Are Solar and Electric Utilities Really Cooperating?

Renewable energy can drive enormous job growth, and local investment, with some reports estimating that it will generate over 55,000 additional job-years worked right here in Virginia by 2030.  The key to tapping this potential is integrating new sources of energy into the existing electric grid. Since the grid is heavily regulated, this means finding policy solutions that give new sources of energy the space they need to grow.

That is why many in the solar industry strongly advocate for continuing on a path – utilized between the 2016 and 2017 legislative sessions – that delivered material successes in this past legislative session.  Starting last May the solar industry and the electric utilities – Appalachian Power, Dominion Energy, MD-DC-VA Solar Energy Industry Association, Powered By Facts, and Virginia’s Electric Cooperatives – engaged in an intensive and collaborative dialogue focused on the byzantine rules of these markets and the complex economics of the business models.  (Southern Environmental Law Center and Virginia League of Conservation Voters supported the development of the Bill creating community solar pilot programs discussed below.)

Our local utilities perform a colossal task in safely balancing a myriad of unique electricity supply sources and unique demand sinks, each minute of the day in each neighborhood and for your house.  This operating complexity coupled with a regulatory regime crafted over one hundred years – providing for safety, reliability, and just and reasonable rates – requires that we carefully consider the implementation of new electricity policies.

For a long time, those of us in the solar community would craft policy and legislation mostly independent from the utilities.  While we devoted significant resources to this process, time and again, we would take our solutions to the General Assembly only to realize that the utilities would not support our implementation approach to these often broadly supported policies.  This process led to some frustrating conversations, to say the least, and at the end of the day, we’d be no closer to advancing solar power in the commonwealth. All the while, we’ve watched North Carolina and Maryland enjoy tremendous success, creating both jobs and investment opportunities just over our borders.

This past year, we tried a different tack. We realized that we needed the utilities and the solar industry to engage from the beginning of the process, do our analytical homework, put in time face-to-face, and find common ground. With some tacit support from the General Assembly, we formed a working group that included representatives of the solar industry, the electric utilities, and other advocate groups.

This collaborative approach has generated tangible proof that the solar industry and the utilities can find common ground.  In just a few months, we have produced several pieces of legislation that the participants all recognize improves the operating environment and creates new market opportunities.  We thank the legislative leadership for their guidance as we navigated the General Assembly.

We are filled with optimism when we think about the future of energy in Virginia. The following conditions will continue to propel an open and dynamic market for solar – strong and growing demand, political awareness of the job growth and investment potential, and a sufficient local industry base. We need to enable entrepreneurs to build innovative businesses that can develop a skilled Virginia-based workforce.  Through a locally grown workforce, local innovation and entrepreneurial hunger we will capture the economic benefits and job growth here in Virginia.

The General Assembly has approved the following legislative Bills which the Rubin group developed through the above-described process.

SB 1393 (Electric Utilities; community solar pilot programs) requires that Dominion Virginia Power and Appalachian Power Company conduct a Community Solar Pilot Program for their retail customers. Community Solar provides solar energy for interested customers that cannot or chooses not to install solar panels at their residence or place of business.  This three-year pilot program will develop “community-scale” solar energy generators using third-parties to develop, construct and finance projects.  The electric utilities will administer, market and manage the subscriptions to the program.  Utilities also bear the risk of non-subscription, causing this Community-Solar program to blend competitive market realities with the regulated electric utility model.  We designed this program to deliver the following benefits to the subscribing customer:

  • no upfront costs – panels on a rooftop can require tens of thousands of dollars cash or financing
  • no requirement for a long-term agreement
  • the option to remain on the program for the life of the system, providing a hedge against energy price increases
  • a streamlined process (signing up is through the electric utility, and the transaction is on your normal electric bill)

SB 1394 (Small agricultural generators) will expand the opportunities for local farmers to benefit from solar on their land by raising the maximum allowable system size from 500 kW or 100% of consumption, to 1,500 kW or 150% of consumption.  This Bill provides the rules under which these small agricultural generators may sell their production to the local utility.  Given the relatively small scale of these generators, requiring the local electric utility to purchase the energy at a fair price provides a market for year-round revenue to farmers.  The pricing structure allows for these generators to benefit from the correlation between peak solar production and peak demand when market prices are at their highest.

SB 1395 (Permit by Rule Modifications, PBR) increases the upper limit from 100 to 150 MWs for renewable energy generators utilizing the PBR and allows regulated utilities to utilize the PBR rather than the State Corporation Commission process if all project costs are isolated and not passed onto the general customer base.  Previously, the Virginia Department of Environmental Quality’s ‘Permit by Rule (PBR)’ process limited its application to project under 100MWs.  Relative to the alternative State Corporation Commission ‘Certificate of Public Convenience and Necessity (CPCN)’ the PBR provides a streamlined and significantly less costly regulatory process.  Both processes require the same state oversight on the environmental and social impacts, and both provide the same protections to all Virginians.

As the renewable industry grows and evolves in Virginia, we see increased demand for projects exceeding 100 MWs. The influx of private investors and large, corporate buyers has fueled growth in larger projects. As such, the somewhat arbitrary number of 100 MW had become a self-imposed ceiling.

By |2018-08-10T15:02:27+00:00March 1st, 2017|Company Update, Policy, Virginia Solar|

Leave A Comment