A Preview of Virginia’s Looming Energy Crisis

Existing Dominion power lines. Photo credit: Daily Press.

Existing Dominion power lines. Photo credit: Daily Press.

by James A. Bacon

Hampton Roads north of the James River could face brownouts or rolling blackouts within two years if Dominion Virginia Power can’t start building a transmission line across the river on a timely basis, the power company informed the U.S. Army Corps of Engineers earlier this month. The Daily Press uncovered the letter in a Freedom of Information Act request seeking recent communications about the project.

“We are running perilously close to an unacceptable service reliability risk that is unprecedented in the modern era here in Virginia,” wrote Dominion project manager Wade F. Briggs in the March 6 letter. If the Army Corps doesn’t clear the way for construction of the power line, he said, “We would need to implement load shed plans in North Hampton Roads which would be unacceptable to everyone concerned.” The purpose of the automatic browns and blackouts would be to avoid overloading the transmission grid and setting off uncontrolled, cascading blackouts.

Northern Hampton Roads, a region stretching from Charles City County to Hampton on the Virginia Peninsula, is served by aging coal-fired power plants that Dominion is phasing out to meet Environmental Protection Agency standards for the release of mercury and other toxic materials. The transmission line would enable Dominion to wheel in electric power from other sources. But it will take 16 to 17 months to build the $155 million line. Dominion has been pleading for delays in implementing the pollution standards. The state Department of Environmental Quality has granted an exemption from the standards through April 2016. A lawsuit filed by opponents to stop the project has been appealed all the way to the state Supreme Court.

The James River power line controversy is significant on its own terms. There are legitimate trade-offs here. There is no denying that the power line would be unsightly, marring pristine vistas of what the first English settlers saw when they sailed to Jamestown four centuries ago. And there is no reason to disbelieve Dominion’s assertion that failure to build the line, which the company has been doing for years, would put the region at risk for economically damaging curtailment of electric power.

But the controversy is also symptomatic of issues facing the entire state — the canary in the coal mine, so to speak, a harbinger of clashes that will become more endemic and more acute over time as  Dominion struggles to meet a steadily increasing demand for electricity in the face of stricter environmental rules and resistance to the infrastructure — power lines and gas lines most notably — required to deliver that electricity and the natural gas that fuels it.

The coal plants on the Peninsula will be retired to meet EPA regulations restricting the emission of toxic pollutants. Another wave of EPA regulations likely will phase out all but one of Virginia’s remaining coal-fired power plants within another decade to meet the goal of reducing carbon emissions. A battle new brews over how Dominion will replace that capacity — with natural gas, nuclear or renewable fuel sources such as solar and wind power.

Here’s the backdrop: The long-range forecast in Dominion’s Integrated Resource Plan (IRP), updated annually and filed with the State Corporation Commission, indicates that overall  customer demand for energy in its service area will increase by an average annual rate of 1.3% and peak energy (as seen below) will increase at a rate of 1.4%. That growth forecast reflects 17.6% population growth between 2015 and 2029, with commensurate increases of commercial and industrial customers, as well as the increasing use of electric vehicles and hybrid-electric vehicles, which require electric charging. Dominion projects approximately 240,000 such vehicles on the road in its service territory, adding 215 megawatts of additional load and annual energy usage of 853 gigawatt-hours.

peak_load

Not only does Dominion have to replace the coal- and oil-fired plants, it has to bring on new capacity (or buy it on the open market) sufficient to meet the demands of Virginia’s growing population, economy and electric-vehicle fleet. Failure to add generating capacity beyond that already under construction will result in dangerously low reserve requirements — at least 11% is considered desirable — that could lead to blackouts and brownouts in extreme weather conditions.

reserve_margin

How does Dominion propose to meet projected power demand?

Dominion’s IRP presents two plans: a base plan, representing the least-cost path forward, and a fuel-diversity plan, which increases the use of nuclear and renewable fuels. The base plan has two main components:  demand-side management (DSM) plans that would reduce the summer peak demand for electricity by 583 megawatts by 2029 and the addition of natural gas generating capacity of more than 4,000 megawatts some time between 2019 and 2029.

Excessive reliance upon a single fuel, natural gas, does present risks, however. As the Dominion IRP states: “An over dependence on any one fuel source is not desirable.” Future prices are difficult to predict. On the one hand, shale gasfields appear to have ample spare production capacity, which is momentarily depressed due to low prices. On the other hand, as former Federal Energy Regulatory Commission Chairman Jon B. Wellinghoff noted in a recentWashington Post op-ed, United States could begin exporting natural gas to Asia and Europe through as many as 14 natural gas-export terminals. That’s good news for the U.S. economy. But, he warns, “For Virginia ratepayers, that means a cheap, local commodity will become an expensive, global commodity.”

Diversifying the utility’s fuel mix will be made more difficult by the shutdown of three nuclear units at Surry and North Anna in the early 2030s. Dominion’s fuel-diversity plan calls for construction of another nuclear unit in North Anna, which would bump up nuclear’s  contribution by 2029 before a sharp decline in the following decade, plus the development of wind- and solar-energy capacity. Under the fuel-diversity plan, the fuel mix would evolve as shown below:

fuel_diversity_plan

This plan represents Dominion’s preferred strategy for balancing the goals of lower cost and reduced pollution/carbon emissions, but it would fall significantly short of the state’s voluntary Renewable Portfolio Standard: generating 15% of electricity from solar, wind, hydro or biomass by 2025. Therefore, the plan does not meet the expectations of environmental organizations who, incidentally, also tend to disapprove of nuclear power.

Dominion and its customers are in a bind. There are major obstacles to every fuel alternative. Coal and oil are being phased out for reasons of cost (natural gas is cheaper…. for now) and the environment (they are the dirtiest fuels). Nuclear will increase over the mid-term if the proposed North Anna plant is constructed — although that’s no sure thing, given environmentalists’ opposition to it — but will decrease over the long term as aging plants are shuttered. Natural gas is the preferred fuel for the moment — it’s cheaper and cleaner than oil and coal — but excessive reliance upon the fuel makes Virginians vulnerable to spikes in price when economic conditions change.

That leaves renewables and purchased power to take up the slack. The great advantage of renewables is that the fuel comes free. But at present they have higher up-front capital costs, and they present major issues of reliability. Environmentalists aren’t legally bound by a commitment to ensure reliable electric service; Dominion is. The problem with wind and solar is that both are intermittent power sources. Solar plants don’t generate electricity when the sun goes down or when clouds block the sun. Wind turbines don’t generate electricity when the wind doesn’t blow, or when it blows too hard.

Dominion has two options for providing backup power to renewables: building additional gas-fired plants, which, unlike coal and nuclear, can rapidly adjust output, or purchase the power on the open market, delivered over high-voltage electric lines.

Adding gas-fired capacity that sits idle much of the time is inherently expensive, negating renewables’ cost advantage of zero fuel prices.

The other alternative is purchasing power on the open market. Dominion participates in the PJM organization that coordinates the operation of the electric grid serving 60 million people in 14 Mid-Atlantic and Midwestern states. Dominion currently purchases about 13% of its electricity, most of it through PJM. Here’s the catch: Wheeling large volumes of electricity from other states requires a robust network of transmission lines. For understandable reasons, nobody likes building new transmission lines in their back yard.

Dominion backed off a proposal to build a transmission line through Virginia’s northern piedmont several years ago, and now it faces legal challenges with the James River power line. Any effort to build more high-voltage transmission lines, with their intrusive towers and invasive right-of-way, inevitably will inspire the same kind of resistance.

The simple fact is that there are no easy answers for supplying Virginia’s increasing energy needs while simultaneously reducing CO2 emissions and avoiding brownouts and blackouts. Likewise, there is no broad consensus on how to move forward. That’s why the drama playing out in Hampton Roads could be prelude to conflicts that will break out across every corner of Virginia over the next ten years.

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16 responses to “A Preview of Virginia’s Looming Energy Crisis

  1. Problem one with this public relations wheez…the coal plants in question are about 50 years old. Dominion has had plenty if time to figure this out.

    • Why does it matter how old the coal plants are? If you have to shut them down, for whatever reason, you have to replace the power. The question then becomes what fuel you choose to run the new plant — or, in the case of Hampton Roads, how to you get the electricity there.

  2. And you believe Dominion’s desperation? Give me a break.

    • I’m not sure what “desperation” you’re referring to.

      I presented Dominion’s information. If you take issue with all or parts of it, let’s hear specifics. What do you find implausible? Are the forecasts of demand increase too high? I think it would be worthwhile to subject its forecast to greater scrutiny. But all I hear from you is pure, unvarnished skepticism with nothing to back it up.

  3. It’s a well articulated post… but as usual – instead of challenging Dominion, Jim becomes their apologist and supporter of their default plan.

    what are those “sources” that will supply the line over the James? I think that’s a significant issue you did not really track down, especially if we’re saying it’s closing coal plants that is causing the problem in Hampton.

    how are they replacing that power with the line over the James?

    this is the key phrase: ” Excessive reliance upon a single fuel, natural gas, does present risks, however. As the Dominion IRP states: “An over dependence on any one fuel source is not desirable.”

    hello? what is coal?

    and again as stated before – why is Dominion wanting to build a pipeline – to the same region and not plan to use it for nat gas power generation and instead possibly export it?

    In their “plan” why do they not explicitly mention the pipeline as a key part of their plan?

    the biggest problem here is that Dominion is a for-profit company – that makes more profit when it sells more electricity and so it has little or no interest in selling less electricity. Their heart is clearly not in it or else they’d incentivize rooftop solar to diversify their sources and use nat gas to generate when solar does not.

    they basically burn coal to sell electricity – and that’s what they do and they’re losing their cash cows because they pollute too much and there are available alternatives which will cost no more once people increase their conservation efforts – which they will do when the price goes up.

    Dominion is the tail that clearly wags the dog – in Virginia…

    so where is the power coming from for that James River line?

    • Where is the energy coming from for that James River line?

      Good question. I don’t know. If I had to hazard a guess, I’d say from the Surry nuclear plant across the river. But to some degree, electricity is fungible across the grid, so I don’t know.

    • I am not an “apologist” for Dominion’s plan. I reported Dominion’s plan — which I haven’t seen any other journalist see fit to do — in order to illuminate the debate that is taking place. Perhaps you take issue with my conclusion that there aren’t any easy solutions to (a) keeping rates low, (b) ensuring system reliability and (c) reducing CO2 emissions. Why don’t you tell us, then, what those easy solutions are?

      • re: ” I am not an “apologist” for Dominion’s plan.”

        close. how about “explainer in Chief”?

        Dominion is pretty transparent. We can figure out their position pretty easy by just asking what path yields them the most income or potential for income and what path they oppose that usually means not as lucrative.

        Let’s do this. If you were going to design a 21st century smart grid for Virginia – what would it look like?

        now tell me how Dominion’s plans evolve towards that ….

  4. I have. You deploy and use natural gas as a dynamic load balancing strategy that not only increases the reliability and resiliency of the grid but allows discretionary use of wind/solar.

    but you’re the guy who slobbers over disruptive technology in all sorts of things from education to transportation to big data – and yet here – you don’t – not even a small spittle…. where are your drooling “ideas” for disruptive technology for Dominion? all I hear are crickets… 😉

    • Larry, I’m flattered — I truly am — that you deem me some kind of journalistic superman who can conduct the in-depth research required to address your every concern. But I am only a humble blogger who is paid intermittently for the work I do on the blog and cannot devote 100% of my energies to the task. I would love to write about disruptive technologies for the electric power industry, and if I get a chance, I will.

      • Alright. NOW we’re COOKING! I can’t wait… “How Dominion could be a driver of Disruptive Technology and not become the Kodak of Power Generation”.

        😉

  5. The more I read about this – the more questions I have and I do not identify with the NIMBY types at all.. if this line is needed and needed where the crossing is – then do it ……….but…………

    Dominion has a responsibility to the public to :

    1. – tell people why this is the only or best place to cross the river
    2. – where the power is coming from that this line is needed to transport

    it’s hard to believe that most all of the reports of this – to date do not deal with these two issues.

    and if Dominion has provided this info through the regulatory process – they certainly have not provided it through the media or their own news releases as far as I can tell.

    And Jim has chosen to tell only Dominion’s story and not perform due diligence to answer the two questions above.

    so here is my request

    1. – how about a map showing the proposed and existing power lines

    2. – explain where the power is going to come from

    3. – explain why no other path is possible

    Dominion is acting like they don’t have to justify their actions beyond asserting that if they don’t get what they want – that reliability is threatened.

    this is what they say:

    ““We have investigated as many options as feasibly possible, including alternatives that came up during the hearing,” said Bonita Harris, media and communications manager for Dominion. “The process has only confirmed that the route from Surry across the James is the right choice for the residents, the rate payers, the critical military facilities and the environment.”

    translation: ” we don’t have to justify to you the various alternatives – we’ve already decided”

    this is not the way to do a public process but apparently Dominion has such an arrogant view of itself in Va that their SCC and GA lapdogs are all they need to do what they want.

    Jim .. seems to have little trouble directly question the governments motives on a wide variety of issues – yet he seems to accept without question what DOminion is asserting.

    Dominion is subject to a legitimate public process and to me this is yet
    another example of the arrogance of that company in basically telling
    Virginia and its citizens what it is going to do and there is no need to
    justify it beyond informing folks of their plans.

    I urge Jim – to perform due diligence here and not come across as a surrogate for Dominion. Hold them to the same standard that you often hold government to.

  6. Believe the 17.6% population growth projection (2015-2029) may help to explain a lot. EPA’s Clean Power Plan is (in round numbers) asking for about 15% CO2 reduction from today by 2030, which on the surface, sounds manageable. But when you consider population growth, that basically becomes 15+17.6% = 33% reduction per capita. Add in a little extra strictness that the EPA threw in for it’s VA-specific plan, and now we’re at about 40% CO2 reduction per capita. Then the EPA plan says that they want most of that CO2 reduction by 2020, and hence we are in serious trouble. However the CPP is not yet adopted, I would anticipate the 2020 intermediate target is almost impossible considering construction lead times. I would expect some change in the final rules for VA.

  7. the problem is that Dominion can’t seem to trouble itself to explain to the citizens and ratepayers how it plans to actually deal with the issues.

    What kind of power is PGM making available to provide more power to Dominion ? or perhaps more to the point – how can other power generators deal with the CPP and have extra power to sell to folks like Dominion?

    They show a huge increase in Natural Gas but don’t say how or where it will be used.

    Jim worries about the green weenies on Nukes but he usually worries about ROI and govt subsidies which are part and parcel of Nuclear…

    finally – coal provides baseload and if nat gas is “too expensive” or might become so what is the solution? To burn more base load coal and just not actually use it to power turbines during the slack periods?

    we seem to have dialogues about what Dominion cannot do rather than what it will do or can do …

    once it’s done blaming rules to close dirty plants.. what’s it’s plan?

    and does it plan to use it’s new pipeline to feed nat gas to distributed nat gas plants or try to export it overseas?

    Dominion acts like all it has to do is tell people what it has decided to do without really justifying it .. something they apparently believe is their prerogative.. and apparently is given the role of the SCC and the GA in pretty much rolling over to do whatever Dominion wants.

    The crossing of the James as well as the route of the pipeline are examples.

    they claim they’ve already looked at all the alternative options and they have decided what is best… right?

  8. I think a map would be helpful in understand the issue:

    http://goo.gl/9fdtJC

    and I have problems with the way Dominion is handling the proposal by using provocative “alarmist” language about the potential consequences if they don’t their line.

    this can’t be the only line that takes power to Hampton Roads. Where are
    the other lines?

    Also – the argument is that plants are being shut down – fair enough – although it’s not make clear under what regulations they are being shut down and I suspect they are very old and very dirty and not being shut down due to the EPA clean power proposal.

    Next – if reliability is the issue – then why not put Natural Gas plants on Hampton and feed them with existing natural gas pipelines and/or the
    new one proposed – which if it were tied to the reliability issue in Hampton would boost the justification for the pipeline.

    this comes across – over and over – like VDOT gets to decide .. the SCC and the GA become their de-facto surrogates – and the role of the public is to accept what Dominion wants to do without questioning why and demonstrating to the public why these other things are not reasonable alternatives.

    It’s not so much the powerline per se – I find it hard to get really passionate about a power line more than 5 miles away and I have suspicions that it’s waterfront homeowners who are really concerned.

    But DOminion should not have the power they have and the attitude they have with regard to justifying their actions – from a public perspective.

    they do not have sole “dominion” over the electric grid in Va and they do not have the right to essentially dictate their preferred actions pro forma without a real public process beyond the doors of the SCC hearing room stuffed full on inside baseball folks …

    This evokes in me not only a distrust of Dominion to conduct proper public participation processes but more important – are they making choices about the power grid that are in the long-term interests of Virginians and rate-payers?

    how would you even know because the current process is about as close to rubber-stamping as you can get.

    I have no faith what-so-ever that Dominion has demonstrated that they actually have the reliability of the grid in Va, much less in Hampton in the best interests of the Commonwealth.

    We might as well rename Virginia to be the Dominion Commonwealth.

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