Senate advances bill expanding access to renewable energy
A bill that would allow state residents, nonprofits and schools to more easily seek and secure alternative energy sources such as rooftop solar recently passed the Senate by a vote of 22-18.
Senate Bill 710, patroned by Sen. Jennifer McClellan, D-Richmond, cleared the hurdle on crossover day, the last day for each chamber to advance its own legislation before it dies.
McClellan’s amended bill helps remove some barriers that make it harder for individuals and organizations to access energy alternatives outside of public utility providers such as Dominion Energy.
One of those barriers makes it difficult for nonprofits to reap the rewards of private renewable energy generation under current law. Nonprofit entities like churches and some schools don’t qualify for a 26% federal tax credit to implement solar systems. This deters some nonprofits and those who don’t qualify for the tax incentive from generating their own renewable energy because of the up-front price of these projects.
Many of these organizations are opting for third-party solar contracts, to either lease a system or to pay for energy use. A customer can lease a solar energy system from an installer or developer and pays to use it for a period of time, according to the Environmental Protection Agency. Alternatively, a power purchase agreement allows customers to pay a solar developer an agreed-upon rate for energy use, usually a lower price than what the local utility charges.
“The beauty of the third-party solar contract is that the third party is not only installing the panels, they are usually helping to finance it too,” Bob Shippee, Sierra Club Virginia Chapter legislative chair, said. “This means the schools or governmental agencies do not have to go through the capital budgeting process and they start seeing savings on electricity from day one.”
The current law caps third-party power purchase agreements on renewable energy generation at 50 megawatts in Dominion territory and seven megawatts for Appalachian Power territory. Dominion would have a tenfold increase to 500 megawatts, while Appalachian Power would have a limit of 40 megawatts, according to the bill.
“We support our Virginia customers using more renewable energy and hope any legislation would ensure the fair and equitable distribution of energy cost to consumers across our footprint,” Rayhan Daudani, Dominion Energy spokesman said in an email.
Consumer solar prices have dropped 36% over the past five years, according to the Solar Energy Industries Association’s recent data. Virginia residents get 1% of their power from solar energy, the association said.
Homeowners have been joining “solar cooperatives” to help households convert to solar power, but churches, schools and other municipal buildings are not allowed to generate their own power outside of energy provided by Dominion — except on rare occasions such as weather emergencies.
The average monthly consumption of energy for Virginia residents is 1,165 kilowatt hours per month according to a 2018 study conducted by the U.S. Energy Information Administration. A kilowatt hour is the measurement of how much energy is used when a 1,000-watt appliance runs for an hour, according to an OVO Energy article. One megawatt equals 1,000 kilowatts.
The proposed legislation would allow non-residential customers to increase their system capacity from one to three megawatts of energy. By law residential customers can generate up to 20 kilowatts.
Shippee said the current cap on third-party renewable energy generation projects impacted savings and jobs in Northern Virginia and Hampton Roads.
“That is savings those taxpayers can’t get until those laws are changed,” Shippee said. “The savings flow right to the taxpayer.”
The bill also raises the cap from 1% to 6% on the amount of solar or renewable energy that can be net metered in a utility service area. Net metering is when an individual who produces their own electricity from solar power uses less electricity than they generate. The excess electricity is then sold back to the utility grid in exchange for a reduction in the customer’s power bill, according to the SEIA.
Some lawmakers also want the State Corporation Commission to regulate third-party renewable energy developers. The current bill does not give the commission jurisdiction to regulate the terms and conditions of third-party power purchase agreements.
“We are putting a lot of additional costs that we are unsure of on the backs of our ratepayers and this is another one of those costs,” said Sen. William DeSteph Jr., R-Virginia Beach during a Senate floor meeting ahead of the vote.
Del. Mark Keam, D-Fairfax, introduced a similar bill in the House that passed with a 67-31 vote.