By Robert Zullo Richmond Times-Dispatch
A group of Republican lawmakers is touting an advancing clean energy legislative package that will, though critics say only modestly, crack open the door for more renewable energy options in Virginia.
“The word ‘conservation’ and the word ‘conservative’ comes from the same piece of Latin,” said Del. Randy Minchew, R-Loudoun. “No conservative should ever be disappointed to call themselves a conservationist. The two things are brother and sister terms.”
Much of the legislation was developed during the past year by a working group consisting of representatives from the state’s utilities and electric cooperatives and solar industry proponents and led by Mark Rubin, executive director of the Virginia Center for Consensus Building at Virginia Commonwealth University.
On the cusp of crossover Tuesday, the last day for each chamber to complete work on its own legislation except the budget bill, and with Republicans in control of both houses, they look likely to pass.
“The takeaway right now is that it’s a mixed bag but it leans slightly to the positive,” said Will Cleveland, an attorney with the Southern Environmental Law Center in Charlottesville, which pushes for more renewable energy options in a state where two powerful investor-owned utilities, Dominion Virginia Power and Appalachian Power, hold considerable sway over policy decisions.
Solar industry groups and big corporations such as Microsoft, Walmart, Best Buy, Ikea, Staples and Mars Inc. have clamored for a clearer legal framework that would allow more options for companies and consumers to procure renewable energy.
“In this political climate it is very encouraging that you have delegates and senators on both sides of the aisle carrying bills related to solar,” Cleveland said. “That being said, some of these bills are not perfect.”
The package includes legislation that allows farmers to sell more renewable energy generated on their property to utilities, establishes a pilot community solar program for subscribing utility customers; and allows streamlined permitting for small-scale renewable energy projects.
Other bills allow utilities to ask the State Corporation Commission for recovery of costs for pumped hydroelectric generation and storage facilities in Virginia’s struggling coalfield regions.
“We’re suffering in southwest Virginia from the decline of coal,” said Del. Terry Kilgore, R-Scott, whose pumped storage bill, HB 1760, cleared the House last month and advanced out of the Senate Commerce and Labor Committee on Friday. “But this is one way that we can get into the renewable side.”
Pumped storage projects move water between two reservoirs at different elevations to store energy and generate electricity.
The concept is that when electricity demand is low, excess generation capacity is used to pump water to the higher elevation, according to the Federal Energy Regulatory Commission. When demand is high, stored water is released to the lower reservoir through a turbine to generate electricity.
In Southwest Virginia, the idea is to use abandoned mines as pumped storage facilities connected at least in part to renewable generation, Kilgore said.
“The key to really, really making renewables take hold and becoming a much more important part of the overall energy mix in Virginia is that ability to store the excess energy when it’s produced,” said Sen. Frank Wagner, R-Virginia Beach.
“Virginia’s making steps, but it’s approaching it in a deliberate and planned manner that I think will result in not having some of the problems in some of the other states that have gone aggressively into it only to have to reverse.”
Though Virginia has boosted its solar production, with about 100 megawatts installed and about 1,300 megawatts under development, it lags far behind other states, including North Carolina, where 1,140 megawatts of solar capacity was installed in 2015 alone, according to the Solar Energy Industries Association.
“Virginia is a state where there hasn’t been a huge amount of solar development to date. It’s one that we’re watching,” said Sean Gallagher, the association’s vice president of state affairs. “The states that have seen strong solar market development have typically done something to kick that off.”
The package of bills the GOP lawmakers are pushing won’t exactly blast open the doors, but that’s intentional, they said.
“Virginia’s about taking a methodical approach to some of these investments,” Kilgore said. “I think everybody realizes up here and supports the solar industry and improving the solar industry and improving solar investment in Virginia. We’re going to take small steps instead of large steps.”
Absent from the legislation that will move forward: legal clarity for power-purchase agreements, specifically arrangements involving third-party financing.
A bill by Del. David Toscano, D-Charlottesville, that would have authorized third-party power purchase agreements for nonresidential customers died in a House energy subcommittee.
Another that is still alive, by Kilgore, would extend pilot power purchase agreements to “nonprofit, private institutions of higher education” in Appalachian Power’s service area.
Power purchase arrangements generally involve a third-party developer who owns, operates and maintains the solar array or wind generation and a customer who agrees to site the system on his property and purchases electricity produced by the system for a predetermined period, according to the U.S. Environmental Protection Agency.
Generally, Virginia law allows customers to obtain 100 percent renewable energy from a licensed non-utility “competitive service provider.”
However, if the incumbent utility in that customer’s area receives approval from the State Corporation Commission also to offer a 100 percent renewable product, also called a “green tariff,” no new competitive service provider may set up shop in the utility’s service territory.
In Dominion Virginia Power’s service area, the state created a pilot power purchase agreement program, not the same as green tariff, for wind and solar facilities on a customer’s property, though it is only available to certain customers and includes limits on how much each customer can generate.
The law that created the program says a customer who wants to purchase electricity from a third party must utilize the pilot program in Dominion’s territory. Otherwise, the customer’s supplier must provide 100 percent of the load requirements, though Cleveland, the Southern Environmental Law Center attorney, says there’s disagreement in cases before the SCC on that issue.
Appalachian Power is seeking permission from the SCC for its own green tariff in its Southwest Virginia service area, though opponents call it a thinly veiled attempt to use repackaged renewable generation from elsewhere to keep out competition from third-party providers.
Cleveland said the law center long has argued that Virginia’s existing net-metering law allows customers to enter into agreements with third-party providers anywhere in the state. Net-metering means customers only pay the utilities for the difference between what they produce from their systems and their total usage.
Third-party arrangements are attractive for businesses and residential customers, because they defray the initial expense of installing solar panels.
A brief filed last month by the Virginia Attorney General’s Office in Appalachian’s green tariff case supports the Southern Environmental Law Center and others’ contentions, writing that the “plain language” of the net-metering law allows “eligible customer-generators to contract with a third-party to own and operate a renewable electrical generating facility on the eligible customer-generator’s premises to supply all or part of that customer-generator’s load requirement.”
Cases currently pending before the SCC could provide more clarity. Direct Energy, a Houston-headquartered energy services providers, is seeking to provide 100 percent renewable energy to customers in Dominion’s service area and has asked the commission to rule on legal issues surrounding that effort.
And though Kilgore and other lawmakers said working groups like Rubin’s could iron out the issues down the road, Cleveland said that might not be necessary.
”I don’t think we need additional legislation to clarify the issue,” he said. “What we need is some bold moves from the industry to start offering these third-party options.”
Easier said than done, said Joe Moore, vice president of operations for Altenergy, a solar installation firm that works in several states, including Virginia.
Moore, whose company has worked with Dominion Virginia Power on some projects, noted that the utility also has issued cease-and-desist orders in the past to third-party providers.
”It takes a lot of capital investment to do a system like that and not know whether it’s going to work out,” he said.
HB2303 by Del. J. Randall Minchew, R-Loudoun: Creates a “small agricultural generators” program for such producers to sell to electricity to utilities under power purchase agreements. Limits renewable energy systems to those used as part of an agricultural business and having a capacity no more than 1.5 megawatts, not to exceed 150 percent of the customer’s expected annual energy consumption.
SB1393 by Sen. Frank W. Wagner, R-Virginia Beach: Establishes community solar pilot projects for utilities to sell power to subscribing customers under a “voluntary companion rate schedule.”
Solar arrays are to be “acquired by an investor-owned utility through an asset purchase agreement or is subject to a power purchase agreement under which the utility purchases the facility’s output from a third party.”
Maximum generating capacity limits are 10 megawatts in Appalachian Power’s service and 40 megawatts in Dominion’s. Utilities are directed to examine options to “facilitate the subscribing by low-income customers to the utility’s pilot program” and “disclose to subscribing customers the cost difference between the voluntary companion rate schedule and rate the customer would pay if it was not a subscriber.”
HB 1760 Del. Terry G. Kilgore, R-Scott, and SB 1418, Sen. A. Benton Chafin, Jr., R-Russell: Authorizes electrical utilities to request rate adjustment clauses from the State Corporation Commission for recovery of costs of one or more “pumped hydroelectricity generation and storage facilities” that utilize renewable energy “as all or a portion of the power source” in coalfield regions.
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