Dominion Virginia Energy filed this afternoon its 2018 Integrated Resource Plan (IRP), an updated 15-year strategic plan. The IRP reiterates the utility’s commitment to more natural gas and more solar power as a path to a lower carbon future. There’s a lot to cover here, so I will just hit the highlights today, and I’ll dig deeper into the report tomorrow.
The key assumption behind the plan is that “carbon emissions regulation is virtually assured in the future, either through new federal initiatives or through measures adopted at the state level.”
A proposed regulation from the Department of Environmental Quality, if adopted by the State Air Pollution Control Board, would make Virginia a participant in the Regional Greenhouse Gas Initiative, which would ratchet down carbon dioxide emissions by 30% over 10 years. “Compliance with carbon regulation could, unless mitigated by other public policies, lead to an increase of between $2.23 and $5.81 in 2018 dollars in the typical residential customer’s monthly electric bills by 2030,” stated the company in a press release.
The IRP also incorporates legislation enacted by the General Assembly this year, the Grid Transformation and Security Act of 2018,” under which earnings above the allowed return on investment would be plowed back into investments in renewable energy, energy efficiency, and smart grid upgrades. The plan contemplates construction of the 12-megawatt Coastal Virginia Offshore Wind project to demonstrate the viability of wind turbines off the Virginia coast, license renewal for the Surry and North Anna nuclear units, the roll-out of new energy-efficiency programs, and the possible retirement of older, less-efficient coal, oil and gas power plants.
Dominion’s press release highlighted the growing role for solar energy. Depending on Virginia’s regulatory path, the company could add 4,720 megawatts of solar capacity over the next 15 years — enough to power 1.18 million homes at peak sunlight, and a nearly 50% increase over last year’s 3,200 forecast.
To back up the solar farms when the sun isn’t shining, Dominion forecasts the need to build eight new gas-fired combustion-turbine (CT) units capable of producing up to 3,664 megawatts of electricity, enough to supply the needs of more than 900,000 homes. Unlike combined-cycle gas plants, which ramp output up and down slowly, the CT units provide surge capacity that can nimbly adjust to fluctuating solar and wind output.
The exact details vary with five scenarios reflecting different federal and state regulatory approaches. The scenarios include:
- No CO2 tax — no new regulations, the least-cost baseline.
- RGGI participation — compliance achieved by importing “more carbon intensive out-of-state energy and generating capacity;” $1.5 billion more expensive than the baseline plan.
- RGGI (unlimited imports) — Virginia becomes a full RGGI member, CO2 allowances cost more; costs $3.71 billion more than the base-line plan.
- RGGI (limited imports) — Virginia becomes full RGGI member, but builds low-carbon capacity rather than imports it; costs $4.04 billion more than the base-line plan.
- Federal CO2 program — assumes federal CO2 legislation beginning in 2026; costs $3.09 billion more than the base-line plan.
Predictable flashpoints.
Inevitably, there will be pushback in the environmental community to Dominion’s plan. First, skeptics likely will dispute the utility’s forecast for increases in peak electricity demand and the need for more generating capacity; Virginia, they will say, needs to deploy energy-efficiency measures more aggressively. Second, they will argue that the re-licensing of the four nuclear units is unneeded. Third, they might contend that battery storage will be more cost effective than gas-fired CT units in offsetting fluctuations in solar production. Fourth, they will say that Dominion is exaggerating the cost of CO2 regulation; indeed, they will argue that the RGGI carbon trading regime will have little impact on costs to rate-payers, and might even reduce their monthly bills.
I’ll dig into each of these issues in the days and weeks ahead.
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