Tag Archives: Solar

Three 2016 Dominion Solar Plants Missed Targets

Dominion’s Scott Solar Facility in Powhatan Co.

Some of Dominion Energy Virginia’s recent solar installations, despite using technology designed to track the moving sun, have turned in disappointing energy results, fueling skepticism at the State Corporation Commission toward the utility’s claims for future solar energy success.

The three units were put in service in December 2016, with a nameplate capacity of 56 megawatts. Their operations were scrutinized in the pending annual update of the rate adjustment clause that pays for them, Rider US-2.  The criticism has spilled into the more important integrated resource plan case, also pending at the State Corporation Commission.

The utility persists in claiming a 25 percent capacity factory for its own solar plants, meaning they produce energy for the equivalent of one hour in four throughout the year.  These units are not getting there, not on a steady basis, with the financial consequences falling on customers.  Continue reading

Introducing a Novel Concept: Cost per Ton of CO2 Reduced

tji_studyby James A. Bacon

A new Thomas Jefferson Institute for Public Policy paper about the impact of a Renewable Portfolio Standard (RPS) on Virginia warrants close examination. You may or may not accept the study’s conclusion that implementing a requirement for 6% solar and wind in Virginia’s electricity mix by 2025 would increase electricity rates in Virginia by 9.85%, depress gross state product by $3.4 billion, and cost 24,000 jobs. Frankly, those who want to believe the numbers will believe them, and those who don’t want to believe them will not. Experts can argue all day about the assumptions, methodologies, models and data inputs that go into studies like this and none of it will mean anything to politicians or the public.

But the author, Timothy J. Considine with Natural Resource Economics, Inc., does raise a really fascinating question. Forget the electric rates, forget the jobs. Let’s say your No. 1 priority is reducing carbon dioxide emissions. Is mandating a minimum percentage of wind and solar production a cost-effective way to achieve your goal?

In the study, “Evaluating the Costs and Benefits of Renewable Energy Portfolio Standards for Virginia,” excerpted from a larger study encompassing 12 states, Consadine makes what seems to be an uncontroversial point: The cost of achieving RPS goals will vary from state to state, depending upon the cost structure of existing power sources and the availability of wind and solar resources. He writes:

For states with a fleet of low cost electricity generation capacity, imposition of RPS could raise electricity costs significantly higher because higher-cost wind and solar generation displace low cost sources of power.

Implementing a 6% RPS goal in Virginia, Consadine says, would reduce annual CO2 emissions by 7.6 million tons per year in 2025 at a total cost (including federal subsidies) of $182 million inflation-adjusted dollars. The cost to achieve those reductions: $182 per ton. The CO2 savings would increase in subsequent years and the cost would decline as the benefit from “free” fuel kicked in, driving down the cost per ton of CO2 avoided down to $136 by 2040.

That compares to the Environmental Protection Agency’s estimate of CO2’s social cost per ton of $12 to $24 (assuming a 5 percent discount rate to reflect the fact that a dollar today is worth more than a dollar in the future). Even if your sole priority in driving energy policy is CO2 emission, you have to confront the finding that the cost of implementing a 6% RPS goal for Virginia would exceed the social benefit by a margin of about 10 to 1.

I’m in no position to appraise Consadine’s methodology for arriving at these numbers. I’m sure that RPS advocates could poke holes in his approach, that Consadine could rebut them, and that the RPS advocates could counter the rebuttal. But a 10 to 1 differential is massive. Assuming Virginia’s goal is to reduce CO2 emissions at the lowest possible cost, as opposed to simply subsidizing the renewable energy sector, I think that everyone, including the most ardent environmentalists, would be open to the idea that there might be more cost-effective ways to achieve that goal.

While Virginians need not accept Consadine’s numbers at face value — it is always important to subject such studies to critical analysis — we should embrace the concept of “cost per ton of CO2 reduced,” we should seek to identify the most cost-effective means to cut CO2 emissions, and we should debate whether it makes sense to implement policies that cost more than the EPA’s estimated social cost. Finally, we should recognize the reality that policies that might make sense in other states might not make sense here.

How Solar Subsidies Might Backfire in Accomack

Does mixing sheep with solar panels make a solar "farm" an agricultural use?

Does mixing sheep with solar panels make a solar “farm” an agricultural use?

by James A. Bacon

Back in April, John VanKesteren told the Accomack County Board of Supervisors that he and his family wanted to build an 80-megawatt solar facility on their family farm. The 200-acre site they had selected was an ideal location: less than 1,000 yards from a power station. The family, organizing under the name of SunTec Solar Solutions, had aspirations of landing a $100 million solar energy project.

One might think that the community would embrace a project that would create wealth for local landowners, generate a slew of construction jobs, and increase the tax base of the economically depressed Eastern Shore county. But local planners and supervisors weren’t entirely pleased. They saw a solar facility conflicting with the agriculturally zoned use of the land.

“There’s a contradiction between agriculture and solar,” said Rich Morrison, the county’s planning director, in a report to the Board of Supervisors in September, according to Delmarva Now. “It’s basically pick one. You’re either picking solar or you’re picking ag. … They haven’t found a place to coexist.”

Last month the Board approved a planning commission request to start preparing an ordinance amendment that would remove utility-scale solar and wind farms from the county’s Agricultural Zoning District, severely limiting the potential to develop renewable power sources in the county.

One of the reasons cited for the amendment was a 2016 state law that provides tax exemptions on real and personal property, including equipment, for solar farms up to 20 megawatts in size. While the measure improves the economics of solar from the developer’s perspective, it undermines the economics of taxation from a county government perspective.

“It’s a different game with the ruling of the state and not being able to tax that property,” said Board Chairman Ron S. Wolff in the September board meeting. “That would’ve made a big difference in how I would’ve looked at it.”

Land-use conflicts may become more frequent in Virginia as the state energy mix shifts increasingly toward utility-scale solar, the most economically efficient way of producing solar electricity. Solar panels will consume thousands of acres of land just to provide the modest amount of electricity contemplated under the state’s current energy plan — and far more if Virginia were to meet the ambitious goals of environmentalists who want to clamp a lid on gas- and nuclear-fueled energy. While it may be theoretically possible to retrofit solar panels on building roofs, ease of construction favors utility-scale construction of long banks of solar panels on inexpensive farmland .

The problem is that in rural counties like Accomack with abundant farmland, that land is zoned agricultural, and local governments are the ones who define whether “agricultural” uses include solar. If solar facilities are mostly tax-exempt, local governments could perceive solar farms a revenue loser, not a winner.

The bill (HB1305) signed by the governor “provides a sales and use tax exemption for machinery, tools, and equipment of a public service corporation used to generate energy derived from sunlight or wind. The bill also … exempts from such [real and personal] property taxes 80% of the assessed value of such equipment used in projects equaling more than one megawatt.”

Dennis Nordstrom, a SunTec shareholder, argued that the two uses can coexist. Only 174 acres of the 200-acre site actually would be developed, and solar planels would occupy only 30% to 40% of available space. SunTec proposes partnering with Shooting Point Oyster Company to bring a flock of Hog Island sheep to graze among the panels, similar to what solar farms are doing in North Carolina. That way, the solar farm doubles as a sheep farm and preserves the agricultural use.

Nordstrom also says that the solar farm would yield higher tax revenue, even taking the tax exemption into account. Writes Delvmarva Now:

Based on recent real property tax bills for SunTec’s proposed site, the county received about $5,500 from the land annually, [Nordstrom] said. Switching to a mixed-use solar farm would bump that number to around $26,000 per year, based on the same value per acre the county assessor’s office gave to Accomack’s other solar project, in Oak Hall Nordstrom said.

“The county was a little bit upset, and I can understand this, because they (the state) basically took over their power of taxation,” he said.

However, as Nordstrom sees it, Accomack could garner an additional $15,000 annually from a mixed-use solar and sheep farm, versus a traditional agricultural site — around $375,000 over the solar farm’s 25-year lifespan.

Bacon’s bottom line: Clearly, tax subsidies had consequences that solar advocates did not anticipate. If Accomack’s Board of Supervisors ends up removing solar from the list of agricultural uses, solar energy in Virginia will be dealt a significant blow. If other counties adopt Accomack’s logic, the result could be disastrous. Assuming Accomack moves ahead as planned, the General Assembly should consider amending the legislation again. Gaining access to agriculturally zoned lands is more important to advancing the cause of solar in Virginia than the exemptions on sales and property taxes.