Virginia legislation opens door to over 5 GW of renewable energy

New York (Platts)--13 Mar 2018 830 pm EDT/030 GMT

Recently passed legislation in Virginia shifts the renewable energy landscape by finding 5.5 GW of solar and wind energy are in the public interest and expediting the state's renewable energy project regulatory approval process.

"The Virginia legislation is a really good start that sets out a trajectory for where solar should go in the state," Maggie Clark, southeast state affairs manager at trade group Solar Energy Industries Association, said in a phone call Tuesday.

Acknowledging that you do not always get everything you want in negotiations, Clark said the solar industry is "relatively pleased" with the result.

Virginia Governor Ralph Northam signed the 2018 omnibus energy bill into law Friday. Known as Senate Bill 966, the legislation includes provisions for energy efficiency and energy storage, in addition to wind and solar. THE BILL UNFREEZES UTILITY RATES

The law also ends a utility rate freeze that has been in effect since 2015. The CPP plan is a measure introduced by the Obama administration designed to reduced power plant emissions. It faced legal uncertainty and the Trump administration is taking steps to reduce its scope. Dominion and AES subsidiary Appalachian Power are Virginia's two largest utilities.

"One of the reasons we felt this legislation necessary was due to the rate freeze in place that resulted from expected cost increases associated with the Clean Power Plan," Dominion spokesman Rayhan Daudani said in a phone call. "We now feel the risk and uncertainty associated with it [the CPP] has been mitigated, making it appropriate to move forward on this legislation," he added. The bill was the result of a broad stakeholder process that included the utilities, environmental groups and other interested parties. The idea was to facilitate a consensus-driven approach to policy in which all parties had to sign off.

In a perfect world the result would be more similar to a North Carolina program enacted in July 2017 that includes mandatory procurement goals, Clark said. The solar industry wants to make sure that when Virginia's process gets underway "we see the type of volume procured that the solar industry is able to provide," she said.

The 5.5 GW of renewable energy in Virginia is not a mandatory target or procurement, but serves as a regulatory greenlight for achieving that volume.

Others agreed that while the law is a step in the right direction toward a cleaner energy system, more could be done. Will Cleveland, a staff attorney with the Southern Environmental Law Center said in a phone call that the law is "a little more than business as usual but a good demonstration of the fact that solar is growing for economic reasons."

If done right, Virginia could see real growth in savings from energy efficiency that would both lower people's bills and lower the demand curve which would delay or make large investments in new baseload power plants unnecessary, Cleveland said.

The law increases funding for both utility- and shareholder-funded energy efficiency programs.

"So the hope is that by marrying renewable energy growth, energy efficiency and storage you suppress the need for incremental fossil generation and still have customers come out ahead economically," Cleveland said. DECLINING SOLAR COSTS COULD BOOST INSTALLATIONS, SAVE CUSTOMERS MONEY

Dominion listed utility-scale solar as its least-cost resource in its latest Integrated Resource Plan, Clark pointed out. Indeed, the company had already contemplated adding 5.2 GW of solar by 2042 in its IRP, Daudani said.

So while roughly 5 GW by 2024 is a more aggressive goal, "we think it's achievable especially given cost decreases associated with solar," he said. Increased volumes of solar could result in fuel cost reductions, which can provide "substantial savings to industrial customers, in particular, but also residential customers," he added. -- Jared Anderson,

-- Edited by Matt Eversman,

Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.