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Why Virginia Has No Renewable Energy

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Peter Galuszka
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offshore wind By Peter Galuszka

For all the hew and cry over renewable energy sources and the “War on Coal,” it is extremely interesting to see just how much progress Virginia has made with renewable energy. The answer: hardly any to none.

A moment of clarity came when I was perusing blog postings by IvyMain, a D.C. area lawyer and Virginia Sierra Club activist who is quite often ahead of the curve on energy issues.

She posted a table of how Virginia compares with neighboring states in development of solar and wind power.

Leading her list is West Virginia with 583 megawatts of wind power. Next is North Carolina with 335 megawatts of solar power. Maryland is almost equally split between solar and wind with 262 megawatts.

And Virginia? A whopping 18 megawatts of solar and zip-o wind.

The State Corporation Commission has written against proposal EPA regs limiting carbon emissions saying it would shut down too many coal-fired plants. Solar and wind could make up some of it, but the SCC claims that “there is still zero probability that wind and solar resources can be developed in the time and on a scale necessary to accommodate the zero-carbon generations levels needed” to help meet the EPA’s carbon emission goals by 2030. Even more curious, the SCC used EPA figures that Virginia has 351 megawatts of renewable power. Hmmm.

One can almost see a clever and duplicitous scheme here. One reason why Virginia’s neighbors have remarkably more renewable power than Virginia is that they have mandatory renewable portfolio standards. In Maryland, 20 percent of all electricity generated must come from renewable sources by 2020. In North Carolina, it is 12.5 percent by 2021 and in coal-rich West Virginia, it is 25% renewable by 2025.

Virginia’s “voluntary” goal is 12 percent by 2022. Why so little and voluntary? Easy. Dominion Virginia Power has a legal deal going where it has a “monopoly” on electricity distribution and according to IvyMain cracks down wherever possible on independent solar generation. She notes that Dominion squelched a solar project at Washington & Lee University a few years ago and has attacked similar plans. After preventing renewable power from developing, Dominion and its allies can then say we must keep big, traditional  facilities (nuclear, natural gas and coal-fired) going because there’s so little available on the renewable front.

Dominion, of course, is a huge political contributor. According to the Virginia Public Access Project, Dominion and Dominion Resources combined are the No. 1 corporate donors in this state. They gave about $1,042,580 this year. The No. 3 corporate donor is Alpha Natural Resources, a major coal company based in Bristol that gave $218,874.

Conservative commentators regularly pin the EPA’s flexible but stricter rules on a so-called “War on Coal” led by President Barack Obama. Yet, Virginia is a small coal producer compared to West Virginia, which is presumably ground zero in the fight against the Black Diamonds. So, how come West Virginia, the No. 2 coal state, has mandatory renewable standards and leads the pack in renewable energy?

The answer is that West Virginia’ leadership knows that its coal days are numbered and this started long before Obama came to power. The Mountain state has plenty of, well, mountains that can be great foundations for wind. So, too, does Virginia – the exact same mountain ranges in fact. But that doesn’t seem to matter. One noted right-winger blogged about the supposed “War on Coal” and then tried to preempt responses that broadened the reasons for coal’s demise:

“No lectures about the coal industry, please. I understand that the current woes of the coal industry stem in large measure from coal’s loss of competitiveness to natural gas as a fuel and to cyclical movements in the market for metallurgical coal (used by the steel industry). However, the Appalachian coal industry still produces a lot of steam coal for power plants, and the EPA rules would destroy much of that market. Clearly, the EPA rules, which are not yet in effect, have not yet destroyed a single coal-mining job. Come back to me in 2020 and it will be a very different story.”

Today’s New York Times has a story about political races in West Virginia where coal and Obama are naturally issues. The story contains this revealing passage:

“The coal industry’s long decline is economically complex. When Alpha Natural Resources, one of West Virginia’s largest coal operators, warned 1,100 employees of potential layoffs in July, it blamed a worldwide glut of coal, competition from cheaper natural gas, and lower-cost coal from western basis – as well as Environmental Protection Agency regulations.

“But in the charged political arena, complexities fade and both sides identify a sole culprit for the industry’s struggles: the administration’s anti-coal regulations.”

So there you have it. In Virginia, rules are set up to prevent renewables from being established while political types and their conservative blogger handmaidens beat the drum against the EPA and Obama.

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26 responses to “Why Virginia Has No Renewable Energy”

  1. TBill Avatar
    TBill

    Re: on-shore wind, makes sense due to reasonable cost, but we have to consider where the wind resources are naturally located. If you look at wind maps, you’ll see there is a mountain ridge stretching south from PA to MD to WV. Interesting recent trip – got off the PA Turnpike at Somerset and headed south on Rt 160 to MD, visually it looks like your car might get sliced in half by one of the hundreds of wind turbines along the winding roads up there. Quite impressive.

    I believe Dominion gives customers an opportunity to pay a little extra for wind power from this region, but you are correct, in this case, it’s not going to be built inside of VA. But if it is build by Dominion, we should get credit for it. I’d like to see more of this idea, letting customers opt for the wind energy.

  2. Acbar Avatar
    Acbar

    “One can almost see a clever and duplicitous scheme here.” Really?

    Peter, it’s dollars and common sense. If you are a renewable energy developer, you look for three things: (1) a good site (meaning, a location with cheap land, windy for wind [or sunny for solar, or a water with a big drop for hydro, etc.] and low NIMBY opposition; (2) a good market (meaning, good access to the electric grid and demand for renewables either from consumers on the grid willing to pay extra for it, or from utilities’ mandated purchases; and (3) good economic subsidies (meaning, the most dollars you can get through tax rebates, or artificially-high payments due to regulatory pricing distortions, for long enough to obtain loans based on them).

    There are lots of jurisdictions out there these days promoting renewable energy through mandated purchases and subsidies – why would anyone set up a renewable energy generator in a state that offers less than the best package? The states are competing against one another to attract a limited number of players, and some states have the added disadvantage of little available natural renewable energy to tap.

    This begs the question, why should any jurisdiction try to out-compete the states with natural resource advantages by offering such high subsidies and such high levels of mandated purchases that they attract renewable energy developers anyway? What’s in it for the jurisdiction? I submit, darned little. The local retail distribution utility (with the regulators’ blessing) passes all those costs on to consumers; they might as well pay the extra cost through taxes, except it’s easier and less transparent to make the utility pay than to raise taxes. The presence of a few windmills or solar collectors or dams may make a good talking point for politicians but they are hard to hide; try and stick a big one in a sensitive landscape and see what happens. The resilience of the electric grid overall is helped a little by the diffusion of generating resources but hurt substantially by the inability to rely on resources that don’t generate due to vagaries of weather. Also, electric generation is usually a high capital cost endeavor, but renewable resource generation is moreso, offset by lower operating cost. In other words, you pay more up front, which is always riskier in business.

    And what good does having renewable resource generation do you? Well, there’s the avoidance of fossil fuel consumption. Yes, this contributes incrementally to an electric utility’s reduced “carbon footprint.” But assuming that is your goal, you would probably get the same incremental reduction cheaper by building more nuclear power. At the least, you should first build bigger transmission lines (yielding lower line losses) to bring in electricity from distant areas where there is already a lower percentage of fossil-fueled generation (probably mostly due to existing nuclear power).

    In short, we pay extra for renewable-resource energy for the privilege of avoiding fossil fuels. I understand why Virginia had held back, letting other states impose these costs on their own customers thus giving Virginia an economic edge. It would be irresponsible to impose those extra costs on electric consumers without a policy directive from the legislature to do so. But if you disagree, why not debate that choice openly, instead of decrying the absence of hidden subsidies and opaque regulatory policies here?

  3. Acbar Avatar
    Acbar

    “One can almost see a clever and duplicitous scheme here.” Really?

    Peter, it’s dollars and common sense. If you are a renewable energy developer, you look for three things: (1) a good site (meaning, a location with cheap land, windy for wind [or sunny for solar, or a water with a big drop for hydro, etc.] and low NIMBY opposition; (2) a good market (meaning, good access to the electric grid and demand for renewables either from consumers on the grid willing to pay extra for it, or from utilities’ mandated purchases; and (3) good economic subsidies (meaning, the most dollars you can get through tax rebates, or artificially-high payments due to regulatory pricing distortions, for long enough to obtain loans based on them).

    There are lots of jurisdictions out there these days promoting renewable energy through mandated purchases and subsidies – why would anyone set up a renewable energy generator in a state that offers less than the best package? The states are competing against one another to attract a limited number of players, and some states have the added disadvantage of little available natural renewable energy to tap.

    This begs the question, why should any jurisdiction try to out-compete the states with natural resource advantages by offering such high subsidies and such high levels of mandated purchases that they attract renewable energy developers anyway? What’s in it for the jurisdiction? I submit, darned little. The local retail distribution utility (with the regulators’ blessing) passes all those costs on to consumers; they might as well pay the extra cost through taxes, except it’s easier and less transparent to make the utility pay than to raise taxes. The presence of a few windmills or solar collectors or dams may make a good talking point for politicians but they are hard to hide; try and stick a big one in a sensitive landscape and see what happens. The resilience of the electric grid overall is helped a little by the diffusion of generating resources but hurt substantially by the inability to rely on resources that don’t generate due to vagaries of weather. Also, electric generation is usually a high capital cost endeavor, but renewable resource generation is moreso, offset by lower operating cost. In other words, you pay more up front, which is always riskier in business.

    And what good does having renewable resource generation do you? Well, there’s the avoidance of fossil fuel consumption. Yes, this contributes incrementally to an electric utility’s reduced “carbon footprint.” But assuming that is your goal, you would probably get the same incremental reduction cheaper by building more nuclear power. At the least, you should first build bigger transmission lines (yielding lower line losses) to bring in electricity from distant areas where there is already a lower percentage of fossil-fueled generation (probably mostly due to existing nuclear power).

    In short, we pay extra for renewable-resource energy for the privilege of avoiding fossil fuels. I understand why Virginia has held back, letting other states impose these costs on their own customers thus giving Virginia a considerable economic edge. Anyway, it would be irresponsible for the SCC to impose those extra costs on electric consumers without a policy directive from the legislature to do so. But if you disagree, why not debate that choice openly, instead of complaining about the absence of hidden subsidies and opaque regulatory policies here?

  4. larryg Avatar
    larryg

    Excellent article Peter!

    Dominion does dominate Virginia on energy policy but to the detriment of citizens and rate-payers and ultimately to the detriment of its own self and it’s investors.

    But the SCC through their petulant filing with the EPA (read it) – has said that rate-payers are going to pay for stranded investments – if the EPA forces changes – but they also say rate-payers are going to pay if they start to adopt solar on their own.

    I think it is ludicrous to say between Virginians ubiquitous mountain ranges and ocean coastline that Dominion – anyone – would assert we “have no wind resources”. What kind of BS is that?

    just travel to our neighboring states and see for yourself -the turbines.

    1. DonR Avatar
      DonR

      I agree with LarryG? Yikes! Beyond wind power – apparently the sun shines in Maryland, West Virginia and North Carolina but not Virginia.

      Distributed energy generation (e.g. wind, solar) is a real threat to electrical power generating monopolies like Dominion. In other states the legislators are relatively honest representatives of the people. In those states they have been forcing more and more alternative energy because it’s good for the environment, the technology is steadily improving and it will help the state meet federal mandates. In Virginia the legislature is bought and paid for. No troublesome mandatory renewables. And when the inevitable chicken comes home to roost? Blame Obama.

    2. TBill Avatar
      TBill

      BS? Nobody would disagree with your premise that, if VA has excellent, low cost, on-shore wind opporunities, that should be developed (probably way before we go after mega-expensive off-shore wind). But what I am hearing in the papers is that VA mainly has excellent off-shore wind opportunities…but that’s a whole new ballgame in terms of high cost energy source.

      1. larryg Avatar
        larryg

        I don’t know but I’ve traveled across the Chesapeake Bay Bridge Tunnel and noted the wind on the way across and then on both coastlines of the Eastern Shore.

        it seems to be a lot of territory.

        http://www.nrdc.org/energy/renewables/virginia.asp

      2. larryg Avatar
        larryg

        I also remember way back when – you would have thought the automotive world as we know it was coming to an end when we took the lead out of gasoline.

        I do not recall the SCC weighing in on that to argue about the cost to consumers and for that matter I do not remember the POTUS being maligned as an ideologue for supporting it.

        Ditto with CFCs.. never heard a peep from the SCC.

        Dioxin, PCBs, lead in paint, ethanol, and a few more.

        so what exactly is the SCC doing now by getting involved beyond the basic regulatory role and essentially not only helping DOminion avoid investing in wind and solar – and at the same time – undermining competitor companies that would by making it harder for them to connect to the grid.

        here’s an example: http://my.firedoglake.com/elsner/category/uncategorized/

  5. larryg Avatar
    larryg

    I’m not in favor of subsidies for renewables… and I’d acknowledge that the footprint required for wind/solar is substantial compared to coal/nukes.

    Having said that – I do not think coal should get a bye on pollution and I’m not talking about co2 but instead mercury and sulfer-dixoide – that is demonstrably harmful to people’s health.

    I’m fine with Nukes – as long as they too are not subsidized and that includes disposal.

    what we have right now in the energy sector is financial and environmental subsidies that are ignored when comparing them to less polluting energy sources.

    we pay a high environmental price for coal – not only in blasting mountaintops off but in the resulting damaged to streams from sulfur-bearing rock exposed to rainfall which in turn destroys streams – turning them into lifeless acidic waterways.

    Nukes not only have disposal issues – they are targets for terrorism and it don’t take much imagination if one had been targeted with an airliner in 911.

    People are going to self-adopt solar – and it won’t take much more in the way of breakthroughs for an avalanche to ensue – and when it does – what exactly is Dominion going to do to try to recoup revenues?

    1. Acbar Avatar
      Acbar

      Agree with you; except, I doubt we will see much self-adoption of solar in homes not designed for it, the physical obstacles are too great. We need builders who’ll begin making solar easier by how they design (and orient) new homes, and advertising “solar ready,” if not by including solar power in the finished product. And for that we need consumer demand for it: chicken and egg!

      1. larryg Avatar
        larryg

        I think solar is going to go forward and the only question is how fast and I think there is a real potential for it to turn into a cell-phone type evolution.. overnight.

        and my question is – what is Dominion’s plan if that happens? how will Dominion deal with it?

        This is going to happen.. it’s not a question of if – it’s a question of when.

        and “when” .. when happens what position will Dominion be in to cope with the revenue loss?

        what is the plan?

        1. Acbar Avatar
          Acbar

          I understand the stranded cost argument but it’s really unlikely the spread of distributed generation can or will happen that fast. Perhaps popular support for d.g. will spring up nearly overnight, but even if that happened tomorrow the investment in that much d.g. will require decades, which is consistent with the timeframe of retirements of older “cycling” generation, and there will still be a need for a certain percentage of grid-supplied “base load” power where economies of scale will probably support extending lifespans for some of the existing infrastructure (e.g., that “40 year Surry” posting the other day). So I don’t see that much cost being “stranded” even in the worst case scenario for the utility. And, seems like the worst case scenario has a long way to go to get underway — there’s a lot of inertia to overcome for something as unsexy as distributed generation on your rooftop to become such an overwhelming fad.

          1. larryg Avatar
            larryg

            I think we are one breakthrough away from significant disruption to the utility industry.

            one change that makes solar no more expensive than utility power will change the game.

            do we really think such a change is decades away and thus not a concern for utilities?

            they themselves say that changes by 2030 to retire older coal plants will result in stranded costs.

            by 2030 – the solar industry could render moot the “threat” from the EPA and instead market forces could overwhelm Dominion.

            the question is – is that happens what impacts are there?

        2. TooManyTaxes Avatar
          TooManyTaxes

          Under normal circumstances, a regulated utility, not under some form of price and incentive regulation, is entitled to recover its sunk costs for plant that was used and useful in the provision or service, or, if there is a risk that some of those costs will not be recoverable, a higher allowed rate-of-return cap to reflect its higher risk. Of course, to the extent someone is no longer a customer, Dominion’s rates are immaterial.

          Still, if I were a Dominion executive, I would look for ways to lower my generation costs, including by the use of renewables, and building a more reliable distribution network to compete with other decentralized sources of power. Rather than look to the past, I would amortize my embedded investments as soon as possible; try to expense, rather than capitalize costs; look forward; and try to obtain legislative authority to surcharge backup power. One argument Dominion can make is remaining connected to the grid provides insurance against being powerless for long periods of time. Just how fast can a neighborhood come back from a devastating storm. Of course, this assumes Dominion starts trimming trees and providing better reliability.

      2. DonR Avatar
        DonR

        Solar seems to be in vogue everywhere but Virginia …

        https://farm6.staticflickr.com/5607/15357865708_3f400a591d_o.jpg

  6. Acbar Avatar
    Acbar

    Personally I’d be delighted to see solar distributed generation get that kind of attention and demand from young homeowners. Stranded costs may well worry the SCC staff and Dominion, too. Only, d.g. is not the cell phone or the internet; there’s nothing comparable to a cell-phone’s groundbreaking portability (compared with a landline) to drive that sort of revolution in peoples’ habits despite the costs in just a few years. More likely decades. The only thing that would grossly accelerate that timetable is a regulatory/legislative mandate, which is exactly what the EPA’s proposed rule is intended to be. In that context the SCC staff’s concern about stranded costs in their EPA filing is not surprising to me.

    1. larryg Avatar
      larryg

      stranded costs in a 2030 timeframe and no threat at all from technology changes?

      sorry.. that’s Dominion Kool-aid.

      when you look at various different ways that Dominion can meet the proposed rules.

      and sorry -when I see the SCC worry about things like the cost of the Chesapeake Bay cleanup or stormwater regulations.. I’ll believe that they are concerned about all regulatory rules … not just the ones DOminion is worried about.

      I’t unbelievable to me that folks don’t think SOLAR can see technology changes.. you can believe that but can you believe it to the extent that you see no change in decades?

      it doesn’t make sense. Solar is a threat to the current utility business model and that’s coming from the utilities themselves ….

      Dominion and the SCC have no plans – only a “belief” … that’ not smart… it was not smart for Kodak or Blockbuster Video or dozens of other business models that changed far sooner and far faster than they thought.

      THe SCC should not be carrying water for Dominion Investors.. but instead looking at the interests of rate-payers.

    2. TooManyTaxes Avatar
      TooManyTaxes

      The cell phone industry is totally dependent on cables and wires to operate. The wireless part is limited to single towers or other antenna installations that are connected by fiber or copper circuits. Ditto for the mobile switching centers that connect to other centers and the PSTN on a wireline basis.

      1. larryg Avatar
        larryg

        I was under the impression that microwave moved a lot of communication data these days.

        but mobile phones are an example of just how fast technology changed – and transformed an industry.

        landlines are still around but virtually everyone now has a cell phone and it could not have happened without the computerized automatic switching between cell towers … not only can hundreds of people be talking to one cell tower at any given time, but – dozens can be transferred off that tower to others and new ones transferred on to it in seconds.

        some telephone companies did not resist the technology and delay change to try to recover their sunk costs – at least the ones who intended to remain viable companies.

        If Dominion were a cell phone company – they’d probably be a defunct one….

        Thank God the SCC did not regulate cell companies the way it has the electric grid.. we’d still be using land lines.

        who would have predicted just how fast an entire industry transformed in a couple of decades?

        What Dominion is doing with the SCC’s help is a disservice to the people of Virginia in my view.

        The interests of Dominion have taken precedence over rate-payers right to a modernized grid and a strategy for the future.

        1. TooManyTaxes Avatar
          TooManyTaxes

          Microwave needs towers that are clearly visible to each other. Microwave, while still used, often is not as useful as fiber optic circuits.

          The Telephone Industry did make major efforts in the 70s through the 90s to reduce capital investment and amortize existing ones. The FCC allowed them to expense the cost of connecting phones to the network (once a Telco function) and to amortize the existing investments while much of the industry functioned as a monopoly. Depreciation methods were changed to provide faster capital recovery and embedded investments amortized. These amortizations allowed Telephone Companies to avoid rate decreases during the years their market power was the strongest.

          State Commissions, like the SCC, were prohibited from regulating rates, market entry and market exit by Congress in the early days of the Clinton Administration.

          But I agree the wireless industry has been much, much more innovative than the wireline companies. Not even debatable.

          1. larryg Avatar
            larryg

            If the Va SCC did with phone service what they have done with electric service – we’d have one providers with a virtual monopolies that would not modernize.

  7. LifeOnTheFallLine Avatar
    LifeOnTheFallLine

    That’s a lot of letters to spell Republicans.

    1. DonR Avatar
      DonR

      Not really.

      Texas, Georgia and Arizona are far more Republican than Virginia and far ahead of Virginia with renewable energy.

      In Virginia corruption is non-partisan.

      1. LifeOnTheFallLine Avatar
        LifeOnTheFallLine

        Texas and Arizona also have giant swaths of land that are useless for anything other than dumping giant arrays of solar panels and/or windmills on. I’m sure the powers that be there were more than happy to help any development there that might give a return.

        “In Virginia corruption is non-partisan.”

        Corruption is non-partisan everywhere.

        1. DonR Avatar
          DonR

          Population density is not really a factor with solar. Plenty of solar in Pennsylvania, New Jersey, New York. In fact, pretty much every populated state … except Virginia.

          As for corruption being non-partisan everywhere – probably so. In Virginia corruption leans Republican but the Dems are happy to join in (although usually with more decorum).

          1. LifeOnTheFallLine Avatar
            LifeOnTheFallLine

            And those three states are all more Democratic than Virginia. My point wasn’t population density as much as it was geology.

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