Category Archives: Energy

Pipeline Passes FERC Environmental Review

While the proposed 605-mile Atlantic Coast Pipeline (ACP) would have temporary adverse impacts on people and the environment, the impact can be reduced to “less-than-significant levels,” if the project is constructed and operated in compliance with federal standards, declared the Federal Energy Regulatory Commission in a final Environmental Impact Statement issued today. Read the EIS here.

The finding is a critical step toward ultimate approval or denial by the commission. Backers of the project lauded the FERC finding, while pipeline foes criticized it. Here follows a sample of the immediate reaction.

Atlantic Coast Pipeline. Leslie Hartz, vice president-engineering and construction for Dominion Energy, the ACP’s managing partner: “The favorable environmental report released today provides a clear path for final approval of the Atlantic Coast Pipeline this fall. The report concludes that the project can be built safely and with minimal long-term impacts to the environment. The report also reinforces previous findings by the FERC and decades of research demonstrating that natural gas pipelines do not adversely impact tourist economies or residential property values. With this report, the region moves one step closer toward a stronger economy, a more secure energy supply and a cleaner environment.”

Allegheny-Blue Ridge Alliance. Executive Director Lew Freeman: “The Trump administration’s final environmental report issued today for the Atlantic Coast Pipeline, which would carry fracked-gas through West Virginia, Virginia and North Carolina, utterly fails to independently assess whether the project is even needed. This is the core issue upon which all other considerations of the controversial project are based, says a coalition of community groups and legal and technical experts.”

Energy Sure. Samantha Quig with the Virginia Chamber of Commerce and Rich Greer with the Laborer’s International Union of North America: “After almost three years of extensive study by the Federal Energy Regulatory Commission (FERC) and other agencies, we are encouraged by the favorable conclusions of the final environmental report released today. Never before has an infrastructure project in our region received so much scrutiny by so many agencies and offered so many opportunities for public input. We have total confidence in the process, and we are convinced the project will be built with all necessary protections for the environment and public safety.”

House Republicans (no link): Virginia House of Delegates Speaker William J. Howell and Speaker-designee M. Kirkland Cox: “We are heartened by today’s positive news from the Federal Energy Regulatory Commission regarding the Atlantic Coast Pipeline. Construction of this project is crucial to ensuring Virginia’s economy continues to grow in the years ahead, and that our families and businesses will continue to have access to affordable and reliable domestic energy. As Governor Terry McAuliffe has noted, the ACP is really a ‘jobs pipeline’, and it is desperately needed in our Commonwealth. We know that we can grow Virginia’s economy, and create thousands of good paying jobs for our people, while also preserving the environmental treasures we all cherish and love. Today’s report proves this.”

Southern Environmental Law Center. Staff attorney Greg Buppert: “FERC still hasn’t addressed the most basic question hanging over this project: Is it even needed? It’s FERC’s responsibility to determine if this pipeline is a public necessity before it allows developers to take private property, clear forests, and carve up mountainsides. Mounting evidence shows that it is not.”

Bold Alliance. Richard Averitt, affected landowner and entrepreneur: ““The FEIS is based on incomplete information, false narratives, and superficial statements of need that are based on corrupt self-dealing. It makes a mockery of the approval process. It’s clear that FERC exists to do the bidding of the industry that pays its salaries and feels no responsibility to the public or to the truth.”

I’ll add more responses as I get them.

Dominion Wins OK on Switching Station

The James City County Board of Supervisors approved yesterday a Dominion Energy request to build a switching station needed to connect the proposed 500 kV Surry-Skiffes transmission line to the electric grid on the Virginia Peninsula.

The action eliminates the last substantive hurdle for the project, which triggered a massive outcry on the grounds that the transmission line would cross the James River near Jamestown, despoiling what foes described as pristine views of a national historic treasure.

The board split 3 to 2 on approving the station, which required a special use permit, zoning change, and height waiver. A decisive consideration, according to the Richmond Times-Dispatch, was concern that failure to build the transmission line would leave the peninsula vulnerable to blackouts.

Opponents have vowed not to give up the fight, but I can’t imagine what options they might have now that Dominion has obtained all needed regulatory approvals. I think we can close the file on this particular controversy.

Update: OK, I guess we can’t close the file. The National Parks Conservation Association has filed a lawsuit against the Army Corps and Secretary of the Army, seeking an injunction to block the permit issued for Surry-Skiffes. The T-D has the story here. See Dominion’s response in the comments.

Dominion, DONG Seal Deal on Two Offshore Wind Turbines

The yellow square in this Dominion graphic shows the location of the two wind turbines on the edge of the bloc that Dominion has leased for a large offshore wind farm.

Dominion Energy Virginia has signed a Memorandum of Understanding (MOU) with DONG Energy, the world’s largest offshore wind-power company, to build two 6-megawatt turbines off the Virginia Beach coast — a critical step toward opening up 2,000 megawatts of off-shore wind to development.

Dominion will own the $300 million project, while Dong has committed to delivering the project at a fixed price. A Dominion solicitation in 2015 yielded a low bid of $375 million, way higher than the company’s internal estimates. When a federal grant expired, creating even more exposure for the company, many observers gave up the project for dead.

But the Denmark-based DONG, which claims to have built 27% of the total offshore wind capacity in the world, is eyeing the U.S. East Coast. Besides working with Dominion, the company has formed a partnership with Eversource, a Massachusetts utility, and has committed to develop a major lease off the New Jersey coast. The MOU with Dominion gives the company “exclusive rights to discuss a strategic partnership” with Dominion Energy to develop the commercial site based on successful deployment of the initial test turbines.

“Virginia is now positioned to be a leader in developing more renewable energy thanks to the Commonwealth’s committed leadership and DONG’s unrivaled expertise in building offshore wind farms,” said Thomas F. Farrell, II, Dominion Energy CEO, in making the announcement earlier today at a Port of Virginia facility in Portsmouth.

“Today marks the first step in what I expect to be the deployment of hundreds of wind turbines off Virginia’s coast that will further diversify our energy production portfolio, create thousands of jobs, and reduce carbon emissions in the Commonwealth,” said Governor Terry McAuliffe, who also spoke at the waterside announcement. McAuliffe had pushed hard for the project behind the scenes.

So far, the only offshore wind turbines operating off the U.S. coast are a five-unit farm located off Block Island, Rhode Island. While that heavily subsidized project does have the distinction of being the first offshore wind power, no one expects it to provide an economic model for U.S. offshore development. The Dominion-Dong project could provide that model. 

The significance of the new Coastal Virginia Offshore Wind project is not in energy the turbines produce — only 12 megawatts — but in demonstrating how well they hold up under hurricane conditions off the East Coast.

DONG has extensive experience operating in the North Sea, which is known for its harsh weather, but wave and wind conditions off the Mid-Atlantic coast are different. “From a technical perspective, we’re very keen to learn about Mid-Atlantic weather patterns,” Francis Slingsby, in charge of DONG’s strategic partnerships, told Bacon’s Rebellion. Experience with the two demonstration turbines will guide design and construction of the estimated 2,000 turbines to come later. “When we put steel in the water,” he says, “we want to do it right.”

“We are excited to bring our expertise to America,” said Samuel Leupold, CEO of Wind Power at Dong Energy, in a prepared statement. (Leupold was unable to attend the announcement.) “This project will provide us vital experience in constructing an offshore project in the United States and serve as a stepping stone to a larger commercial-scale project between our companies in the future.”

Work on the project will begin immediately, and the two turbines are expected to go into operation by the end of 2020. The pace of construction will vary, depending upon factors such as weather and the migratory patterns of whales and other animals. The tips of the blades will reach higher than the Washington Monument, Dominion says, but simulations indicate that the turbines, located 26 miles from the shore, will not be visible to Virginia Beach beach goers.

A primary motive of building offshore wind is to provide an additional source of clean energy. While solar is taking off in Virginia, wind inside state borders has been relegated to small ridge-line projects in the western part of the state. The only way wind can be a major contributor to Virginia’s energy future is through development of off-shore wind.

Two thousand megawatts, if built, would be the rough equivalent to two state-of-the-art gas-burning power plants. The difference is that wind is not “dispatchable” — it generates power when the wind blows, not necessarily when Dominion needs it. Despite that drawback, the cost of offshore wind power is increasingly competitive with other sources, and utilities are increasingly confident they can handle the fluctuations in electricity output.

Assuming the two-turbine demonstration project turns out well, Dominion expects to phase in large-scale wind production in increments, Mark Mitchell, vice president-generation construction, told reporters. As turbines are added, the company would assess the ability of the Hampton Roads electric grid to accommodate the added volume of intermittent capacity. Dominion would make grid upgrades as needed.

McAuliffe has been a vocal proponent of renewable energy in Virginia. He also sees offshore wind as a potential economic boon for Hampton Roads. Over and above the potential for large-scale construction work, the Coastal Virginia Offshore Wind project would support hundreds of jobs in ongoing operations & maintenance.

Economic developers have touted the advantages of Hampton Roads, with its mid-Atlantic location, ports, and shipbuilding as a logical center for the U.S. off-shore wind industry.

“We’re optimistic, Virginia has what it takes” to attract companies in the wind-power supply chain, Slingsby said. However, he noted that the European wind-power industry has multiple industry clusters, so there was no reason to think that companies necessarily would concentrate in a single U.S. location like Hampton Roads. Factors that states can control are the ability to ramp up for a large-scale installation of wind turbines and to make skilled labor labor available. Wind farm technicians are one of the most exciting and fastest-growing blue collar occupations in the U.S. right now, he said.

Appalachian Power Nails Down 225 MW in Wind Power

Appalachian Power Co. is asking state regulators in Virginia and West Virginia to approve 225 MW of new wind generation from facilities located in Ohio and West Virginia.

The Roanoke-based electric utility, which serves roughly 1 million customers in Virginia, West Virginia, and Tennessee, already has 375 MW of wind generation, with another 120 MW coming on line in 2018. With the approval of the two new projects, the company would have a total of 1,000 megawatts of renewable energy (wind and hydro).

“We are continuing to transition to an energy company of the future and further diversifying our power generation portfolio. These acquisitions move us in that direction,” said CEO Chris Beam. “Direct ownership and operation of these facilities will give our employees new experiences in the planning, production and delivery of power from diverse generating assets as Appalachian continues to add renewable resources in the years ahead.”

The 175 MW Hardin Wind Facility will be located in Hardin County, Ohio, and the 50 MW Beech Ridge II Wind Facility will be in Greenbrier County, W.Va. Both wind projects are under development by Invenergy, LLC.

Bacon’s bottom line: I wondered why Appalachian, the bulk of whose service territory resides in Virginia, would acquire wind properties based in far-away Ohio. Spokesman John Shelpwich gave the following response:

Appalachian Power operates in both Virginia and West Virginia. Our customers share in plants in both states… hydro and natural gas plants here, coal plants in W.Va. Historically, we have also owned or partly owned plants in other states (generally coal) too. In this case, these two facilities were proposals that came out of the RFP we issued in 2016 for wind generation with a primary requirement being that the new plant had to be interconnected with PJM. Both of these are.

We had a number of proposals in response; these two — and one other that was also approved will be in Indiana that we will not own, but will purchase its output by long-term contract — provide our customers the best deals. (I will note that it has been hard to get a sizable wind facility constructed in Va. so far).

If you recall, the RFP for utility scale solar we issued earlier this year calls specifically for construction to be within our service territory in Va. or W.Va. We received numerous proposals for that RFP too and are reviewing the best opportunities.

The key sentence: “It has been hard to get a sizable wind facility constructed in Va. so far.”

The problem here is not obstruction or foot-dragging by Virginia’s electric utilities. Appalachian wants to own Virginia-based wind power. A big part of the challenge, I suspect, is the paucity of viable utility-scale wind sites. Also, wind farms in the mountains are strung along ridge tops, almost invariably stimulating resistance from locals who don’t want their views marred. If Virginians want more wind power, we may need to take a look at how local zoning codes empower NIMBYs and hamper wind development.

Another lesson: If you like wind power, you’d better like the transmission lines that enable electrons in Ohio and Indiana to flow to Virginia. As renewable wind and solar make gain an increasing share of Virginia’s electric power mix, Virginia needs to build out a highly flexible grid that can handle the intermittent power generation from those sources. That means investing in “smart” grid technologies. And it could well require building more transmission lines.

Campaign Contributions and Selective Indignation

Steve Nash, author of “Virginia Climate Fever,” is on a crusade against Dominion Energy, electric utilities, the coal industry and other corporate special interests that donate vast sums of money to Virginia politicians. He has been submitting op-eds to newspapers around the state taking Dominion and Appalachian Power to task for their outsized campaign contributions.

Writing most recently in the (Lynchburg) News & Advance, Steve asks:

So whether you’re conservative, green, libertarian or liberal, here’s the question: Can your legislator explain why it’s OK to accept “donations” from the two power companies and still cast votes on legislation that affects not only their profits, but also our electric bills and, crucially, our environment? For that matter, why is it legitimate to take money from any corporate interests who also have legislative needs that should not pre-empt the public interest?

Now, Steve is a very close friend of mine, and we debate issues like this with regularity. One of the things that I love about Steve is that, although he is tenacious in his beliefs, he does make an effort to understand the other side of the argument. He engages in reasoned, gentlemanly discussion rather than resorting to change-the-subject evasions and ad hominem attacks. I will endeavor to engage Steve’s arguments in the same generous spirit.

It is an article of faith on the left that the coal and electric-power industries, and Dominion most of all, are fending off worthy environmentalist legislation by buying legislators’ loyalties. Dominion, as Steve points out, has given more than $7.4 million to legislators of both parties since 2016 — $826,000 in 2016-17 alone. The company is Virginia’s top donor. And it doesn’t hand out the money in a spirit of charity and good will. Like everyone else, Dominion gives money because it hopes to get something in return — access, if not legislators’ votes.

As Steve writes:

Public servants who take Dominion’s and Appalachian’s money have voted on countless power-utility-related bills, listened to the pitches of the sturdy corps of power company lobbyists, and then handed those companies a lengthening series of legislative home runs worth hundreds of millions of dollars — perhaps a billion or two by some estimates. And they routinely vote on legislation affecting the bankers, realtors, beer wholesalers, the health industry and their other benefactors.

Please note that Steve seems to have no problem with environmental interests donating large sums of money. As the Staunton News Leader observed recently, the top three environmental campaign donors, the League of Conservation Voters, NextGen Climate Action, and the Sierra Club have shelled out $5.0 million to individual statewide candidates over the past decade, compared to Dominion’s $3.3 million. (The comparison is not entirely fair because it doesn’t include other utility and fossil fuel interests. But the article makes the point that environmentalists aren’t slouches when it comes to throwing around big money.)

Steve and other environmentalists frequently note that Dominion donated $75,000 to Governor Terry McAuliffe’s 2014 gubernatorial campaign, not including thousands more from individual Dominion executives. Although I don’t recall Steve making the connection, others have suggested that such campaign booty explains the governor’s support for the controversial Atlantic Coast Pipeline, of which Dominion is the managing partner.

But the critics of utility donations never acknowledge that NextGen Climate Action, founded by California hedge-fund billionaire Tom Steyer, donated more than $1.6 million to McAuliffe! Another $1.7 million came from the League of Conservation Voters, and nearly $470,000 from the Sierra Club. Nor do the critics ever observe that, as a reward to his environmental supporters, McAuliffe appointed Angela Navarro, an attorney with the Southern Environmental Law Center, as deputy secretary of Natural Resources.

When was the last time a Dominion Energy executive was appointed to a senior administrative post?

Steve holds up as exemplars more than five dozen House of Delegates candidates who have signed a pledge to refuse to accept campaign cash from either Dominion or Apco. These are mostly Democrats, but Steve argues that conservatives should join the movement, too. After all, big money in politics encourages big government.

As a libertarian, I agree that big money and big government are intertwined.  And as a libertarian, I have no problem with candidates voluntarily turning down corporate money — as opposed to restricting the right of corporations to offer the money. But as best I can tell, Tom Steyer, the Virginia League of Conservation Voters, and the Sierra Club are not calling for less government. They just want to utilize the power of state government to different ends.

The difference between the electric utilities and the environmentalists, Steve implies in the quote above, is that the utilities are lobbying for their own private interests while environmentalists are pushing for the “public interest.”

It’s fair to say that environmentalists believe they are working for the public interest. But they’re working for their definition of the public interest. Their’s is not necessarily the same definition that, say, coal miners in Southwest Virginia would adopt. Or that economic developers in natural gas-constrained Hampton Roads would use. Or that electric rate payers would use. Or that businesses and homeowners counting on the reliability of the electric grid would use.

Environmentalists are a special interest lobby just like Dominion, Apco and the coal companies. That doesn’t make them evil; it doesn’t even make them wrong. Indeed, I’m happy to entertain the idea that in many instances, they are right. But it is romantic nonsense to insist that environmentalists dwell in some higher ethical plane and that their goals are any more pure than anyone else’s.

Bacon’s bottom line: If Dominion, Apco, the coal industry, Tom Steyer, the Sierra Club, and every other corporate or special interest group under the sun didn’t believe that money didn’t buy them access, they wouldn’t give the money. Clearly, money does influence the public policy process. But so does the media. So do grass roots organizing efforts. So do lawsuits. And, believe it or not, so do the actual merits of the case.

Thanks to the Virginia Public Access Project, it’s easy to follow campaign money. However, a large fraction of the cash dedicated to influencing public policy is invisible. We can’t track how much different groups are spending on public relations and influencing the press. We can’t track how much money is spent on research, organizing demonstrations, letter-writing campaigns, and other grass-roots activities. We can’t track how much money is spent on filing lawsuits and pressuring regulators.

Wouldn’t it be great if the electric utilities and environmental groups alike revealed how much they spent on such efforts? I’m not holding my breath. Most groups hew to the ethic of “Transparency for thee, but not for me.” Until such time as we know the bigger picture, I’m not inclined to make a big deal about disparities in one channel — campaign contributions — for influencing the political process.

Update: I just came across a 2014 Mother Jones article that said Steyer’s NextGen Climate Action spent $8 million “to keep Republican Ken Cuccinelli out of the state’s top office.” So, Steyer spent more money in one year than Dominion donated in ten.

A Patch in Time Saves Nine

The WannaCry and Petya cyber-assaults on banks, airports and other businesses in Europe in May used a vulnerability in Microsoft software to infect machines and spread around the world. Microsoft had issued a patch to close the back door months earlier, but many users never installed the update. Ironically, when Microsoft creates a software patch, it tips off bad guys to a previously unrecognized vulnerability. Cyber-criminals can create a virus to exploit that vulnerability sure in the knowledge that many corporations will fail to update the all of the thousands of computers and devices in their system.

The single-most effective thing that any IT manager can do to maintain security is to promptly install software patches. The task sounds pretty basic. But it’s easier said than done.

Christiansburg-based FoxGuard Solutions helps clients keep software up to date on critical infrastructure such as power grids, wind turbines and nuclear power plants. Founded in 1981, the company has seen its cyber-security business expand at a compounded growth rate of 42% over the past five years.

As far as FoxGuard CEO Marty Muscatello is aware, none of its customers were affected by the WannaCry and Petya attacks, reports Jacob Demmit with the Roanoke Times, after accompanying U.S. Rep. Morgan Griffith, R-Salem, on a tour of the FoxGuard facility. The company’s software is used in 40 different states and 35 countries. Reports Demmit:

FoxGuard has been using a $4.3 million cooperative agreement from the U.S. Department of Energy since 2013 to develop tools to track software updates and patches for 128 companies in the critical infrastructure industry.

It’s pretty easy to keep a single home computer up to date, but that becomes increasingly difficult when an IT department is trying to protect a power plant that could have 100,000 different machines across a power grid. A company might not even be aware of some computers on its network that could let hackers in, like an air conditioning system.

FoxGuard, it would seem, has a bright future, for its market will expand exponentially. As the Internet of Things takes off, embedding microchips and wireless in billions of devices, corporations will be hard-pressed to keep track of them all. Patching them all will be almost impossible, for Original Equipment Manufacturers typically stop updating software for devices they no longer manufacture. The challenge is particularly acute for electric utilities, which have cobbled together multiple generations of technology to operate their systems. As they move increasingly toward flexible “smart grids” to accommodate solar and wind power, they will install thousands of sensors and actuators across their systems, potentially making them even more vulnerable to cyber-attacks.

For a monthly fee, says the Roanoke Times, FoxGuard tracks all those machines and makes sure the client knows of every update on a timely basis. The company can even download and test the update in its own lab to check for compatibility issues before installing it in the field.

Bacon’s bottom line: The news brings daily remembers of how vulnerable the global Internet-connected economy is, and how anyone with a good cyber-security technology or service can tap into a global market. Governor Terry McAuliffe is right about this: Cyber-security is one of the biggest economic-development opportunities to come along in Virginia in a long time.

On the Fine Art of Forecasting Peak Load Demand

Comparison of Dominion and PJM growth forecasts in peak load. Source: Dominion 2017 Integrated Resource Plan.

Billions of investment dollars ride on the long-range forecast of Dominion’s peak load electricity demand. But whose projections do we believe — Dominion’s or PJM’s?

In its 2017 Integrated Resource Plan (IRP), Dominion Energy forecasts the increase in its peak electric load and anticipates what combination of new gas, solar and nuclear facilities it will take to meet that demand. Although the IRP is a highly technical document, against the backdrop of the debate over the future of Virginia’s electric grid, it has major political implications. Environmentalists argue that Dominion overstates future electric load and, consequently, it overestimates the number of new combustion turbines (gas-fired turbines designed to generate electricity on call) or the amount of new nuclear capacity that it will need to add.

As evidence, Dominion’s opponents point to the 2017 peak load forecast by PJM Interconnection, the regional transmission organization of which Dominion is a part. Where Dominion’s IRP projects an average annual increase in summer peak load of 1.4%, PJM projects an increase of only 0.4%. Projected over the 15-year planning horizon of the IRP, that amounts to a tremendous difference in peak electric load, as can be seen in the graph above.

Needless to say, Dominion defends its forecast, and offers detailed reasoning in the IRP to support its position.

Which forecast is correct? That of Dominion, which has a more intimate, granular knowledge of its service territory, of that of PJM, which has no profit-maximizing agenda?

It might come as a surprise to outsiders, given the big gap between their projections, but Dominion and PJM coordinate their planning and forecasts very closely. In most ways, the two forecasts are closely aligned. In PJM’s estimation, the difference boils down to two main factors: (1) the assumptions that Dominion and PJM make about the growth in demand from energy-intensive data centers beyond 2021, and (2) assumptions about how to account for rapidly “behind-the-meter” electric generation by homeowners and businesses. To those two issues, Dominion adds two more arcane issues of methodology.

Data centers. Data centers figure largely in Dominion’s forecasts because Northern Virginia has emerged as one of the world’s leading clusters of energy-intensive server farms, drawing upon the region’s rich network of high-capacity fiber-optic cable, low-cost electricity, tech-savvy workforce, and friendly state-local policies. Having observed the success of Loudoun County, other Virginia localities from Virginia Beach to Wise County in far Southwest Virginia, are getting into the act.

Data centers are an anomaly for economic and electric-load forecasters. Because they are such big consumers of electricity to run thousands of servers and cool the heat they throw off, they skew the normal relationship between economic growth and energy consumption. Accordingly, Dominion and PJM have to make special adjustments to their economic models to take them into account.

“Each year Dominion comes to us with information about their projections of data center growth,” says Tom Falin, director of resource adequacy planning for PJM. “We do analysis to see if that growth is already embedded in our forecast. In general, it isn’t. [Data centers] put a drain on the energy grid that’s not normally associated with economic growth — there’s not a lot of employment and housing associated with it.”

Data-center loads reached more than 800 megawatts by 2016 and are projected to amount to 1,500 megawatts by 2021.  That compares to a total peak load of about 20,000 megawatts for Dominion. PJM estimated that it needs to adjust Dominion’s peak load forecast upward by 500 megawatts by 2021 to account for the data centers. At that point, says Falin, PJM assumes that the growth in energy demand will be embedded in the historical load history and won’t require further adjustment. “Perhaps Dominion is assuming stronger growth in these data centers than we are.”

Indeed it is. As Dominion explains in its 2017 IRP:

PJM has eliminated new data center growth in the DOM Zone beginning in 2021 – in other words, it excluded incremental data center growth beyond what is captured in historic trends. This is a significant change from PJM’s 2016 peak demand forecast, which included new data center growth continuing for the balance of the forecast. In comparison, the Company utilizes historical trend data center load coupled with interconnect data from new and existing data center customers to forecast data center growth within its service territory. Over the longer term, the Company relies on data center forecasts that are included in a 2015 study prepared for the Company by Quanta Technology, LLC, entitled “Dominion Northern Virginia Load Forecast.”

The difference between the Dominion and PJM forecasts can be seen in this graph taken from the 2017 IRP:

Source: Dominion 2017 IRP.

The dotted line shows what PJM’s peak demand forecast would look like if adjusted for data-center growth. Continue reading

Dominion Explores Pumped Storage in SW Virginia

Graphic credit: Dominion Energy

Much to my astonishment, Dominion Energy is taking a serious look at building a pumped-storage hydro-electric power plant in Virginia’s coalfields. I wrote about the idea back in February but it struck me as a long shot. So much for my superficial impression. It now transpires that Dominion is identifying potential sites in far Southwest Virginia and hopes to narrow the list later this year.

If Dominion decides to proceed, it will notify potentially affected landowners and set up meetings to gain public support, according to Dominion spokesman Greg Edwards. Though still in the early exploratory phase, Dominion describes the prospects as “very exciting.”

The potential impact is enormous. The pumped-storage power station would have a capacity of 1,000 megawatts, making it even bigger than Dominion’s coal- and wood-burning Virginia City Hybrid Energy Center, which cost $1.8 billion to build and generates $6 million a year in tax revenue for Wise County. “We’re talking about revenues way in excess of what Virginia City generates,” Edwards told the Coalfield Progress.

The idea behind pumped storage is to move water between reservoirs at different elevations. Dominion would let the gravity-fed water run turbines, as shown in the company-supplied graphic above, during periods of peak power demand when the cost of electricity is expensive, and then pump the water back to the upper basin when electricity is cheap. The concept is the same as Dominion’s pumped-storage dam in Bath County, the world’s largest.

Pumped storage will be increasingly attractive as eastern utilities increasingly rely upon wind and solar power, which are intermittent sources of electricity. A pumped storage facility could help even out fluctuations in electric production due to variations in wind and sunshine, or even shift power production from periods of peak solar output during the mid-day to peak demand in the late afternoon/early evening. The massive scale contemplated for the project — 1,000 megawatts, roughly equivalent to the capacity of a state-of-the-art gas-fired facility — suggests that Dominion could be considering the plant for load-shifting purposes. And that could be a game-changer.

Source: Dominion 2017 Integrated Resource Plan. Click for legible image.

Dominion’s Integrated Resource Plan foresees the need for a new nuclear power plant by 2030 (under the strictest CO2 regulatory regime), up to five new gas combustion turbines by 2032, and more than 5,000 megawatts of solar power by 2040. I am entering the realm of speculation here — none of this comes from Dominion — but the addition of a giant pumped-storage facility to Dominion’s generating fleet might enable the company to shift more aggressively to solar power and still maintain grid reliability. Potentially, depending upon transmission line limitations, pumped-storage could eliminate the projected need for four 240-megawatt combustion turbines. (How such a shift would impact the demand for natural gas supplied by the proposed Atlantic Coast Pipeline is a big unanswered question.)

The idea originated with coalfield legislators, not Dominion. Del. Terry Kilgore, R-Gate City, Del. Todd E. Pillion, R-Abingdon, and Sen. Ben Chafin-Lebanon, amended the state code to add pumped-storage hydroelectricity generation and storage to the list of projects which, if built in the Virginia coalfield counties, would be deemed “in the public interest.”

Learning of the proposal during the General Assembly session, Dominion quickly began exploring the idea. Early media reports emphasized the idea of using underground mines as a holding tank for the water, but Edwards told the Coalfield Progress, “We’re not wedded to underground.”

So far, Dominion’s investigations into potential sites have involved working with maps and satellite imagery. The company has looked at “literally hundreds” of possible locations. Even if Dominion finds a suitable site, however, it could take seven to ten years until a pumped-storage facility became operational.

A Fourth Force in Virginia Energy Politics

The political economy of energy in Virginia used to be simple. Three main interest groups contended to formulate energy policy in the state: environmentalists, consumers, and electric utilities. Consumers, both homeowners and businesses, pressed for lower electric rates. Environmentalists fought for cleaner air and, more recently, lower CO2 emissions. And utilities — the only parties responsible for keeping the lights on — lobbied for reliability at a reasonable cost (within a framework that preserved profits).

In the last few years, a fourth force has entered the picture, and the political dynamic is changing. The Old Dominion has seen a surge in the number of small, independent solar- and wind-power developers. They have exercised limited political clout, but now large, national corporations embracing a green energy agenda have entered the fray.

Half the Fortune 500 companies have committed to green agendas, and they signaled their desire earlier this year to see policies in Virginia that were friendlier to wind power, solar power and energy efficiency. (See “Clean Energy Options and Economic Development.”) Their message: If Virginia wants to attract outside corporate investment, the state had better get on board the solar-powered electric train.

Then, in an unprecedented flexing of political muscle last week, a green industry group injected itself into the Virginia gubernatorial race. Advanced Energy Economy (AEE), an association of green industry companies, delivered a policy memo to the campaigns of GOP nominee Ed Gillespie and Democratic nominee Lt. Gov. Ralph S. Northam.

“Evolving consumer preferences, dynamic new technologies and aging infrastructure are causing the energy system as we have known it to modernize,” states the memo. AEE outlines four priorities:

  • Allow competitive procurement to attract investment and benefit consumers. Virginia energy policy should open up third-party market alternatives. “While current Virginia law allows competition in statute, more could be done to attract investment and benefit consumers.”
  • Expand access to advanced energy options. The ability to control energy costs is a factor in where many corporations choose to locate. But they’re not just looking for cheap energy — they want green energy.
  • Maximize energy efficiency and demand-response. Under Virginia regulatory regime, electric utilities lose money when customers reduce their electricity consumption, discouraging utilities from investing in energy efficiency programs and demand response. Virginia should “decouple” electricity sales from profitability so utilities don’t lose when they invest in energy efficiency and demand-response programs that cut sales.
  • Modernize the electric grid. Evolving consumer preferences, new technologies, and the need to replace aging infrastructure have created a need to modernize the electric grid. The regulatory system, which inadvertently stifles innovation, needs to be modernized.

AEE wants more wind and solar, more electric vehicles, more energy efficiency, more innovation, and more freedom for entrepreneurs to design solutions for customers. At the same time, the association acknowledges that the way to achieve these aims is not to browbeat electric utilities into submission but to change their incentives, which would take a major re-writing of regulatory law.

Bacon’s bottom line: To advance AEE’s vision, Virginia would need an upgraded electric grid flexible enough to accommodate a less centralized, more distributed grid while still maintaining system-wide reliability. In effect, the green businesses are calling for a deregulation of electric power production. But no one wants to build a competitive and redundant electric transmission-distribution system.

Any viable energy system of the future must allow electric utilities to continue investing in, and earning a profit on, their transmission-distribution systems. Also, deregulation of electricity generation would require grappling with the issue of “stranded” investments — investments in generating capacity that utilities made in good faith under the existing regulatory environment that might not be economical and must be scrapped in deregulated environment.

Like the environmental movement, this Fourth Force in energy politics wants to see a fundamental transformation of Virginia’s electric power system. Unlike the environmentalists, many of whom see Dominion and Appalachian Power as the enemy, the Fourth Force acknowledges the need for a healthy utility sector. This new interest group has plenty of money, which means it can afford to hire lobbyists and spread cash to political campaigns. Plus, these new voices will be more credible to Virginia’s pro-business legislators than the more strident environmentalists had been. 

The politics of electric power in Virginia has reached an inflection point. We are entering a new era.

Workgroup Seeks Compromises to Move Solar Forward

The consensus-building workgroup that fostered 2017 legislation to promote community solar energy in Virginia reconvened Monday to grapple with more intractable issues that stand in the way of widespread adoption of solar power.

Participants in the Solar Policy Collaborative Workgroup had clashed repeatedly in the General Assembly over the years, but decided to pursue a different approach in 2016. Mediated by Mark Rubin, executive director of the Virginia Center for Consensus Building at Virginia Commonwealth University, they worked out a compromise proposal that will allow Virginians to purchase renewable electricity generated by local, independent solar developers and marketed by electric utilities.

The General Assembly enacted the law in the 2017 session, and participants hope to build on the success, tackling issues that they could not resolve last year. “A level of trust and respect has been established among members of the steering committee,” said Rubin when convening the Monday meeting.

This year the ad hoc organization is seeking input from a broader array of stakeholders and inviting the public to attend meetings. Sub-groups will discuss issues relating to land use, large developers, large customers, community development and net metering. Of the five topics net metering — in which utilities pay owners of solar facilities for surplus electricity they supply to the grid — stimulated by far the most interest, inspiring numerous comments from the audience.

“No ideas are off the table,” said Sam Brumberg, counsel for the Virginia, Maryland & Delaware Association of Electric Cooperatives, and a leader of the net metering sub-group. He cited time-of-use rates, charging for usage of the grid, feed-in tariffs (which enable long-term contracts for solar generators) and other options that might be considered to encourage distributed solar development. “No idea is off limits.”

Brumberg was joined by Scott Thomasson, southeast director of Vote Solar. His organization has engaged in some “fierce battles” in other states over solar policy, he said. By participating in the Virginia solar workshop, he added, he hopes to “get better outcomes through dialogue. We want to avoid the melt-downs in other states.”

Net metering. One thing most audience members agreed upon is that the existing net metering law, designed to protect electric utilities, is a hindrance to widespread adoption of solar energy by homeowners, small businesses, and other small users. Current law limits net metering to residential systems up to 10 kW and commercial systems up to 500 kW, with a program cap if generating capacity reaches 1% of an electric utility’s peak load for the previous year. The benefit to generators is that their surplus electricity can be used to offset electricity purchases from the utility during off-peak periods.

Dominion Energy has sought to limit the surplus that generators could use to offset their electricity sales, while both Dominion and Appalachian Power have insisted upon stand-by charges to compensate them for the cost of maintaining the electric grid that solar-generating residences would draw upon for backup. Builders, environmentalists and other advocates say the restrictions make solar less attractive to install and give small, distributed generators no credit for the load they take off the transmission and distribution grids.

The interests of the electric utilities and the others seem starkly opposed, and there is no obvious way to reconcile the two. But Katharine Bond, senior policy adviser for Dominion, sounded an optimistic note, suggesting that new technology and novel rate structures might make the utilities “more agnostic” about solar initiatives that cut into utility revenues.

Another complication is that net-metering advocates are a diverse group and do not agree amongst themselves on the best approach. Charles Guarino, a Richmond-area resident, made a plea for simplicity in the net metering law. “If people don’t understand it, they won’t participate,” he said.

But Tom Hadwin, with Waynesboro-based ACN Energy Solutions, advocated a value-of-solar tariff based on the premise that it made more sense from the perspective of balancing load on the electric grid to put solar in some locations than in others. Electric rates would be less favorable for solar located near where the grid was congested than for locations where grid congestion was not an issue.

“Simplicity is good, but there are trade-offs,” said Thomasson with Vote Solar., who suggested that a tariff that varied by time of day and load demand might suit some better.

“Not everyone can get what they want,” said Brumberg, but “if we’re successful, folks will get some of what they want.” Continue reading