If big corporate customers start generating their own electricity, who will pay to build and maintain the electric transmission-distribution grid?
As the General Assembly reaches the mid-point of its session, solar-energy legislation sponsored by Republicans has a very good chance of passing, reports Robert Zullo with the Richmond Times-Dispatch.
The proposals emerged from lengthy discussions in a working group of Virginia’s electric utilities, electric cooperatives, and solar industry proponents. While the package is “a mixed bag,” said Will Cleaveland with the Southern Environmental Law Center, he conceded that it “leans slightly to the positive.”
According to Zullo, the package includes bills that:
- Allows farmers to sell more renewable energy generated on their property to utilities;
- Establishes a pilot community solar program for subscribing utility customers;
- Allows streamlined permitting for small-scale renewable energy projects; and
- Allows utilities to ask the State Corporation Commission for recovery of costs for pumped hydroelectric generation and storage facilities in Virginia’s coalfields. As envisioned, this pump-storage would be coupled with solar energy.
Bacon’s bottom line: Anything that injects more entrepreneurs and competition into the equation is a good thing. However, these bills leave unanswered perhaps the most important issue facing solar energy in the state: legal clarity for power-purchase agreements, specifically for arrangements involving third-party financing. A consortium of Fortune 500 corporations had requested clarification of laws that would make it easier for them to execute deals with third parties in order to generate their own solar energy. Power-purchase agreements are complex legal and financial instruments set up to extract maximum value from federal tax credits.
Many corporations have made a commitment to clean power and would like to derive a bigger percentage of their electricity from renewable energy sources, which in in most parts of Virginia means solar. From their perspective, the ideal law would allow them to generate their own solar electricity and sell surplus power back into the grid at the full retail rate. However, power companies argue that independent solar generators should recoup a lower wholesale rate for the electricity. Electric utilities oppose laws that allow competitors to capture retail market share without compensating the utilities (and their rate payers) for the cost of maintaining the transmission-distribution grid that everyone relies upon when the sun isn’t shining.
Until the General Assembly grapples with the fundamental issue of how to generate solar electricity without undermining the transmission-distribution grid, all the rest is window dressing.
