Dominion Inks Second Solar Deal with Amazon

Dominion adds 180 megawatts to its solar portfolio

Dominion has announced a major expansion of its solar alliance with Amazon Web Services (AWS), adding 180 megawatts of generating capacity at five Virginia locations. The deal will build Dominion’s solar fleet to 434 megawatts in Virginia and North Carolina, close to its goal of 500 megawatts by 2020. Dominion’s eight-state fleet will reach 1,400 megawatts by 2017.

The Richmond-based utility is acquiring four 20-megawatt projects from Virginia Solar LLC as well as a 100-megawatt development from Community Energy Solar in Southampton County. Dominion Energy, a Dominion subsidiary, will supply electricity under the terms of long-term power purchase agreements with AWS, Amazon’s cloud computing enterprise.

AWS, a major operator of data centers in Northern Virginia, has announced a long-term goal of achieving 100% renewable energy for its global infrastructure, with a milestone of 50% by the end of 2017.

“We are nowhere near done,” said Peter DeSantis, AWS vice president-infrastructure, said in a press release. “We will continue to make progress toward 100 percent and have many exciting initiatives planned.”

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10 responses to “Dominion Inks Second Solar Deal with Amazon”

  1. Although slow to move in this direction in Virginia, Dominion is now responding to customer requests for renewable energy. The RE100 is a collaboration of many of the world’s most influential companies who are committed to 100% renewable electricity. Where possible, they are developing projects with third-party developers or utilities. Amazon is one of those companies.

    In Virginia, those choices are more limited, but Dominion can see that these companies will seek renewable sources regardless of the regulatory scheme in a state or will move operations to those locations where their long-term goals can be fulfilled. Dominion would rather maintain the customer so they are trying to provide the renewable generation themselves.

    I support the production of more renewable energy because it serves the customer and other ratepayers and is a long-term lower cost source of generation for the utility.

    I would prefer to see solar move forward on a level playing field in Virginia, however. In other states, the cost of energy from solar facilities is usually lower from projects built by third-parties because they have a leaner organization, lower overheads and are willing to work on lower margins. It is unfair to give an economic advantage to utilities that have a guaranteed profit and whose risk is borne by the ratepayers. There is no reason that solar project development could not be restricted to the for-profit subsidiaries of the utilities and opened to third-party development throughout the state. Utilities would compete on a more equal footing with third parties but would still enjoy the ITC benefits and greater access to capital. Dominion’s solar subsidiary has done a number of solar projects throughout the U.S. and a year or so ago, moved their headquarters to Richmond.

    In North Carolina, where Duke has maneuvered to diminish third-party participation in solar development, solar developers and lawmakers have complained that the amount of solar could be 5 times higher in North Carolina (even though it is one of the top 10 states for solar now) if Duke was not allowed to suppress third-party development.

    Utilities are in a tough spot with the cost-of-service rate model. Even though Dominion is putting in huge penalties against solar in their IRP in order to justify more gas plants, I am sure many in the company recognize the declining cost of solar and storage and its potential to disrupt their current business model. Their best response is to try and control all of the solar themselves and put it in the rate base. But this does not best serve the customer or the grid.

    We need to examine better ways of keeping Dominion financially healthy while serving the interests of the ratepayers.

    1. “If Duke was not allowed to suppress third-party development” — can you elaborate on what Duke is doing that’s having a “suppressing” effect?

      1. Acbar,

        I will have to dig up old notes. This is recollection from an article interviewing a North Carolina legislator who was complaining about the dampening effect Duke was having on solar development in the state, even though they were on of the leading states.

        I hesitate to guess without checking the facts, but it is probably what we have seen here in Virginia: prohibitions against PPAs in their service territory, caps on net metering, etc. I’ll try and check it for you when I get time.

  2. LarrytheG Avatar

    A solar project proposed off Waldrop Church Road would be more than four times the size of the one now under construction in the county.

    The developer, Belcher Solar LLC, wants to blanket some 1,000 acres of farm and forest land with solar panels, which it claims is enough to provide electricity to 14,000 homes. Producing up to 88 megawatts of power, the solar field could be among the largest on the East Coast.

    The land where the solar panels would be located is owned by the Purcell family. Belcher Solar is an affiliate of Virginia Solar LLC, which is currently involved in building a 17-megawatt project in Powhatan County.”

    so the obvious question is – if Dominion is inhibiting 3rd party solar – where did this project come from and what is keeping other projects like this from multiplying?

  3. I am not familiar with these projects or where they are located. If they are in Dominion’s territory the output is probably being sold back to Dominion and not directly to a customer. Dominion’s current moves have been to let a third-party do the hard work of developing a project, then buying it out, or contracting with them directly to build the facility. In other states, the corporations are contracting directly with the third-party developers, which lowers the price.

    These huge developments also impinge on existing land uses and require extra expense for transmission. Smaller installations would avoid the land use loss and transmission issues and could provide more value to the grid if sited in the proper locations.

    With the current regulatory scheme, one can understand why a utility wants to protect its revenue stream which is already being compromised by lower per capita use. However, giving a utility monopoly control over the supply of energy does not necessarily protect the interests of the end-user. The monopoly was originally granted to avoid duplication of wires. That makes sense to me. Utilities should be fairly compensated to build and maintain a highly efficient and effective grid. Generation should be open to competition and the customer should be able to select the one that best serves their needs (proximity, lowest cost, right fuel type – renewable , etc.). The utility should be fairly paid for the use of their wires and transactional services.

    By maintaining monopoly control over the type of generation the utility can avoid choosing better methods in order to protect their existing investments or select those that yield the highest rate of return, not the lowest cost. Other states are working out ways to make it fair for everyone. Why can’t we have that conversation in Virginia?

  4. LarrytheG Avatar

    Massive solar field proposed in rural area of Louisa County

    A solar project proposed off Waldrop Church Road would be more than four times the size of the one now under construction in the county.

    The developer, Belcher Solar LLC, wants to blanket some 1,000 acres of farm and forest land with solar panels, which it claims is enough to provide electricity to 14,000 homes. Producing up to 88 megawatts of power, the solar field could be among the largest on the East Coast.

    By comparison, Dominion Virginia Power’s solar installation on 250 acres just east of the town of Louisa off Chalk Level Road will produce 20 megawatts of power when it is completed at the end of December.

    “There’s nothing unique about the site,” Matthew Meares, a partner with Virginia Solar, said. “It’s got a power line and a willing landowner.”

    the private site is about 7 miles from the Dominion site

    I just thought it ODD that the private venture came in to virtually the same location after Dominion had already built solar – and they built more solar – 4 times more…and are quite likely connecting to the same regional grid that Dominion is…and apparently Dominion had no role in the decision .. at least not any that made it to the public realm.

  5. According to the Richmond Times-Dispatch, “A group of 18 major corporations, including big names such as Microsoft, Walmart, Best Buy, Ikea, Staples and Mars Inc., among others, have sent a letter to state lawmakers and the Virginia State Corporation Commission calling for “an explicit legal framework” to expand access to renewable energy from utilities and third-party sellers.” “The letter was included last week as part of public comment on a request to the commission by Appalachian Power for a voluntary, 100 percent renewable energy rider that will come before the commission for a hearing today. Opponents contend the measure is actually aimed at thwarting competition from third-party providers and financiers of renewable energy in the utility’s Southwest Virginia service area.”

    The Times-Dispatch went on to say “Virginia currently lacks the specific legal pathways for companies to enter into power-purchase agreements with “non-utility energy service providers,” including third-party financing, which is attractive because it spares companies major upfront capital expenses and the “risk associated with operation and maintenance,” the letter says. The companies request more choice, including the ability to negotiate direct arrangements; “cost-competitive renewable energy tariffs”; subscriptions to community solar projects; and “other policy mechanisms tailored to the needs of large buyers.”

    The economics currently support these solar projects and will only improve with time. Developers will continue to install these projects as subcontractors to Dominion, as independent suppliers to PJM (IPPs) or as direct providers to private companies (using PPAs). It would be best if we had a consistent statewide policy for this that was fair to the customers, the developers, and the utilities so that it could expand for the benefit of all Virginians.

    These projects are below the threshold for SCC approval so they can probably proceed under the radar for a good while. The primary load growth for Dominion is due to the data centers planned for northern Virginia. That use and other corporate uses in the area will probably be able to soak up much of the new solar installed in the near future.

  6. LarrytheG Avatar

    For a while there – I thought we had some folks “in the know” commenting here and helping us ignorati to better “understand”.

    Not to say I don’t appreciate these guys and their dialogue which DOES help educate – but I’m not sure they totally understand it all – either… any more….


    Everytime I see a new non-Dominion gas plant or solar farm conceived – and built – I end up thinking that – that certainly goes against the understanding I thought I had gleaned from the dialogue.

    I think Acbar has alluded to the “arcane” environment for utilities and regulation as well as TomH here.

    so I’m sorta back at square one – as it does look like other independent non-Dominion affiliated/controlled players in Va can build solar or gas plants… so they must know something others don’t…

    I’m presuming that the SCC does know… regulation is their schtick and no company in Va operates without adhering to Va regulations.

    1. Sorry I’ve been off-line . . . living the rest of my life. But LG you say, ““There’s nothing unique about the site,” Matthew Meares, a partner with Virginia Solar, said. “It’s got a power line and a willing landowner.”” That’s exactly the point. I have been a skeptic all along when it comes to reports of Virginia “suppressing” solar development as a general proposition. Specific things could be tweaked, yes; specific policies could be enhanced, yes; tax benefits surely could be greater in Virginia, if the goal is to achieve some level of saturation more quickly. But in general, Virginia and North Carolina are similar, and even have the same utility operating in much of each of them, and when you compare them, NC solar was way ahead and VA is starting to catch on also. The primary differences I am aware of between these states are (1) bigger State tax support for solar in NC, and (2) a very slight edge to NC due to being further south and therefore receiving more sunlight especially in the off season. TomH is concerned about the absence of solar PPAs (equipment-lease / power-purchase agreements) but I don’t think that’s what’s driving the slow onset of solar in Virginia. You are correct, the VSCC should know, and should be able to tell you if you ask them, or read up on the testimony and orders in recent SCC cases involving solar investment in Virginia.

  7. The case in front of the SCC at the moment deals with APCo’s refusal to allow solar within its territory. The same goes for Dominion. An SCC Administrative Law Judge has recommended to the commission that the SCC allow solar PPA’s in the utilities’ territory. The letter sent to the SCC by many major corporations said that the big corporations would like the opportunity to deal directly with third-party solar providers, not just the utilities.

    Larry is correct that an independent power producer (IPP) can build a solar facility in Virginia and sell the output to PJM. But that is a much harder deal to finance since there is no guaranteed buyer or set price for the power – just whatever is the clearing price is in daily auctions. An IPP can also build a new gas plant, after approval by the SCC, and sell the output as a PPA to a utility or on the PJM market. In my view, they would be exceedingly foolish to do so because the plant will never pay for itself, but 3-4 IPPs have made proposals for new gas plants in Virginia.

    A long-term contract at a specified price (PPA) is a much more certain situation, and that will attract financing. Often a contract between a big corporation and a third-party will result in electricity sold at a lower price than is available from a utility (because a similar solar facility built by a utility has a higher guaranteed rate of return). Without SCC approval of PPAs, third-party development of solar projects is limited in Virginia. When Secure Futures developed a PPA with Washington & Lee, Dominion sued them. They worked out a one-time agreement for a lease-purchase agreement that allowed the project to move forward. W&Lee has more properly aligned rooftops that they would like to install more solar panels on, but the lack of an authorized PPA structure in Dominion’s territory has stymied further development.

    Perhaps I have done a poor job of explaining this situation, but I have talked to solar developers, including the one responsible for the W&Lee installation. They have all said that it is the lack of “an explicit legal framework” in Virginia for these types of deals that is stalling further third-party development of solar in Virginia. A good size solar facility requires complicated financial and legal agreements. Investors are not going to move forward rapidly in Virginia without the proper framework in place.

    Absent third-party projects, Dominion is installing only the amount of solar they are required to build as part of the rate freeze deal. Utilities are conflicted about solar. They can now see that solar will produce less expensive energy than conventional plants and it will become increasingly less expensive. Rapid deployment of more solar will cause existing units to be dispatched less often, harming their economic return. Slowing down the influx of solar generation in Virginia protects utility revenues, but increases the cost to ratepayers.

    Until we change the rules in Virginia to allow utilities to prosper by managing the grid and serving ratepayers, Dominion and others will continue to have an incentive to delay the installation of lower cost sources of electricity. If major corporations see that Virginia is a laggard in providing the type of energy that they desire, they will locate elsewhere, and our energy prices will be higher than surrounding states.

    The more new gas plants that are built, the greater the stranded costs we will have to confront. There is too much evidence of the cost trends for renewables and storage both in the U.S. and abroad to ignore what this will mean over the next 10-15 years.

    I will try and find the North Carolina specifics for Acbar, but the letter from the Fortune 100 companies to the SCC makes it very clear what the obstruction to more solar development in Virginia is related to – the lack of a legal structure in Virginia similar to other states that allows third-party development and direct to corporate PPAs.

    If this is still obscure or misleading, please let me know how I can make it more clear.

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