The Growing Clout of Virginia’s Solar Lobby

by James A. Bacon

It may be a while before the solar industry matches the clout of Dominion Energy and Appalachian Power, but it has come into its own as a lobbying and political player. The new reality hit me forcefully when the Virginia Solar for All Campaign issued a statement applauding the advance of the Virginia Clean Economy Act out of committee yesterday.

“The House of Delegates is taking bold action on energy, advancing legislation that will create a clean energy economy, put Virginia on a path to 100% clean energy, and eliminate harmful carbon emissions to turn back the tide against climate change,” said Rachel Smucker, Virginia Policy and Development Manager for the Maryland Delaware Virginia Solar Energy Industries Association (MDV-SEIA).

Distributed solar generation — small-scale rooftop and community projects — is a key component of the bill, which would mandate a 100% renewable electric grid by 2050. At present, distributed solar is capped at 1% of Dominion’s peak load forecast. Lifting that cap, expanding opportunities for Power Purchase Agreements (PPAs), and mandating 100% renewable energy sources would open up multibillion-dollar market opportunities for solar companies.

The collection of logos seen above, representing members of the Virginia Solar for All Campaign, does not even account for all the solar players in the state.

As with every industry coalition, it is useful to follow the money.

At present, the main role of solar companies is to develop solar projects — identify sites, acquire land (often requiring the assembly of multiple parcels), obtaining state and local permits (sometimes in the face of stiff local opposition), erecting solar panels, and then selling the projects to a regulated utility. In Virginia, for the most part, that has meant selling to Dominion, which does not want to get into the messy and contentious business of developing solar farms itself. While developing solar sites can be profitable, the amount of capacity that solar businesses can own, operate and re-sell is capped at a low level. The other avenue for developing solar is to build “net-metered” solar (in which the owner of solar panels can sell surplus electricity to a utility) up to 1% of total forecast peak demand. That limit has been reached, so without a change in the law, there is no more room for expansion.

The Virginia Clean Economy Act would turbo-charge the independent solar industry in at least three ways over the short term. It would increase the net-metering cap to 6%, boost the power-purchase agreement cap from 57 megawatts (Dominion and Apco) to 500 megawatts, and create a 900-megawatt carveout for distributed generation. Enactment of the bill would represent a massive boon to the state’s solar industry.

A Virginia Commonwealth University study commissioned by Virginia Solar for All Campaign says that Virginia currently has less than 100 megawatts of distributed solar, far below that of neighboring states. Installing, 2,500 megawatts would equal 3% of statewide electricity use and would increase the number of solar-related jobs by roughly 10 times.

Excessive reliance upon intermittent energy sources like solar and wind could create grid-stability issues. But the VCU study contends that Virginia can get up to 19% of its energy from “distributed” (decentralized, small-scale) solar and 30% of its total electricity from renewable energy sources without creating significant operating issues. I can’t imagine that Dominion and Apco, both of which are regulated monopolies, are happy about the prospect of so much competition, and lawmakers need to give serious thought to the consequences for the utilities, which are responsible for ensuring the integrity and reliability of the electric grid. However the debate evolves, it seems pretty clear that solar corporations and nonprofits will be playing a bigger role in Virginia’s economy and exercising more clout in the General Assembly.

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10 responses to “The Growing Clout of Virginia’s Solar Lobby

  1. Press releases are good. Actual bills are better, and the substitute versions of various bills — heavily negotiated — that passed out of subcommittee are still not available on the LIS system. So we patiently await that and then may weigh in….knowing the revisions will continue perhaps until March. (Sorry folks, I did not stay there till past midnight for that subcommittee.) A Senate committee takes up the same issue over the weekend in an expected Sunday meeting.

    The solar groups do continue to get better organized, and have perhaps the best lobbyist on land use issues on their team. It is also key that they are offering products consumers want, including products outside the utility monopoly. They are winning more battles with local governments, and I noted this week they are expanding that major tax credit the localities hate. We’ll see what subsidies they have baked into this new bill.

  2. I think I would rather have a set of Ginsu knifes. I wonder if Virginians are aware of the huge solar lemon in Nevada. It cost a billion bucks and is already obsolete. The solar farms deforest our beautiful state and do not give back enough. And who is going to clean up the obsolete solar farms in 20 years?

  3. We should recognize that in almost every industry the greatest innovation and job creation comes from small to medium size businesses. Opening up our energy industry in Virginia to increased participation from independent energy producers and energy service companies would increase our choices, lower our costs, and spur economic development and job creation.

    Other states that have done this have found it to be true. Those states have also created ways for our important utilities to continue to prosper and serve their customers better.

    The difficulty in Virginia is that our current regulatory scheme creates a zero sum game. APCo and Dominion see that modernizing our energy system in ways that other states have done harms their interests because we pay them more only when they build more.

    Once this obstacle has been removed, as it has in 19 other states, the utilities have opportunities to earn more by serving their customers better (performance-based rates, etc.).

    Monopoly power does not grant a utility unlimited power to extract money from their customers. Although, that is how it has evolved in Virginia. The natural monopoly is for the wires, not generation and other services.

    Many of the new energy technologies can be deployed less expensively and more flexibly if accomplished by independent companies. Solar, storage and other distributed resources have the greatest value and least impact when placed in the distribution grid rather than at the transmission level.

    We need Dominion to transform the grid to accommodate the necessary two-way flow of energy and information and create the platform and transaction services for everyone to use. They will be paid well to do this.

    Instead, they are inflating our prices and limiting our choices by trying to own and control it all. The times they are a changin’. There is room for everyone to succeed if we do it right.

    These new initiatives are a step in the right direction for the new-tech businesses, but we need a path to help our big utilities transition into a new role as well.

  4. Re: “I can’t imagine that Dominion and Apco, both of which are regulated monopolies, are happy about the prospect of so much competition, and lawmakers need to give serious thought to the consequences for the utilities, which are responsible for ensuring the integrity and reliability of the electric grid.”

    Serious thought about the utilities’ profit margins is one thing; serious concern for the “integrity and reliability of the electric grid” is another. Lifting the cap on distributed solar is necessary and overdue, and despite the direct competitive sales threat, it will create a tremendous opportunity for Dominion too, as somebody has to supply the off-solar generation and deliver it; somebody has to maintain the two-way-adaptable grid and cost-effective add-ons like batteries when they come into vogue. Expanding opportunities for PPAs will help promote distributed generation among customers historically indifferent to it and unwilling to pay the up-front cost to achieve the long term savings. Where I jump off this train, screaming No!, is when the solar lobby talks about “100% renewables.” Let the wholesale electricity market sort that out: solar is already cost-competitive up to around 30% of total generation, and that percentage can go higher if somebody actually develops cheap, safe battery storage (current lithium-ion technology is never going to cut it for widespread use, Elon Musk notwithstanding) — but, there must always be non-solar, 24/7-reliable (not wind either), generation available.

    The reason solar ceases to be as competitive above 30% of grid generation is that the daytime (peak solar hours) price in the market will drop due to the competition. But solar has nearly zero marginal cost to operate, you point out? Yes, but the off-peak generation also has to recover its costs, which are not zero, so when these off-peak (generally fossil-fueled) sources are also running, the market price rises accordingly and the profit margin for solar rises with the market price.

    If legislative mandates interfere with these market forces, e.g. by compelling “100% renewables,” the market price during those daytime solar hours is pushed lower, to the point where more solar cannot be financed without subsidies.

    The peak solar hours are not when the peak load typically occurs; that is in the evening, after the work day and around or after sunset. If there’s wind generation, it too typically diminishes around sunset. Now what is this other generation on the grid that’s going to supply power when the sun and wind aren’t producing enough? Cycling generation (such as gas turbines) can be shut down or brought back on-line on fairly short notice; but that flexibility imposes a design that is less efficient. The cheapest non-renewables generation is “baseload” generation (e.g., nuclear, coal) that is not designed to cycle on/off except, at best, on notice hours or days ahead. But if these units aren’t needed during sunny days, they will not recover their costs in all hours, and eventually will not run at a profit overall; they will be shut down — again, unless they are subsidized to stay in operation (ask Dominion about the 10-year subsidy they recently negotiated with the State of Connecticut to keep their Millstone Nuclear Plant open). A grid without any baseload generation, however, is not going to generate power at the lowest overall price for customers.

    This discussion concerns where we are today on the eastern regional grids; I’m ignoring the complicating overlay of substantial wind power generation coming on-line and going off, if that develops here also, not to mention the further complication (though largely beneficial) of widespread battery storage, which will have the effect of “time-shifting” solar and wind power from when it occurred to when it is needed most (and will sell at the highest market price). With sufficient batteries, you could, theoretically, generate just about all the electricity required on wind-less evenings and nights from wind and solar when available, storing windy, midday generation in excess of load at the time for later release. But, first, that battery technology simply does not yet exist; and second, the grid must have backup capabilities to “weather the storm” of an extended cold snap or heat wave combined with a string of days without sun or wind. Mandating “100% renewables” generation on the gamble that sufficient batteries will somehow be there when needed could be extremely foolish, or costly, or both.

    There are folks like Elon Musk who claim we have adequate battery technology today; in fact he’s offering to sell them to us now. Well, certainly we’ve made strides with lithium-ion manufacturing technology, but the insurmountable facts are: these batteries require a lot of scarce cobalt, mined under harsh conditions; and, these batteries have a penchant for exploding unless manufactured to extremely high (and expensive) quality standards; and, they slowly degrade and must be replaced periodically (there is no way to renew a Li+ battery by renewing just one component). At today’s battery prices, reflecting a fairly mature market for hybrid autos, they are at best break-even additions to the grid, except where grid prices are artificially high for other reasons. Other battery technologies have their own advantages and limitations, and despite huge R&D optimism a breakthrough on new batteries is always “10 years away.”

    Let’s leave the experimentation with 100% renewables to Germany.

    • Thanks, Acbar, for your fine, fact based, and highly informed comment. It covers the waterfront across a vitally important topic, that regarding today’s limitations and risks of solar. Given our own chronic lack of memory storage within our hop-scotch modern brains, we need to be constantly reminded of these key limitations and risks of solar, and the animal spirits at war against our memory and appreciation of them.

  5. re: loss of farmland –

    totally bogus narrative. There are already massive amounts of land no longer used for farming – it’s just a misleading narrative.

    re: experimental solar

    New technology inevitably is going to have successes and failures – just look at cancer research or hybrid cars or LED TVs which went through a series of failures before it was finally perfected.

    This is how we go forward on just about anything so it’s not to be feared nor should it be used to try to stop it.

    re: the real costs of solar

    I AGREE that there is a cost for solar (and wind) over and above their basic costs, that relates to the fact that they are no dispatchable, require grid upgrades to handle the variability and storage.

    so apple-to-apple levelized costs need to include those other costs.

    BUT – we ALSO need to include the other costs for how much land is needed for pipelines to fuel gas plants and the like.

    No energy source is without impacts and every energy source has limitations. Coal and Nukes have their limitations and external costs also.

    to the extent that “burning” solar and wind can offset the burning of gas is a good thing , not to be tossed away because it is not a perfect fuel.

  6. As far as the falling behind neighboring states, is always one of the critiques about Virginia. But it is weak.

    NC: Many decades ago, unrelated to solar, North Carolina had rules to subsidize alternate energy sources, due to the 1970’s oil price shocks, back in the day when oil was used for electric gen. So when solar came along with federal subsidies and NC subsidies, the NC+Fed subsidies allowed a lot of solar to be built.

    MD: Maryland may have more solar but that is the only power source acceptable to Dems. Maryland is heavily dependent on importing power, that way they do not have to have politically unacceptable in-state generation. Gov Hogan is trying to encourage more in-state generation even if it has to be nukes or heaven forbid nat gas.

    Virginia is in a favorable position to intelligently expand on solar and maybe off-shore wind. But I wish we could try to do the intelligent not political haste options. How we deal with Dominion I dunno..if I was Gov I would consider revamping our relationship with utilities, but that assumes there is a better way out there somewhere.

  7. TBill, there are better ways out there and 35-40% of the other states are implementing them. There is no reason that we cannot create an appropriate version for Virginia.

    Failing to do so will limit our freedom of choice, increase our costs, and reduce our economic competitiveness.

  8. I agree with your general outline Acbar. But if we keep our demand stable, we already have all of the conventional, dispatchable power plants to meet our peak power requirements in Virginia. Dominion has built three new gas-fired plants that we will pay for over the next 40 years regardless of how much they are used.

    Building more renewable sources does not threaten reliability as some claim. We already have enough dispatchable plants to meet our load now and cover any output reductions from renewables. There is a real issue of having the ability to ramp up units properly to meet the high evening loads as the sun goes down. Storage in pumped hydro, batteries and EVs can significantly help with this. So can demand management, time-of-day rates with real customer feedback and control. Thermal storage and other types of non-battery storage might also contribute. New battery designs with a much higher energy density and faster charging rates than lithium-ion chemistries are expected soon, without some of the drawbacks. But you are right, we will have to see if the promise is materialized.

    We face a significant issue with Virginia’s four nuclear plants reaching the end of their licenses in the 2030s. Many see them as a source of low-carbon generation. My concern, as I have expressed, is that the billions needed for their refurbishment to make them safe to operate for another 20 years will make the electricity they generate prohibitively expensive, especially considering the billions in guaranteed profit that Dominion will derive from them.

    I have proposed that a statewide program of saving about 100 MW per year through energy efficiency. This would offset the need for those facilities and provide a higher reliability and capacity factor than what the nuclear units provide. Other states save at least this much per year. But it is hard to get a sensible, affordable long-term approach to energy issues here in Virginia.

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