A Good Year for Retail Solar in Virginia

It's not everything environmentalists wanted, but a new law will create new retail solar options for consumers.

It’s not everything environmentalists wanted, but a new law will create new retail solar options for consumers. Photo credit: VA SUN

  • A collaborative process involving utilities, solar developers and environmentalists broke the legislative logjam thwarting the growth of retail solar in Virginia.
  • A new law will enable electric customers to subscribe to green electricity built by independent developers.
  • The same process will be used to tackle tough issues like net metering.

So, you want to help save the world from global warming but you’re stymied from installing solar panels atop your house. Maybe you rent the place. Maybe trees are shading the roof. Maybe you’re planning to move soon. Or maybe you just don’t have the money.

There are many reasons why even the most zealous green power advocates are stuck buying the same regular, garden-variety electricity as everyone else. But now, thanks to legislation passed in the 2017 General Assembly session, Virginia energy consumers soon will have a new option — subscribing to solar power rather than owning it outright.

SB 1393 requires Dominion Virginia Power and Appalachian Power to create solar programs in which the utilities bundle electricity from community solar projects — typically small solar farms or large rooftop arrays — and resell it to customers. Under the new plans, customers pay monthly knowing that their dollars are supporting development of solar facilities near where they live. If more customers subscribe, more solar farms will be built.

The scheme benefits small-scale solar developers as well. They don’t have to worry about signing up subscribers and the hassle that goes with billing and collections. It’s up to us to develop a program that’s attractive to subscribers,” says Katharine Bond, senior policy advisor for Dominion. The arrangement even works for rate payers who have no interest in going green. Says Bond: “The only people who bear the cost are those who elect to participate.”

The legislation represents a genuine step forward for retail solar in Virginia. “At the end of the day, I think it’s a really good policy that will benefit Virginians,” says Mike Town, executive director of the Virginia League of Conservation Voters. Equally important is the way in which utilities, solar developers and environmental groups sat down to work it out. “It’s precedent setting. It will lay the groundwork for progress down the road.”

While Virginia’s utilities are building large, utility-scale solar projects, state laws and regulations have made it all but impossible for independent developers to create smaller projects and sell electricity to individual businesses and households. Every year solar backers have submitted bills in the General Assembly to open up the market, and every year the legislation has been beaten back. Utilities have opposed measures that would cut into their monopoly in retail electricity sales.

In the 2016 General Assembly session, legislators submitted several retail solar bills that failed to pass. This time, lawmakers asked the utilities and solar industry to work on a compromise and come back with a proposal that would fare better in 2017. Dominion Virginia Power, Appalachian Power, and Virginia’s electric co-ops sat down with representatives of the solar energy to negotiate legislation that would let independent solar developers into the game.

Mark E. Rubin, director of the Virginia Center for Consensus Building at Virginia Commonwealth University, was hired to facilitate the dialogue. As the industry groups approached agreement, Rubin invited environmentalist groups to join the conversation. They injected important perspectives that would win the support of the environmental lobby.

“I think the general view was that this process turned out to be a helpful way to get together and work through issues,” Rubin says. “Just the idea that you had different stakeholders siting around the table having very candid, very productive discussions was a big deal in and of itself.”

The legislation doesn’t make everyone happy. In theory, existing Virginia law allows independent companies to sell renewable electricity to customers if neither Dominion nor Apco have tariffs to do so. Delaware-based Direct Energy filed a petition last year for declaratory judgment with the State Corporation Commission, asking the regulatory body to clarify the company’s rights under Virginia law to sell electricity to Dominion and Apco customers. The SCC ruled earlier this year that it could, but only as long as the utilities weren’t doing it. If utilities entered the market, Direct Energy could continue serving existing customers but couldn’t sign up new ones.

“It can take months or years of marketing for a third-party supplier to build up enough of a customer base to make the whole effort worthwhile, so the SCC’s ruling makes the Virginia residential market much less attractive,” writes Ivy Main, editor of the Virginia chapter of the Sierra Club’s “Power for the People” blog.

But environmental and solar-industry players participating in the collaborative process say that half a loaf is better than none.

“This is a pretty big win,” says Will Cleveland, staff attorney with the Southern Environmental Law Center. “The model they chose isn’t necessarily the model we would have advocated, but it’s a perfectly acceptable model. … If you want to subscribe to the program, it’s easy in-easy out. The solar rate is frozen. It will not rise. … We think that the rate will be very competitive with normal rates.”

“We spend a lot of time talking about all the things that Dominion doesn’t do right, and deservedly so,” says Towns with the Virginia League of Conservation Vogers. “But if you’re a resident and have big trees in front of your house, you can be part of the solar revolution. … It’s good for the market, good for the environment, good for the rate payer.”

People want the ability to band together to build their own communal facilities. “I have to tell them that’s not legal,” says Aaron Sutch, program director of VA SUN, a non-profit that runs solar co-ops that negotiate with installers for better rates. But “at the end of the day, [SB 1393] is a positive step in the right direction.”

The General Assembly passed two other bills that move solar energy forward incrementally. One bill allows farmers to use up to 25 percent of their land for a solar generating facility and lets them sell surplus energy not consumed by the farm to their utility. A second measure increases the capacity of small renewable projects — from 100 to 150 MW — that is exempt from environmental review by the State Corporation Commission.

The same collaborative process that led to SB 1383 can serve as the basis for working out solutions to other seemingly intractable issues, and the discussions with Rubin are continuing. One big outstanding issue, he says, is net metering — a billing mechanism that credits individual solar owners with surplus electricity they feed into the grid. Owners want utilities to pay them the retail rate; utilities want to pay them the wholesale rate.

“It’s a very complicated issue,” says Rubin. “We talked about it some last time and didn’t get there. But folks were encouraged by the tenor of the discussion.”

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19 responses to “A Good Year for Retail Solar in Virginia

  1. In the future, I hope such efforts include a broader array of organizations. Energy decisions like this affect all consumers and are especially important for older and low income consumers. In the past, consumer groups and others were involved but we were not included in this project.

  2. The rules blocking community solar are what I ran aground of 5+ years ago when I took a Colorado program of shared solar to NOVEC. But look out for this ‘improvement’ to the rules. The new bill that is supposed to allow community solar in VA is being called “misleading” by several people including Aaron Sutch, who heads the Virginia Chapter of Solar United Neighborhoods (VA SUN) and Jennifer Wexton who tells us not to be confused be confused by the name.

    Wexton’s bill, SB 1208 was, in her words, “rolled into” another bill — SB 1393 — and the 2 bills “are not similar in any way.” She said elements of her bill were modeled after Colorado’s community solar program.

    “Real community solar is when the community, not a monopoly utility, owns and develops a shared solar project,” Sutch wrote in this month’s chapter newsletter. “Real community solar enables utility customers to own or lease a share of a solar project and see a positive financial return. Instead, the bill passed by the General Assembly does not allow direct community ownership or administration of the project.”

    Added Sutch: “Under SB 1393, the utility decides where the project will be built and acts as a middleman buying the power from the solar array owner and then selling it to the consumer. SB 1393 also lets the utility buy the solar array project itself, which makes such projects just another form of utility-provided energy.”

    SB 1393 also requires pilot programs to be administered by the state’s two investor-owned utilities, Dominion Virginia Power and Appalachian Power. The utilities are to contract for the output from solar installers and then sell the power to ratepayers interested in participating. The price for that power and other details are to be approved by the state Corporation Commission.

    As Jim states … “Ivy Main, a frequent critic of Dominion, has undressed the language describing the “Dominion Community Solar” program. She focused on the how the utility wanted to charge an extra 4 cents per kilowatt hour on top of its regular retail rate of about 11 cents,” with the added un-community benefit of using that extra charge to fund other Dominion solar projects that have “nothing to do with community solar.”

    So there it is … another ruse, like the “we have very low rates” ruse that does not include the RAC in the comparison. Me, I am ready to quit arguing here … now that some VA politicians are willing to speak openly about why VA is where we are on the global path to clean energy.

    It has been fun putting together for you what is happening in other places to show how far behind we in VA actually are, but I believe what Chap Peterson said recently … “He plans to introduce a bipartisan program in the 2018 session, which would reduce the political influence of Dominion and increase the influence of consumers, saying there are a lot of ways to do this, under the current state Constitution. Once we change the power status, you’ll see lower electric prices and a greater emphasis on renewables. It’s that simple.”
    http://southeastenergynews.com/2017/04/12/qa-a-virginia-lawmaker-challenges-utility-over-customer-charges/

  3. If this approach truly lets consumers chose whether or not to participate, it seems like a positive step. If another producer can offer me a lower electric bill, I’d be quite likely to consider a switch. But I have no interest in paying more for the same amount of power.

    As far as limiting any company’s ability to lobby, I get concerned government is restricting speech based on content. That result can never be tolerated.

  4. James: Given that Dominion, as I understand it, is a sponsor of your blog, it’s perhaps understandable to some that you and others are predisposed to shine a positive light on the minor solar gains from this year’s General Assembly. But as the previous comment notes, please distinguish between gains for Dominion and those that have yet to be achieved for residential ratepayers. Virginia still lags way behind other states, including many in the Southeast, RE solar for homeowners and communities.

    • Jim, There are two ways to go about increasing solar’s market share in Virginia. One is to relentlessly condemn Dominion and other utilities for failing to live up to the desires and expectations of environmentalists. Where has that gotten you over the years? Nowhere. The other is to sit down with Dominion/Apco/ODEC and hash out the difficult issues one by one and make incremental progress toward your goals. In one year, that approach has accomplished more for retail solar than years of demonizing Dominion. The big picture story here is the creation of an ongoing process by which more progress can be made. Environmental groups like SELC and VLCV understand that.

      • SELC and VLCV may understand that. With a narrow exception for SELC’s participation in the entire Rubin group, I hardly call solar for farms and utility scale significant steps forward for residential rooftop and real community solar. It’s clear that Dominion is working against that in the General Assembly, the SCC. I hardly call that demonizing Dominion. Take a look at Ed Gillespie’s and Tom Perriello’s statements about the infamous SB1349 law from the 2015 General Assembly. There may be a shift underway toward enabling a bonafide market for solar in Virginia a la the Carolinas and Georgia.

        • Re-thinking solar has to be part of re-thinking wind, energy efficiency, battery storage, micro-grids, the whole works. As Tom Hadwin frequently says on this blog, Virginia needs a regulatory regime that incentivizes Dominion, Apco and ODEC to go along with things that are not currently in their self interest. Moreover, the push for green energy has to be balanced with cost and reliability. It’s a very complex picture, and there are no simple answers.

  5. Virginia will only be truly free when the last Dominion lobbyist is strangled with the entrails of the last “politician for life” in the General Assembly.

  6. All stakeholders should have a seat at the table, but it seems pretty scary to me to allow true believer environmentalists to make decisions about energy, something that is critical to safety, income and a quality life. Keep in mind that the same basic groups rallied for an extremely dense Tysons because it would reduce SOV automobile traffic drastically. Yet, SOV trips are the leading mode of transportation into and out of Tysons and will continue to grow in number, even as they might decline percentage wide.

    We also need to fear overreach, which includes agency actions beyond their enabling statutes and requirements to apply procedural safeguards.

    Getting people, including bona fide representatives of consumers, to the table with the participation of the VSCC staff is likely to result in a better energy policy than one dictated by any single stakeholder group, including Dominion or hard-line environmentalists.

  7. As long as we continue to give utilities an incentive to earn more when they build more, utilities will continue to try and control the development of solar which will slow down its development and increase its cost.

    With the state solar energy credit in North Carolina, that state developed the second highest amount of installed solar of any state in the US. Now that the state energy credit has expired and Duke has sponsored policies that make it difficult for third parties, the development of solar has slowed significantly in North Carolina compared to previous years even though solar continues to decline in price.

    If we develop appropriate new rules that allow utilities to prosper by providing the services we need, there will be no need for them to obstruct third-parties. Solar will develop rapidly where it is economic and there will be no added charges for putting solar in the rate base or for other unnecessary surcharges.

    Utilities should identify zones within their grid that would most benefit from local generation and recognize all of the costs and benefits of adding solar in that zone and fairly pay for the distributed generation of solar through a Value of Solar tariff. This would encourage the development of solar throughout the grid with no cross subsidies in a way that would benefit everyone.

    Utilities would only have to propose tariffs for various zones for SCC review and perhaps get a performance based rate for providing excellent service and rapid connections of various distributed energy resources. They would earn a return for providing various services and would not need to own and control all new solar additions. This would considerably open up the market and let each customer decide what was in their interest rather than have that determined by the utility.

  8. BI haven’t studied this deal, and the devil is in the details. What’s needed above all is transparency — not just in the way the program works but in the way the cost of it, to other ratepayers, will be reflected in Dominion’s retail rates. These programs are too often shaped by starry-eyed dreamers whose naive visions of a Green lifestyle are promoted by equipment manufacturers and politicians with far more cynical goals, made achievable through hidden subsidies, with powerful vested commercial interests opposed to ever undoing them. IMHO the cleanest, best, economic subsidies for solar (if any are required today at all) come directly to customers through the tax code, because they are not hidden in utility rates; their cost remains highly visible and the pressure to repeal them never goes away. Next best is a “retail access” regime where Dominion’s role (or NOVEC’s, etc.) is that of an electricity distribution common carrier with competitors including “community solar” free to create whatever “electric service” they wish, for anyone willing to trust in it and pay for it. Having Dominion deeply involved in creating and running an electric customer program that competes with its own retail services is, on the face of it, absurd.

    • What I fear is decisions made by stakeholders with other agendas that make my power bill higher than its costs for production and distribution, with appropriate overheads. In most markets affected by technology, unit costs fall. Think of your first desktop computer’s capabilities and price against what you use now.

      I’m hopeful that technology will drive down prices for generation of non-fossil fuel electricity. If so, demand will rise. What I fear is ideology driving energy decisions to force consumers to pay more for power than the economics dictate. This ideology can come from the incumbents who want to get the last dime from their embedded investment or from environmentalists who want people to pay more than economic costs because its the right thing to do.

      And who is at the table to represent the consumer interest?

      • TMT,

        You have hit on a very important point and one that is usually overlooked in our energy system discussions. For three-quarters of the 20th century every time a new power plant was built our cost of electricity declined. This decreasing unit-cost relationship fueled the huge post-world War II buildup of our economy.

        In the early 1970’s after the first oil embargo, the utility industry underwent a sea-change that has not been recognized by its executives nor by its regulators. After that time, the utility business became an increasing unit-cost industry. Every time a new power plant was built our energy prices went up.

        This is a fundamental shift in the nature of an industry and requires entirely new behaviors and ways of thinking. It was only the relative lack of price elasticity of electricity that allowed the same mindset and behavior to remain in place.

        With renewables and storage declining in price by 50% every 4-5 years, these new technologies are disrupting the old cost-of-service regulatory model. Energy efficiency and renewables are now lower cost options to replace conventional sources of generation, but they reduce revenues for utilities. Thus, they are obstructed or needed to be controlled and put in the same outmoded rate structure as conventional generation.

        If utilities were fairly paid for serving their customers well, shareholders would benefit as well. If the market was open to all, energy efficiency and renewables would be utilized only when it made sense. Utility ratepayers would benefit because utilities would not have to build new generating facilities which raise everyone’s rates.

        We should not have any illusions (despite Dominion’s incorrect explanation about how low their rates are) the current trend for Dominion and any other vertically integrated utility is an increasing cost path.

        There is an alternative that can be good for shareholders, ratepayers and Virginia’s economy, but it would require a revision in the way we are currently doing things. This is not Dominion bashing, because such a change would be good for Dominion too.

        • Tom, you make a lot of good points in many of your comments on electricity but implying that utilities and their regulators fail to perceive industry changes that you discern is not among them.

          Also, if you want to be honest about proliferating solar, just come out and say it: The easiest way to get more solar is to get someone else to pay for it, a la North Carolina, hinted at in your comment above:

          “With the state solar energy credit in North Carolina, that state developed the second highest amount of installed solar of any state in the US. Now that the state energy credit has expired and Duke has sponsored policies that make it difficult for third parties, the development of solar has slowed significantly in North Carolina compared to previous years even though solar continues to decline in price.”

          North Carolina incentivized solar there by making its taxpayers pay for it.

          • Rowinguy,

            Many are aware of energy industry changes but very few are doing something about it. The development plans of utilities in this region are largely strategies out of the 20th century. But that is because regulators in only a few states are actively readjusting the rules so that utilities can prosper without overbuilding new generation. This is a complex and potentially contentious process. It takes a while and we have not even begun it here in Virginia.

            I think that subsidies can be useful in developing new industries. They should be abandoned once the new industry gains a competitive foothold. The solar credits will begin to phase out in three years (except for utilities). It is hard to make good energy policy decisions when the price signals are so distorted. The larger subsidies for fossil fuels have been in place for 100 years, and perhaps the largest, for nuclear, have been in place for 50-60 years.

            North Carolina taxpayers did finance a portion of the recently added solar installations. I cannot cite specific studies of the return on their investment, but it is likely that they created many new jobs (solar installer is the fastest growing job category in the US) and NC residents will save a good deal on energy because of the fixed cost of solar energy over the life of those projects. Energy costs from gas-fired units will only go up in price during the same period.

            My point has been that the conventional energy solutions such as pipelines and power plants are not long-term job creators. They provide work for an itinerant group of workers who already have a job, but move from project to project. I do not mean to belittle the value of this work. I wish only that those who are promoting it so heavily would be more accurate in describing the actual creation of long-term jobs for Virginia (39 for the pipeline, about 45 for a power plant). Solar (without subsidies) and energy efficiency would provide thousands more long-term jobs than would building new pipelines and power plants.

            If jobs and low-cost energy are so important in the choice of our energy projects in Virginia, we should have an objective comparison of which types of activities are most likely to yield the most jobs and lowest energy costs. Corporate press releases and statements from politicians are not the most objective sources of information about this topic.

  9. Another comment about the diminimus impact on ratepayers without recognizing the far bigger benefit to the state’s economy and the thousands of jobs created, along with all of those benefits to local governments.

  10. Tom —

    I’ve been out of town for a few days and just now logged back in. I think you must know that regulators in Virginia and, I expect, throughout the South, are not “actively adjusting the rules,” because they are constrained by statutes enacted by utility friendly legislatures. The General Assembly does not even want the SCC to look at Dominion’s rates for years, yet keep granting “rate adjustment clauses” for this and that–basically any expense that keeps rising, such as for those new gas plants. It’s not hard to imagine reluctance on the part of the solar industry not to invest more heavily here in Virginia, when every January the Friends of DVP reassemble to see what sustenance the power company says it needs this year.

    I do agree that solar installation has created a number of jobs, and I’d certainly like to see more of them in the Commonwealth, but these are truly itinerant, aren’t they? No one mans a solar installation once it is built. No one fracks sunshine to fill up a solar pipeline, nor mines wind to turn a turbine.

    I also agree with you that these renewable sources can produce the lowest cost energy that gets onto the grid but they provide comparatively little in the way of capacity and, as I’m sure you also know, PJM imposes capacity requirements on its members, including the utilities in Virginia.

    Don’t want to come off as a DVP apologist, but I imagine that that company will be pivoting over to solar, though not so much to wind, very soon. They have built almost all the big capacity units they will need to build for years unless they try to ram North Anna III through. Once that happens (the pivot, that is), who knows — maybe they will let the Assembly turn the SCC loose again…..

  11. Rowinguy,

    I think you have captured the present situation quite well. Although I would characterize the solar and energy efficiency jobs somewhat differently. These are jobs that rely on a series of short-term projects for long-term employment. If solar is done correctly, much of it will be small to medium-sized installations spread throughout the state with numerous projects in various states of completion. This provides ongoing work for people within the region in which they live. Energy efficiency provides our skilled building tradesmen steady work improving our building stock and lowering our use and cost of energy.

    I am not on a great crusade for a particular point of view. I am seeking pragmatic solutions to provide long-term jobs with a livable wage and methods to reduce our energy costs in ways that enhance our lives.

    I do not see that our present path will do that. I believe that those who are trying to “protect” Dominion’s interests are actually doing them harm. We are afraid of change, yet we live in a world where the rate of change is accelerating. Protecting our organizations from realistically acknowledging change actually weakens them. We should be helping them find new and better ways of meeting the challenges of the future. Assuming that the next 40 years will be like the last 40 years is foolhardy. If we do so we will injure Dominion’s shareholders as well as its customers.

    Many solutions are available if we would only change the way we look at the situation. But that is the hardest shift to make. Utilities will not do that on their own. They are too much creatures of habit.

    Someone has to be the adult in the room. If we treat our utilities like spoiled children they will become incapable of meeting future challenges on their own. Many utilities are already asking for “public welfare” in the form of subsidies for aging power plants or rate freezes and other various means.

    It is time to confront the issue head on and begin serious discussions about the best ways of serving all of the major interests. Every enterprise has to balance the interests of shareholders and customers. Shareholders benefit the most when customers are well served. We can do that here in Virginia if we put in the effort.

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