Category Archives: Environment

When Dynamic Pricing Meets Energy Storage


Will Gathright

Other states are targeting energy storage as an industry of the future but Virginia may have the most hospitable climate for it.

by James A. Bacon

Will Gathright was living in New York, where he had earned a Ph.D. from Renssalaer Polytechnic Institute, when he got fired up with the idea to use storage batteries to help business customers cut their electric bills. The idea was to buy electricity when it is cheap to charge the batteries, then draw down the batteries during periods of peak demand to offset consumption when electricity is expensive. For the business model to work, he needed to find a location where there was a wide differential in the cost of electricity.

Initially, he figured he might wind up in Hawaii, California or New York, states that are putting a high priority on energy storage. But after conducting a national search to see where his value proposition would fare best, Gathright moved to Northern Virginia.

“Virginia has the winning combination of three factors not present elsewhere in the country,” he explains. First, although Virginia’s peak-demand rates aren’t the highest in the country, they are relatively high. Second, while a few states have cheaper base rates, Virginia’s are significantly lower than the national average. The spread between low base rates and high demand charges creates a bigger potential for savings.

A third factor, Gathright says, is that Virginia electric utilities belong to PJM Interconnection, which manages the electric grid and wholesale markets for 60 million people in the Midwest and the Mid-Atlantic region. When his batteries aren’t helping shave a building’s peak demand charge, they can help PJM fine-tune short-term fluctuations in the supply and demand of electricity.

Welcome to the new world of electric load management. Power companies around the country are experimenting with novel rate structures that encourage customers to curtail their electricity consumption during periods of peak demand — typically summer afternoons when air conditioners are running flat-out. One of the most promising strategies for shifting electricity demand is energy storage, usually using batteries, and other states are targeting the sector as a strategic priority. California is requiring its utilities to purchase 1,325 megawatts of energy storage by 2020 and the state of New York state has invested $1.4 million in six battery and energy storage start-ups.

Gathright thinks Virginia may be the most promising location in the country to implement energy storage — not that the idea has gotten much attention here. What Virginia has done is experiment with dynamic pricing: using the price mechanism to encourage customers to shift electric consumption away from periods of peak demand when it is most costly to supply.

The results of Dominion Virginia Power’s dynamic pricing pilot program have been modest so far — positive enough to encourage Dominion to continue the project but not dramatic enough to persuade the company that a revolution in electric consumption is in the offing. But the outlook could change if entrepreneurs like Gathright figure out how to help customers capture the savings that the dynamic-pricing rate structures make possible.

With the encouragement of the State Corporation Commission, Dominion rolled out its dynamic pricing program in 2011, branding it as the Smart Pricing Plan. “The basic premise,” explains SCC spokesman Ken Schrad, “is that if customers are willing to modify behavior and use less electricity during high price periods, they will have the opportunity to save money, and the company in turn will be able to reduce the amount of energy it would otherwise have to generate or purchase during peak periods.”

The pilot was limited to 2,000 customers under a residential tariff and 1,000 small and midsized commercial customers under two commercial tariffs. Participation required having Advanced Metering Infrastructure (AMI) or Interval Data Recorder (IDR) meters that record energy usage every 30 minutes, thus allowing Dominion to measure consumption with greater precision.

Dominion provides customers at least 280 days a year with low-priced electric rates (“C” days), up to 30 days with high rates (“A” days), and the balance with medium rates (“B” days). Dominion communicates the classification to customers the day before to allow them to plan accordingly. Additionally, the company designates up to 25 five-hour blocks, or critical peak events, per year to commercial customers with two-hour notice. The rate differential for the critical peak hours could be literally dozens of times higher than the lowest rates.

For most customers, the jet savings have been minimal. Between October 2013 and October 2014, residential customers saved an average of $48 annually (3% of their electric bills), small commercial customers saved $92 annually (3%). However, larger customers saved $5,900 annually (14%), according to Dominion’s 2015 annual report on the program filed with the SCC. Continue reading

George Mason Profs: Prosecute Climate Deniers

Jadadish Shukla (right) receiving award in India.

Jagadish Shukla (right) receiving Padma Shri Award in India.

by James A. Bacon

Jagadish Shukla, a George Mason University climate scientist, thinks corporate climate deniers should be criminally prosecuted under the federal Racketeer Influenced and Corrupt Organizations (RICO) law.

Corporations and other organizations have “knowingly deceived” the American people about the risks of climate change, wrote Shukla and nineteen other scientists (five of whom also are GMU professors) in an open letter to President Obama and Attorney General Loretta Lynch. “If corporations in the fossil fuel industry and their supporters are guilty of the misdeeds that have been documented in books and journal articles, it is imperative that these misdeeds be stopped as soon as possible so that America and the world can get on with the critically important business of finding effective ways to restabilize the Earth’s climate, before even more lasting damage is done.”

Wow. Is this what science has come to in the United States today — seeking criminal prosecution of those who espouse different views? The implications of this mindset are absolutely terrifying. Thankfully, only 20 scientists signed the letter, so we can be hopeful that the thinking expressed therein is not representative of most climate scientists or even climate alarmists generally — although the missive does cite as its inspiration a proposal championed by Senator Sheldon Whitehouse, D-Rhode Island.

The premise is that fossil fuel companies, like the tobacco companies before them, are knowingly and fraudulently disseminating false science. Barry Klinger, also a GMU climate scientist, insists that the letter signatories aren’t trying to throw climate skeptics in jail or repress their right to free speech — just squelch the right of companies engaging in fraud to sell a product that does harm.

In a Q&A on his website, Klinger is sensitive to the charges of “ideologically based legal harassment.” That’s how he described former Virginia Attorney General Ken Cuccinelli’s aborted investigation of Michael Mann, a former University of Virginia climate scientist whose name was prominent among those sullied in the East Anglia email scandal. “Apparently,” writes Klinger, “there are some who believe it is the return of the Inquisition to investigate a giant corporation but a good deed to investigate an individual scientist.”

In other words, while Klinger disapproves of Cuccinelli’s subpoena of Michael Mann’s emails — Cuccinelli never got the emails, by the way — but thinks ideologically based criminal prosecutions are OK if the targets aregiant corporations.” Pardon me for failing to see any meaningful differences between the two cases. If one is wrong, so is the other. Of course, the ultimate goal of the letter signatories is not to pursue justice but to de-fund and de-legitimize those with opposing views while maintaining their own sources of funding from government and foundations as sacrosanct.

Which brings us back to Mr. Shukla, Klinger’s colleague at GMU and lead signatory to the letter. Shukla is a scientist of some renown, who specializes in building computerized climate models and has served as a lead author for the United Nations Inter-Governmental Panel on Climate Change. He has done work reconstructing the climate of the Mediterranean world in the Roman era that I, as a serious amateur student of 1st-century Palestine, find fascinating.

I am not remotely qualified to judge the scientific value of Shukla’s work, but I do feel competent to comment upon his foray into public policy. It appears that climate alarmism, to riff off an old Saturday Night Live routine, has been bery, bery good to Mr. Shukla. Roger Pielke Jr., a climate scientist himself, notes that Shukla runs his government grants through a tax-exempt, non-profit organization, the Institute of Global Environment and Society, Inc. The Institute raked in $3.8 million in 2014, from which Shukla paid himself $293,000 in reportable compensation and his wife Anne Shukla $146,000 as a business manager. It’s not bad money, considering that Shukla also received total compensation of $250,000 as a professor and chair of the GMU Climate Dynamics department. That would make Shukla slightly more highly compensated than GMU President Angel Cabrera — and I’m betting that Cabrera’s wife doesn’t knock down a $146,000-a-year salary for work related to his job as university president.

Shukla also has been granted numerous awards and medals, including the 2012 Padma Shri Award from the government of India. In sum, he is richly rewarded financially and with status conferred by his peers for his work building global climate-change models.

I wonder if Mr. Shukla’s climate models predicted the actual, real-world temperatures of the past 18 years. The mean temperature increase has been zero, as measured by satellite readings, and within the statistical margin of error, as measured by terrestrial readings. If after the expenditure of millions of dollars Mr. Shukla has failed to forecast those readings and yet persists in raising the cry of catastrophic climate change, could we conclude, using the logic he applies to others, that his work was not only in error but fraudulent, motivated by the desire to continue the flow of lucrative research contracts — and not only fraudulent but economically devastating because it justifies the expenditure of hundreds of billions of dollars to combat an exaggerated threat?

Shukla certainly knows the stakes. As he himself is quoted in 2011 as saying: “It is inconceivable that policymakers will be willing to make billion-and trillion-dollar decisions for adaptation to the projected regional climate change based on models that do not even describe and simulate the processes that are the building blocks of climate variability.”

Ordinarily, I would not be inclined to equate Mr. Shukla’s behavior with criminality, but it does seem reasonable to apply to him the same criteria he applies to others. Perhaps he should be more careful about what he asks for. Once the precedent of criminalizing science has been set, some future administration might decide Shukla falls on the wrong side of the ideological divide.

An Intractable Dilemma


When Dominion shuts down the Yorktown Power Station, Virginia’s Peninsula will need another source of electric power. Dominion says a 500 kV transmission line over the historic James River is the best option. Conservationists disagree.

by James A. Bacon

Communities in the historic Virginia Peninsula face a devil’s alternative: Immediately accept a high-voltage transmission line that foes say could mar views of a historic stretch of the James River or face the prospect of rolling blackouts that Dominion Virginia Power says could disrupt the economy for 500,000 people.

The State Corporation Commission (SCC) and the PJM Interconnection regional transmission organization have given the go-ahead to build the 500 kV Surry-Skiffes Creek transmission line to balance electricity lost when Dominion Virginia Power shuts down two antiquated coal-fired units at the Yorktown Power Station. But many residents in and around the history-rich region are up in arms, and Dominion cannot begin construction on the line until it obtains necessary switching-station zoning approval from James City County and a nod from the U.S. Army Corps of Engineers.

If a decision isn’t made immediately, contends Dominion, the power company will be unable to complete construction of the transmission line before it shuts down the Yorktown power plants in April 2017 at the latest.

At that point, reliance upon four existing 230 kV transmission lines will put the electric grid only one or two “contingencies” — unplanned transmission-line outages — away from a meltdown that could send uncontrolled blackouts cascading to the Richmond region and beyond. Rather than risk such a catastrophe, federal regulations would require Dominion to take customers offline on a rotating basis. Depending upon weather conditions and other events, the Virginia Peninsula will be at risk of rolling blackouts 50 to 80 times a year.

“If there’s a one in million chance of a breakdown, PJM tells us to shed load,” says Kevin Curtis, Dominion’s director of transmission planning, referring to the regional transmission organization that would issue the command to pull the trigger. If Dominion failed to follow through, it could face fines of $1 million per day for violating North American Electric Reliability Corporation standards.

But foes of the transmission line are still fighting back. In early August, the James City County Planning Commission recommended denial of a rezoning request that would allow Dominion to construct a sub-station critical to the project. Meanwhile, the USACE says,  “Due to the many variables yet to be addressed, we are unable to provide a discrete timeline” for when it might decide whether or not the project requires a full-fledged Environmental Impact Statement, which could delay it yet another year.

Margaret Nelson Fowler, founding member of the Save the James Alliance, isn’t buying Dominion’s warning of rolling blackouts. Dominion is making a business decision to shut down the Yorktown power plant, she says. Dominion can continue operating the coal-fired units in a non-compliant status. It will have to pay fines, but fines are Dominion’s problem, not the community’s, she says. “We’ve been told by people who know that blackouts would never be permitted. … This is all scare tactics.”

Surry-Skiffes Creek is perhaps the most controversial of some three dozen transmission line projects that Virginia’s major power companies are planning or implementing as they undertake a sweeping re-engineering of Virginia’s electric grid. Under heavy regulatory pressure, power companies are shifting from coal-fired generating plants to gas, wind and solar energy sources; transmission lines must be built or upgraded to accommodate the re-routed flow of electricity. Dominion lists 27 Virginia projects at some stage of approval or construction; Appalachian Power lists seven approved and pending projects.

The problem is that no one likes looking at power lines, and proposals often encounter local resistance. The Surry-Skiffes Creek proposal arises from a set of circumstances that is particularly complex and intractable. The engineering logic that dictates building a 500 kV Economic transmission line across the James River is persuasive. But so are objections by conservationists and property owners, who say Dominion’s cost-benefit analysis fails to take important non-monetary values into account. The result is institutional gridlock as the proposal works its way through federal, state and local oversight. In this case, the economic consequences of a failure to reach a timely resolution could be highly debilitating to the Peninsula economy. Continue reading

Energy’s Innovation Race

Rendering of a GE combined-cycle natural gas-burning plant.

Rendering of a GE combined-cycle natural gas-burning plant.

Foes of fossil fuels are wondering if natural gas production in the United States is peaking. While some observers depict the supply  of natural gas as lasting decades, maybe a hundred years, others see signs that gas wells in the Marcellus shale formation are playing out more rapidly than anticipated. As supply becomes constricted, prices will rise, punishing electricity consumers who in Virginia will relying increasingly upon natural gas for electric generation. To protect against inevitably rising gas prices, the argument goes, states should mandate the use of renewable energy sources such as solar and wind power.

Environmentalists aren’t the only ones making the argument that gas production in the Marcellus formation has peaked. Oil and Gas Investments Bulletin Publisher Keith Schaeffer, among others, makes the same case.

But that sentiment is far from universal. “The U.S. may have far more natural gas than anyone imagined, all reachable at a profit even with today’s bargain-basement prices,” states the lead of a Wall Street Journal article today. The article quotes Mark Papa, a partner of Riverstone Holdings LLC, an energy-oriented private equity investor, as saying, “There’s a large likelihood that the United States will be enjoying very low gas prices for a very long time, maybe 20 years.”

Fossil fuel producers are showing remarkable resilience in the face of incredibly low fuel prices. They are embracing new technology, pioneering new drilling methods and figuring out how to slash production costs. Meanwhile, designers of power plants that burn natural gas are developing combustion systems that can extract 50% more energy from a BTU of gas than the previous generation. Traditional gas turbines convert 32% to 38% of the heat content from gas into electricity. The latest gas turbines incorporating advances in materials and aerodynamics and running in combined cycle mode can operate at 60% efficiency under optimal conditions.

The competition between different types of energy source is good news for consumers. The price of solar power and wind power continue to drop as R&D efforts yield technology breakthroughs, as supply chains mature, and as the solar and wind industries move up the learning curve. If the gas production/ generation industry had remained static, solar and wind might well be broadly competitive today. But the gas industry continues to innovate as well. Wind and solar (and coal, too) are chasing a moving target.

There is something to be said for hedging Virginia’s bets by encouraging the diversification of energy sources used in generating electric power, as there is for investing in energy efficiency, another field rife with innovation. But there’s also something to be said for committing to the lowest cost energy source, especially if, like natural gas, it is clean burning and emits significantly less CO2 than coal. Rather than approach energy policy with preconceived ideas that one energy strategy or the other is “the best,” Virginia should aim for an energy strategy that is flexible, adaptable and capable of exploiting opportunities created by an innovative energy economy.


Why Doesn’t Virginia Have More Wind Power?

Map credit: National Renewable Energy Lab

Map credit: National Renewable Energy Lab

Why hasn’t Virginia made more progress in generating energy from wind power? This map from the National Renewable Energy Lab highlights the problems we face. Unlike the plains states, where almost every square mile is wind blown, Virginia has few suitable locations. Wind power is practical only offshore and on scattered mountain ridges.

Putting windmills on mountaintop ridges poses a problem because it disrupts viewsheds. Every mountain-ridge wind project proposed in Virginia has generated opposition from the surrounding population. In several instances, local governing bodies have used their zoning powers to thwart the projects. Of the half-dozen wind farms proposed over the past decade, not one has been built. As long as (a) people believe they have a right to exercise veto power over land uses for aesthetic reasons, such as protecting viewsheds, and (b) local governments have the power to restrict land uses based upon aesthetic impact, wind power projects likely will be blocked at the local level.

Building wind power projects off-shore avoids the viewshed issue because  turbines can be placed far enough at sea that they won’t be visible from the shore. However, offshore wind power on the East Coast of the U.S. faces a chicken-or-egg problem. Wind power is incredibly expensive because the supporting maritime infrastructure is not available on the East Coast; specialized ships and equipment must be brought in from Europe at great cost. But the wind-power industry is not willing to invest in establishing an East Coast presence until there is sufficient volume of business to support it.

It might be possible to overcome the chicken-or-egg problem if enough players committed to enough wind projects within a relatively narrow time frame to make it financially worthwhile for the wind industry to make that commitment. So far, no one has undertaken such an effort. Offshore wind initiatives remain frustratingly piecemeal.

Perhaps one thing the McAuliffe administration could do to advance wind power in Virginia and the East Coast would be to convene a meeting of every East Coast state with an interest in wind power along with major wind industry players to build the necessary critical mass. Hampton Roads, with its large existing shipbuilding fabrication industry and central East Coast location, is the logical location for the wind industry to be situated. We have the most to gain, so we should take the lead.


Apex Encounters Headwinds in Botetourt Wind Project

by James A. Bacon

An interesting player is emerging in the Virginia renewable energy scene — Apex Clean Energy. The Charlottesville-based company has announced that it has erected two test towers for a proposed wind farm in Botetourt County to gather data about wind strength and frequency. The company has proposed constructing up to 25 wind turbines on a ridgeline about five miles east of Eagle Rock, according to news reports.

But the Rocky Forge project is encountering legal headwinds. A lawsuit filed a month ago sought to block the project on the grounds that “industrial turbines are known to catch fire, to collapse, emit audible and low frequency noise, cause shadow flicker and to throw ice from spinning blades in the wintertime,” reported the Roanoke Times. The lawsuit also noted that turbines kill birds and bats and destroy their habitat.

Dominion Virginia Power is running into similar obstacles in Tazewell County, where the energy giant faces stiff local opposition. The Tazewell County has proposed a zoning plan that would classify solar panels and wind turbines with other undesirable developments such as medical waste facilities that require a special permit.

For Apex Clean Energy, Rocky Forge is one of two wind power projects in Virginia. The facility would have a capacity of 80 megawatts, enough to power 20,000 houses. The expected completion date is 2017-2018, according to the company website. Another project, Pinewood Wind in Pulaski County, would have a capacity of 180 megawatts, enough to power 50,000 houses. All told, the company lists 53 projects in its portfolio, with the greatest concentration in the plains states of Texas and Oklahoma.

The company was founded in 2009 with the mission of building “a new kind of energy company.” The founders, who had sold their previous company, Greenlight Energy, to BP Alternative Energy, assembled a team of wind and solar energy professionals with skill sets that could originate projects, finance them, build them and manage them.

It’s not clear from the company website or news reports what the business model is for the Virginia wind farms. Among the possibilities: Purchase Power Agreements, in which a customer signs a contract to purchase a specified amount of energy from a project; project ownership in which Apex delivers a turn-key facility along with asset-management services over to a buyer; and a Structured Purchase Agreement, a long-term price agreement that allow companies to hedge against volatile fuel prices. Or Apex simply may sell electricity into the PJM electric bid, which supports a market for green energy.

Circuit Court Judge Upholds Pipelines’ Right to Survey

pipelineA circuit court judge in Montgomery County dealt a setback to foes of the Mountain Valley Pipeline yesterday by finding constitutional a controversial state law allowing natural gas companies to survey private property without an owner’s permission. Turk said that the Virginia law allows a natural gas company to enter private property for surveying even if its owner has denied permission, reports the Roanoke Times.

Temporary access to a landowner’s property for purposes of conducting a survey does not represent an unconstitutional “taking” of property without compensation, Turk ruled. “There’s no transfer of property,”  he said. The law in question “takes away the criminal aspect of trespass, something the Virginia legislature has the right to do.”

Turk’s ruling in the Giles County case could have implications for lawsuits filed by landowners in the path of both the proposed Mountain Valley Pipeline (MVP) and the Atlantic Coast Pipeline (ACP), who say that the activity of survey teams on private property can impose costs for which they are not compensated.

Attorneys representing landowners said that they intend to file lawsuits in other counties where clients could be impacted by the proposed pipelines. They will challenge state law on the grounds that MVP does not meet the criteria of a public service corporation. Pipeline foes have advanced the argument that there is no “public necessity” for either the MVP or the ACP, despite the fact that both pipeline companies have signed contracts for most of the pipelines’ capacity. Foes argue that existing pipelines could handle much, if not all, of the volume of natural gas required by the shift from coal- to gas-fired utilities and growth in the economy, and that there is no justification for acquiring rights of way through their land through eminent domain.


Yes, Virginia, the EPA Is Still Cracking Down on You

EPA_CPP_and_Vaby Bill Tracy

Many folks are trying to interpret the Environmental Protection Agency’s final Clean Power Plan (CPP) and its impact on Virginia. The EPA, along with its August 3 rule announcement, released a large volume of on-line support material including the popular State-at-a-Glance Summary sheets.

Unfortunately, Virginia’s state summary sheet is misleading. EPA made relatively large adjustments to Virginia’s 2012 Base Case, not shown on the state summary sheet. The adjustments were necessary to account for natural gas power plants that were already under construction. The 2030 final targets for Virginia do not seem logical unless you compare them against EPA’s adjusted 2012 base numbers.

Fortunately, EPA does give us enough source data in the State Goal Visualizer spreadsheet to allow me to calculate the adjusted 2012 base, shown below, according to my math:

Carbon intensity (pounds of CO2 emission per megawatt/hour of electricity):
2012 lbs CO2/MWhr: 1,477
2012 lbs CO2/MWhr: 1,366 (EPA Adjusted 2012 Base)
2030 lbs CO2/MWhr: 934

Total CO2 emissions permitted:
2012 CO2 Short Tons Mass: 27,365,439
2012 CO2 Short Tons Mass: 35,733,501 (EPA Adjusted 2012 Base)
2030 CO2 Short Tons Mass: 27,433,111

Now we can see that Virginia’s mass CO2 reduction target (23.2%) makes a lot more sense. The actual degree-of-difficulty is better described by the carbon intensity data (CO2 per MWhr), and Virginia’s 934 lbs target works out to a 31.6% CO2 reduction mandate.

To see how Virginia compares, I’ve hand-entered the data for all 50 states and plotted them up (see the graph above). The first conclusion that jumps out is how well Virginia (in purple) is doing, already operating at relatively low CO2 emission rates. The second conclusion is that Virginia does indeed seem to fall above the trend line, with our 31.6% CO2 reduction target. A bit lower target (27.5% reduction) would appear more equitable, assuming my trend line is correct. Virginia’s final carbon intensity mandate (934 lbs CO2/MWhr) could have been closer to a more manageable 1,000 lbs CO2/MWhr.

Those familiar with these numbers will recognize that 934 lbs CO2/MWhr is the approximate CO2 yield of a clean natural gas power plant. In others words, Virginia probably cannot operate many coal plants and still meet their 2030 CO2 target. In fact, EPA seems to be assuming that Virginia will shut down all but one coal plant by 2020, before CPP even kicks in. I’ve asked EPA to check their numbers to see if there is an error on the Virginia state summary sheet data for 2020.

Bottom line for me is that the Virginia CO2 targets appear very challenging. But somebody needs to check my numbers, and preferably EPA should show their adjusted 2012 base numbers on the State-at-a-Glance summary sheets. Meanwhile please be advised that most of the Virginia CPP information out there on the Web is using our non-adjusted 2012 base data.

Bill Tracy is a retired engineer, concerned citizen, and grandfather residing in Burke, Virginia.  

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.

Next Step for Offshore Wind

Alstom wind turbine like that contemplated for installation off Virginia Beach.

Alstom wind turbine like that contemplated for installation off Virginia Beach.

Earlier this year Dominion Virginia Power received a bid for building two experimental offshore wind turbines that exceeded internal cost projections by more than half, making the proposed project unlikely to win State Corporation Commission approval. In a July stakeholder meeting, DVP executives laid out their analysis of what went wrong. Now stakeholders will convene in three “problem solving cohorts” to determine how to bring down the cost of the project.

According to Nancy Lowe, with the Virginia Center for Consensus Building, which Dominion has engaged to lead the process, the groups will be broken down as follows:

  1. “Contract process and logistics – horizontal vs. vertical contracting, how to cut costs and balance risk through implementation and execution strategies, including multiple contracts versus a single contract, etc.
  2. Technology – focus on  balancing the cost issue with the amount of innovative technology to be developed and explore other technology issues.
  3. Policy Issues – determine the laws or regulations that could be changed to improve the chances of success. Determine the likelihood of being successful in achieving the modification noted, identify and quantify benefits to Virginia ratepayers.”

The stakeholders will not address the issue of cost sharing. Finding other groups to help shoulder the cost of funding the project, which would demonstrate the efficacy of new technologies benefiting the wind power industry broadly, would best be pursued by “the facilitator,” i.e. DVP, wrote Lowe in a communication to stakeholders.

Among the critical technologies to be demonstrated in this proposed pilot test are adaptations to the kind of hurricane-force winds that turbines are likely to encounter in the Atlantic Ocean. Without that technology, investing billions of dollars in an offshore wind farm might be too risky to win regulatory approval.