Why Dominion Is Cautious about Solar

solar_panelsJames A. Bacon

Solar energy may account for a barely perceptible sliver of Dominion Virginia Power’s electric generating portfolio today, but the power company sees an increasing role for it in the future.

Even under its “low cost” scenario, Dominion foresees installing 1,000 megawatts of photovoltaic (PV) solar energy by 2041. Under a variety of other scenarios designed to meet the goals of the Clean Power Plan, which may or may not pass U.S. Supreme Court muster by 2041, solar could comprise between 2,100 megawatts and 8,000 megawatts of capacity. That compares to about 24,000 megawatts of current capacity across the utility’s power generation fleet.

Those numbers come from Dominion’s 2016 Integrated Resources Plan, a planning document filed last week in which the company lays out its expectations for electricity demand and its strategy for meeting that demand.

While the company expects a bigger role for sun-powered electric generation, the IRP raises concerns about the difficulty of integrating large amounts of solar, an inherently intermittent source of electric power, into a system that requires stability and predictability.

One commonly heard critique of solar is that it delivers electricity when the sun is shining, not when it is needed. (It is not “dispatchable.”) Therefore, the power company must either maintain backup power capacity or purchase electricity from elsewhere on the regional grid, both of which can be expensive. The 2016 IRP goes into great length elaborating upon a different problem: the difficulty of integrating large volumes of solar-generated electricity into the transmission and distribution grid.

In effect, says Dominion, the move to solar represents a paradigm shift in how electricity is generated and distributed. States the IRP:

All levels of the existing electric infrastructure, standards and operating protocols were originally designed for a dispatchable generation fleet (based on the market price as well as the topological condition of the electric network). This paradigm ensures system stability through control of frequency and voltage. PV generation systems, in contrast, only produce electricity when the sun is shining; therefore, energy output is variable and cannot be dispatched.

Conventional generating facilities are utility-scale, while solar panels installed by homeowners, businesses and public institutions bypasses the transmission grid and ties into local distribution circuits.

Therefore, the electric grid is evolving from a network where power flows from centralized generators through the transmission network and then to distribution systems down to the retail customer, into a network with generators of many sizes introduced into every level of the grid. The overall result is that traditional assumptions about the direction of power flows are no longer valid.

Meter readings from the Virginia Solar Pathways Project. (Click for larger image)

Meter readings from the Virginia Solar Pathways Project. (Click for larger image)

Fluctuations in electric power output cause variable power injections and losses on the grid, impacting frequency and voltage, which the industry must control within tight parameters. That’s not a problem when PV penetration is low, states the IRP, but it can be a problem when PV constitutes a larger percentage of power production. “On a multistate level, it is possible that the resulting sudden power loss from disconnection of distributed PV generation could be sufficient to destabilize the system frequency of the entire Eastern Interconnection.”

There are fixes for these problems — but they cost money. Static synchronous compensators (STATCOMs) can help prevent “voltage flicker” from solar power. Similarly, PV inverters, which invert the DC output of a solar PV facility into AC, continuously monitor the grid for voltage and frequency levels. High resolution meters, such as synchrophasors and digital fault recorder devices placed at the point of interconnection, support high-speed tripping to address power quality concerns.

So, how expensive would it be to upgrade the electric grid to accommodate a significantly higher contribution of solar power? The IRP alludes to a 2015 filing by Southern California Edison, estimating capital expenditures in the range of $1.4 billion to $2.5 billion to upgrade its current grid to facilitate integration of distributed solar.

The IRP also addresses energy storage technologies such as flywheels, batteries and compressed air energy storage. Of these, batteries are a potentially attractive option. States the IRP: “Batteries can be used to provide energy for power station blackstart, peak load shaving, frequency regulation services, or peak load shifting to off peak. … The primary challenge facing battery systems is the cost. Other factors such as recharge times, variance in temperature, energy efficiency, and capacity degradation are also important considerations for utility-scale battery.” Still, says the IRP, Dominion is “actively engaged” in evaluating the potential for energy storage technologies.

In conclusion, states the IRP, “Virginia’s potential maximum solar build out is relatively small compared to other states in the U.S. and countries in the world.”

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32 responses to “Why Dominion Is Cautious about Solar

  1. I think the innovations are going to happen – and it’s going to be DVP’s job to figure out how the grid will have to be modified to deal with it and that’s actually going to be something more compelling and urgent than building new plants or else we’re going to see something akin to DVP asking the General Assembly to “outlaw” some of these things … as too “disruptive” …. which would be a real kick in the pants …

  2. In conclusion, states the IRP, “Virginia’s potential maximum solar build out is relatively small compared to other states in the U.S. and countries in the world.”

    Maybe I am reading too fast but I don’t see the arguments for why Virginia’s use of solar has to be so much smaller than that of other states and countries. Why is North Carolina having such success with homeowner installed solar but Virginia can’t do it? Is the problem that Dominion can’t earn as much per dollar invested on solar as it can on other infrastructure?

    • If “Dominion can’t earn as much per dollar invested on solar as it can on other infrastructure,” that would be a good reason for management to drag its feet on solar. Without knowing, I wonder whether some of the reason is related to protecting sunk investment and to ride that investment as far as possible. From an operations standpoint, using even fully depreciated plant to provide service avoids additional Cap-Ex costs.

    • My understanding is that North Carolina has a regulatory mandate for energy diversification that has been their policy for many decades, which gives a favorable treatment of certain solar projects.

      • Correct TBill. Dominion wrote our law. Designed our incentives. It has kept our motivation voluntary instead of mandatory. It continually claims that renewables are not feasible – and our leadership is not inclined to question or challenge the company.

        We have a situation that must be equivalent to the one that existed with the railroads before the SCC was created to take critical decisions out of the political environment at the General Assembly. Back then legislators realized they could not make the right decisions in that environment. More recently power of the SCC has been systematically reduced and the General Assembly has increasingly taken on its role – telling the SCC how to rule and not allowing the SCC to tell what it knows. Everyone knows that the only right answer if someone from the SCC is asked a question by a legislator is: the SCC has no position on this. When the judges are interviewed they are made to promise that they will not appear before the General Assembly uninvited and that they will assure that the staff also stays out of the political discussions. Our big businesses, especially Dominion, have orchestrated this.

      • Yes, North Carolina enacted a mandatory RPS in 2007, and has also had a generous tax credit, soon to expire, to incent the development of solar projects in that state.

        Bear in mind, though, that hundreds of MW of solar is or soon will be installed in the Dominion North Carolina service area that is physically interconnected to DVP’s service area in Virginia. All of that power is in the PJM footprint, unlike the rest of the state.

      • VAC, you paint a bleak picture of the SCC’s servitude. It is an independent Constitutional agency, despite the “guidance” from the GA; someday the GA is going to go too far and get some serious pushback.

        Your question, “Why is North Carolina having such success with homeowner installed solar but Virginia can’t do it?” — is complicated. You can mostly blame the Virginia GA because the principal factor in NC’s success with solar is those State tax credits, and also there’s the RPS mandate, a lesser factor I think. Another factor is the latitude and the weather (percent of cloudy days); coastal NC is just a better place to build solar than piedmont VA — see fig. Figure 5.1.2.4 in the Dominion IRP. But I really don’t see how you can blame Dominion; the success of solar on the NC side of the State line dividing Dominion’s territory demonstrates it is not the utility per se holding back solar in Virginia. I do wonder about NC vs VA reform of building codes and about the solar installation “culture” (anecdotally, there seems to be a lot more third party support in NC for homeowners who want to go solar). That kind of support builds on itself.

  3. from the NYT … “integrating solar and wind power into electric grids is proving easier than many thought. Variable renewable power presents real challenges for grid operators, but those are being managed even as solar and wind power exceeds 50 percent of the energy fed into electric grids in Texas, Colorado and elsewhere. The solutions include technologies that help grid operators forecast solar and wind input, reduce electricity demand when needed and store excess energy.”

    To say that we do not have the ability to generate and integrate a large portion of our electricity generation with solar is way off base. Among the states, Virginia’s potential for solar is #11. The issue is not potential. It is policy. A recent report, “Throwing Shade” put Virginia in the category of the 10 worst states. We are there because of our large solar potential and our terrible policies. Here is Virginia’s evaluation …
    #11 in technical potential for rooftop solar
    #29 in installed capacity (MW of distributed solar)
    Overall policy grade: F
    Renewable portfolio standard: Voluntary and weak
    Net-metering policy: Weak
    Third-party ownership: Unclear
    Community solar laws: None

    Joined by 10 other states, VA is failing to adopt to change that is real..

  4. yeah – I’m not buying DVP’s assessment of solar in Va either and CleanAir&Water has got the goods on them.

    DVP is going to become the Blockbuster Video of utilities if it does not get it’s mind straight on Solar.

    and for that matter – POOP

    ” How D.C. Water officials planned to turn poop into power”

    https://www.washingtonpost.com/local/trafficandcommuting/poop-flush-power/2015/10/07/d0c9c6de-6c3a-11e5-9bfe-e59f5e244f92_story.html

    I have no clue – what percent of power needs a place like DC could supply from a well managed poop-to-power operation but it sounds promising –

  5. Just ran across more “goods” ….

    “There are many options for maintaining a flexible grid and many are cheaper options for meeting demand and allowing higher penetrations of variable renewables than battery storage and natural gas,” according to the new report co-authored by Energy Innovation (EI) Director of Strategy Sonia Aggarwal “Grid Flexibility: Methods for Modernizing the Power Grid.”

    Only after addressing operational changes like Demand Response, shorter dispatch intervals, advanced weather forecasting, a diverse portfolio of energy resources balanced over a wide geographical area, and improved market structure, does the paper advocate “utilities opt for investments in more familiar sources of grid flexibility — gas plants and storage. While both are available today, there’s a good chance they aren’t the most cost-effective options.”

  6. It is clear that Dominion’s lip-service to solar is because (a) it can get more bucks out of older technologies; (b) solar means loss of control and (c) the very idea of having billions in stranded assets bypassed by renewables scares the $*&% out of them.
    Their strategy is to buy off politicians (and blogs) so they can do things their way for as long as possible.

    • Unfortunately, you have hit the nail squarely on the head. The environment is such that no political person who wants to be successful dares to cross Dominion. It is totally wrong in a democracy but until folks stand up and declare “enough” the company will control everything and hurt those of us who dare to not toe their line.

      Case in point, they plan to bisect my family farm with their pipeline and make it so I consider it unsafe to live there in the zone where everything will be destroyed if there is an accident. We will be just a couple miles from the Compression Station where the pipeline will cross existing pipelines – creating an environmental hazard and terrorist target. They will take my heritage and render the family property a danger zone, after we’ve operated that business for over 100 years. I’m convinced our country needs businesses like ours but as long as our system allows what is essentially take over of our property, the future is bleak. (If you don’t think it’s take over of property, read the 10 page document describing how pipeline land must be protected and the economic and other threats to any who do not follow the rules as outlined. The safety risk alone renders the land and land nearby all but unuseable.) This is how Dominion does business. They control.

      • VaConsumer, I hope to start working soon on an article about safety issues relating to gas pipelines, and I’d like to interview someone who (a) is personally impacted and (b) up to speed on the safety issues. Could you contact me directly at jabacon[at]baconsrebellion.com? Thanks, Jim

  7. The most interesting figure in the IRP commentary about solar was Dominion’s citation of Southern California Edison’s estimate that refitting the grid to accommodate solar would cost between $1.4 billion and $2.5 billion. Let’s assume that the cost to refit Dominion’s grid would be in the same ballpark.

    Well, that’s really not a terrifyingly high number — roughly comparable to the cost of building a new gas-fired power plant, and a whole lot cheaper than building a $19 billion nuclear plant at North Anna 3. (In my conversations with Dominion officials, they have not confirmed that figure, but they have not pooh-poohed it either; they acknowledge that the number is really high.)

    The big question is whether or not large-scale energy storage — battery storage — can become viable. It’s one thing to install batteries to feed electricity into the grid to reap really high prices that prevail for short periods in wholesale markets, and quite another to capture thousands of megawatts of excess solar production in the mid-day for release later in the day. If that can be accomplished economically, solar will rule. If not, there will be a natural ceiling. PJM says it can handle up to 30% or so renewables. By that metric, while Virginia can’t go all-renewables in our lifetime, there’s room for a lot more than what Dominion seems comfortable with.

    • I don’t think batteries are an answer unless someone can point to existing ones but I do think the technology to upgrade the grid IS available AND SOLAR IS going to happen by Consumers even if they cannot sell the excess back – that installed SOLAR is still going to affect the grid – and maybe in some counter-intuitive ways such as SOLAR having a big impact on hot summer days – at the same time there is huge demand for air conditioning.

      One of the things that Dominion COULD be doing is advising homeowners, perhaps even selling the equipment that would sit between the grid and a solar installation.

      But Dominion needs to be moving on this – rather than listing out all the reasons they want to go slow – IMHO.

      Dominion may well also -need to move into these kinds of businesses… and might need laws and regulations changed to allow them to do that.

    • No, you are correct, it is not a (relatively) large number, and solar is not even the largest part of it. Don’t forget that wind power is big on the plains and hills across the MidWest, and that’s part of PJM — not that Dominion seems to recognize the overall PJM market area as relevant to its planning. From PJM’s overall point of view, wind, unlike solar, power comes at night as well as during the day, so the grid must deal with increasingly volatile generation conditions off peak when it used to be that only the big, baseload generating units (e.g. nuclear, coal) ran at night. The [in]stability of wind generation is going to contribute a lot of transmission and dispatch costs, probably moreso than solar. There’s also the need for more transmission capacity to bring all that Midwest power eastward at night when the wind is up.

      • Acbar … Wind from the plains?
        The truth is that East Coast offshore wind has the capability to provide a very large percentage of electricity to the largest concentration of population right there along the coast from Cape Cod to Cape Hatteras. The estimated projection for Virginia is 60% of what we used in 2012, according to the Stanford Jacobson study.

        There is also a lovely report that discusses the synchronicity of offshore wind and solar to meet peak demand on the East Coast. When the solar mid day peak begins to fade wind is just starting up and peaks later in the day at a time when peak use is still needed.

        Dominion says that offshore wind is too expensive. Right now that is true. Reducing the price requires developing the offshore wind industry. We could have done that development here in VA, but will probably loose the opportunity through our delay. According to one study … offshore exploration and development could create almost 25,000 jobs in the commonwealth and contribute nearly $2.2 billion to Virginia’s economy over the next 20 years including adding $400 million per year to Virginia’s coffers from revenue-sharing agreements by 2035.

        Finally, will someone please explain why there is any consideration of more nuclear reactors on the fault line at Lake Anna. Common sense says that nuclear plants built on fault lines are not very smart, especially at a time when “revenue from electricity sales in the U.S. fell 1.3 percent to $388.1 billion, and the utility industry retired almost 18,000 megawatts of generation, according to the Energy Information Administration.

        Back to solar … “A decision by the grids to factor in power from rooftop solar arrays in the future would be ‘a double punch on the conventional power plants,’” according to George Katsigiannakis.

        • I am not as familiar with the North Anna history as others might be, but I believe that Dominion made a preliminary application for the development of North Anna 3 a number of years ago. This has allowed them to obtain rate recovery for various “site preparation” activities since that time. This is not a small amount. I thought I saw a request by Dominion for something like $800 million. Because of the extraordinarily high expense for new nuclear generation (among other reasons), it is unlikely, that ratepayers will ever receive any benefit from this investment, but if it remains under discussion in the IRP, Dominion can still get ratepayers to cover the costs as long as the SCC agrees.

          • CleanAir&Water

            Thanks. That makes sense but … Oh dear … paying for stranded assets already!

  8. Yeah – I’m probably in agreement here – I do not see a whole lot of leadership on DVP’s part on Solar – they’re not even interested in existing approaches being using by other utilities.

    Its like they’re in their own little bubble on solar- while other utilities are pushing ahead upgrading their grids and accommodating solar rather than giving reasons why they can’t.

    Their whole culture whether it’s money in the GA or pipelines or coal ash or powerlines over the James seems to be mostly all or nothing propositions from their agenda rather than treating the public and ratepayers as legitimate players to work with collaboratively for consensus paths forward.

    It walks and talks like a Corporate Culture thing…….

  9. Just an observation: Dominion is correct that the grid has to adapt to an influx of a higher percentage of solar PV generation. But the cautionary tone of the latest Dominion IRP seems extraordinarily defensive in nature. Moreover, PJM, not Dominion, is in charge of transmission planning for adequacy throughout the PJM area, including all of Dominion’s PJM ‘zone,’ and has been working on the problems of solar integration for some years now. Dominion’s role as one of the PJM transmission owners is to make the investments required by the PJM annual transmission upgrade plan, the “RTEP” (‘Regional Transmission Enhancement Plan’), a document you might think of as a transmission version of the IRP, prepared by PJM and submitted to the FERC (not to the State commissions, though with plenty of State and transmission-owner input). So, basically, it’s not Dominion’s responsibility to raise transmission concerns as reasons for what kinds of generation Dominion should build (or encourage others to build) on its portion of the PJM grid. Indeed it’s not even the SCC’s concern, other than to weigh the overall costs of different generation+transmission configurations and throw its support accordingly. Yes, Dominion must make changes to its distribution system facilities also, but that’s another subject. This transmission-focused portion of the IRP looks like a document Dominion might have written 20 years ago; it betrays how little Dominion has adapted to the shifting regulatory and technological priorities since then.

  10. Jim,
    If you want to research a story on natural gas pipeline safety, here’s a good place to start:

    https://en.wikipedia.org/wiki/Ufa_train_disaster

    And please don’t tell me that it’s Russia and cannot happen here.

    • Peter sounds like that Russian case is a propane/butane pipeline, and the incident was related to the heavier-than-air-nature of those materials. This is not the same material as natural gas (which is mostly methane). It’s just not the same animal (unless WikiP is wrong).

  11. Possibly, that is if the ACP is all methane.
    When I was a Moscow correspondent for BusinessWeek, we would read TASS reports that Soviet officials would handle natural gas pipeline leaks this way in Siberia:

    They’d fly in helicopters, detect a massive leak and then shoot a flare from a gun to ignite it.

    Seemed to work.

  12. Given Virginia’s key role in data centers and IP-based transport, it would make sense for those companies to fund an entity that represented the interests of enterprise customers in energy matters before the VSCC and FERC. Those customers have a vital interest in ensuring access to affordable and reliable sources of energy, a smart network and a reasonable balance in energy sources. As I responded to an earlier post of Larry’s, I like competing studies and experts.

  13. well here’s the deal. We have an evolving environment on electricity, generation and the grid that moves it.

    Leadership is needed.

    The logical place for that to occur is DVP. Its really an opportunity -not a burden

    If they don’t want to do it – then someone will – and those folks will also be the ones to take the opportunity and become the drivers.

  14. Tbill,
    The soviets also used tac nukes for fracking oil and gas. I am not making this up.

    • I believe you. The only surprise would be if it worked well. I thought the USA tried that in the early days of nuclear testing and concluded it was not very effective…

  15. Several utilities have developed Value of Solar Tariffs (VOS) to establish an even handed way of handling higher penetrations of solar in their grid. Austin Energy in Texas is a leading example. Rocky Mountain Institute has developed a VOS calculation methodology that can be used in any area in the U.S. As opposed to net metering, a VOS tariff separates the sale of the electricity back to the utility from the purchase of electricity. The customer pays for the distribution and transmission services just as any other customer, so it avoids the issue of cross-subsidies. The VOS calculation also changes based on different conditions, so it could vary within the service territory of a utility as necessary to fairly recognize the costs and benefits of solar in that location.

    An unbiased calculation of the benefits provided to the grid by distributed solar generation has shown that the value (in many different ways) is far greater than is assumed in the development of net-metering rates. Although some improvements to the grid are usually required there is typically a net cost savings to the utility in areas with distributed generation. The contribution from distributed solar also lowers the system peak which saves all ratepayers money.

    We have to make substantial improvements to the grid with or without additional solar generation. We have mostly decades old electromechanical SCADA devices and switching equipment that are slow to respond and often must be manually reset. Significant investments must be made to create a two-way flow of information about customer usage and system stability using digital devices. Some companies choose to portray this investment as mostly needed because of solar and use it as a rationale to delay solar development.

    Grid modernization is essential. States that are resetting the utility role as the “wire infrastructure provider” are moving most rapidly on this. In this way the utility gets well paid to provide a high-quality, reliable infrastructure for the transmission and distribution of electricity and information to enable a variety of services that they and third-parties provide to meet customer needs. Think of it as the “internet of electricity”. Once the transaction capability is created, a whole host of new services and savings opportunities can be developed just as we have experienced with information technology. Clearly, this will also require attention to cyber-security and privacy issues, just as we have seen with the internet.

    When the utilities are given a crucial and profitable role as the central service provider, they can make effective long-term plans for resource allocations without having to protect their turf as the primary supplier of energy. They still have an opportunity to be a generator, but must compete on merit and costs with other options. An intelligent rate design would include a performance component that would allow for higher rewards for superior service. Economic results for utility shareholders would depend on the value provided by the utility rather than its control of the state’s legislative and regulatory arena.

    Dominion has a subsidiary that is providing these grid development services to their own utility subsidiaries and to others. They could be encouraged to do well by providing these valuable services on behalf of Virginia customers. Paying utilities based on their ability to provide the most customer benefit instead of allowing a fixed return on capital invested uses the power of the marketplace to encourage investment where it has the most value.

    In another departure from the past, instead of solely using their own separate and expensive custom information and control scheme, utilities might consider using existing systems such as cell phone towers or the internet to more efficiently collect real-time data on actual grid conditions and distributed resource performance. Utilities and regulators should explore whether a “trust-but-verify” approach relying on third-party data would be more cost-effective than utility-only investment in sensors and telemetry.

    Two thirds of the 62 MW of storage deployed in the US in 2014 was located in PJM territory and PJM continues to be the leading marketplace for utility-scale storage in the United States. NEC will install 60-megawatts more of network of grid storage systems in PJM for frequency regulation that will be operational this year. About 110 megawatts of fast-responding assets are now on-line in PJM’s frequency regulation market, with another 100 megawatts or so in backlog.

    If we changed our approach to providing energy and gave utilities an important and secure role that is different from their past, we could enable an innovative, more reliable, lower cost and cleaner future than we are struggling to define today.

  16. and thanks too for this excellent analysis

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