Wednesday, July 24, 2024

Dominion’s Renewable Projects Approved by Regulators Despite Cost Concerns

Dominion Energy’s Scott Solar facility in Powhatan County, Va. (Sarah Vogelsong / Virginia Mercury)

RICHMOND — Dominion’s regulators on Friday approved a suite of renewable energy projects proposed by the utility in a move that goes against State Corporation Commission staff’s recommendation to deny two projects because of cost concerns.

The commission approved nine solar projects and one energy storage project totaling about 500 megawatts that will be owned by Dominion. The approved projects also include 13 power purchase agreements (PPA) or contracts with third-party developers who will build solar and storage facilities, totaling about 300 megawatts, and sell the energy to Dominion.

With the approvals, Dominion is allowed to recover the costs of about $88 million for development of the projects, which will add $0.38 to the average residential bill. The projects are expected to be completed by 2025.

“The Commission has continued to exercise its delegated discretion in a manner that faithfully implements the VCEA’s carbon-reduction requirements, while best protecting consumers who expect and deserve reliable and affordable service,” the commission said in issuing its ruling.

The Virginia Clean Economy Act, or VCEA, seeks to decarbonize the electric grid by 2050 by encouraging a transition to renewable energy sources, including solar and wind facilities.

Dominion, in a press release, pointed to savings of $250 million in fuel costs for the company by switching to renewable energy projects. The utility says the projects will support thousands of jobs and more than $920 million in economic benefits.

Two of the Dominion-owned projects will be built on previously developed land, including Ivy Land Solar in Albemarle County, the utility’s first project developed on a former landfill, the release read.

“This is another big step forward in delivering reliable, affordable and cleaner energy to our customers,” said Ed Baine, president of Dominion Energy Virginia. “These projects will bring jobs and economic opportunity to our communities, and they will deliver fuel savings for our customers. That’s a win-win for Virginia.”

Staff at the SCC had recommended denying two of the projects, a distributed generation solar project and a storage project, because of cost concerns. But the commission in its ruling noted the requirements of the VCEA to have 1,100 megawatts of solar or onshore wind come from distributed generated projects, or those that are 3 megawatts or less.

The “Distributed Solar Projects together will contribute 6 MW towards this 1,100 MW target,” the commission wrote.

The commission also noted energy storage targets included in the VCEA, which require 2,700 megawatts of storage from Dominion. Battery storage has been revered as critical to providing energy during intermittent periods of renewable solar and wind energy generation when the sun isn’t shining or the wind isn’t blowing.

“The Commission has considered, among other things, the aforementioned provisions of the VCEA as enacted by the General Assembly, the relatively nascent stage of energy storage deployment in the Commonwealth, and the experience that Dominion will gain from operating Shands Storage,” the commission wrote. “We have also carefully considered the cost to Dominion’s customers and the results of the economic analysis presented by Dominion, as well as other statutory standards applicable to this type of resource.”

Electric regulatory attorney Will Reisinger said he wasn’t very surprised with the full approval.

“It’s a pretty big deal to reject a project that is deemed in the ‘public interest,’” Reisinger said, referring to the phrase that is used in the VCEA to favor project approvals.

The commission’s ruling also included responses to concerns raised by environmental respondents, who argued a VCEA requirement to enter into power purchase agreements, which can be cheaper than utility-owned projects, is not limited to 35%.

But the 35% directive in state code does not include modifiers of “at least” or “greater than” that exist in other areas of the code, the commission wrote, adding it ”does not permit more than 35% of capacity to come from third-party-owned resources.”

“Indeed, the commission must presume that the General Assembly both included and omitted such modifiers with ‘equal care,’ the commission wrote.

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