Bacon's Rebellion

Democracy Thrives in Sunlight

More on the Oceana Solar Plant: Expensive but No Cost to Virginia Rate Payers

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by

James A. Bacon
in ,

More details dribbling in about the Oceana Naval Station solar power plant…

According to Dominion Virginia Power’s SCC filing, the project is expected to cost $39.6 million, excluding financing costs, or $2,252 per kW. That is roughly three times the up-front capital cost per kW of Dominion’s newest gas-fired power plant under construction in Greensville County. Of course, solar’s “fuel” is free, while the cost of natural gas is not. The truly relevant comparison would be the so-called “levelized” cost, including both capital and fuel, plus whatever value you attach to the reduction of carbon dioxide emissions.

Quoting from Dominion filings, State Corporation Commission spokesman Ken Schrad explains the unusual deal structure, which includes the Commonwealth of Virginia as an integral component:

Through the partnership arrangement, [Dominion] will construct, own and operate the Oceana Solar Facility. …. The electrical output of the facility will be solely dedicated to the Commonwealth, which the Commonwealth has agreed to purchase for a negotiated price for a term of 25 years. … The sale of the energy is occurring pursuant to an agreement entered into between Dominion Virginia Power and the Commonwealth. Under the agreement, the Commonwealth is able to benefit from the sale of the energy into PJM [Interconnection, a regional transmission organization], while also supporting the deployment of additional solar generation in Virginia. …

The consolation for Dominion rate payers is that they are not subsidizing the project. “There will be no impacts to the Virginia jurisdiction cost of service, base rates, fuel rates, or [Rate Adjustment Clauses] as a result of [Dominion’s] ownership and operation of the project during the 25-year term of the agreement,” writes Schrad.

This is a highly unusual deal structure. The McAuliffe administration probably deserves kudos for creativity, but I still have questions about the structuring, cost ad risk allocation of the deal. Alas, it just turned Margarita time in Emerald Isle, N.C., so I must demur.

Maybe readers can provide insight. For anyone interested in digging into the details, the case number is PUE-2016-00079. The documents have been filed but, as of this moment, not yet posted online.

— JAB

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38 responses to “More on the Oceana Solar Plant: Expensive but No Cost to Virginia Rate Payers”

  1. LarrytheG Avatar
    LarrytheG

    well – not unique –

    http://greenfleet.dodlive.mil/files/2016/03/REPO_projectmap_v11-01-1024×609.jpg

    http://greenfleet.dodlive.mil/files/2016/03/Project-Models.png

    1. Acbar Avatar
      Acbar

      Interesting graphic. Apparently the Oceana project is an example of “Model 2.”

  2. TomH Avatar
    TomH

    This sounds a little high. Studies show that cost per MW for utility scale solar were about $1400-$1500 at the end of 2015 and should be lower by 2017.

    The capital cost for solar should be about twice that of the combined cycle plants given that the gas plants’ energy costs are about 50% capital/50% fuel.

    Maybe the the micro-grid improvements are rolled into the solar facility capex.

  3. LarrytheG Avatar
    LarrytheG

    dumb question – what are “micro-grid” improvements?

    1. TomH Avatar
      TomH

      A micro-grid would allow energy generated to be used on the base even if Dominion’s grid was down because of a storm or some other circumstance. It just isolates a small area such as a building, industrial park, government complex, college campus, military base, etc. from the larger grid as needed to maintain service when the larger grid is down. The isolation from the grid is important during these emergencies because any energy generated within the micro-grid cannot be fed out to the larger grid because feeding power into to a downed power line could expose utility repairmen or the general public to electric shock.

      Usually there is not enough self-contained generation within the micro-grid to provide for full normal operation but it does allow for continued operation at some level. This is the Model 3 scenario in the Navy’s chart that you posted above.

      But with Acbar’s input showing that all of the energy is going to the Virginia state government via PJM, I’m no longer sure that this is the arrangement – although it still could be to provide for emergency operation when the power couldn’t reach the larger system if lines are down.

  4. Acbar Avatar
    Acbar

    Jim, DVP’s stuff has been posted now. The VSCC website can be obtuse, so here is how any reader can get to any of the documents filed by DVP concerning the Oceana solar plant:

    [go to] http://www.scc.virginia.gov/docketsearch#search
    [enter] Case Number > PUE-2016-00079
    [click on] Search Cases >
    case number/case name appears below; highlight and
    click on this; new screen will appear headed “Case Summary
    For Case Number: PUE-2016-00079”
    [click on] Documents >
    list of public documents filed in the case appears; highlight
    and click on any of these to obtain a .pdf of that document.

    Now you have access to all the PUBLIC documents in the file. But in this case, DVP filed redacted documents for the public; the TOP SECRET documents with the real forecast costs of solar and other costs of the deal included are not available because they contain “competitive information” or some similar mumbo-jumbo. Nevertheless there’s a lot of useful stuff here.

    Happy reading!

  5. Acbar Avatar
    Acbar

    And anyone with several margaritas to spare may wish to dive into this particular document: “Virginia Electric & Power Co – Public Version – Vol 1 of 1 – Petition for approval & certification of the proposed Oceana Solar Facility pursuant to secs. 56-580 D & 56-46.1 of the Code of Va. (part 1 of 5 – Petition)”

    Here is the first paragraph of Part II of that document:
    “The Project represents an innovative public-private partnership between Dominion Virginia Power and the Commonwealth that is designed to allow the Commonwealth to benefit from the Company’s sale of the Project’s energy into PJM Interconnection, L.L.C. (“PJM”). Through the arrangement, the Commonwealth, a non-jurisdictional customer, will compensate the Company for the net electrical energy output of the Oceana Solar Facility. In addition, the Company will retire renewable energy credits (“RECs”) in an amount equivalent to those generated by the Project on the Commonwealth’s behalf.”

    And here’s a translation: DVP is going to own and operate this solar plant [being built on Navy property at Oceana NAS] and sell its output to PJM. PJM presumably is going to pay somebody (the Commonwealth?) for this power, and the Commonwealth is going to pay DVP. Moreover, the Commonwealth gets the renewable energy credits for this solar generation, and DVP “retires” an equivalent number of credits. Got that?

  6. LarrytheG Avatar
    LarrytheG

    Thanks Acbar!

    And you know what comes to mind when reading your “guide to finding public information for the SCC”?

    that it sounds a little like the kerfuffle over the UVA budget!

    Perhaps Dragas should expand the scope of her complaint!

    seriously – and obviously – the public has no hope of really understanding much of this – not even folks who know more about how – like you .

    and what this leads to – and it’s rampant these days – if the facts are not provided such that people do understand – then others will surmise what they think the facts are – and not infrequently through the lens according to their own political philosophies!

    I actually found out far more about the project – reading the Navy’s PR than DVP or the SCC!

    It’s pretty clear that DVP puts their own spin on it by omission of key info that Jim was saying “more info please” as if someone other than Dominion should have provided it and as you have show – the SCC does not consider providing clarity to the public to be their mission either.

  7. Acbar Avatar
    Acbar

    Very true, clarity for public consumption is not the main goal. Partly I think that’s the inevitable consequence of the complexity of the business — this sort of technical/legal application targets the regulators and their staff, who read this stuff all the time. In spite of appearances there’s a highly structured format here and the info is laid out logically, and it’s all there. I’ve had experience writing this stuff and certainly in reading tons of it. But partly, this is the product of jargon-speakers talking to jargon-speakers. The cumbersome, plodding presentation is shaped by regulatory conventions that go back a long time. I don’t think there’s a practical solution other than get used to it. That said, there’s no reason the regulator should so readily grant the requested “protective order” to keep the “sensitive” data secret. People like Jim who CAN read this stuff need to have access to all of it!

  8. LarrytheG Avatar
    LarrytheG

    Well – we have these long running discussions with questions of which the answers are not easily available to the public but the information does exist in the bowels of DVP and the SCC –

    Take the CPP – lots of questions, lots of assumptions , claims, counter-claims and that slides into the political – of which the General Assembly and their constituents take positions – not based on facts and evidence but whatever is coming out of whoever wishes to make claims – like the folks down at Va Tech -which was taken as gospel by the partisan fools in the General Assembly until scientists at UVA just totally took it apart – but that did not keep the folks from believing the discredited analysis because it fit more with their politics…

    Jim asks the questions – yes but it’s more than embarrassing when DVP sponsors this blog, puts out the press release on Oceania and Jim sez ” more info please” – when both DVP and the SCC DO have it but neither seem inclined to provide it – to the public – to help the public be better informed – for them to formulate views actually based on real stuff – not propaganda spouted by those with agendas.

    I think the mission of the SCC is to serve the interests of citizens and it’s more than a little irritating that they seem to think their duty is primarily to industry.

    It’s like they think the public is largely ignorant (they are) and it’s not their job to relieve it ….. they’ll leave that to the partisans and zealots… and whoever else has an agenda to serve the gullible.

  9. TooManyTaxes Avatar
    TooManyTaxes

    At the surface, this is the appropriate regulatory treatment for the project. It makes no sense to keep Dominion from engaging in creative projects, but ratepayers must be protected from any risk of loss or mandatory subsidy. Use of below-the-line accounting for all direct and indirect costs and investments (revenue also), along with a reasonable allocation of common overheads, should be sufficient to protect ratepayers. Similarly, under the older Democratic Central Committee case, any gains must follow the party with the risk of loss – here the shareowners or the United States Navy.

  10. LarrytheG Avatar
    LarrytheG

    What keeps Dominion from doing with other 3rd party solar or wind enterprises – what they did with Oceania?

    the SCC?

    Did the Navy get different treatment than others making proposals similar to the Navy’s?

    1. TomH Avatar
      TomH

      This is a different situation from third-party projects.

      It appears that Dominion was granted use of the land for free in exchange for some type of improvement to service to the base (a micro-grid for emergency operation?). Dominion will own the solar array and get the tax credit and the renewable energy credit to apply against the Virginia voluntary RPS and the agreement with the Governor to add a bit more solar in the next few years (in exchange for the rate deal).

      Apparently the State gets the energy at a lower cost by bypassing the SCC (the facility is not rate based) and gets the energy at near wholesale costs (?) directly through PJM similar to how a Power Purchase Agreement (PPA) might work.

      Third-parties wants to make arrangements similar to this, but the benefits would accrue to them not Dominion so Dominion is doing these projects themselves and making it difficult for others to do so.

      1. LarrytheG Avatar
        LarrytheG

        @TomH – so looking at the Amazon deal – that Dominion turned down originally then once Amazon did it and someone else got the credits -they did a turn around?

        1. TomH Avatar
          TomH

          I do not know the specifics of the Amazon deal. The tax credits cannot be applied for until the project is completed. If Dominion is the owner at the time of completion then they will get the tax credits and the REC’s. But the financing of solar projects can be complicated (for third-parties) and the REC’s can be allocated to others (Amazon) so I don’t know exactly how this was worked out for this particular project.

  11. LarrytheG Avatar
    LarrytheG

    re: ” Apparently the State gets the energy at a lower cost by bypassing the SCC ”

    I thought the SCC had to approve?

    1. TomH Avatar
      TomH

      The SCC approved the project, but because of the way the deal was structured the costs were not included in the rate base. I assume that it was considered a “merchant generator” as is allowed in Virginia, so the ratepayers did not bear any costs or receive any benefits from the project other than the addition of 22 MW of solar added to the grid to serve some of the previous load.

      1. Rowinguy Avatar
        Rowinguy

        The SCC will be asked to issue a construction certificate for DVP to build the facility. All of its energy will be purchased by the state government, which is not a jurisdictional customer–the SCC doesn’t set rates for sales to governments.

        1. TomH Avatar
          TomH

          Thank you. I’m still learning about Virginia. It’s different than the other states I have lived in.

  12. LarrytheG Avatar
    LarrytheG

    sounds like DVP put solar on property they did not own – and provided “in kind” micro-grid benefits while they took the credits and retained ownership.

    why does that not work for others like Amazon who basically want to claim their power is from renewable sources and have some on-site emergency backup?

    It’s highly probably that DVP had to make sub-station changes near Oceaniea to make that solar work, right?

    1. TomH Avatar
      TomH

      A third-party developer is unlikely to find 100 acres provided for free. They cannot provide grid benefits in exchange the way a utility can.

      Amazon could build a solar array on their own property. But then they would be in a net metering situation which has limits and is subject to Dominion approval. Currently, in Virginia it is not easy for a building owner or a third-party to put in anything other than a small solar installation. Power purchase agreements and other third-party projects that are going strong in other states don’t have that same opportunity in Virginia at this time.

      I saw nothing about substation changes. There is probably an existing sub-transmission or high-voltage distribution line that feeds the Navy base. They might just hook up to that.

      The solar unit might actually feed into the Navy base, but the accounting will show it going out on the grid to PJM and the state offices.

  13. LarrytheG Avatar
    LarrytheG

    so if some entity – like a farmer or a school or a sewage treatment plant, etc… owns a lot of land – and they want to contract some of that land to a 3rd party to sell to PJM and they split the proceeds … why is that not an option?

    for instance, land in flood plains – cannot be built on , abandoned industrial sites, sewage treatment plants that no one wants to build next to – landfills – ditto… old quarries…

    many of these sites – could do what Oceania is doing… no?

    1. TomH Avatar
      TomH

      They could do that. But they could only sell it at wholesale rates to PJM, not directly to the customer as Dominion is doing with the state. This makes the economics much less desirable for third party developers.

      Acbar told us earlier how protective utilities are of their right to control the retail sale of electricity. There is a good reason for that. They need a continuing revenue stream to pay off past investments and attract investors.

      But these old rules are hampering innovation. Several states are looking to change the rules to keep utilities healthy and open up the market to more participants to lower costs and provide more choices. I hope we can bring that to Virginia soon. In the meantime, expect Dominion and other utilities to vigorously protect their income stream.

      1. LarrytheG Avatar
        LarrytheG

        Alright – so anyone can do 3rd party solar – hook up to DVP’s grid and sell that power – wholesale to PJM?

        and DVP does not “charge” for the use of it’s grid in moving the power to PJM ( or using it local and sending equivalent)?

        So in theory DVP could buy that power at wholesale then sell it – itself at a profit?

        is net metering what is different between Va and other states or is it something else?

        1. TomH Avatar
          TomH

          The locational marginal pricing for the energy includes the charge for movement between the source and the use of the energy. PJM does the bookkeeping for this. Payment goes back to those providing the transmission.

          Dominion’s whole business is buying power from PJM at wholesale and selling it at retail. Much of the power they buy is generated by units they own. PJM pays them for that power according to the marginal price at the time of use. Acbar has explained how all of this works. Third-parties or utility “merchant generators” or utilities with rate based units all sell their output to PJM based on the day-ahead auction price or the daily spot market price. All producers are then paid the highest price at the time of use. PJM chooses which units are online at any time. PJM keeps track of who is generating how much at any time and who is buying how much at any time and the transmission costs for moving the energy. PJM then bills and pays everyone. That is today’s energy system. It is a lot more complicated than most people imagine. That is why it is not easy for an independent generator to just jump into the fray. They have to follow the same rules as everyone else to keep the system stable and reliable.

          Renewable generation is auctioned separately from dispatchable generation because its marginal price is zero because there is no fuel price.

          Net metering rules vary by state and sometimes by utility within the states. Utilities usually focus on the short-term costs of solar connections and they want to charge extra for that. Third-party generators focus on the long term benefits to the grid and they want to get paid for that. The reality is often somewhere in between and the value of solar can vary within different regions of the same utility. Right now both sides are fighting each other. We all need to sit down and work out an equitable solution. Solar is coming in a big way because it is getting cheaper than the other alternatives. We will have problems integrating it well if we don’t plan ahead. Or if we fight against more solar development ratepayers will pay more than necessary and economic vitality will decline.

          1. LarrytheG Avatar
            LarrytheG

            You and Acbar and others here do an excellent job of “explaining” – more than once – over and over and it’s appreciated but I see see inconsistencies that I don’t understand:

            ” PJM chooses which units are online at any time. PJM keeps track of who is generating how much at any time and who is buying how much at any time and the transmission costs for moving the energy. PJM then bills and pays everyone.”

            then this:

            ” Utilities usually focus on the short-term costs of solar connections and they want to charge extra for that. Third-party generators focus on the long term benefits to the grid and they want to get paid for that.”

            so why are they “arguing” with each other if BOTH of them are selling power to PJM and PJM is deciding who is providing the power?

            Let me give you a real-world example that is NOT Solar but IS 3rd party power generation:

            Birchwood Power Partners, L.P.
            The Birchwood Facility is a 242MW pulverized coal-fired cogeneration facility in King George County, Virginia.
            Operation Date: November 1996

            http://www.jpowerusa.com/projectsBirchwood.html

            so my question is – WHO is Birchwood selling power to ?

            PJM or DVP? Who tells them to start generating and feeding power into the grid? PJM or DVP?

            bonus question – Birchwood Power has quite a bit of excess land themselves AND they are co-located with a huge landfill.

            When they first opened – they had a second company using their excess heat to grow hot-house tomatoes so they have a bunch of green houses that look a little like this:

            http://www.gardens.si.edu/images/greenhouse5-600×360.jpg
            so why can’t Birchwood contract with a 3rd party to convert those structures to solar and provide that power to Birchwood and then PJM?

            thanks!

  14. Darrell Avatar
    Darrell

    So these 179,000 solar panels… Are they going to rotate these to follow the sun? Will Oceana’s pilots get Blinded By The Light of 179,000 solar panel reflections as they make their approach on the main flight path at Oceana?

    Any possibility of adverse effects on A/C instruments, night vision goggles, or instrument landing systems?

  15. TomH Avatar
    TomH

    Regarding solar. There aren’t many Independent Power Producers using solar in Virginia. Most of the projects that were underway have been bought up by Dominion. A few others that I am aware of such as the solar installation at Washington & Lee were special arrangements allowed by Dominion after much legal wrangling.

    My point was more general and included policies in other states. For example, utilities in Nevada convinced the regulators to change the net metering rules. They did not grandfather in the owners that had put solar on their residence under a different set of rules. The steep charges that the utilities added to their tariffs drove solar installers out of the state and left many homeowners with uneconomic installations.

    The manufacturers and installers of solar want a fair, stable rate arrangement that properly values the costs and benefits of solar so people can make a good choice about residential solar (this is not sold to PJM). Experience is showing that there might be better methods than net metering to do that, such as the Value of Solar tariffs.

    As far as I know, solar Power Purchase Agreements (PPA’s) do not exist in Virginia in the same fashion as in many other states where a third-party solar generator can make an arrangement to sell directly to an end user. This runs afoul of Virginia’s prohibition against the retail sale of electricity by a third-party within a utility’s service territory. I am not exactly sure how the original Amazon deal was structured to get around this. Someone else might have more information about how this can be accomplished in Virginia, other than just a lease or sale of the equipment.

    The Birchwood plant was developed by a Southern Company subsidiary in 1996. It is a pulverized coal-fired plant that sells power under contract to Dominion. It is now jointly owned by GE and J-Power who run the plant as Independent Power Producers, still under contract to Dominion I assume. Although Dominion is letting its contracts lapse with several of the IPP’s it has been purchasing from. The power is sold to PJM at the clearing price, just as with any other plant, and purchased from PJM by Dominion at the locational marginal price, I would assume. PJM determines the merit order of dispatch. Acbar is much more familiar with this process than I am.

    At some time it seems that the Birchwood plant provided waste heat to the greenhouses to produce hothouse tomatoes (probably just in the winter).

    You would not want to cover those greenhouses with solar because you would no longer get sunlight and they might not be structurally strong enough to hold them. But any empty land could be used for a solar array. But they would probably then have to sell into PJM at the wholesale rate, unless they could work out a deal such as was done with Amazon.

    Solar developers favor situations where solar is used to offset a retail rate, because the economics are better. Solar makes sense for Dominion right now because any solar generation offsets more expensive coal, oil or gas-fired intermediate or peaking unit generation and saves them money. And they do not have enough solar penetration that would cause a cut-back in their baseload units.

    This is helpful to ratepayers, assuming savings are actually returned to them. But as long as solar is left up to the utilities to develop, it will proceed at perhaps 20-25% of the speed that it would in an open market.

    1. LarrytheG Avatar
      LarrytheG

      re: ” The Birchwood plant was developed by a Southern Company subsidiary in 1996. It is a pulverized coal-fired plant that sells power under contract to Dominion. It is now jointly owned by GE and J-Power who run the plant as Independent Power Producers, still under contract to Dominion I assume. ”

      okay. so the days that Dominion does not need power from Birchwood – can Birchwood still run their plant and sell their power to PJM or putting up their own gas-fired (or even coal-fired) plant?

      what makes a 3rd party plant attractive to Dominion over PJM?

      If the Birchwood plant power is more – or less expensive that PJM – does that impact who Dominion would buy the power from and they’d buy from the lower cost source ?

      Is Birchwood, in effect, competing with other power generation sources in the entire PJM region? i.e. if Birchwood can sell power for less than other power generators in the PJM region – does PJM buy it from Birchwood instead of others?

      Conversely – if there is solar being generated by others in PJM and that solar is cheaper than other power generated (including coal) – does PJM buy that solar instead?

      If Birchwood put solar on their site – could they sell that power to PJM and , in effect, compete with other solar producers inside of PJM – apart and separate from Dominion?

      Is this the reason why Dominion is building their own plants and wanting to pipeline their own gas?

      i.e. that if they use their own gas – they can produce power on their own for less than other producers in PJM and thus not have to buy as much power from PJM sources?

      It appears to me ( not that I know much at all) – that Dominion best makes use of it’s monopoly when it can produce it’s own power and not buy it wholesale from other sources – PJM and/or other 3rd party producers like Birchwood.

      1. TomH Avatar
        TomH

        We need to be clear. PJM is not a generator. It is the market. Through its auctions and order of dispatch a price is set at a particular moment (the clearing price). As I understand it, all generators providing power to PJM at that time get paid that price for their energy, regardless of what it costs to generate. As I understand it, Dominion usually bids its nuclear capacity into the next day’s market at $0.00 just so that it is first on the merit order of dispatch and runs all of the time it is available.

        I do not know the terms of the agreement between Dominion and the Birchwood plant. I expect the plant goes online as soon as it qualifies for being dispatched by PJM. Dominion will probably use that energy because the unit is in its service territory and the locational marginal pricing would be less than a similar unit farther away.

        PJM always buys the next cheapest available unit on its dispatch list. The plant will continue to provide energy as long is there is sufficient load to require its use. As load declines, plants will be taken off line usually in reverse order that they were brought online. That is, the most expensive units will be dropped first.

        This is complicated a bit by renewables because their marginal price is zero because there is no fuel cost. They will be used whenever they are available. Higher cost units might be brought on earlier to deal with the variation of output in renewables, because lower cost units such as gas combined cycle units, coal or nuclear cannot vary their output fast enough to deal with the variations.

        The contract with Dominion might only mean that the unit can be considered as part of Dominion’s responsibility to PJM to meet its load plus a reserve, or it could require a minimum amount of power purchased each year. I am not familiar with these contracts in Virginia or PJM. Acbar or someone else could provide better information.

        Dominion would contract with a third party when it is cheaper or more flexible for them to do so rather than build their own units. In the late 1980’s it was prohibited to use natural gas for new power plants because it was scarce and expensive. Dominion may have signed a 10-20 year contract that allowed it to have the generation they needed without the need to use their own money (maybe they were trying to reduce their debt to increase their stock price) or perhaps they did not want to get locked in with a new coal plant for 40+ years.

        The reason Dominion wants to build its own gas plants now and build a pipeline is because they see these options as the best way for them to make money. By putting these units in the rate base and by forcing DVP to use its pipeline rather than less expensive options, Dominion has put the entire risk of increased gas prices and potential stranded costs in the hands of the ratepayers. With increased revenues and lower risks they are more attractive to investors. The ratepayers will have to fend for themselves, especially since the SCC and the GA do not appear willing to speak on their behalf.

  16. CleanAir&Water Avatar
    CleanAir&Water

    It was my understanding, some years go, that it was possible to sell solar project generation directly to PJM, something that require jumping through a lot of hoops, but was possible.
    The Amazon project did that and also worked with DelMarva Power, which is part of Exelon and located in MD.

    Here is a bit from Community’s website
    “About the Process:
    Amazon Solar Farm US East was approved for a Conditional Use Permit by a unanimous vote from the Accomack County Board of Supervisors.
    All necessary grid studies have been completed by PJM and Delmarva Power & Light, and the Interconnection Services Agreement is in place. As a result, the project is on target to commence construction in late 2015, and reach commercial operation in 2016.
    Community Energy Solar has teamed with Amazon Web Services, Inc. that is purchasing the power output of the project for their data centers under a long term Power Purchase Agreement.”

    Not sure when Dominion bought the project, but I believe it was up and running.

    1. LarrytheG Avatar
      LarrytheG

      re: ” Not sure when Dominion bought the project, but I believe it was up and running”

      the question is -why did Dominion buy it? especially when they initially had no interest and Amazon went out of state?

      1. TomH Avatar
        TomH

        I suspect they bought it to meet their agreement with the Governor to install a few hundred megawatts of solar in exchange for the rate freeze. And to close off development by third-party solar developers that could threaten to reduce their revenues. Plus, they get a rate of return if the plant is put in the rate base.

  17. LarrytheG Avatar
    LarrytheG

    so….. can 3rd party folks build solar – not worry about DVP and sell directly to PJM or … not?

    trying to understand what keeps 3rd party producers from just building solar and selling direct to PJM…. why is that not an option?

    is the clearing price at PJM not economic for 3rd party solar?

    1. TomH Avatar
      TomH

      It is an option. Until recently, solar was economic only as an offset for retail rates. With prices for solar lowering each year, it is now competitive for wholesale power production. But greater gains are available to developers under the direct to customer PPA’s that are allowed in other states that were developed in order to encourage greater adoption of solar.

      Many large businesses such as Amazon, Microsoft, etc. are looking to install their own solar to power new facilities. That is easier for them to accomplish in other states compared to Virginia. Solar for universities and schools is harder here too.

      PJM has a separate marketplace for renewable energy because of its variable nature and zero marginal cost.

      I would like to see it be easier in Virginia for office complexes, universities, and local governments to do more solar self-generation. Other states make this possible. Virginia is limited to net metering which does not suit these situations. If a company or university wanted to have more renewable energy they would have to a pay premium “green” rates.

  18. LarrytheG Avatar
    LarrytheG

    re: ” But greater gains are available to developers under the direct to customer PPA’s that are allowed in other states that were developed in order to encourage greater adoption of solar.”

    okay – so -… it looks like Amazon was able to have a 3rd party build a facility – and sell that power to PJM – and (I presume) that had the effect of essentially saving money on power by using solar when available….

    I’m confused here as to why any company, on it’s own or through a 3rd party can do solar – without needing to deal with VDP – anyhow.

    or is that not the reality? In those circumstances where someone does solar and sells to PJM – do they have to also pay a fee to DVP to move that solar onto the grid?

    1. TomH Avatar
      TomH

      As I understand it, an independent power producer can attempt to sell to PJM but there is no guarantee how often they will be dispatched or in the case of solar what price they will receive for their energy at any particular time. It is hard to get such projects financed because of the uncertain revenue stream.

      That is why the rapid development of solar happened in states that allowed direct to customer PPA’s that had a contractual revenue stream that would support financing. It is a savvy move by Duke and Dominion to suppress the development of those policies in Virginia and North Carolina. It reduces competition and protects their revenues, but greatly slows the expansion of solar.

      The costs of moving energy from source to use is covered by the locational marginal pricing. PJM tracks all of this and pays the appropriate utilities for the use of their lines. The generator only needs to be certain they have a connection to the grid.

      1. LarrytheG Avatar
        LarrytheG

        ahh… so there are times -when there is more solar available than there is demand for – at PJM? So your solar panels are sitting there producing power and there are no buyers for it?

        re: connection to grid.

        I presume – perhaps incorrectly that one cannot just plop down a new source of power just anywhere without the utility doing something to configure the connection point to be capable of handling that new load input… the bigger the input – the more than might have to be done – e.g. a substation, etc?

        those costs would probably belong to the entity generating the power and needing a connection…

        all things equal – and they never are – ANY 3rd party generator of power – whether it be solar or gas would have similar issues.

        and if it were a significant generator of power – it pay actually affect the grid regionally beyond the connection point – depending on the other substations in the region and their capacity capabilities.

        So if a 3rd party wants to put a large generator of power in a location where the lines and substations cannot handle that load – and upgrades would have to be made – and paid for by the generator – then costs to connect could be influenced by location!

        which makes it odd that Amazon would find a suitable 3rd party connection point – way out on the Eastern Shore where one might expect not a great deal of excess infrastructure for accommodating additional loads.

        or am I talking gibberish here?

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