Bacon's Rebellion

Democracy Thrives in Sunlight

Clean Energy Stakeholders Agree on Solar Legislation

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James A. Bacon
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Utilities, other stakeholders hammer out solar legislation for Virginia
Solar legislation proposed for 2017 General Assembly

A working group that includes Dominion Virginia Power, Appalachian Power and an assortment of clean energy advocates has achieved consensus on pro-solar legislation to submit to the General Assembly. According to Jim Pierobon, writing for Southeast Energy News, the group worked through the summer and early fall guided by Mark Rubin, a mediator with the Virginia Center for Consensus Building.

According to a summary provided by Rubin, the four initiatives would:

  • Streamline the regulatory oversight utilities are subject to on large-scale solar projects, boosting the size limit from 100 megawatts to 150 megawatts for systems seeking a one-time permit earmarked for a specific project.
  • Increase the profit that investor-owned utilities (Dominion and Apco) can make on projects originated by third-party developers and power purchased under Power Purchase Agreements.
  • Provide for a community solar pilot program administered by utilities.
  • Allow wineries and farmers to build sizable solar systems and earn credits for power they push into the local distribution grid, in effect expanding Virginia’s “net metering” law.

Not everyone is wild about the package. “It’s very much a utility-centric proposal,” said Tony Smith, CEO of Secure Futures, an independent provider of solar solutions.

Ivy Main, the renewable energy chair for the Virginia Chapter of the Sierra Club, says the proposed legislation would not promote true community solar. In her Power to the People blog, she wrote:

For real community solar, we will have to look to legislation developed by the Virginia Distributed Solar Collaborative. This broad-based group of solar stakeholders includes consumers, local government employees and environmentalists as well as solar industry representatives (but not utilities). The Collaborative developed its own model bill this summer based on legislation from other states. The model bill gives much greater freedom to customers to cooperate in the development and ownership of renewable energy facilities for their own benefit.

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18 responses to “Clean Energy Stakeholders Agree on Solar Legislation”

  1. LarrytheG Avatar
    LarrytheG

    well sorta 2 steps forward, one step back… evolution.

    and … this is just to agree to SUBMIT legislation – and all kinds of things can happen at the lobby level and with non-recorded committee votes so I’m not holding my breath.. and would not be at all shocked if this just evaporates..

    No would the utility folks work behind the scenes to kill this legislation ??? surely you jest…

  2. LarrytheG Avatar
    LarrytheG

    Headline: “Solar Is Being Held Back by Regulations, Not Technology”

    https://hbr.org/2016/12/solar-is-being-held-back-by-regulations-not-technology?utm_source=twitter&utm_medium=social&utm_campaign=harvardbiz

    GOOD LORD! Do you think this is the job-killing regulations the Conservatives are all promising to “fix”?

    1. James A. Bacon Avatar
      James A. Bacon

      Interesting study. Virginia should see what rules may be in place here in the Old Dominion to hold back solar.

  3. TomH Avatar
    TomH

    I agree with Tony, this is a utility-centric proposal. As such, it will increase the cost of solar.

    I don’t blame the utilities for this approach. They are just trying to protect their business model as best they can. But it does increase the cost of solar energy above what it would otherwise be. We need to give utilities a new profit-making formula so that they don’t have to interfere in the marketplace and raise customer costs.

    I need to check but I think NY REV has left this market to third-parties to minimize costs or at least they have not allowed ratepayers’ sponsored profits. Utility subsidiaries can compete in this market, but on the same basis as everyone else. Utilities make money from third-party solar with grid services and transaction services.

  4. LarrytheG Avatar
    LarrytheG

    re: ” Utilities make money from third-party solar with grid services and transaction services.”

    two questions:

    1. is that also true of Dominion in Virginia?

    2. is it true for electric cooperatives in Virginia?

    1. TomH Avatar
      TomH

      No. It is not true for any utility in Virginia until we revise our regulatory scheme. This is how some other states are considering doing it.

  5. CleanAir&Water Avatar
    CleanAir&Water

    Agree? I am with Tony and Ivy …

    Both Md and NC are taking steps to redo their regulatory systems. NY’s REV is the most far reaching. As I understand it … the key to REV was that utilities would not own Distributed Energy Resources (DER), except in certain circumstances. Instead the utilities were given the role of Distributed Platform Provider (DPP), a role similar to PJM’s but at the retail level, coordinating the retail grid.

    Our utilities are doing everything they can to remain owners of ALL generation. For instance, you could buy a few panels of a community solar installation but would not receive any compensation for the extra output to the grid because the panels are not located on your property. That is just one example of our rules that are in the way of third party ownership.

    As has been said before, the utilities are not going to be happy until they are allowed to make money in alternate ways because third party ownership and efficient buildings are a reduction in demand and therefore a loss of profits. In Hawaii, where solar plus storage for residential installation is cheaper than utility diesel generated electricity, the PUC had to tell the utility to come up with a plan to allow the long waiting list of residential solar customers who wanted to hook-up to be integrated.

    The individual regulation changes, one at a time won’t do the job.

    1. TomH Avatar
      TomH

      Utilities will continue to make the most of the existing scheme until they are given a new set of rules that allow them to be financially successful in a different role.

      In NY, the utilities were skeptical of the changes until they were shown how they could succeed as Distribution Platform Providers. They were an integral part of developing the new system (which is still evolving and being rolled out). Even with the significant changes, the existing power plants are governed by the old cost-of-service rules in order to keep the utilities financially whole.

      With NY REV the regulated utilities are not allowed in the Distributed Energy Resources market, but their unregulated subsidiaries can compete equally with third parties if they desire.

      I lived on Kaua’i where they have a co-op. They are installing 52 MW of battery storage provided by Tesla’s Solar City in order to meet their evening peak with solar energy. Because the owners are the customers they have not been caught up in the obstructionist policies to slow down solar adoption that has been the case with investor-owned utilities on the other Hawaiian islands.

      We have to recognize that any new scheme must still provide an adequate return to shareholders including a fair compensation for previous investments. Utilities will still need access to capital at reasonable rates, so shareholder considerations are important.

      The idea behind the new schemes being developed in other states is to reward utilities for doing things that also benefit the ratepayers, so everyone wins. By continuing the old rules, the ratepayers can suffer higher rates and less freedom of action in order to satisfy the shareholders. Win-win works much better in the long run.

  6. LarrytheG Avatar
    LarrytheG

    a couple of comments about storage.

    first is that there is an efficiency loss storing electricity – disagreements about how much.

    but if we are going to assert that solar is cheaper than other fuels – if we want a true apple-to-apple levelized cost number – it ought to include the cost of the storage as well as the efficiency loss which would require more solar panels than if you were just feeding directly into the grid.

    Are we at that point where solar combined with storage can provide sufficient 24/7 power to a home – at a cost lower than if they got grid electricity?

    Are we add that point where the utility could combine solar with storage to provide 24/7 power cheaper than gas or or fuels?

    Here’s the point.

    When you can answer that question “yes” – then it truly will be a game-changer and the traditional utility model will unravel.

    When will we KNOW we are getting CLOSE?

    When we see an island that has to import fossil fuels to generate electricity – stop having to import fossil fuels..

    When we see electric cars that have 500 mile ranges and recharge in minutes. When ocean vessels can use solar + storage to navigate the seas.., drones – that can stay aloft for 24 hours.. etc.

    We’ve heard a lot of talk about getting there… and some existing projects that are hailed as major steps forward – including some claims that they’ve transitioned to 100% renewable power – which I don’t believe – it’s more hype than reality.

    But we are getting there.. it may actually happen in our lifetimes and it won’t come a minute too soon for global warming…

    1. TomH Avatar
      TomH

      Losses are not great for most forms of storage, except for pumped storage which can be upwards of 20%. The bigger issue for various forms of batteries is the battery capacity degradation after many discharges and recharges. For example, Tesla guarantees 80% of original capacity for their automobile batteries after 8 years of use and automobile use is harder on batteries than most other electrical applications. Some utility-scale battery types are better for some applications and different battery chemistries are better for others.

      The battery storage being installed on Kaua’i is using Tesla batteries in their utility-scale configuration.

      It is not necessary for solar to be coupled with storage for it to have value in the grid today. In most places in the U.S. new solar is the cheapest source of new generation other than wind and energy efficiency. That is why the majority of new generation is now solar.

      But its affordability is also part of the problem. Because solar is now cheaper than other types of conventional generation it displaces conventional generation whenever it is available. This means intermediate load and peak load units are not dispatched as often as they would be if solar was not contributing. This lowers the amount of revenues generated by these types of units because they run fewer hours and the auction clearing prices are now lower because of solar so they get paid less when they do run.

      In states with higher solar penetration than we have in Virginia, the traditional utility model is already unraveling. It is not “close”, according to Bloomberg New Energy Finance, it is already here. In California, solar generation is even displacing baseload units. So much so that gas-fired units cannot make a profit over the course of a year. They also have a problem when the sun goes down and the conventional units must quickly ramp up to meet high evening loads. Most conventional units do not ramp up quickly and it is expensive to keep them as spinning reserve.

      Batteries are an excellent solution for this. Energy can be drawn from storage for a while to cover the period required to spin the conventional units up to full power. This provides for reliable service and the conventional units can then come into action at the spinning reserve rates which pay them more.

      NY is coping with this by subsidizing the continued operation of old nukes which normally would be too expensive to dispatch. But they want to provide reliable service until the contribution from solar increases. They believe it is cheaper for the ratepayers to do it this way rather than for them to approve the construction of new combined cycle units that they believe would soon result in stranded costs.

      Although batteries have economic value for a variety of grid applications today, it will be 5-10 years before the price comes down enough to allow the widespread applications that you describe. But it might not be in the way you envision. Most people think the batteries will be needed for solar. As our grids are shifting from the old model of changing supply to meet demand, newer methods will alter the demand to meet the available supply.

      The batteries might be used for the new gas-fired plants instead. The new combined cycle plants do not ramp very quickly or very efficiently. It is best to use solar whenever it is available. Rather than turning the combined cycle plants down when this happens you would add a new load to the system (a battery) and continue to operate the gas plants in their optimum range. As the sun sets and solar tapers off, the gas plants would continue to operate in their most efficient mode and the batteries would discharge to the grid. In reality, the grid does not distinguish what plants generate which energy, but it is easier to visualize it this way.

      But using this explanation shifts people’s perspective that batteries will be needed to keep gas-fired plants economic rather than being needed to have solar make sense.

      Because we have so little solar in Virginia, this is not an issue for us operationally yet. But we should look ahead and evaluate how many more (if any) new gas plants it makes sense for us to build.

  7. LarrytheG Avatar
    LarrytheG

    TomH – when solar/wind are “running” – both are subject to variations in solar and wind that in turn mean another generator would need to be “ready” to pick up the slack.

    That would be even more true if you have wind/solar variability AND varying demand… shifting to peak and then receding..

    then finally come night – and solar goes down – what would you do – to maintain grid-wide power?

    I just don’t see storage doing that in any near-term time-frame.

    and if you really want to look at levelized costs – you need to look at what are the levelized costs over a 24 hr period to get a true picture because claiming solar is the lowest price is only good for less than 24 hours then you need to cost out what would be used to take over from solar – those costs.

    I totally agree that “storage” as a concept would cover the grid when solar is not available – but at what cost ? and would that cost be less than burning gas?

    I just don’t see anything that

    1. tells us we are near-term to grid-wide solar to carry the grid overnight

    2. what that cost would be

    I just think we’re getting the cart in front of the horse on this.

    realistically – right now – until we see price-competitive grid-wide 12 hour storage for night time, we need some practical alternative.

    What I read about combined cycle plants these days is that they CAN ramp up quick – in the stage 1 mode – but in that mode they are not as efficient as stage 2 where it does take longer to reach much higher temperatures squeeze out more power and they also use the waste heat to help drive the turbines.

    You won’t give an inch on this and I’m befuddled why because clearly storage is not where it needs to be to handle grid-wide nighttime.

  8. TomH Avatar
    TomH

    Larry,

    I think we are just coming at this from a different point of view. As I understand your view, you are saying that solar and storage are not worth considering because batteries are not yet cheap enough to make solar a baseload alternative. I agree that the prices are not yet low enough to allow that application, except in areas with very high rates (islands).

    My point is, that solar and batteries have an economic contribution to the grid right now even though they cannot yet fulfill a baseload role.

    You are saying that you would never go to a restaurant for lunch that serves the best food at the lowest cost because they don’t serve dinner. That does not make sense to me.

    There will be a transition time where we incorporate more solar and storage into the grid as their prices continue to decline. In the meantime, solar and wind are disrupting utility business models throughout the nation. Some states are embracing this and are exploring ways to change their regulatory schemes to allow their utilities to succeed in this new environment. Other states are allowing their utilities to slow down the development of solar or they will only allow it if the utility owns it entirely.

    These are not trivial issues. Utilities have a great deal invested in existing power plants and they have developed operational methods that allow them to make a profit with them. For example, baseload plants have historically been paid 2-3 times their cost of generation during periods of higher electricity use. Solar displaces the expensive peakers and intermediate load plants. This reduces the auction clearing prices and the baseload plants get paid less than they have historically. This is a real problem for utilities, especially when high amounts of solar generation actually cut into the need for baseload units during the sunniest times of the day.

    As I said in the post above, affordable storage might be more important to keep combined cycle plants economic than it is necessary to justify more solar. You are correct in saying that combined-cycle plants can operate in the combustion turbine-only mode. But rapidly changing the load to the steam turbine can cause operational problems and higher maintenance expenses. Besides, paying the higher price to build a baseload plant but being able to operate only as a peaker some of the time does not allow the plant to be profitable. That is why storage in the grid can be so useful. It allows the combined cycle plants to operate at optimum efficiency all day long even though loads and supplies are varying throughout the day.

    Batteries can operate as both a load (charging) and as a supply (discharging). This helps the grid shift from a mode of adding supply to meet changes in demand to changing demand to meet supply – which is a much better way to deal with the variation in supply from renewables.

    I guess my message is – at this time we don’t need storage to provide for the overnight supply of electricity. We have plenty of conventional units to do that and they are not yet paid off. We need innovative ways of using those existing units during the transition to higher solar penetration in ways that are economically sound for the utilities and their ratepayers. The existing units are adequate to meet our night-time loads. If we increase energy efficiency, we don’t need to build any new plants other than renewables to have a reliable supply of electricity, even with projected load growth. And we won’t have a rate increase like we do every time we build a new gas-fired plant.

    Within 5-10 years, solar and storage will be far cheaper than what they are today and will give us many more options for designing our energy systems. Eventually, we will get to a primarily renewable system. But it has to be done in a way that does not create too many stranded costs. In the meantime, we need better methods of using the generation we already have. The worst thing we can do is build more conventional plants that have an increasing cost curve when we know that they will soon be displaced by renewables and storage that have a rapidly declining cost curve.

    Saying that solar has no value until storage is cheaper only lends support to those who say we must build more new gas plants.

  9. LarrytheG Avatar
    LarrytheG

    re: ” you are saying that solar and storage are not worth considering because batteries are not yet cheap enough to make solar a baseload alternative. ”

    Nope.

    I’m saying they cannot compete economically against other fuels for overnight grid power.

    I’d be the very first one to advocate for solar/storage when it can provide overnight power or even any significant part of the load.

    But right now – I do not see very many examples of this except in places when grid power is 40-50 cents KWH.

  10. LarrytheG Avatar
    LarrytheG

    “You are saying that you would never go to a restaurant for lunch that serves the best food at the lowest cost because they don’t serve dinner. That does not make sense to me.”

    Actually not _just saying let’s not open 24/7 and you do need 24/7 food service .

  11. TomH Avatar
    TomH

    OK, so it looks like we are on the same page. To sum up:

    Solar generation has value now. It is probably the lowest cost source of new generation in Virginia today (energy efficiency is cheaper and so is wind, but not much of that here).

    Storage has value in certain applications now. Its use will expand rapidly as the price goes down. Prices are expected to go down by half every 4-5 years. In 5-10 years storage will displace most of the existing peaking units. In perhaps 10-15 years renewables plus storage can offset many baseload units. In Virginia, we can phase out the nuclear plants in the 2030s after 60 years of operation. Using solar plus pumped storage will produce nighttime energy cheaper than the nuclear units.

    Depending on the price of natural gas, with storage, we might be able to keep the newly built combined cycle plants operating for at least half of their normal economic life. They will be useful in a backup role if we encounter long periods of reduced sunshine.

    With flat load growth or new load growth offset by energy efficiency, we currently have all of the capacity we need to meet nighttime demand. There is no need to build new units that result in rate increases. We need to find innovative ways of using storage, demand response and other methods for the existing conventional units to operate economically as they are paid off.

    Who knows what other innovations might occur during this time if we don’t obstruct their development.

    A fundamental requirement of this shift in our energy system is a new way for utilities to prosper without having to build more to earn more. We need to reward them for things that are of value to the ratepayers in a way that is also fair to shareholders.

  12. LarrytheG Avatar
    LarrytheG

    I’ve ALWAYS thought that SOLAR was of great value – and have argued that we should harvest it whenever we can so that we don’t have to burn other fuels.

    BUT I’ve also said that the REALITY is that we MUST burn fossil fuels when solar is not available – unless and until storage gets to the point where it can carry the nighttime when solar is not available . If it cannot do that – then we have to burn gas.

    Innovations – yes – I can’t wait for them. If we can power the grid overnight with storage rather than gas – I totally would do that.

    But – if we cannot do that right now – what do we do instead – other than burn gas?

  13. TomH Avatar
    TomH

    We will use the mix of generation that Dominion has currently. That includes the nuclear plants and the new combined cycle plants for baseload. The biomass-fired plants, the remaining coal plants, the hydro, pumped storage, and the various oil and gas peakers would all be used in order of their economic dispatch. As more solar comes into the system, the most expensive units would be displaced first. Unfortunately, until 2022 the savings from this will be kept by Dominion and not refunded to the ratepayers.

  14. LarrytheG Avatar
    LarrytheG

    okay, thanks TomH.

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