Virginia law expands shared solar into coal country, but key details still have to be worked out

Virginia law expands shared solar into coal country, but key details still have to be worked out

After languishing since 2022, a revamped measure to launch a shared solar program in Southwest Virginia found daylight this year.

The General Assembly gave the go-ahead to a pair of measures (SB 255, HB 108) directing utility regulators to set up Appalachian Power’s inaugural 50 megawatt program by Jan. 1.

Despite the modest size laid out in the new law, Charlie Coggeshall, Mid-Atlantic regional director with the Coalition for Community Solar Access, is content with the breakthrough into a part of the state historically dependent on the coal industry.

“Our expectations had to be tempered significantly,” Coggeshall said. “But we got to a place where we’re putting a stake in the ground in Southwest Virginia, a win for continuing the advancement of shared solar in Virginia.”

It isn’t yet clear how soon Appalachian Power customers will be able to subscribe. The utility must provide tariff information and other related requirements by July 1, 2025.

Relatedly, the Senate and House of Delegates passed separate legislation, SB 253 and HB 106, to enlarge Dominion Energy’s existing shared solar initiative to 350 MW from its current 200 MW limit.

Shared solar, also known as community solar, allows Virginians to purchase solar power via subscriptions to communal, off-site arrays typically built and owned by third-party entities, not utilities.

The arrangement is attractive to customers who can’t afford the upfront cost of rooftop panels, residents with shaded southern exposure or subject to homeowner association restrictions, and apartment renters and condominium owners without control of their rooftops.

Ideally, subscribers earn credits in the form of savings on their monthly electric bills while also helping to pay down the cost of constructing the shared array.

Proponents are encouraged that programs for both investor-owned utilities could eventually include incentives for shared solar projects that are sited on underused surfaces such as rooftops, landfills and brownfields or that incorporate advances such as combining solar with agriculture ventures.

The Virginia Department of Energy will be organizing a stakeholder group to shape the particulars of such inducements.

Coggeshall and other advocates were disappointed two years ago when legislation aiming to set on-the-ground goals for shared solar at Appalachian Power was scuttled in favor of a bipartisan law calling on utility regulators to meet with interested parties to evaluate the program’s possibilities.

Peter Anderson, the director of state energy policy at Appalachian Voices, said proponents had no choice but to persist. Now, he added, it’s up to the State Corporation Commission to institute an affordable model that attracts subscribers and solar developers.

“I’m over the moon that we are establishing shared solar in Appalachian Power territory,” Anderson said. “But my fear is that if we don’t have demonstration projects to build from, we’ll have to go back and rewrite the bill.”

Breakthrough on ‘minimum bill’?

One continuing fractious issue with Dominion’s shared solar program is the debate over what’s called the “minimum bill.” It’s a monthly fee the utility is allowed to charge enrollees to account for the costs of implementing the program and for use of the utility’s grid infrastructure.

In 2022, regulators opted to set that fee at $55, but agreed to exempt lower-income participants from paying it.

Advocates argued that such a high charge for a renewable energy initiative designed to save customers money would prevent wealthier residents in Dominion territory from enrolling. That has indeed been the case since operators began enrolling participants last July 1.

On the other hand, the Appalachian Power program will include a minimum bill, but does not include an exemption for lower-income customers. 

“This makes it risky for solar project developers,” Coggeshall said. “With Dominion, at least developers can be somewhat confident about building a project that’s 100 percent for low- and middle-income customers. Appalachian Power doesn’t have that kind of backstop.

“Still, the interest is there. I have coalition members asking me about Southwest Virginia. I tell them the economics are to be determined. We won’t know for about a year.”

Utility regulators are tasked with setting Appalachian Power’s minimum fee. The utility pushed to reshape the legislation this session because it didn’t want non-participating customers to be burdened by any costs of adding shared solar.

“This issue is specifically listed within the bill as a factor the SCC must consider when determining the minimum bill,” spokeswoman Teresa Hamilton Hall said. “Appalachian Power worked hard to get this language inserted in the legislation, and we believe the SCC will be mindful of the financial impacts to non-participating ratepayers when making decisions.” 

While advocates will be weighing in on that docket to be sure it sets a fair minimum bill, they’re also heartened that the new Dominion law directs regulators to recalculate the current $55 minimum bill charged to market-rate subscribers.

Specifically, the commission must calculate the benefits of shared solar to the electric grid and the state, then deduct those benefits from other costs. Regulators must spell out each cost, benefit or other value used to determine the minimum charge.

The law basically requires a reconsideration of the minimum bill, Coggeshall said, adding that other states already recognize that shared solar and other distributed generation projects help utilities offset the cost of transmitting and generating power.

“Dominion has failed to look at the other side of the ledger and ask what the benefits of solar really are,” he said. “This law is forcing that discussion. Nothing is guaranteed. It’s still going to be a big fight.”

Anderson said it will be intriguing to watch how the three-member SCC — which has two new commissioners — approaches assigning a value to solar that will help dictate a minimum bill.

“The commission is where the rubber meets the road,” he said. “I’m an optimist. We’ll take our swings in front of the commission. My fingers are crossed and I’m hopeful we get projects in the ground.”

Small gains, not great leaps forward

Robin Dutta, the acting executive director of the Chesapeake Solar and Storage Association, said having shared solar folded into Republican Gov. Glenn Youngkin’s 2022 Energy Plan gave it priority status among legislators.

“It’s a great example of how clean energy should be bipartisan because it’s a step forward in building an equitable clean-energy economy,” he said. “Seeing the program expand in megawatts and territory is valuable.”

Quashing any growth since shared solar legislation was first authorized would have been the worst outcome, he said.

In 2020, Fairfax County shared solar champion Sen. Scott Surovell ushered in the original legislation by reluctantly capping Dominion’s program at 150 MW. That was permitted to stretch to 200 MW if at least 30% of the enrollees qualified as lower income. No project can be larger than 5 MW.

Thus far, Dominion has greenlighted 41 shared solar projects totaling close to 150 MW, according to its website. Operators began enrolling participants last July 1 when the law took effect. Another 15 projects — which add up to 60-plus MW — are on Dominion’s waiting list.

Under the new law, half of the additional 150 MW in Dominion’s territory can cater to lower-income subscribers. However, the other 75 MW must basically be split between market-rate and lower-income subscribers.

Another switch in the Dominion program allows the utility to keep the renewable energy credits from each project so they can count toward compliance with the state’s renewable portfolio. Appalachian Power also will benefit by holding onto its renewable energy credits.

“Before, developers in Dominion territory could do anything at all with the credits,” Coggeshall said. “Monetizing the credits helped developers recover costs of building projects, so that’s a lost economic advantage. That change might provide ammunition to regulators to lower the minimum bill.”

Even though Virginia’s shared solar program is relatively small overall, Coggeshall and other advocates are hopeful a federal infusion of $156 million announced on Earth Day can widen its reach.

The Virginia Energy Department will use its Solar for All grant from the U.S. Environmental Protection Agency — part of the $7 billion national Greenhouse Gas Reduction Fund — to design and expand residential solar programs serving marginalized communities. Funding for the five-year program begins in 2025.

Surovell, the Senate Majority Leader who represents suburbs of Washington, D.C., latched onto the idea of shared solar in Virginia more than five years ago when he clicked on an ad for a program while visiting his vacation house in New York’s Adirondack Mountains.

He signed up in five minutes during that summer of 2019 and soon discovered that tapping into an off-property array would about cover his entire electric bill.

Though the Democrat admits the learning curve has been steeper in his home state, he has doggedly sponsored legislation every year since 2020 to enlarge shared solar’s overall footprint and ensure that access to renewable energy doesn’t solely benefit affluent homeowners.

This year, he was the patron behind both Senate versions of the bills that became law. Notably, neither was amended by Youngkin. Last year, Surovell introduced Senate Bill 1266, which would have boosted total capacity to 1 GW. It passed the Senate with a nine-vote margin but failed to advance out of committee in the House.

Regulators’ decision to set a high minimum charge has continually frustrated Surovell. He has always maintained that such fees must be reasonable to attract subscribers seeking fairly priced renewable energy.

For Coggeshall, this session’s shared solar gains only reinforce the reality that Virginia is poised to embrace incremental progress, not great leaps forward.

“Virginia is not New York,” he concluded. “It has been a roller coaster trying to strike a balance to meet Virginia where it is at instead of where we want it to be.”

Virginia law expands shared solar into coal country, but key details still have to be worked out is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

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