More Questions about Virginia’s Solar Energy Policy

Solar panel harness energy of the sun

by James A. Bacon

I’ve been covering business in Virginia four nearly four decades now, and I have to say, the electric power industry may be the most complex and difficult to understand. I freely admit that I have a steep learning curve ahead of me, and it’s pretty clear that other Virginia journalists do, too. But at least the Richmond Times-Dispatch appears to be trying. The latest case in point is a front-page feature story about solar energy published Sunday.  The article by John Ramsey omitted some critical pieces of the debate but he did surface some valuable perspectives. In itself, the story was incomplete. (The same can be said of my coverage.) But if seen as part of an ongoing dialogue in which the Virginia public builds a workable knowledge of the issues, it makes a worthwhile contribution.

The thesis of Ramsey’s story is that Virginia lags neighboring Maryland and North Carolina in the installation of solar energy and is missing a major economic opportunity as a result. The Old Dominion ranks 30th nationally in installed solar capacity, with only 14 megawatts installed, compared to 242 megawatts in Maryland and 1,011 megawatts in North Carolina. Admittedly, that gap will diminish if Dominion Virginia Power makes good on plans to install 400 megawatts by 2020, and as merchant providers such as Amazon Web Services, which has announced plans to build an 80-megawatt facility on the Eastern Shore, start coming on line.

The unstated assumption of the article is that large-scale installation of solar power is a desirable thing, that it would create thousands of construction jobs, and that it should be expedited by state policy. Nowhere in the article, however, does Ramsey acknowledge the  inherent variability of solar: Panels don’t generate electricity at night and output plummets when it’s cloudy. Intermittent production creates huge challenges for the reliability and stability of the electric grid, and companies must maintain expensive backup capacity to fill in when solar output is deficient. To my mind, it is impossible to discuss intelligently the benefits of solar without acknowledging these challenges.

Ramsey does raise one interesting issue, however. “Dominion’s incentive to build and own its solar farms at the expense of private developers,” he writes, “could continue to stifle the market in Virginia, even in the face of the new federal law requiring power companies to reduce carbon emissions with clean energy.” He quotes Francis Hodsoll, president of the Virginia Advanced Energy Industries Association (VAEIA), as saying, “Here in Virginia, [solar] hasn’t really been allowed to grow. Our policies don’t support it. Now we have a situation where Virginia wants to see solar being built and our utility wants to build it themselves.” Building its own solar plants, Hodnoll contends, is more lucrative than buying production from independent power producers because Dominion can generate a 10% return on equity on its own facilities, which it can’t do when it buys power from someone else.

Does Dominion suppress independent solar power production in order to maximize its own profit? Dominion is a profit-making institution, so it would surprise no one if it pursues policies designed to maximize its profitability. But is that, in fact, what it is doing? Could Dominion be shaping its actions to obtain regulatory approval from the State Corporation Commission, whose job it is to juggle the priorities of electric rates, grid reliability and green energy?

Another factor to consider: Independent producers do not require SCC or Dominion approval to build solar plants in Virginia. They can, as Amazon Web Services proposes to do, sell into the PJM wholesale energy market, of which Dominion is a part. PJM maintains a separate market for green energy, which sells for a price premium over non-green energy. If an independent power company wants to sell green kilowatts into the wholesale market, there is nothing to stop it. I confess, I do not fully understand how the wholesale markets function. But any discussion of solar policy in Virginia is incomplete without such knowledge.

More questions that need asking… During a July General Assembly hearing, Dominion announced that it was issuing a Request for Proposal for third parties to generate up to 20 megawatts of solar power to come online by 2016 or 2017. Hodsoll’s response on the VAEIA blog:

While Dominion’s announcement appears to provide the remedy sought by the industry, Dominion’s description of the process raised concerns about unreasonable deadlines and the complete lack of transparency.

Is Dominion stacking the deck in its own favor? Is this RFP a token gesture to appease greenies and other critics? Or is Dominion genuinely seeking to diversify its solar sourcing? Fair-minded journalists cannot presuppose answers either way. I would dig into this issue if I wasn’t already up to my neck in other unanswered questions. Perhaps the Times-Dispatch will go the extra mile and follow up on the questions arising from its article.

There are currently 2 comments highlighted: 116238, 116270.

75 responses to “More Questions about Virginia’s Solar Energy Policy

  1. No discussion of the “variability” of SOLAR is truly completely honest in my view if it continues to fail to address the fact that SOLAR can be co-located with combined cycle gas “hybrid” plants.

    http://www.shell.com/global/future-energy/innovation/inspiring-stories/solar-gas.html

    why do we continue the “variability” issue without at least acknowledging that hybrid gas/solar/wind plants are not being designed?

    • Another lacunae in my knowledge… I’m not sure why the co-location of solar with combined cycle gas is so special. I understand that a gas-fired plant can easily ramp up and down as the output of solar facilities varies. But such a plant cannot serve both as a base-load plant and a variably producing back-up plant, can it?

      • Gas plants CAN BE BOTH and in fact, gas plants are explicitly used to balance base load plants precisely because they CAN , for instance, deal with peak load demands.

        why do you continue to refuse to acknowledge it and continue to cite solar as having no mitigation to it’s variability?

        • I don’t “refuse” to acknowledge anything. I forthrightly acknowledge my ignorance on the subject. I’m not persuaded that the issue is as simple as you’ve portrayed it, but I’m willing to be convinced. Larry, I am flattered by the implication that I am so sagacious that I should know everything about everything. But I don’t. As I mentioned in this very post, I’m still moving up the learning curve. While working on Virginia energy policy on a part-time basis, I can move up that learning curve only so fast.

          • Jim – I’ve posted the existence of hybrid plants several times over several different posts on SOLAR.

            I’ve mentioned it multiple times..

            You’re not the only one who ignores the existence of hybrid gas/solar/wind plants.. though…

            it seems to reside in those who are largely predisposed against solar to start with – they’re not really interested in how solar/wind might actually fit into a grid.

            Why don’t you take it upon yourself to actually do an actual post on the current state of hybrid gas/solar/wind plants then you would become better educated on the subject and stop irritating me? A win-win!
            😉

          • That was my question on the Amazon solar farm. Who cares if Amazon has solar for day hours? (if they are consuming boat-loads of energy 24/7). Seems to me that just requires Dominion to build base load plants. If I am installing solar or wind, I am hoping it reduces the need for big new base load plants like nukes. Therefore I’d like to see nat gas back-up for the low output periods.

    • Larry, that link you published in your co-location comment specifically identifies only one such plant, where Florida Power & Light added a 75 MW solar facility to an existing 3,752 MW natural gas plant. Those are hardly co-equal producers.

      Sure, where there is available land at existing gas plants, solar can be added on. One problem is that it takes a LOT of land to deploy solar. I would not be surprised if the footprint of the two FPL plants was surprising close in acreage.

      Fossil units that are small enough to cycle up and down against a 75 MW solar plant would typically not be 3,752 MW baseload gas plants, but much smaller combustion turbine units, basically diesel plants.

  2. oops.. “NOW being designed”..

  3. re:

    ” But such a plant cannot serve both as a base-load plant and a variably producing back-up plant, can it?”

    Jim – the back end of a hybrid plant measures the solar input and then adds to it – what is needed to deliver a constant output.

    it works just like a hybrid car works or a residential home that uses solar combined with a natural gas backup generator.

    you use a computer to “adjust” the output of the gas plant according to how much solar is being provided.

    I cannot understand why .. this is not understood…

    do you not understand how it works or you don’t believe it or what?

    there COULD BE some issues.. in doing this.. I have yet to see them but perhaps Dominion has some… and I’d like to hear what they might be but to continue to ignore the fact that solar can be combined with natural gas and coordinated with a computer .. well… I’m not understanding why.

    • I can see how the solar plant and gas plant work hand-in-hand. I can see how the arrangement solves problems associated with distributing load over the grid. What I don’t see is how the gas plant can simultaneously do two things at once: (a) provide base load capacity and (b) provide back-up reserve capacity.

      • Jim – it’s running continuously – that’s base load. but it can ramp up quickly to provide more than base load – to meet peak demand.

        now think that such a plant can have several gas turbines – each one turning and generating but all of them feed into one output.

        Each one of them can be modulated – turned up or turned down or even have some of them turned off and then turned on later.

        Now think of a plant not only with multiple turbines but different kinds of turbines. Maybe there is a big one and several smaller ones that can be individually turned on when more power is needed and turned down when not needed

        Now think that ONE of those turbines is solar… that will vary in it’s in put – and as it varies – the other turbines are adjusted in response to that variability.

        the solar is just like another turbine.. feeding in to the aggregate power the plant is generating. the primary difference is that the solar will vary – on it’s own – whereas the other turbines are controlled to vary according to what is desired.

        because the other turbines can be modulated on demand – it means they can be modulated also in tandem with variable solar…

        on the output side – it’s one output – the sum of the turbines on the back end – and the computer coordinates and adjusts according to the sources being used and the output needed.

        Is that concept really that hard to understand?

        this is what computers are used for. This is how a hybrid car works .

        where am I getting this wrong?

  4. Bacon’s comment in above article:

    “The thesis of Ramsey’s story is that Virginia lags neighboring Maryland and North Carolina in the installation of solar energy and is missing a major economic opportunity as a result. The Old Dominion ranks 30th nationally in installed solar capacity, with only 14 megawatts installed, compared to 242 megawatts in Maryland and 1,011 megawatts in North Carolina.”

    An excellent illustration of the hole in the Richmond Times Dispatch article (and assertions Virginia Advanced Energy Industries Association), is the fact that the changes mandated in CO2 Emissions under the Obama’s Clean Power Plan require Maryland to reduce its CO2 emissions by 28%.

    In stark contrast, Virginia can enlarge its CO2 emission by PLUS 2%.

    This illustrates that overloading the grid with excessive amounts of solar and wind substantially HINDERS the ability of states to reduce C02 emissions. And it also shows that moving ahead with new gas fired plants is a highly effective strategy to reduce CO2 emissions.

    As Bacon points out, the reasons for this counter intuitive result are complex and numerous and powerful. Meanwhile of course such an ill conceived rush to change the grid, overloading it with renewable power, will be horrendously expensive, punishing consumers at all levels of society, individuals, families, workers, and businesses alike.

    Hence the harm is cumulative.

    • Reid, where did you come up with the figures about the impacts of the CPP on Maryland and Virginia? I really don’t know where Maryland comes out, but I can assure you that even under the new, less stringent targets, Virginia units will need to reduce CO2 output from current levels. The original proposal would have set the target at 810 lbs/MMBTU while the new final figure is 947 lbs. That set of units is currently emitting between 1100 and 12oo I believe.

      I don’t think the RTD article identified the importance of state tax incentives subsidizing the construction of solar or other renewables. North Carolina enacted a solar tax credit 15 years ago for instance:

      http://www.citizen-times.com/story/news/local/2015/07/01/value-solar-tax-credit-might-known-gone/29579671/

      • Rowinguy –

        For the list of states which is quite interesting see:

        nationalreview.com/article/422306/clean-power-plan-electricity-prices-job-loss?

        • Thanks Reed, I’ll have to check this out.

          • And now I have checked it out and may have an answer. The baseline year in the chart you link to, Reed, is 2012. In that year, Dominion’s coal plant in Wise County came on-line in mid year, thus only half its emissions are included in the 2012 total. Since 2012, Dominion has started building 2 very large natural gas units at Warrenton and Brunswick, 2700 MW total. The emissions from those units are not included in the 2012 baseline either, but they are subject to the regulations since they were under construction as of the date the proposed regs were issued last June.

            If the full year of Wise County and full years of the Warrenton and Brunswick plant emissions were included in the 2012 “total,” then the 2030 final emission level would be a negative, not a positive in that EPA chart.

            Basically, EPA math.

  5. The energy industry is complex and becoming more so as the various states inch their way towards a 21st century energy industry and associated regulatory climate. And new distributed energy technologies such as solar, wind and energy efficiency are competing with large central station power plants which have been the norm for the last 100 years.

    The data show that Virginia is lagging most states, especially its neighbors, in the development of new energy technologies. It is important to understand why and identify some good ways of working our way towards an energy infrastructure that promotes a vibrant state economy.

    One of the difficulties of carrying on an effective statewide discussion of Virginia’s energy future is that proponents of the status quo and of the emerging technologies stake out extreme positions in their support of their particular point of view. What actually moves us forward is usually something in between.

    The opponents of renewables often argue that solar doesn’t work at night or poorly on cloudy days, which is true. It is also true that you can generate more megawatt-hours from a 100 MW gas-fired plant which can run all-day than you can generate from a 100 MW solar facility. But that is not entirely the point. Because of the nature of the demand for energy, we don’t use much energy at night. Which is often a concern for utilities that would prefer to run their cheapest units 24-hours per day, but the demand is not always there to allow it. Fortunately, we have the pumped storage facility in Bath County which acts like a giant battery and allows units such at the two nuclear units at North Anna to run as many hours as they are capable and store cheap energy generated at night to be released when more expensive energy is needed during the day. The typical criticism against solar – that it is not base load (meaning designed to meet the minimum continuous system demand), is an unfair comparison. It is like saying a golf club is worthless because you can’t play tennis with it. The two devices are both perfectly functional when used as intended.

    In general, the minimum continuous load (base load) is about 30 -40% of the maximum system load, so the bulk of a typical utility’s generating capacity is something other than base load. The usual base load units, nuclear or coal, take a long time to come up to full power, so they don’t follow changes in load very well, which is why utilities want to keep them running 24 hours a day. Unfortunately, nuclear plants can experience long outage periods, sometimes lasting for six months or a year or more, for refueling, safety issues, or repairs.

    The biggest challenge with solar is its intermittency. When a large cloud blocks the sun, output can drop dramatically, in an instant. Demand is constantly varying as well and utilities have evolved a number of strategies to deal with those variations, but widespread use of solar requires development of a more intelligent and resilient grid. By widely distributing solar installations this variation is evened out, since the sun is usually shining somewhere. The main contribution of solar is to the intermediate and peak load. If the day is cloudy and solar output is down, then typically so is the peak, because the day won’t be as hot or cold as it would have been without the cloud cover. Europe survived a continental solar eclipse during peak hours, when 20 -25% of its power was provided by solar.

    The heated argument becomes solar vs. gas, when we really should be asking – for what purpose? This is really an issue of appropriate design and economics. What we really need in Virginia is a level playing field. There should not be obstacles to private parties or utilities to developing solar energy where appropriate.

    Other states used state tax credits and Renewable Portfolio Standards, plus the federal tax credit to promote the development of solar in their territory. Subsidies are nothing new in the energy business. Nuclear power has by far the largest national subsidy with 100% federal loan guarantees for construction. Oil and gas have had perhaps the largest aggregate taxpayer subsidy with many decades of the oil depletion allowance. Many would argue that the external costs of pollution and greenhouse gases that have not been included in the price of fossil fuels also are a form of societal subsidy. Even though the 30% federal tax credit has helped solar compete economically, in 2014, a majority of solar installations would have been economically justified without the tax credit. Nonetheless, the expiration of the credit at the end of 2016 is jamming the pipeline with projects to take advantage of the savings. Over half of the electrical generation installed in the first quarter of 2015 in the U.S. was solar.

    It would be simpler to proceed in Virginia without the complications of government mandated programs. But the field should be open to all players. Dominion should not use its influence to keep out other providers. It already has a decided advantage. Utilities have the lowest cost of capital of any industry in the U.S., although this might not last forever. Disruption of the corporate bond market because of the debt overhang of shale oil and gas drillers could upset things shortly; as could utilities that avoid transitioning into 21st century business models. After the 30% tax credit expires, a 10% solar tax credit continues for utilities. Dominion CEO Tom Farrell seems to think the higher tax credit might be reinstated after installations fall off when the current credit expires. He said in an earnings call last week, while noting that the timing of it to earn the most credit from the federal government could be key, “You could have a couple of years where there’s a lack of incentive to build renewables when compared to waiting.” It is not clear whether he knows something that others don’t, or if this is an excuse to further delay solar development.

    Solar currently makes sense in Virginia to offset retail electricity, such as for a homeowner or business with a properly oriented and unshaded roof. Projects such as the 52 MW array that Duke Energy is building in North Carolina to supply two universities and hospital in D.C. makes sense when compared to the customers’ current cost of power. The Amazon solar project also seems to be an offset of their commercial rates. Although details are sketchy, the project seems to be economical. The costs of solar generation plus wheeling costs to use transmission lines of the regional transmission operator (PJM) to get the power to its point of use are lower than their current cost of electricity.

    If Dominion were to build a utility scale solar facility their breakeven threshold would be a wholesale cost of an equivalent intermediate or peak load unit. With solar costs continuing to drop dramatically over the next 5-6 years, Dominion foresees solar as the lowest cost source of carbon free power. There is no question that solar creates many more jobs than an equivalent size gas-fired plant. The higher labor costs are offset because the fuel is free.

    We need to focus less on which is better, since they are used differently, and work on a modern rate making system that keeps Dominion healthy, but also encourages them to create a 21st century utility/regulatory system as is happening in other states. A system like this will allow market principles to work out the best choices without a utility or regulator altering good decision-making because of prejudices or old habits. Without movement in that direction, Virginia’s economy could suffer in the long run.

  6. SOLAR and wind will likely NEVER make any sense what-so-ever without melding them with a more reliable source that also has the ability to ramp up and down quickly i.e. what is known as dispatch plants that can be spun up in minutes… as opposed to the hours that baseload coal and nukes take.

    The plants already exist and are used all the time to top-off coal and nuke baseload when peak demand exceeds what they are generating.

    Wind and solar have no viable future without being co-located with a natural gas plant. There are no other options at this point and it’s really silly to talk about using solar and wind as stand -alone.

    The thing is – the ability to co-locate wind and solar with a natural gas plant – is a reality already.

    Hybrid natural gas plants with co-located wind and solar are being designed and built right now.

    they work pretty much like a hybrid car works – with a computer balancing off the electric source with a gasoline source.

    Islands right now are building hybrid diesel oil plants that harvest wind and solar while the diesel motors vary in response to the variability of wind and solar.

    this is really a non-issue .. technology already exists to deal with the variability issue.

    the bigger issue … is what happens when/if the shale gas runs low ?

    at that point – without gas plants , the wind/solar would also die.

    what I’d like to see – is what the plan is – when the shale oil is depleted.

    when does that happen and what do we do then?

    • Solar and wind exist independently all over the world. There is no requirement to co-locate them with a source of dispatchable power. That is the whole reason we have a grid, so that the demand is supplied from a variety of sources, in a variety of locations under computerized dispatch from a power control center. It does make sense to locate utility scale solar at existing or future central station generating plants. But that is mainly for the land use considerations and the joint use of access to the transmission system. When upgraded to modern standards (and not all of it is), the grid is most reliable and resilient when the generation is small and distributed. It won’t be like that right away because the economics of the existing business model favor large-scale centrally located plants. But history has shown us that this results in widespread power outages when things get out of balance.

      I am assuming that the hybrid plants you are referring to are the combination solar thermal and gas-fired combined cycle plants that you referred to in another post. These plants do have some advantages, but they require special circumstances, the most important being that they are only economical in high-intensity sunlight areas such as the southwest. They would not be cost competitive in Virginia for a long-time to come. Solar thermal plants are not experiencing the same rapid cost decline as is being experienced with solar PV.

      However, your main point is right on the money and was the point that I was trying to make. A utility’s system is a combination of generating technologies designed to provide base load, intermediate load and peak load power. Various sources of energy can contribute to the grid (including renewables when economic) and the system balances the generation to the load. The challenge is that renewables can create more rapid variability in the grid, which can cause problems both to the utility and to customers. Solutions for this already exist and better, cheaper ones are rapidly coming to market.

      But it requires a proactive response on the part of a utility and a regulatory body which properly compensates them for these services. This is new territory for a utility to be paid for valuable energy services as opposed to just selling kWh’s. It is exactly a shift to this type of business model that I am promoting. Otherwise, the system will become less reliable, customers will pay more than necessary for poorer service and utilities will be less financially healthy. As a result the state’s economic climate will decline.

      It is especially important for the reason you brought up. The entire U.S. energy industry is charging forward on the assumption that we have a long-term supply of affordable natural gas. Several independent analyses have shown that this is not the case. (I can provide the references if you are interested). The studies conclude that the production of affordable natural gas (about $4 mcf) will peak about 2018 – 2020 and will decline fairly rapidly thereafter. This does not mean we will run out of gas. But if we continue a policy of burning a lot of it in power plants and exporting it overseas (Dominion Cove Point LNG export terminal), we will only obtain more gas if we spend a lot more to get it.

      This has huge repercussions for our economy. The CEO of Dow Chemical and the head of an industry group representing U.S. manufacturers with over $1 trillion in revenues have opposed this policy. They are on record that this headlong rush to using up our affordable natural gas will cost Virginia thousands of its 231,000 manufacturing jobs and many more throughout the U.S.

      I have much more regarding this issue, but perhaps this is not the appropriate post to bring this up.

      One thing to keep in mind – natural gas provides a reduction in CO2 only when compared to coal. All of these new natural gas plants will be a huge new source of CO2 emissions. Especially since the new plants will run 24 hours per day and the dirty coal plants that they replaced often only ran a few hours per day. The only way to actually reduce CO2 emissions is through demand reduction, energy efficiency or renewable generation. The new CPP numbers are the result of intense lobbying to reduce the economic dislocation of continuing to do it the “old way”. There are a variety of options using existing methods and technology that would produce a far better result at a lower price and with greater reliability.

      • re: ” One thing to keep in mind – natural gas provides a reduction in CO2 only when compared to coal. All of these new natural gas plants will be a huge new source of CO2 emissions. Especially since the new plants will run 24 hours per day and the dirty coal plants that they replaced often only ran a few hours per day.”

        base plants usually run 24/7… they take hours to bring up or down, right?

        ” The only way to actually reduce CO2 emissions is through demand reduction, energy efficiency or renewable generation.”

        if you replaced all coal plants with all gas plants – would you not get significant reductions?

        • One thing to keep in mind is that for years Dominion had less generating capacity in Virginia than it needed to fulfill VA demand, so the neighboring states released the CO2 to provide Virginia with electricity. By building the new gas-fired generating plants we will actually be increasing the CO2 released within the state. The new Clean Power Plan provides the choice whether to use a limit of tons per CO2 per MWh or total tons released. The state has several years to develop the plan and make the choice which standard to use.

          Natural gas-fired plants release about 50% of the CO2 produced by a comparable size coal plant. If they both ran 24 hours a day, replacing the coal plant with a natural gas plant would cut the CO2 released by 50%. But the coal plants that are retiring first are old and inefficient. These more expensive plants only operate a few hours a day to provide intermediate or peak load power. So if the new gas plant ran 24 hours/day and the same size coal plant ran 12 hours/day, they would release the same amount of CO2. If the coal plant operated less than 12 hours per day, the new natural gas fired plant would release more total CO2.

          With this scenario, it would make sense for the state to use the CO2/MWh standard where the natural gas plant would always produce less CO2.

          Energy executives have held out the possibility that at some point in the future something like a carbon tax might be imposed. If that occurred, natural gas plants could also incur additional expense to lower emissions or pay a fee for their CO2 emissions. That’s why I mentioned that the only way to avoid dealing with CO2 issues in the future would be to save the energy rather than generate it or use renewable sources.

      • Dow Chemical is lobbying that they want to throttle use of natural gas to ensure cheap supplies for themselves. I do not personally buy it. As a lonely natural gas advocate for many years, I would observe we can export or import natural gas. The reason the US built so many coal plants was the incorrect business assumption that nat gas prices would skyrocket. I can almost guarantee, there is so much resistance to using nat gas, it will remain low cost. Also I do not want to repeat the past error of building out power plants with the wrong energy source, based on totally false long term predictions of fuel cost. Here and today cost is important.

        • “I do not want to repeat the past error of building out power plants with the wrong energy source, based on totally false long term predictions of fuel cost.”

          Long-term fuel costs forecasts are no more than educated guesses, and people have gotten those forecasts wrong as often as they’ve gotten them right. To me, that sounds like an argument in favor of building an electric system that uses diverse fuel sources, including renewables.

          • Reed Fawell 3rd

            I agree Jim.

            Diversity of power sources throughout the grid is absolutely the essential key here on many fronts and for many reasons. It is the classic example of a case where one must be risk adverse in the extreme. Failure is not an acceptable option.

            Reliable and highly affordable Electric power is an essential and irreplaceable key to our nations Economic health and growth, indeed the health of our modern civilization, and ability to defend it.

        • I think there is a serious question as to how long we expect the shale gas to last.

          Have you seen any estimates?

          this is why I am opposed to exporting it.

          when do we run out – and what do we do for electricity once we do run out? do we go back to coal or build more nukes, ?

          If coal and nukes can only be base load – how do we deal with peak demand if gas is scarce and expensive?

        • Dow and other U.S. manufacturers are trying to protect their interests. They are also bringing jobs back to the U.S. because of the cheap gas and natural gas liquids that are being produced by the drillers that have to continue to drill to pay off their loans even though some wells are not profitable.

          In the 1990’s we were running out of (conventional) gas and it is still declining. Utilities would only use gas for peaking units because of gas’s flexibility and lower pollution. In the early 2000’s we were importing natural gas. The lack of supply and increased demand (the economy was booming with the easy credit) natural gas prices spiked to over $13 mcf. High prices made fracking affordable and we began to develop our shale gas resources. It is a complicated story with misrepresented data, media hype and Wall Street shenanigans, but the shale gas wells depleted in a few years rather than the several decades of decline we experienced with conventional wells. Gas is especially cheap now because drillers cannot afford to cut back on production to balance with demand and strengthen the price.

          It is a bit of a mystery to me why when we have at last found a way to extend our gas supply, we are so eager to send it overseas.

          With national policy determining that our energy system will move towards burning natural gas to produce electricity and with 29 LNG export terminals under development or consideration, the demand for natural gas will soar. The shale geology will only produce so much at a low price, then the price for extraction increases dramatically.

          Dominion will have $10 – $13 billion invested in natural gas projects (power plants, pipeline, LNG facility) over the next five years. Just as these projects begin operation, the supply of affordable gas is expected to decline. Although, fuel cost increases will automatically flow through to customers, providing Dominion revenue to cover increased costs, our economy and households will suffer as a result.

          If Virginia’s energy system has not begun to evolve to a pay for services model, with a place for demand reduction, energy efficiency and renewables, we all could be in for a rough ride. Imagine a scenario where Dominion is shackled with this massive debt, with 20+ years needed to pay it off. As energy prices rise, customers will seek out alternatives. The cheapest method will be to conserve energy. If Dominion has not been given a way to get paid to reduce demand and earn a return on it, customers will do it themselves or turn to energy service companies to do it for them. This leaves Dominion with fewer kWh’s sold with which to pay off their debt. This either requires a rate increase or lower payout to shareholders, or both. A rate increase drives more customers away and a reduced dividend drives investors away. It is the beginning of a long downward spiral. Especially when businesses move to the states which were more forward thinking and created a more diverse and affordable energy system.

          • Bringing back manufacturing jobs, preferably to Va., is tops on my list by the way. If I thought giving Dow control of natural gas policy would bring back jobs, I’d let them have their way. I am starting to worry that the manufacturing “renaissance” due to cheap natural gas is weaker than hoped. I know it will take time.

  7. if you feed raw solar into a grid without modulating it what happens as more and more solar is added?

    would’t that inherently make the grid unstable and harder and harder to manage ?

    isn’t that the concern that Dominion has?

    If there are thousands of SOLAR inputs to the grid – how would Dominion be able to measure them and then adjust the other generators with any precision?

    The computerized dispatch that you speak of is exercising control of power plants it can control.. it can respond to changes by coordinating the plants it can control. How can they control thousands of independent and disparate solar inputs?

  8. re: ” I am assuming that the hybrid plants you are referring to are the combination solar thermal and gas-fired combined cycle plants that you referred to in another post. These plants do have some advantages, but they require special circumstances, the most important being that they are only economical in high-intensity sunlight areas such as the southwest. They would not be cost competitive in Virginia for a long-time to come. Solar thermal plants are not experiencing the same rapid cost decline as is being experienced with solar PV.”

    I’m looking at SOLAR in Virginia . which would be better – thousands of independent and disparate solar sources feeding into the grid – in an uncontrolled manner – or co-located SOLAR at hybrid plants that “mix” solar inputs with gas inputs to modulate the solar… by adding or reducing as much gas as it take to balance the variability of the solar.

    what’s better – thousands of uncontrolled solar sources or co-located solar that is modulated?

    how do you “adjust” the grid to respond to thousands of solar sources ?

  9. Going back and re- reading.. I probably need to further clarify .. my thinking…

    The current argument against wind and solar is that their inputs are ‘variable” therefor not only not dependable but further, that you can never have significant amounts of it because their variability would increase in scope and scale and could destabilize the grid -unless and until we have a “Smart” grid which presumably means one which has some way to adjust other inputs to the grid to compensate for the uncontrolled and variable inputs from wind/solar.

    that’s my thinking.. where have I messed up in my reasoning?

    How would any utility – like Dominion , be able to manage wider/larger scope/scale installations of distributed wind and solar – to harvest the power but also to not have it destabilize the gird when wind/solar are adding significant voltage to the grid?

    Seems like they’d have two problems.

    First when wind/solar were productive – larger installations, but also numerous disparate smaller installations would be pumping significant additional aggregate voltage into the grid , how would Dominion be able to detect where such increased voltages were occurring across the grid and then how would they be able to manage multiple non-solar/wind generators – coal/nuke/natural gas turbines to lower their inputs to compensate for the increased wind/solar voltage?

    then, second, when wind/solar did die … would Dominion actually have enough stand-by generation to make up the loss of wind/solar across a region ?

    baseload coal/nukes could not respond quick enough to match needed changes… it would take gas plants to do that.

    so it would seem – the more wind/solar that was installed – the bigger the impacts to the gird – and the bigger need to have compensating power generation capable of quickly ramping up and down in response to the varying inputs from wind and solar.

    In other words – distributed , controllable gas plants are how we’d actually be able to add/subtract compensating voltage in response to the variability of wind and solar.

    that’s my reasoning.. where am I going wrong?

  10. I don’t think you’re too far wrong, Larry. Wind and solar can be and are being added in big quantities in places like California and in Texas, which has its own independent Texas-only grid. (Cal is part of the western interconnection.)

    Both those states have had difficult grid management issues, and ramping gas plants (which each state has a lot of) is a large part of the control solution. California also has demand side resources it can bring into bear to reduce load when the wind suddenly dies or clouds diminish solar. Another thing these states have in common is vast size, so weather issues rarely hit the widely dispersed renewable resources all at once, though it has happened in Texas:

    http://www.reuters.com/article/2008/02/28/us-utilities-ercot-wind-idUSN2749522920080228

    • and the thing about Texas and the article you supplied is that 10% of Texas electricity comes from wind.

      what would have happened had 20% of Texas electricity came from wind?

      gas turbine plants are how you backstop the variability – the “unreliability” of wind/solar.

      you would use it very similarly to how a home would use a natural gas backup generator that kicks in when the grid power drops.

      that’s why natural gas as a fuel is so valuable – far more valuable than the current commodity price. What happens if natural gas is depleted and quadruples or worse in price? It’s use as a backstop to respond to peak demand as well as make-up shortfalls of solar/wind would become much more problematic and likely result in running more 24/7 baseload even if it went to waste – as long as that waste did not cost more than using more natural gas.

      we’re basically in a race to see what technology will replace natural gas plants… with the fall back being more coal/nuke baseload.

      my opinion again, as usual.

      interested in hearing others.

      • I’ll try and describe how the grid and dispatch works, especially with renewables. I will oversimplify, so it won’t be exactly technically correct.

        Think of the utility system as a big livestock watering tank. The tank has holes in it representing electrical demand. Imagine there are many small holes in the lower one-third of the tank. These are the loads that exist throughout the day. This is the base load requirement. A utility needs enough big hoses that flow all day long to make sure the tank is at least 1/3 full at all times. They also need to have enough capacity in reserve to produce energy at least equal to the largest hose in case it goes offline. In fact, it is much more challenging to replace a 1000 MW nuclear plant that suddenly scrams and drops instantly offline than it is to deal with 10-100 MW of solar that is variable.

        As people wake up and businesses open, new holes appear in the tank. The next cheapest sources of power (the intermediate load plants) come online to fill the tank to meet these loads. As you know, solar and wind are not dispatchable. There is no way to turn them on and off when you need them. Also, because fuel is free they have a zero marginal cost so you want to use that electricity whenever it is available.

        Think of all of the solar facilities as a shower head or watering can with lots of small streams that can vary from moment to moment. There is no need (and no practical way) to control these inputs. Because they are small and distributed, the variations in each stream often balance each other (studies confirm this). Think of the shower head filling a 10 gallon bucket every minute. During that minute some flows decrease while others increase, but from minute to minute the total contribution remains steady at about 10 gallons per minute. If one region becomes cloudy, perhaps more flows decrease than increase and the bucket is now short by 1 quart per minute. Somewhere in the system a unit must increase its output (or come online) that provides an extra quart per minute. It does not have to be co-located with the other sources. It only has to make up the amount to keep the water at the right level to match the load.

        In utility systems, it is much easier to follow load with small, widely distributed generation (and an appropriate share of dispatchable units). This provides a more reliable, resilient and likely cheaper system. But it is just within the last few years that small, distributed sources of power have become cost competitive, so they must fit into a system that was designed around big chunks of capacity. Solar is also cheaper per kWh in larger utility scale installations than on numerous small rooftops. But the utility does not have to finance the rooftop units (although it could – for a profit). It would also make sense to put gas-fired micro-turbines in industrial and commercial facilities that would use 85 – 90% of the energy in the gas rather than the 50% efficiency of the new combined cycle plants Dominion is building. They would produce electricity, heating and cooling and would be widely distributed (yet still computer dispatched) to match the local variations in renewables.

        Another way to match variances in renewables is for the utility to send a signal to households that turns off their heat pump, air conditioner, or water heater for 15 minutes or so at a time to respond to changes in load. This could provide a cheaper, faster and more local response to load variations than bringing on a new generating unit. Customers would also benefit with lower rates.

        As with any system, diversity increases stability. Natural gas is a very valuable, flexible fuel and we should be wise in how we use it. Sending it overseas for short-term profit seems a very unwise strategy.

        • @TOMH – thank you! that was illuminating!

          I sort of got a mixed explanation on the distributed solar vs distributed gas turbines.

          let me explain.

          it SOUNDS like micro-distributed gas would be more fuel efficient than more remote gas plants sending electricity longer distances.. I assume line loss?

          on the other hand – it appears that you are treating the grid as a giant receptacle no matter where solar is located geographically nor in what density. that it all “offsets”…

          I’m skeptical that solar big and small, far and near – “offsets”..

          For instance – say you have a whole lot of solar on the eastern in big installations but hundreds of smaller ones in southwest Va.

          or say you have far more on the Eastern shore than in other places on the grid.

          does it really offset?

          My thought about co-location was for larger solar /wind sites.. the thinking being that a large solar site in a less dense rural area might have adverse impacts if it varied by a large amount.

          I guess I saw the grid not so much as a giant monolithic vessel but rather a bunch of vessels of varying size across the geography such that some of them could be much more impacted by a higher percentage of wind/solar than other locations.

          so.. we’re making progress and much appreciative of the continuing dialogue from others with knowledge and experience.

          • You are right – if solar is concentrated in one area and susceptible to the same weather conditions, the variations between the individual units would not offset one another in the same way a more widely dispersed set of solar units would.

            And you are also right about the grid not being one giant monolithic vessel. It is in a way, but I was oversimplifying to make a point. There are definitely regional bottlenecks and differences in smaller segments of the grid. Utility planners have to take these into account. In the west, some neighborhoods have a majority of homes with rooftop solar units. The variations in current flow can be a difficult issue for the local distribution system when all of those solar units rise and fall. Larger units are usually sited near access to existing transmission lines. Lack of transmission has caused a delay in development of more wind generation in the Great Plains because there was no easy way to get the wind power to the point of use.

          • Reed Fawell 3rd

            So pick up on Tom’s response to Larry’s observation and question –

            The concentration of solar can be both a strength and weakness. It might make swings in need and lose more dramatic, or reduce the drama depending on concentration of solar on mix of other options nearby.

            This depends on how solar’s concentration relates by its own use and location with the use, size, and location of various other energy generators. These latter include base nuke, coal, and/or gas generators. Most particularly, efficiently of various solar scenarios relates to location, size, use, and efficiently of dispatch-able gas fired plants which done right creates a yin-yang affect striving for best combinations under a variety of complex variables.

            In addition, there is the potentially huge impact off in the future of highly efficient storage technology. Indeed if this future technology becomes powerful enough it enough might cut this Gordian knot of complexity and provide elegant solutions on many different fronts.

            For example it would reduce the need for heavy load dispatch-able power as this storage preserves far more energy that otherwise would be lost.

            Hence such stored energy can “fill in the hole” created by otherwise variable solar and so reduce solar’s need for gas, coal and nuclear “infill power,” and, in the Silver Bullet Futuristic scenario, where homeowners morph into wholesale energy producers, it might in some locations reduce the need Gas, nuke, or coal altogether.

  11. If coal and nukes are baseload and inflexible in responding to dynamic changes in demand – like a hot day or a cold day… then how does wind/solar work in that environment if there are no gas plants or there are gas plants but gas has quadrupled in price because the reserves are depleted?

    I don’t see anything to replace gas in it’s role of responding to demand changes.

    I don’t see how wind/solar can work on the same grid with only base load plants.

    let’s also be clear about what happens to a grid which is top-heavy on base load .

    A base load plant can’t ramp down fast – that’s true. but it doesn’t have to feed electricity into the grid either.

    If a baseload plant is running and demand falls below what the baseload in generating.. then they just disconnect the turbines from the grid. The fuel continues burning but does not power the turbines.

    In other words, the coal continues to burn and put out emissions and the Nukes continue to use the fuel and generate heat – but neither will drive turbines that feed electricity into the grid.

    In fact if gas plants go away or become too expensive to run -that’s how you would handle it. You base load would run at whatever level was need to completely meet peak demand and once demand dropped – those plants would just stop driving turbines but continue to burn fuel until the cycle returned to peak demand. The baseload plants would run 24/7 at the levels needed to meet peak demand if you did not want rolling blackouts.

  12. Larry and TomH –

    Thank you both for keeping this discussion going. Your comments are moving things forward and deeper.

    I do not possess the technical knowledge you both are showing but I am gathering some general impressions from the discussion. That list goes longer the more one learns and contemplates emerging issues.

    For only a few:

    1/ I suspect that Tom’s description of solar’s advantages by reason of diversity assume a solar presence on the grid that is far larger than anything we have to today. If so this raises the obvious and I suspect highly complex and challenging issue of how do we get from where we are with current technology and infrastructure to that point in the future where renewable generation can play such a large roll without taking great risks of all sorts both as its cost and reliability, and the dis-assembly, retirement, or forgoing of other opportunities for technological advances in coal, nuclear, and gas, which advances already to date have been very very substantial, not to mention highly unexpected solutions that come out of nowhere to change everything, including our best laid plans, and if the past be a reliable guide to our future such surprises are the most likely of all things to happen.

    2/ As to issues of renewable reliability, the key to their future would appear at the moment to hinge greatly on advances in Battery storage that captures and keeps alive vast amounts of stored energy for long periods of time at reasonable cost. Solve this problem and it’s likely that renewable energy, particularly solar, is on its way to a great future by reason of its many advantages over most everything else going today. This includes its safety and reliability, its cost of production and infrastructure cost as well as other factors such as the dispersal of risks (including defense against attack on grid), as well as highly efficient and flexible distribution matrix with benefits, including costs, four ways to Sunday.

    But when and how can we get there with all the complications, unknowns and unacceptable risk factors at play? How can we predict when, how, and at what cost this will happen, and what risks are acceptable to get there?

    3. In short there seem to be many Elephants in the Room.

    But perhaps the Elephant that looms larger every year is the ever increasing vulnerability of our energy grid and its sources from Attack. This is frightening. Destroy or take down America’s electric power for 30 days and the horrible consequences are unimaginable.

    • Reed Fawell 3rd
      1. Yes, my scenario assumed a larger presence of solar than we currently have in Virginia. And your point about uncertainty is one that I would like to second. We are in a time of great transition in our national energy systems. Technology, new business models, greenhouse gas issues, long-term availability of affordable natural gas, the cost and implications of renewable source of power, and many other issues are changing rapidly over the next few years. That is why I am concerned about the rush to take on huge debts for projects that have 50+ year lifetimes, when the economics that justify them are susceptible to great change in the next few years. We should be spending this time, as other states are, to thoroughly discuss our options, necessary business models and supporting regulatory changes that are required to create an energy infrastructure that enables a vibrant state economy. We are not having that far reaching conversation, listening to many viewpoints. The path is being dictated by a few, based on the habits of the past, not a vision of the future. The consequences of getting it wrong are huge. Not just for the utilities and its customers, but for the entire state economy. Energy markets, currency issues, interest rates, stock market declines and host of other issues are in turmoil throughout the world. We must develop an energy system that is adaptable to a variety of conditions. We should not create one that is successful only when the future is like the past.

      2. Certainly cost-effective storage solutions can help a great deal. Affordable solutions are coming to market such as the Tesla Powerwall for residential and commercial use. Larger utility scale units are being installed around the country not only to provide storage but other useful grid services as well. The cost curve will just keep getting better as these technologies develop.

      Our national grid is definitely vulnerable. A large segment of the western grid went down when a substation was attacked with rifles. A more coordinated attack could cause greater damage. As we move to a more intelligent grid and “big data” programs we also become more exposed to cyber attacks.

      Reliability and security can be improved by moving to more distributed generation and micro-grids that can be isolated when other portions go down.

      • In terms of debt (I presume you’re talking about Dominion and renewable energy) –

        there are many customers who would invest their own money in renewables if they could sell the excess back to Dominion.

        In other words, what percent of renewables would be added to the grid by private investment if they could help pay for it by selling some of it?

        So that takes the debt burden off of Dominion and puts it on others but if Dominion won’t buy the excess power then investment is actually be suppressed.

        So that takes the focus back to Dominion.

        Do they have a legitimate reason to not buy privately generated power?

        Is the problem that Dominion wants to preserve their monopoly status for it’s investors or are there technical issues with the grid in accommodating wind/solar?

        so what’s the answer to this question?

        And how much of the answer is solely the discretion of Dominion?

        My view is that if private investors could sell excess electricity from renewables at even a wholesale price – that the percent required by the CPP would easily be exceeded.

        If Dominion says they have a technical problem accepting increased output from private renewables – then they need to specify what the problems are – and a plan needs to be put into place to modernize the grid so that it can accept larger inputs of renewables.

        We need to keep in mind that the granting of monopoly status to Dominion (or ANY business entity) is only justified if it is a net benefit to citizens – and not a contest between what is a benefit to ratepayers verses that being at the “expense” of the monopoly.

        And again – in this changing and evolving environment that ought to be working to the benefit of ratepayers as well as other private entities (like Amazon) – the SCC and Dominion seem to be more concerned with the interests of Dominion that the folks who are in theory supposed to benefit from the granting of a monopoly.

        • “there are many customers who would invest their own money in renewables if they could sell the excess back to Dominion.”

          Dominion does allow residential and commercial customers to install their own solar panels and connect to the Dominion system using a process known as “net metering”. The customer (typically using a professional solar energy company) installs the system on their roof or sometimes on the ground. They connect it to their household electrical system (with a cutoff switch to protect line crews if a line is down). If their solar system generates more electricity than is needed in their household it flows out to the utility’s distribution grid. Their home electrical meter records the outflow. At the end of the month, Dominion tallies all of the electricity the homeowner’s solar panels have provided to the grid. They give a credit for this amount (valued at a high wholesale price) against the electricity that was provided to the house (priced at the retail rate). The net (hence the name “net” metering) is what is owed by the homeowner for that month’s bill. The savings over what they would have paid without the solar contribution is used to pay the loan on the solar panel.

          Depending on many factors, the savings is enough to completely pay off the price of the solar system within 8 – 15 years. For the remaining life of the system (which is usually guaranteed for 20 -25 years) the electricity is free. Maintenance costs might be extra, but many contracts are including lifetime maintenance in the initial price of the system. Until the end of 2016, they also receive a federal tax credit equal to 30% of the cost of their solar system. Some states also provide state tax credits.

          Utilities that are promoting solar power within their territory work cooperatively with homeowners and professional installers. Some will charge the cost of the loan payment on the utility bill and pay the installer directly, which lowers the cost of financing. They are also very responsive in connecting the system to the grid soon after it is completed. Dominion is not that accomodating.

          Dominion also has another pilot project for those who wish to sell all of the power coming from their solar panels back to Dominion. For five years Dominion will pay $0.15 per kWh for all power coming from the solar system. Apparently this program is nearly completely subscribed (only a small amount was authorized for the pilot). This surprised me because a five year guaranteed payout is unusually short. In the west, these programs have been going on for years. The Independent Power Producers (IPP’s) usually require a fixed power purchase agreement (PPA) for at least as long as the financing period for the project and often for the guaranteed mechanical life of the system (20 -25 years).

          In any case, Dominion does pay back owners for their excess solar power that goes into the utility system. However, they do not allow for third-party ownership of the system, which has been the primary method of developing solar residential installations in the west.

          One approach favors and promotes the development of distributed solar in a region; the other grudgingly allows it, but doesn’t make it easy. Only a greater push by lawmakers or the SCC would change the approach in Virginia.

      • Tom, if you are referring to the attack on the Metcalfe substation in southern California, no part of the grid went down from that attack.

        http://www.wsj.com/articles/SB10001424052702304851104579359141941621778

        http://www.usatoday.com/story/news/2015/03/24/power-grid-physical-and-cyber-attacks-concern-security-experts/24892471/

  13. @Reed re: ” assume a solar presence on the grid that is far larger than anything we have to today.”

    yes – in two ways:

    1. a much larger percentage

    2. not necessarily evenly distributed geographically

    and that leads to the next issue – reliability.

    what percentage of SOLAR (or wind) leads to risks when solar/wind drops out?

    how much can the grid accommodate and still remain stable and manageable?

    TomH even alludes to this by positing that smaller and more distributed gas plants .. provide a a framework to buffer varying inputs from wind/solar.

    Tom also talks about the utility having the power to reach out and remotely reduce demand by turning off customers equipment – not too sure how that would go over.. but.. there are options to do that in different ways perhaps more palatable …

    but beyond that – think of the utility playing a more direct role in rooftop solar – to recommend/incentivize the additional installation of a gas backup generator that would not only function in power outages but allow the utility to turn on remotely in peak demand scenarios to not only reduce the demand of that house but to actually put additional power back into the grid.

    and I’m further curious about how Dominion might go about doing things like this verses the electric cooperatives… do they have the freedom and latitude to pursue their own strategies separate and apart from Dominion.

    • Larry –

      This reminds be of the times of great change in Naval Warfare by reason of technology. The transitions typically from one game changing technology to another are very often very awkward and horribly costly. The losers of many a battle have been obliterated by reason of their fighting the last war.

      Indeed, stupidity, lethargy, and special interests can oppose the crying need of obvious change to a surprising degree. The Union won the Civil War in substantial part because a very small group of visionary naval officers successfully forced the wartime Union Navy to abruptly convert its war fighting ships from Wood and Sail to Steam and Steel. This upset 2000 years of naval tradition. Remarkably, however, by 1870 the US Navy leaders then power had declared steam to be dead and had gone back to sail.

      It took decades and the Spanish American War to turn this sail over steam absurdity in the US Navy around. Then it took another decade to usher in the age of the super big gunned battleship, the Dreadnaught. This arrived with a bang in 1906 when Japan destroyed the Russian Fleet off Manchuria.

      This launched the US Navy on its over reliance on another dying technology, despite the obvious value and rise of the submarine, torpedo, and airplane as game changing war fighting machines in WW I. The American and British Navy saw what it wanted to see in WW1. Thus convinced itself that WW 1’s battle of Jutland should cement the Dreadnaughts’ supreme central roll as the offensive super-weapon around which all blue water Naval Fleets were build to support and enable so as to win naval wars.

      This continued with a vengeance despite the growing proof of Naval seaborne air-power’s inherent advantages over big gunned battleships in head to head blue water battle as well as the naval airplane’s advantage in countering the proven and growing threat of submarines against critical seaborne commerce and heavy gunship naval engagement.

      At the end of WW I, the British, who lead the world in naval aviation, turned its naval program over to its extremely competent land based air force. As a result, Japan cleaned the clock of the British Fleet from Malaya through the Bay of Bengal in the opening days of WW II. The Brits never recovered. Japan’s navy also cleaned America’s clock with naval air-power until the Miracle at Midway. Indeed it’s said the Japan did America a huge favor by sinking all its battleships at anchor at Pearl Harbor, forcing the American Navy to learn how to fight its few aircraft carriers.

      But the Miracle at Midway and the incredibly rapid emergence of the US naval seaborne air power striking force that won the Naval war in the Pacific was not pure miracle. It happened because a few strong and courageous naval officers and a very few strong foresighted members of the US Congress beat back the US Army’s effort to take control of naval air power (so as to destroy it like the British had done), and instead created a quasi-independent and funded Naval air and aircraft carrier component within the Navy keep naval air-power alive by Congressional funding and many a slight of hand.

      These slights of hand included things like promising that the US carriers Lexington and Yorktown would be never be used as offensive weapons, only to protect battleships, and to serve as scout platforms. Only this sort of highly skilled dissembling, political savvy, and courageous leadership by a small determined cadre of Naval officers build within the Navy the potential to ramp up the naval air strike power that won the war with the help of the US Marines, despite the disaster left them at Pearl Harbor by the Navy’s Gun Club, leaving the US with three Pacific carriers versus Japan’s ten to twelve.

      The same remarkable story of fighting against all odds can be told about the Marine Corps’s development of Amphibious Landing capability, which went hand and hand, like yin and yang, to build the cumulative land sea, and air strike force that working in tandem won the Pacific Ocean war. One was not possible without the other. Think here perhaps Solar and Gas and Nuclear, working in tandem to get safely past great change into and beyond the next war.

      Hence my though would be that in times when there is the potential for great change, where there is highly informed sense by a few visionaries of looming possibility of game changing new technologies in the air, then, with something as critically essential as a utility like electricity – that short to mid term conservationism is the safest course so long as it works in tandem with at the same time with building strategies and core competencies to best manage this great possibility of change, thus hedging against great losses while reserving as best one can positions that best allow one take full advantage of the change and throttle up on it when the right time arrives. Hence build interim bridges as best as one can into an unknown future.

      • Reed,

        This is a wonderful analogy to the evolution of the utility industry. Thank you for the history lesson and the insights.

        Because utility regulation is done on a state by state basis, we have a variety of approaches underway. Some are solidly in the let’s build more battleships camp, many are dabbling with modest efforts in various directions, while others are going full speed toward building multi-disciplinary rapid response teams.

        Just as in your example, if you have chosen the wrong strategy, it takes a massive and expensive effort to get back on the right track. And you hope you don’t lose the war before you get it right. I think many see a time of greater uncertainty coming. It is time to review our strategy and put the proper tools in our arsenal.

  14. Somewhere in the middle of all of the CPP kerfuffle – I would have expected something from Dominion and the SCC with respect to what would need to be done to the GRID to better accommodate wind/solar since Dominion has made it clear they have problems with accommodating it currently.

    I would have liked to know what needs to be done, how long it would take and how much it would cost and how the cost would be shared between investors and rate payers.

    We don’t even know what Dominions strategy with regard to retiring coal plants and bringing on line new gas plants.

    we’re told that Hampton will lose a coal plant and that we need to bring a powerline over from Surry – as opposed to replacing that coal plant with a gas plant like we are seeing in Southside and other places in Va.

    The Atlantic Coast Pipeline actually shows a spur going to Hampton so why not a Gas plant in Hampton?

    all we know is what Dominion wants to do . We know very little about why they want to do some things and not others.

    and we certainly don’t know what needs to be done to modernize the grid and it’s costs.

  15. re: ” Lack of transmission has caused a delay in development of more wind generation in the Great Plains because there was no easy way to get the wind power to the point of use.”

    can you explain this a little further?

    on a simple-minded basis – one would presume that you would hook up the turbines to a local transmission line and would be good to go.

    why is that not the case?

    thanks~

    • Larry, in many instances, can’t “hook up the turbines to a local transmission line and … be good to go” because there just isn’t any local transmission line. The best wind arises in some of the most sparsely settled areas of the country and there simply wasn’t any reason to build transmission out into it. You may have distribution (i.e., very low voltage) circuits that are dozens of miles long to serve one, two or just a handful of customers.

      Tying hundreds of MW of wind power to a distribution circuit won’t work.
      The circuit won’t carry that much power.

      So, you can have a “chicken or egg” situation–does a developer start erecting wind turbines hoping someone stretches a transmission line out to them, or does a transmission provider build a “line to nowhere” hoping that wind developers come along to hook up new facilities to the end of this new line?

      Plus, if you have to get regulatory approval to build a line, will the regulator let you take customer money and build a line not yet capable of carrying any power (because no generator out there) “on spec?” Would we let a transmission developer condemn property for its right of way in such a case?

      Not for nothing is the US electric grid called the world’s most complex machine.

    • Wind power is a special case. The power produced is the cube of the velocity. That means if the wind speed doubles you get eight times more energy (2 x 2 x 2). So you must put the turbines where the wind is and not necessarily where the transmission already exists. The prime wind areas in the U.S. are in the central plains and along our coasts (although not so much in the southeast).

      So if the wind is blowing most steadily out in the middle of nowhere, you typically don’t have an existing transmission line nearby. Long transmission lines are expensive to build and often contentious to site (similar to gas pipelines). So development of wind farms often must go hand in hand with the development of adequate transmission capacity.

  16. I understand the ” there is no transmission line” issue but most wind turbine companies are willing to built the cable to connect.

    It’s the ” the existing lines can’t handle the voltage” issue that I’ve been alluding to with regard to siting solar and wind in general and in large and dense numbers.

    Dominion and others have repeatedly made the argument that they cannot “handle” wind and solar and trying to do so will risk the reliabilit y of the grid.

    So – two questions

    1. – is the sentence above with respect to Dominion and reliability – true? Have I understood Dominion’s objections?

    2. – What exactly IS the problem – and what needs to be done to the grid to make it able to accept wind/solar without the cited problems?

    in other words – what is the problem – specifically and what is the solution – specifically?

    where is that plan that allows the grid to accommodate wind/solar?

    are there “sweet spots” where the existing grid is more able to handle larger amounts of wind/solar ? For instance at substations, existing power plants, major transmission lines, etc? WHERE is THAT Map?

    sorry about the delayed answers. Something was done to BR recently and I no longer get email notifications of new comments.. and I just cannot be checking BR all the time for new comments.

    I always check the “Notify me of follow-up emails” but it’s no go.

  17. There is no one specific answer that fits all circumstances. Solar and wind installations of various sizes have been installed all over the world and appropriate solutions have been developed to integrate them into the grid. Some are easy and inexpensive; others involve more effort and investment. It is not easy and inexpensive to add a new gas-fired power plant to the grid either, but they are so expensive that the costs of added transmission, high-voltage substations, etc. are considered as part of the overall cost of the facility.

    Adding significant amounts of renewable energy to the system often requires some adjustments to the grid. But the grid is in dire need of upgrades anyway. It is an aging system with limited mechanical and electro-mechanical controls. They are coarse tools, many of which respond slowly and must be reset manually. In an age of micro-electronics and computers, it is time that this system is modernized anyway.

    The real advantage of distributed energy resources (DER’s), which includes renewables, is that they can increase stability and reliability of the grid when used appropriately. But to use them to greatest advantage, the grid needs to be better monitored, in small slices of time, and have controls which can be managed remotely and at high speeds. But the utility has to want to do this and the regulators have to have a good way of compensating them for these investments.

    Techniques such as volt/VAR optimization and conservation voltage reduction, make the grid more reliable, reduce customers’ bills, and often allow the utilities to avoid more expensive upgrades, such as building larger substations, etc.

    Because these grid improvements can reduce revenues and require an investment, some utilities oppose them. Duke Energy, in North Carolina, is one of the national leaders in developing these new technologies and encouraging the setting of national standards for communication between devices – so this is not something that only has value in the west. This would be good for Virginia too.

    Dominion appears to not want to deal with any of this. Rather than move forward in an aggressive way with these new techniques (they are doing some things) they are dragging their feet with more rapid development of solar, so that they don’t have to adapt to it.

    Possibly they are very sensitive to a further loss of revenues. For a number of years, the total revenues of Dominion Resources (the holding company for the utility and other subsidiaries) have been declining. I have been told that the CEO won’t even say the word “revenues” at annual shareholder’s meetings. But the essence of the 21st century utility model is for utilities to thrive while providing services that reduce customer’s bills (through efficiencies, grid services, and new lower cost generation – usually from renewables), and provide greater reliability of service (fewer outages, etc.).

    If Dominion was willing to embrace this new model and have the SCC help them create an appropriate version for Virginia, everyone in the state would be better off. When done correctly, these new business models create an environment and a basic set of rules that allow market forces and free choice determine the selection of solar, or wind, or conservation/efficiency, or gas-fired generation. It is the creation of a fair playing field, with a proper allocation of costs so that one group is not unequally subsidizing another. The utility now has the incentive to improve service and lower costs to customers in ways that gives the utility revenues to pay off past debts and continue to return a fair value to shareholders – without always having to build new projects just to get a stream of revenues to pay debts.

    If Dominion had a way of getting paid for these services, you might find that the “problems” related to integrating renewables are not so great after all. They certainly are being dealt with in many other states.

  18. Some observations. First, I don’t know where Dominion has repeatedly made the argument that it cannot handle wind. The big Amazon wind project in northeast North Carolina is going into Dominion territory. Dominion has invested in and begun exploring off-shore in a big way. That said, I agree they are not jumping on the band wagon with even one foot yet, but I really don’t think they dismiss adding renewables when it is profitable for them to do so. They’ve recently committed to adding 400 MW of solar, for instance.

    You have to appreciate that the law in Virginia awards Dominion big incentives to build big projects, granting by statute additional profits for certain types of new generation plant. The biggest such incentives are now limited to nuclear and off-shore wind, but until just recently included awards for new coal-fired plants, landfill gas power plants, carbon capture, so-called “clean coal” units, etc.

    The same law (Virginia Electric Regulation Act) gives Dominion (and Appalachian Power, too) separate recovery of all transmission investment at the FERC-granted rate of return (higher than such rates set by the SCC). So, there’s a big incentive to add transmission lines.

    Since laws can be changed, Dominion is striking while the iron is hot so to speak and investing in the big projects. Off-shore wind is just TOO costly for even them to go to right away, though.

    Bottom line, the smaller renewable projects that can be added will be added eventually, I expect, but Big Electricity brings the biggest rewards under Virginia’s very generous laws.

    • New nuclear and offshore wind are way on the far side of the cost curve. They are by far the two most expensive sources of generation of any that are available at the moment. Even with nuclear’s huge federal subsidy it is not a cost competitive option in the current energy landscape. Although wind generation in the great plains is the lowest cost source of power in the U.S. (about $0.02 – .03 / kWh); offshore wind development is far more expensive and not all of the technical issues have been resolved.

      I am not sure why Dominion is looking at that as a pilot project at this time, unless they just want to somehow “prove” that renewables are not cost-effective. It seems an unlikely choice as a place to start, although the southeast is a poor wind energy resource area and the highest sustained winds are offshore.

      But what you have mentioned about building projects as the way to get the best return is a huge point. This has been true for the 100 year history of the utility industry. It is only recently that this equation has fallen apart as the use of energy has decoupled from the rise in GNP and U.S. electrical use has remained static or declined in the past 7 -8 years. This means having a revenue model that depends on selling units of energy (kWh’s) no longer fully compensates for past investments. That is one of the major reasons for the evolution of the industry towards new business models.

      Companies that force a perpetuation of an old model by taking on a great deal of debt to fund projects with 50 year life spans could find that their capital structure is very much out of synch with the times. The higher rates needed to pay off the debts and the inflexibility of their resulting systems will put place their states in increasingly difficult economic situations.

      • I totally agree with you with regard to offshore wind and nuclear being way expensive. That plant in Mississippi that will “capture” CO2 emissions is out there on that end of the cost curve, too.

        No doubt the business models are and will continue to be changing over the next several years. The best investment a big utility can make right now is in a state legislature…….

  19. Dominion Thwarts Solar Net Metering Bill in Virginia

    http://www.energyandpolicy.org/dominion_thwarts_solar_net_metering_bill_in_virginia

    I guess I got the idea that Dominion was opposed to this because of concerns about the “variability” of wind/solar and I had presumed what they meant by “variability” was the effects it would have on the grid.

    did I get the wrong idea?

    I feel like there is a certain amount of hand-waving going on with respect to why Dominion did not want Washington and Lee or apparently Amazon… building solar or for that matter Apex who is looking for a buyer of their electricity rather than Dominion signing them up as a 3rd party provider.

    And if Panda can build a gas plant in Loudoun and sell the power to PJM why can’t W&L, Amazon and Apex do it?

    • Dominion did not allow W&L to connect because the project was owned by a third-party developer. As a not-for-profit institution W&L could not benefit from the 30% investment tax credit. A for-profit developer could. Dominion’s current rules do not allow third-party owned solar units to qualify for net-metering. The large majority of residential solar units in the west have been third-party owned so Dominion has cut off an easy and established way of promoting the development of residential and commercial solar in Virginia. I don’t think Dominion had much to say about the Amazon project since it was installed outside of their service territory, although I don’t know many of the details of the project.

      An independent power producer (IPP) can sell wholesale power in Virginia if they have a buyer and SCC approval. I do not believe that anyone can just build a plant on “spec”. Nor would they want to – these are large investments and without a guaranteed stream of income that is large enough and for a long enough duration, you would not have anyone willing to invest or loan money. The IPP and PPA (power purchase agreement) market is well developed and Dominion could use it if they wanted. Probably their cost of borrowing is cheaper and they prefer the additional guaranteed rate of return on assets that they own.

      But their clout with the legislature and the SCC has thrown up some barriers to third-party developments that do not exist in many other states. Panda probably has a power purchase agreement with the co-op within whose territory the plant is sited. In 13 eastern states, power is cleared through PJM. They are also the regional transmission operator (RTO).

      • Couple of clarifications, Tom and Larry. First, wind and solar developers no longer have to come to the SCC to get approval to construct anywhere in Virginia for facilities up to 2o MW (solar) or 100 MW (wind). DEQ has a “permit by rule” process that covers these sized projects. The Eastern Shore solar project is proceeding under the DEQ process. Utilities still have to come to the SCC since ratepayers bear the costs of those projects. In 2007, the SCC approved the ONLY wind project ever proposed to it under then existing law. That project in Highlands County has not yet been built.

        Panda, being a gas fired plant, did have to get a certificate from the Commission, but the Commission does not limit or control where the offtake of the plant goes, or at what price. That’s a wholesale transaction that FERC has jurisdiction over. Several independently owned plants have been certificated around the Commonwealth over the years.

        Finally, the ability of a customer to purchase green energy, as W&L wanted to do is an artifact of the prior law enacted when Virginia stuck its toe into “deregulation” years ago. The Code allows individual customers to purchase electric energy “provided 100 percent from any supplier of electric energy licensed to sell retail electric energy within the Commonwealth[.]”

        Dominion raised a rather specious objection (in my view) to W&L’s proposed project because the solar facility would not “provide 100 percent” of the customer’s power requirements. A request for a declaratory ruling was filed by the developer to the SCC, but was withdrawn before it reached hearing by the parties working our an alternate financing arrangement, I believe.

        • Thank you for the clarifying information. I’m still getting up to speed on issues here in Virginia. It does highlight one thing though. States that want to encourage business development work hard to have a streamlined process for permits, simple requirements, etc. A collection of confusing, archaic, or partially phased out laws discourages developers of any type. If Virginia wants to be attractive to new energy businesses they need to cleanup and modernize the legal requirements too.

  20. Tom –

    Where can I find independent validation of these two facts?

    “It is only recently that this equation has fallen apart as the use of energy has decoupled from the rise in GNP and U.S. electrical use has remained static or declined in the past 7 -8 years. This means having a revenue model that depends on selling units of energy (kWh’s) no longer fully compensates for past investments.”

  21. Reed,

    Here is a quote from the article:
    “The U.S. economy has grown 8 percent since 2007, but the annualized electricity demand growth has been zero over that same period. That’s the first time in recent memory that U.S. energy use remained flat over multiyear span during which the economy expanded.

    The third annual Sustainable Energy in America fact book from Bloomberg New Energy Finance found that electricity demand growth, which has slowed since 1990, has come to a grinding halt.

    “There has been an outright decoupling between electricity growth and economic growth,” the report states. Furthermore, it notes, the U.S. economy has become less energy-intensive.”

    Link: http://spectrum.ieee.org/energywise/energy/environment/us-electricity-demand-flat-since-2007

    The second part comes from basic math and extending the traditional rate making process. A regulator reviews a utility’s “rate base” (in simple terms their assets) and their projections for operating expenses and debt service, then adds the rate of return they are allowing to the shareholders. They take this total and divide it over the expected energy units to be sold (kWh’s) and come up with a rate per kWh that provides the appropriate economic returns. It is much more complicated than this, but this is the essential idea.

    This formula has worked very well for 100 years. Utilities were healthy, customers were served and shareholders received a fair return so that they continued to invest. It worked because demand kept rising, so the revenues were always enough to cover costs and provide dividends. If there was too big of a surplus, the regulators would refund some to the customers. The biggest variable costs were for fuel, which became a pass-through cost so there would not have to be constant rate making processes.

    When electrical demand is stable or declines, the kWh’s sold do not meet the rate making projections and revenues fall short of targets. To remain profitable, the utility must do cost cutting and everything possible to maintain revenues.

    My suspicion is that this is one of the reasons why Dominion does not promote residential solar – it would further reduce precious revenues. Utilities in the west embrace solar because they can avoid expenses or new investments. Dominion prefers projects that require huge investments because they see those as a guaranteed stream of future revenues.

    The cheapest way of meeting Clean Power Plan (CPP) emission targets is through energy efficiency and overall load reduction programs. Unless there are changes in the way utilities are paid, this could lead to losses in revenue. For some reason, the South lags the rest of the country in adopting energy efficiency measures.

    I don’t want to get too far off track in answering your question. The main point that I was trying to make is the established business model for utilities is breaking down for a variety of reasons. Those reasons will only intensify in the coming years. The longer a state clings to the old model, the more it is likely to create high energy rates or an unhealthy utility, or both. When an adjustment to a more modern model is required it will probably be a more severe dislocation than if it had been done gradually from the beginning.

    • Thanks for that excellent answer. I read the article referred to as well.

      One wonders about the predictability of any long term demand forecasts? How stable or reliable any might be as a guide to predicting the future, whether it be up, down or sideways, but particularly down, if the future now is so uncertain in so many ways, foreseeable and unforeseeable, and of course against the past history where trends have be up for so long?

      Take now for example the apparently new and rising intensity of demand behind the Amazon venture on the Eastern Shore. And the extent of the involvement of Dominion, however large or slight or variable. Where is all that new segment of the market going for the state, Dominion and others?

      Apparently, like so much in the energy industry today, these demand issues involve so many moving and inter-related parts, each impacting others in predicable and unpredictable ways, that decision making, whether bull or bear, demands many strategies, the hedging and working of many events and scenarios, seeking the right mix amid risk, change, and opportunity. Not to mention all the complications of dealing within multiple regulatory, political, entrepreneurial and technological environments, in flux too.

      This isn’t your grandfather’s public utility. Fascinating.

  22. “This isn’t your grandfather’s public utility.”

    That is exactly right. Which is why generating capacity additions 1000+ MW at a time are no longer an appropriate response to uncertain demand growth. You might build it – but what happens if only a few come? You have a huge debt that someone must pay for.

    You are also noting that larger companies are not waiting for utilities to be responsive. They are creating solutions on their own. Many concentrated business areas are looking into microgrids with self-generation, often with renewables. All that utilities supply are a backup connection to their grid. Military installations are an early adopter for that, which will have big repercussions for Virginia utilities if they don’t change their mindset. The Navy is nearing completion on a energy savings performance contract at Oceana Air Station (in VA) that will save them $6 million per year. All with no upfront capital costs.

    http://blog.rmi.org/blog_2015_08_11_us_navy_plans_to_save_6_million_per_year_at_one_air_station

    Energy service companies are rapidly moving into this field; especially to aid federal, state, and local governments, which typically lack appropriated funding. Utilities will see important segments of their customer base drift away if they don’t get into the modern era. We know what happened to your father’s Oldsmobile – they went out of business.

  23. Thank you guys… there are still questions… for me.. especially about 3rd party providers, selling power to PJM, and the ability of electric cooperatives to row their own boat separate from Dominion and separate from the SCC.

    I do not see the SCC, at this point, at truly working in the best – longer term interests of ratepayers, if they are in essence helping Dominion to preserve an obsolete business model that – ultimately will cost ratepayers. Both residential and business should be able to access and utilize on-site energy generation and conservation without – disincentives.

    I don’t discount the fundamental mission that Dominion is held responsible for but if they are using the SCC and the GA to essentially try to hold back the technological tide in a KODAK style behavior.. it’s not in anyone’s best interests. In fact, we are creating unfunded liabilities.

    • The co-ops are not free from the SCC. They have the same oversight as Dominion and Allegheny Power. The only utilities in the state not under SCC jurisdiction are municipal utilities. The only two electric ones, in Elkton and Harrisonburg, were formed long ago. Dominion had a law passed that made it illegal in Virginia for a new municipal utility to sell electricity at retail, essentially stifling any competition. The co-ops exist in rural areas where the big utilities didn’t want to go because people are spread out and it is much more expensive to serve each customer.

      The legislature and the SCC must choose whether they serve the residents of the state or the interests of a major corporation. But there is no reason Dominion can’t win by serving the interests of their customers. They just have to drastically change the way they do business, the way utilities in other states are beginning to do. Habits of a hundred years are often hard to change.

      That’s why industries are often transformed by organizations that come from outside the industry. They have “beginner’s eyes” and see possibilities that the entrenched organizations are blind to.

  24. re: ” The co-ops exist in rural areas where the big utilities didn’t want to go because people are spread out and it is much more expensive to serve each customer.”

    For some of the co-ops – territories – it’s no longer true they are rural.

    NOVEC and REC are two where rural has been overtaken.

    I THOUGHT the co-ops were not regulated by the SCC but instead the Feds.. so I must be wrong, eh?

    Dominion and the SCC have chosen and continue to choose – to INVEST – not in evolving technology but instead in trying to protect an obsolete, and now, fragile, business model by claiming that they have stranded costs that ratepayers must pay for and that, in turn, does not allow investments in future technology..

    Businesses, 3rd party providers, co-ops, and individuals, ratepayers SHOULD be able to invest in capital facilities that will save them money and energy but they are restricted from doing so … because Dominion and the SCC have chosen to try to preserve the existing business model.

    And it’s a huge risk because technology is relentlessly pushing forward and at some point – ratepayers may well be able to recover their investments without having to sell surplus power back to the grid.

    If that ever happens, the change will occur with equivalent rate and speed that other recent technological shifts like cell-phones have occurred.

  25. There are 2 different types of cooperatives. Distribution coops, like NOVEC and REC, are regulated by the SCC under a different set of statutes than the investor-owned utilities. ODEC, a generation cooperative, is regulated with regard to rates and service matters, by the FERC, since ODEC is a wholesale provider of power to the distribution cooperatives. The Federal Power Act gives FERC jurisdiction over transmission in interstate commerce and wholesale sales of electricity.

    State commissions regulate retail sales of electricity, those to end users of power, i.e., customers. State commissions have various other responsibiilties regarding the provision of utility service, approving stock and bond issuances, overseeing transactions between utilities and their affiliates, approving construction and siting of generation and transmission facilities, etc.

    FERC oversees construction of interstate natural gas pipelines and, by awarding approval to build these facilities, grants their developers the power of eminent domain under provisions of the federal Natural Gas Act. Interestingly enough, FERC possesses very little authority over the construction of high voltage power lines, whether they run between states or not. That’s another matter left to the state commissions.

    In Virginia, that’s the SCC, of course. Each of you seems not to understand fully what the SCC’s authority is. The Virginia Supreme Court has clearly stated that the SCC has no inherent authority. It can only apply and enforce the laws enacted by the General Assembly. Other state commissions seem to have much broader discretionary powers–see California and New York for instance–to enact public policy initiatives or direct their utilities to build certain types of power supply or enact programs intended to provide social benefits. That’s just not the case in Virginia.

    • Interesting. My utility experience is from Michigan and New York and a little bit in Hawaii. I am just beginning to understand how unique Virginia is. The Public Service Commissions in Michigan and New York had a good deal of discretionary power. The commissioners were political appointees, but could develop their own agenda (as is the case with New York REV – with the governor’s blessing). In most states there is a bit of tension between the regulator and the utility because the regulator feels they must protect the consumers and the utility attempts to serve the shareholders. Looking in as an outsider, there appears to be a much closer alignment with Dominion and the SCC.

  26. When you say generation cooperative – is that basically if they own a plant or not? Can NOVEC “own” the PANDA plant and become like ODEC?

    How about PJM? can an electric co-op produce power and sell it or buy it from PJM outside of the purview of the SCC?

    how about 3rd party generators? Can they set up plants in Va and sell the power to willing buyers besides Dominion? Does Panda or Apex need SCC permission to set up and operate in Virginia?

    in terms of what the SCC can and cannot do – you are correct.

    I admit to being pretty much clueless but willing to learn.

    Who determines if Dominion has to offer net metering, i.e. buy power from solar generators? Dominion or the SCC?

    How come Dominion can’t build a Nat Gas plant in Hampton if their p pipeline is showing a spur to Hampton? How come they have to move power from Surry across the River rather than build a gas plant like they are doing in Southside Va?

  27. A co-op can be both a power producer and retail provider of electricity. Often they are just a distribution utility and buy power at wholesale prices from investor owned utilities and other providers.

    The SCC regulates their rates not their power purchases. Power purchases are done through a wholesale clearinghouse. In this region that is overseen by PJM.

    Third-party generators must sell at wholesale or another approved price (like the Dominion solar pilot project). I am not sure if the SCC had anything to do with the Amazon deal since it was a company generating for its own use with some transmission charges added in.

    The two projected gas-fired plants Dominion is building in Southside VA are sited on the main Atlantic Coast Pipeline corridor. Although they will be initially connected to an existing pipeline, Dominion hopes to connect them to the ACP. Opponents argue that since the Department of Energy says there is sufficient capacity in existing pipelines to serve the future needs of Virginia and the Carolinas, additional pipelines should not be needed.

    In general, it is easier and cheaper to move electricity from a plant to where it is used compared to the cost of moving gas to where a plant is.

    The growth rate in the Norfolk area is projected to be about 0.2% per year for the near future. The Norfolk area is already connected to a large existing pipeline coming from West Virginia, so many are questioning the need for the gas pipeline spur coming from North Carolina to Norfolk to serve an essentially static electric and gas demand.

    As I understand it, the net metering issue was decided by the state legislature, despite objections from Dominion. Once the law was passed, the SCC promulgated rules for Dominion and presumably other state utilities to follow.

    There seems to be more than the normal political give and take regarding utility issues in Virginia compared to what I have experienced in other states. It seems that Dominion was willing to trade the requirement to build 400 MW of solar sometime in the future for essentially seven years of business as usual (existing rates in place through 2020, no routine financial revue by the SCC until 2022, and no refunds to customers of any savings during that time).

  28. thanks for continuing the dialogue.. getting educated!

    “A co-op can be both a power producer and retail provider of electricity. Often they are just a distribution utility and buy power at wholesale prices from investor owned utilities and other providers.

    The SCC regulates their rates not their power purchases. Power purchases are done through a wholesale clearinghouse. In this region that is overseen by PJM.”

    so how or why would PANDA build a plant in Va where they did? Are they selling to PJM or NOVEC or Dominion or who?

    who regulated if they can build a plant and where?

    “Third-party generators must sell at wholesale or another approved price (like the Dominion solar pilot project). I am not sure if the SCC had anything to do with the Amazon deal since it was a company generating for its own use with some transmission charges added in.”

    I presumed that Amazon did what they did because Dominion would not buy their power just as they apparently won’t buy APEX wind power.

    why couldn’t APEX or AMAZON sell their power to Va co-ops or PJM?

    “The two projected gas-fired plants Dominion is building in Southside VA are sited on the main Atlantic Coast Pipeline corridor. Although they will be initially connected to an existing pipeline, Dominion hopes to connect them to the ACP. Opponents argue that since the Department of Energy says there is sufficient capacity in existing pipelines to serve the future needs of Virginia and the Carolinas, additional pipelines should not be needed.

    In general, it is easier and cheaper to move electricity from a plant to where it is used compared to the cost of moving gas to where a plant is.”

    then why not burn the gas at the source and transport the electricity?

    “The growth rate in the Norfolk area is projected to be about 0.2% per year for the near future. The Norfolk area is already connected to a large existing pipeline coming from West Virginia, so many are questioning the need for the gas pipeline spur coming from North Carolina to Norfolk to serve an essentially static electric and gas demand.”

    and I would question the need to move electricity across the James from Surry for the same reason

    it appears that what Dominion did was build gas plants in southside to provide power to that area after they shifted Surry power to Hampton. But even then – the reason given – peak power demand that would result in rolling blackouts. Surry is a base-load nuke – it can’t respond to peak loads – you need a gas plant to do that anyhow.

    “As I understand it, the net metering issue was decided by the state legislature, despite objections from Dominion. Once the law was passed, the SCC promulgated rules for Dominion and presumably other state utilities to follow.”

    why would Dominion or any other utility object? And why would the GA do something that restricted citizens and other non-utilities playes ability to invest in solar?

    “There seems to be more than the normal political give and take regarding utility issues in Virginia compared to what I have experienced in other states. It seems that Dominion was willing to trade the requirement to build 400 MW of solar sometime in the future for essentially seven years of business as usual (existing rates in place through 2020, no routine financial revue by the SCC until 2022, and no refunds to customers of any savings during that time).”

    It appears to me that the GA is inserting themselves in an issue that ought to be more resolved by a market. It comes across as them makes choices that favor Dominion investors over Virginia citizens and ratepayers.

    As I understand it, Dominion has more lobbyists in Richmond than another company.. so it’s hard for me to believe that the GA is being influenced.

    • Larry, I think Tom’s got most of your questions from your prior post on the nose. Let me see if I can help with this last set.

      As for Panda, they built (or, are building, to he correct) in Virginia where they did because of the proximity of gas pipelines and electric transmission lines improves their operating costs. They believe they can make money selling into PJM or by selling to another electric distribution utility that can take Panda’s power out of the PJM transmission system. Many such states, D.C., Maryland, and New Jersey, for instance, have quite higher costs of service than in Virginia. The Panda power is likely headed out of state. The construction of that plant was regulated by the SCC, which gave Panda a certificate of public convenience and necessity to construct.

      Amazon will be a customer of Dominion, since its new facility is in Dominion service area in Northern Virginia. The arrangements between its sponsoring of the solar facility and its purchasing that facility’s renewable power are still rather sketchy. Dominion, as a part of a federally approved regional transmission organization (PJM) is not obligated to buy the output of any supplier of electricity, as it once was under the old law known as PURPA. That law obligated utilities to buy power from certain independent suppliers and qualifying facilities up til about 2005, when FERC ruled that since those suppliers could now sell output through PJM and other similar organizations, utilities were no longer obligated to buy direct. PJM will buy all the output from Amazon and AMAX should they choose to sell to it. The coops like NOVEC and REC may have contractual arrangements with ODEC that preclude their purchasing supply directly from a third party.

      Why not burn gas at source and purchase electricity? Many complicated reasons. In the case of gas, as opposed to coal, it makes more sense to ship gas because it has other uses than just firing power plants. Gas distribution utilities sell gas to customers through out Virginia for home and business space heating and they need supply. There are many industrial applications for natural gas like making fertilizer. Gas is easier to ship than coal, which can only go by rail or barge. A pipeline can go most anywhere. Building gas fired power plants only in the gas fields would also require lots of new additional long transmission lines and power is lost in transmission over distance.

      Moving electricity across the James. The peninsula area was primarily served by coal and oil fired generators at Chesapeake and Yorktown. Those are old units and have been retired or are slated to be retired before 2017. The new gas fired plant at Brumswick was intended in large part to replace these sources of power to serve that load on the peninsula. That’s the power that has to come across the James River. That line is not serving growth so much as serving existing load whose current power supply is going away due to age, cost and environmental compliance reasons.

      Net metering. We do have net metering in Virginia. You can read about the rules for its provision here: https://www.scc.virginia.gov/pue/rules.aspx
      Most utility objections, as I understand them, have to do with the price paid for the power delivered by the home-owned generator and whether that generator should pay some sort of “stand-by fee” to the utility for taking power from the utility when the net-metered generator is not fully serving the power needs of its owner. The utility has to stand by and be ready to serve that customer when the sun goes down or behind a cloud, etc. It’s obligated by law to provide that service. I won’t speculate as to the GA’s motives for anything it does, but I think Tom has outlined the arguments behind the most recent enactment pretty fairly.

  29. Thanks , much appreciated.

    I don’t think the “why can’t a gas plant be built in Hampton” was well answered especially after you explained why burning gas then moving the electricity longer distances was not as good an pipelining the gas.

    You STILL need a peaker plant in Hampton to supplement the base load coming from Surry. If you have to have a peaker plant – why not it being a baseload gas plus peaker?

    why is APEX looking for a buyer of it’s wind power instead of selling it to PJM like Panda?

    why can’t any person or business sell their SOLAR WIND directly to PJM instead of messing with Dominion or the SCC or the GA at all?

    something is missing in my understanding…

    there seem to be inconsistencies in some of these answers..at least to me, in my view but I do appreciate the responses.. even if not totally satisfying.

    thanks.

  30. At some point, it may be possible to build a gas plant in Hampton. But, there’s insufficient gas delivery there now. You don’t need to physically site peaker plants adjacent to baseload facilities, they just need to be capable of coming on line somewhere in the deliverable grid when demand ramps up and cycle off as demand ebbs away. The laws of physics will dictate where the power goes once dumped onto the grid. There can be instances where deliverability of generation located outside the load pocket is difficult or impossible, due to lack of adequate transmission capacity.

    Solar and wind power is being sold to PJM. That’s what the Amazon sponsored facilities in North Carolina and the Eastern Shore will be doing. There are a number of wind facilities in Pennsylvania and in the western areas of PJM that do this as well. There are very few utility sized solar facilities in PJM. The vast majority are rooftop solar panels that are not connected to the transmission grid, but to the local distribution grid.

    Keep on asking; it’s a complicated subject. You might want to go over to the PJM website and poke around there a little to get some insights into the wholesale power markets that they operate.

    I really don’t know what the APEX facility is doing. It won’t be able to sell to PJM if it’s physically located outside the PJM area.

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