead of on its own profligate spending and excess profits.

But Dominion Energy made a big bet on fracked gas, not coal. It won’t fight to keep outdated coal plants online and spewing out CO2 if it’s cheaper to close them. Gas plants are another matter. Dominion Energy’s massive investments in gas transmission and storage make the company keen to keep Virginia gas plants running full-tilt, and to build as much new gas generation as possible.

For that reason, Dominion hates the DEQ regulations. It warns the regional cap and trade plan will result in power from outside the state replacing electricity from Dominion’s combined-cycle gas plants, which provide baseload power. Dominion argues this will lead to higher, rather than lower, carbon emissions as well as higher consumer costs.

DEQ and others disagree on both counts, though the SCC takes Dominion’s view. So although Dominion labels its second scenario RGGI-compliant, it treats the DEQ regulations as hypothetical, as if Gov. Ralph Northam might change his mind any day now and order them scrapped.

Instead, Dominion offers its third scenario, positing only unspecified and (with Trump as president) truly hypothetical future federal carbon regulations. In Dominion’s fantasy, a federal plan will be strong enough to support Dominion building profitable new renewable energy and storage projects, but not so strong that it can’t also build a bunch of new gas plants.

Ergo, that’s what Dominion is shooting for. The cover letter accompanying the IRP update makes it clear that Dominion is already pursuing projects that appear only in the third plan. These include a 300 MW pumped hydro storage project that will take a decade to develop and cost upwards of $1.5 billion (if indeed it pans out), and an 852 MW offshore wind project slated for 2025, a year later than what Dominion told investors in March.

The third scenario also includes more than 3,000 MW of solar between now and the end of 2034, but that’s actually a whole lot less solar than under the RGGI scenario. Even the base case has more solar. Go figure.

Still missing is the rest of the 2,000 MW of offshore wind that the Virginia lease area can support. Also still missing are thousands more megawatts of wind and solar that Virginia would need if, instead of a gas-friendly plan, the federal government were to enact regulations actually sufficient to the climate crisis.

Dominion has not even modeled that possibility. The update’s third scenario still includes 10 new fracked-gas combustion turbines, a total of 2,425 MW, with two units coming online every year from 2022 through 2026.

Maybe the Dominion executive team thinks it knows more than the rest of us do about the federal climate plan we’ll see once Donald Trump is sent packing in 2020. More likely, Dominion is simply using its IRP carbon assumptions to bolster its case for more spending and higher profits.

In which case, the more things get updated, the more they stay the same.

 

This article originally appeared in the Virginia Mercury on September 13, 2019.

Dominion’s plans to tackle global warming are mostly hot air

Graph compares CO2 reductions by Dominion Energy and Xcel

Dominion (blue line) starts out with lower total CO2 emissions than the larger Xcel (red line), but after switching out old coal for new fracked gas, Dominion’s carbon-cutting slows to a crawl, while Xcel’s keeps going.

My readers will be shocked, shocked to learn that contrary to Dominion Energy’s propaganda, the company plans to cut carbon emissions by only about 1% per year between now and 2030, a slower pace than it has achieved in the past.

According to an analysis of Dominion’s own data by the Energy and Policy Institute, “the company reduced its carbon emissions at an average rate of 4% per year from 2005 to 2017, mostly by retiring coal plants in the later years of that period. That reduction rate plummets to 1% per year between now and 2030 under Dominion’s new goal.”

“The company’s reduction pace would increase again between 2030 and 2050 in order to meet its later goal [of 80% carbon reduction from 2005 to 2050], though only to about 2.8%, still lower than its pace from 2005 to 2017.”

Fracked gas investments are both the reason Dominion has brought carbon emissions down as much as it has, and the reason it can’t keep up the pace. Closing expensive, old coal plants is an easy way to cut carbon and save money at the same time. Replace the output of a coal plant with the same output from a gas plant, and you’ve slashed carbon emissions almost in half overnight.

But it’s not such a great trick if it requires you to build a new gas plant with a useful life of 30 years. That makes it much harder to decarbonize further by replacing gas with carbon-free renewables.

This is exactly Dominion Energy Virginia’s problem. A comparison of the utility’s 2013 and 2018 integrated resource plans shows coal fell from 22% of the total energy mix to 18%, while natural gas jumped from 17% to 32%, displacing purchased energy as well as coal.

The company achieved this feat with three new, huge combined-cycle gas plants it brought online just in the past five years: Warren (1,370 MW) in 2014, Brunswick (1,358 MW) in 2016, and Greensville (1,588 MW) in 2018. Together these plants increased Dominion’s natural gas generating capacity by more than 50%.

Not only did Dominion stick utility ratepayers with these big new gas plants, its parent company promised investors the utility will burn enough gas to justify spending $7 billion-plus on the Atlantic Coast Pipeline. Decarbonizing violates the business plan.

Dominion is in good company — by which I mean bad company — in making bold claims about carbon cuts that prove inadequate on closer inspection. According to the Energy and Policy Institute, the other southeastern monopoly utilities, Duke, Southern, and NextEra, are all using the same playbook.

Other utilities have avoided the gas trap. National leaders like Minneapolis-based Xcel, Consumers Energy in Michigan, and NIPSCO in Indiana are replacing coal with renewables and leapfrogging over new gas. That puts them in a position to deliver on their promises of rapid emissions cuts.

The Energy and Policy Institute analysis pointedly contrasts Xcel with Dominion:

Xcel Energy is one of the country’s largest electric utilities, with operations in eight states, primarily Colorado and Minnesota. Xcel pledged in December 2018 to reduce its carbon emissions 80 percent by 2030 from 2005 levels, and to fully decarbonize by 2050. Xcel’s new goal is an upgrade of a previous one to cut carbon emissions 60 percent by 2030. It says it plans to lean heavily on renewable energy and batteries will save its customers money. In a detailed report released in March, Xcel says its goals fall within the range compatible with Intergovernmental Panel on Climate Change scenarios that achieve either a 2°C or 1.5°C target.

Graphing Xcel’s trajectory vs. Dominion’s is telling: the companies’ decarbonization pathways tracked one another closely from 2005 until 2017. At that point, Xcel’s trajectory starts turning sharply downward, while Dominion’s flattens out.

Another contrast you’ll notice between Xcel and Dominion: Dominion has no plans to get to zero emissions, ever. It’s hard not to conclude that the company’s leaders are simply putting the best climate face on a gas strategy that hasn’t changed.

Eventually, though, the falling costs of wind and solar and the public’s demand for climate action will force Dominion to follow Xcel and others into deep decarbonization.

It may not be the business plan, but it is the future.

This post was originally published in the Virginia Mercury on July 15, 2019. 

 

Customer-owned utilities should be leaders on clean energy. Why do most of them fail to deliver?

map shows territory of Rappahannock Electric Cooperative

The territory of the Rappahannock Electric Cooperative in Virginia, from the coop’s website.

More than one in six Virginia residents gets electricity from a rural electric cooperative rather than a big investor-owned utility like Dominion Energy or Appalachian Power. Co-ops don’t get much attention from clean energy advocates and the press, but that might be a mistake. Co-op members aren’t just customers; they’re owners.

In theory, that should put co-ops at the head of the energy transition.

The current reality is mostly quite different, both in Virginia and nationwide. While a few co-ops have adopted innovative customer-friendly programs, most actively resist change. Here in Virginia, a battle over reform of the Rappahannock Electric Cooperative (REC) shows how difficult it is for co-op members to make their voices heard.

According to the reform group Repower REC, the co-op’s management not only refuses to make changes that would save members money, it actively cuts members out of the decision-making process. Repower REC is endorsing a slate of reform board candidates and proposing amendments to the co-op’s bylaws that would give members the right to fair elections and to obtain basic information about REC’s management and finances.

The lack of transparency and democracy at REC turns out to be a common failing of co-ops. A 2016 report from the Institute for Self-Reliance described three reasons why co-ops are laggards rather than leaders in the energy transition: overreliance on coal, long-term contracts with suppliers and a failure of democracy in governance.

Coal accounts for 75% of energy generated by electric cooperatives nationwide, compared to less than 28% today for all utilities nationally. Worse, failing to see the promise of distributed generation, most co-ops have locked themselves into long-term supply contracts that give them little room for self-generation with solar and wind. Having tied their members to fossil fuels, it’s not surprising that co-op managers don’t want their governance scrutinized too closely.

In fact, stuck with the dirty black stuff, rural electric cooperatives are much more likely than investor-owned utilities to support coal and oppose climate regulations. This may even help explain why rural voters are so much more likely than urban voters to support coal even in non-coal states, and to doubt climate science. Certainly their co-ops, which are supposed to educate consumers about the electric power industry, are not helping to educate them about the realities of climate science.

But according to the Institute’s report, it’s the third reason that holds co-ops back the most. Co-op member-owners have the right to vote but mostly don’t, often because they’re presented with no real choices, and lack basic information needed to cast an informed vote.

A host of other barriers, such as a lack of transparency, and the practice of collecting blank “proxy ballots” that incumbent board members complete as they see fit, ensures the reelection of entrenched board members and their hand-picked successors. Board members pay themselves handsomely for very part-time work, with many staying on boards for decades if not life.

All of these problems are present at REC, according to Repower REC. Seth Heald, a Repower REC founder who’s been an REC member for over a decade, says “the total lack of transparency surrounding the co-op’s board meetings seems designed to keep REC members from knowing whether their board members are well-informed, engaged and advocating for consumers. It also prevents us from learning the extent to which management may exercise control over compliant board members.”

To be fair, other Virginia co-ops show the promise of the member-owned model. The only community solar programs offered in Virginia today are run by coops: BARC in southwest Virginia and Central Virginia Electric Cooperative in the Charlottesville area. BARC also installed solar on all three Bath County schools, putting it way ahead of larger and richer jurisdictions like Fairfax and Loudoun that get power from Dominion.

Virginia co-ops also reached a deal with the solar industry this year designed to ease some of the barriers to rooftop solar, a deal neither Dominion nor APCo would agree to.

But Virginia co-ops haven’t adopted the kinds of aggressive energy efficiency programs that have lowered energy demand and saved money for members of the nation’s most innovative co-ops, such as Roanoke Electric Cooperative in North Carolina and Ouachita Electric Cooperative in Arkansas. In both places, utility financing of efficiency improvements and federal grants from the Department of Agriculture have allowed even very low-income members to pay for insulation and appliance upgrades while simultaneously lowering electric bills.

(Ouachita also installed Arkansas’ largest solar farm in 2017.)

It’s hard to believe more co-ops wouldn’t offer programs like these if they truly had their members’ interests at heart.

REC members will be voting this month on board candidates and Repower REC’s proposed bylaw amendments, using proxy/ballot forms attached to the cover of the July Cooperative Living magazine. Forms must be mailed back in time to arrive by Aug. 19. Members may also vote through REC’s SmartHub online tool by Aug. 19, or in person at the August 22 annual meeting.