RD352 - 2018 Virginia Energy Plan
The energy industry is a vital economic driver that serves as the foundation for the Commonwealth’s ability to grow and thrive. Homes and businesses rely upon stable, reliable, and affordable energy systems. At the same time, there are a number of market and policy shifts that are transforming the industry in ways that cannot and should not be ignored. These include technological advances that are unlocking new opportunities in both the electricity and transportation sectors, customer preferences that are driving the expansion of new business models, a shift toward a reduction in carbon emissions, and a growing focus on the reliability and resiliency of our electric system. The Commonwealth’s 2018 Energy Plan provides both a status update on Virginia’s current energy system and a set of recommendations that are both forward-looking and adaptive to enable the energy transformations that are underway. The intention of these recommendations is to support technological advances, create new business opportunities, and allow Virginia’s energy markets to grow.
In the development of this Energy Plan, the Department of Mines, Minerals and Energy (DMME) facilitated a robust stakeholder engagement process. This process included six public listening sessions, a 60-day written comment period during which 988 comments were filed, and a series of facilitated stakeholder engagement meetings.
The recommendations provided in this Energy Plan focus on both the electric sector and the shifts in the transportation sector that touch on or impact the electric sector. There are also important market and policy changes occurring within our energy system regarding the energy production and extraction industries, but those issues are outside the scope of this report.
While the Commonwealth has taken a number of critical steps to enable the deployment of innovative technologies, one key takeaway from the stakeholder engagement process is that Virginia will need to plan for the transformation of our energy system to achieve our most significant policy objectives. This process has already started through enactment of the Grid Transformation and Security Act (Senate Bill 966), which provided important mechanisms to modernize our electric system.
Among other things, the legislation includes language providing the following:
• 5,000 megawatts (MW) of utility-owned and utility-operated wind and solar resources deemed in the public interest;
• 500 MW of rooftop solar resources that are less than 1 MW in size deemed in the public interest;
• $1.1 billion investment in energy efficiency programs by investor-owned utilities; and
• Cost recovery structures for projects that modernize the grid and support the integration of distributed energy resources.
As the objectives of this legislation are implemented in the coming years, it is important for Virginia’s regulatory and policy landscape to adapt to these new energy priorities. Virginia’s regulatory structure has historically focused on the traditional power sector model of large, centralized power stations and conventional transmission and distribution infrastructure. However, distributed energy resources such as rooftop solar, smart meters, battery storage, electric vehicles, and other innovative technologies are likely to make up an ever-increasing share of our energy system in the years to come. Yet the regulatory environment has failed to keep up with Virginia’s market and policy shifts toward a more distributed and modernized grid. Further, the traditional regulatory structure does not fully incorporate broader objectives such as energy diversification, technological advancements, environmental stewardship, changing customer choices, and economic development or job creation opportunities.
In order to address these regulatory and policy deficiencies, this Energy Plan provides both high-level and detailed recommendations to enable grid modernization to occur in a forward-looking, dynamic, and flexible manner.
First, there are fundamental policy drivers that weave distributed energy resources together. A number of stakeholders provided feedback and recommendations on these intersections, primarily focusing on grid modernization and the development of a robust regulatory process to accommodate the distributed energy resource investments that will transform our electric grid. This Energy Plan leads with the overarching recommendation that in order to effectively achieve a modern electric grid, Virginia needs a coordinated distribution system planning process.
The Energy Plan then focuses on recommendations regarding five specific policy tracks that are discussed in more detail in the sections that follow:
(1) Solar and Onshore Wind
The recommendations for solar and onshore wind include achievement of at least 3,000 MW of the 5,000 MW of solar and wind resources deemed in the public interest under Senate Bill 966. This level of solar and wind investment should occur by 2022. The recommendations also include expansion of corporate clean energy offerings, enhanced collaboration on the siting of large solar and wind facilities, and expansion of the net metering program, the power purchase agreement program, and the community solar program. The Energy Plan further includes the recommendation to double the Commonwealth’s renewable energy procurement target to 16% by 2022.
The recommendations for offshore wind focus on supporting the development of the offshore wind resource itself as well as growing the offshore wind supply chain. The Energy Plan includes both support for the 12 MW offshore wind demonstration project and the recommendation to establish a goal that the full 2,000 MW of offshore wind potential in Virginia’s wind energy area be developed by 2028.
The recommendations for energy efficiency apply to Virginia’s established energy conservation goal well as potential avenues to deploy additional energy efficiency programs. The recommendations include increasing utility-funded energy efficiency programs to $100 million per year for Dominion Energy and $15 million per year for Appalachian Power Company in furtherance of the energy efficiency investment targets set forth in Senate Bill 966. The recommendations also include expansion of state-sponsored efficiency programs, increasing energy efficiency financing opportunities, additional deployment of combined heat and power (CHP) projects, and establishing effective data management strategies.
The recommendations for energy storage focus on the resource as an emerging technology that could dramatically impact the grid of the future. There are a variety of energy storage technologies under development, and the Energy Plan recommends increased collaboration as the Commonwealth moves forward with a comprehensive evaluation of these storage technologies.
The recommendations for electric vehicles and advanced transportation recognize that shifts in the transportation sector will impact other areas of the energy system, including the electric grid. The electric vehicle recommendations include adopting the Advanced Clean Cars (ACC) program, developing a comprehensive electric vehicle transportation plan, and setting targets for both electric vehicle charging infrastructure and the Commonwealth’s vehicle fleet. The advanced transportation recommendations note that the Commonwealth’s existing programs to promote alternative fuel vehicles have worked well and should continue forward with additional technical support.
Further, stakeholders provided significant feedback on Governor Northam’s proposal to reduce carbon pollution from the electric power sector. This Energy Plan includes a section on the current status of the regulatory program.
Finally, stakeholders provided broad-based recommendations to bolster the resilience of our electric grid and ensure that there are not disproportionate impacts to low-income and minority communities as energy sector investments are made. These policy recommendations touch on a variety of energy resources. Recommendations for these issues are incorporated into various aspects of the sections that follow.