Finally, Virginia’s Political Class Starts Thinking about Grid Reliability

by James A. Bacon

At last — a serious discussion has occurred about the reliability of Virginia’s electric grid as the state moves toward zero-carbon electricity generation by 2050 (and 2045 in the Dominion Energy service territory).

Reliability was a prime topic of conversation at the third Virginia Clean Energy Summit Tuesday. A panel discussion — “Can Texas Happen in Virginia?” — focused on an issue that has gone long ignored in Virginia. (I base my commentary upon the article posted by Virginia Mercury reporter Sarah Vogelsong who attended the event.)

What happened in Texas during a deep freeze in February most likely would not happen here, panelists agreed. Virginia is different. First, its electric utilities are more tightly regulated. Second, Virginia belongs to a regional transmission organization, PJM, which would allow the state’s power companies to import electricity from outside the state should the need arise.

Some of the arguments presented are valid. Virginia has backstops that Texas did not. But Texas may not be the most valid point of comparison. Perhaps we should be looking at the calamity that is California, which also has a tightly regulated electric power industry and also imports electricity from outside the state. Indeed, when Republican gubernatorial candidate Glenn Younkin has warned about blackouts and brownouts in Virginia’s energy future, he was alluding to the example not of Texas but California.

PJM plays a key role in Virginia’s electric grid. The regional transmission organization, based outside of Philadelphia, creates auctions for the sale of electric-generation capacity and spot-market electricity sales, and also engages in long-term planning of the reliability of the transmission grid. The market-based mechanisms ensure that there is sufficient capacity to keep customers supplied in the event of a polar vortex, derecho, ice storm or other extreme weather event.

“Things are taken much more seriously in terms of reliability” in the PJM grid, said John Hanger, a former Pennsvlvania utility regulator who works as an energy consultant for clients lobbying for increased competition in Virginia’s electricity market. Suggesting that the Texas failure could occur in Virginia is a “reckless statement … akin to yelling ‘fire’ in a crowded theater.”

PJM “has a capacity market. It has weatherization rules. It has penalties. It has interconnection. And by and large, if there is a problem in these systems, then there are indeed rotating blackouts for 15 minutes.”

Brad Viator, vice president of external affairs for the Edison Electric Institute, agreed that a Texas scenario, which led to the near collapse of the grid when both wind- and gas-generated power sources failed due to extreme cold, was unlikely.

“If Virginia is to become a fully restructured state, if policy were to take it there, I do think it introduces new and different challenges like the Texas challenge,” said Viator. “I don’t think it’s as severe as some might suggest, but that sort of market change does leave a very real problem, which is how do you create appropriate incentives to ensure generation is there when you need it and when you need it most.”

Panelists agreed that planning for increasingly severe weather, predicted by climate-change theory, is advisable.

But some critical issues went unaddressed in the panel discussion (assuming that Vogelsong hit all the key points, which I expect she did, as she is a conscientious reporter).

The Virginia Clean Energy Act calls for eliminating coal as a fuel source and phasing out natural gas. Within 25 to 30 years, intermittent wind and power would account for roughly 70% total energy generation (depending upon the exact scenario), with nuclear power and electricity imports over the transmission grid the rest. In Dominion’s analysis, it will be critical to maintain nuclear power as a base-load foundation.

Here’s the problem. Most of the cost associated with renewables consists of up-front capital expenditures. Once the wind turbines and solar panels are built, their marginal production costs are almost zero. They will always undercut nuclear and fossil fuels in auctions. Indeed, as happens in California with its heavy reliance upon solar and Texas with its dependence upon wind, renewables can generate so much electricity during periods of peak production that the grid can’t absorb it all and the prices go negative for portions of the day. Over time, this phenomenon can drive base-load generating plants out of business. But the base-load generators are needed for when the sun isn’t shining and the wind isn’t blowing. The “solution” — subsidize the base-load producers to keep them open. Not only does this cost ratepayers, if regulators miscalculate, or if the extreme weather event is extreme enough, you end up with blackouts and brownouts.

Interstate transmission lines can take up only so much of the slack. The lines have finite capacity; they can literally melt down if overloaded. Relying upon electricity exports to provide the backup in instances of diminished wind and solar production will require the construction of more transmission lines. Good luck with that. There is literally nothing more NIMBY-inspiring than a proposed new transmission line. Regulatory approvals can take years, if they come at all.

Another problem is that, while coal and natural gas are being phased out, Virginia is counting on increased solar output to take up the slack. But solar developers are in Virginia encountering fierce regulatory resistance at the local level, and only a fraction of projected solar capacity has been approved. Of the projects that have received local permits, many have not lined up financing and will never be built. What happens if Virginia shutters fossil-fuel generating capacity faster than solar can replace it?

Bacon’s bottom line: A Texas scenario is unlikely to play out in Virginia. But that’s the wrong scenario. California makes a much better basis for comparison. Even then, the comparison isn’t perfect. Virginia presents a unique situation. Virginia’s political class and environmental clerisy have not begun to grapple with the issues. We’re a long way from answers, but at least the panel discussion was asking some of the right questions.