Virginia’s largest utility strives to meet the demand of corporate customers.
Dominion Energy announced a solicitation for 500 megawatts of onshore wind and solar on Wednesday. The request for proposals stems from Virginia’s Grid Transformation & Security Act, which went into effect in July. In a plan tied to the law, Dominion will develop 3 gigawatts of clean energy by 2022.
The RFP is the first of several expected announcements for large-scale renewable resources from the utility. Taken together, the 3 gigawatts of renewables positions Virginia as one of the top growth markets for utility-scale solar over the next five years, according to Wood Mackenzie Power & Renewables.
“This is an impressive RFP. It’s not the biggest RFP that’s been issued, but it’s basically kicking off what is one of the more ambitious solar procurement plans that’s a product of an integrated resource planning process,” said Cory Honeyman, head of solar research at WoodMac. “It’s also a product of deeming solar to be a least-cost, best-fit alternative to new-build natural gas.”
The RFP follows Dominion’s acquisition this summer of 240 megawatts of solar in Virginia from Urban Grid. The utility is also developing a 12-megawatt offshore wind demonstration. At the same time, Dominion’s 2018 integrated resource plan noted the “continued importance” of natural gas and included potential development of over 3.6 gigawatts of combustion turbine capacity by 2033.
Virginia’s Grid Transformation & Security Act allows utilities to collect and spend ratepayer money to modernize the state’s grid, including projects that focus on renewables and energy efficiency.
Prior to the bill’s passage, state regulators dismissed a Dominion pitch to offer 100 percent renewable energy plans to large electricity offtakers like commercial and industrial customers. Third-party power-purchase agreements are not fully legal in Virginia, but a 2017 ruling from the State Corporation Commission allowed Direct Energy to provide such plans until utilities in the state offer it. Because regulators shut down Dominion’s attempt to offer such plans, the door remains open for third parties to provide them.
Honeyman said the state’s third-party limbo could be viewed as a barrier for corporate customers that want access to large-scale, onsite solar. But he also expects Dominion to seek approval for a revamped plan. The utility has already created tariffs for companies, like Facebook and Amazon, with high clean energy goals and could eventually redirect its new solar capacity to serve those customers.
“It’s reasonable to expect that they’ll plan to make other proposals and the additional procurement of larger scale solar projects to meet their resource planning requirements,” said Honeyman. “In the best-case scenario, Dominion is able to successfully repurpose a portion of those projects to market a ‘green tariff’ offering to corporate customers that are siting data centers and other large industrial load facilities in Dominion’s territory.”
Lining up renewables that could be funneled toward large corporates makes sense in a state with companies pressuring the utility to offer more clean power. According to Advanced Energy Economy (AEE), Virginia ranks 12th in the nation for large C&I electricity use. Virginia’s cheap rates make it a magnet for data centers.
Dominion said it has worked with Facebook, Microsoft and Amazon to provide them the clean energy they want to power operations. Currently 260 megawatts of Dominion’s total 656 megawatts of solar in operation or under construction supply Amazon property.
Earlier this month, Dominion also sent out a survey to “key accounts customers” in the commercial and industrial sectors to identify what they want from an energy provider and how the utility can work with customers toward achieving clean energy goals.
“As many businesses and organizations in Virginia establish or expand clean energy and sustainability goals, Dominion Energy is proud to be a trusted energy partner,” said Corynne Arnett, Dominion’s vice president of customer service, in a statement announcing that survey. “This information will help us adapt renewable programs to meet customer needs as we grow our renewable generation fleet.”
In many states, clean energy tariffs like those offered in Virginia require customers to pay a premium for renewable power. Analysis from AEE shows that some Dominion offerings include a premium. Both AEE and Honeyman note that, as Dominion’s investment in clean energy grows, the industry will also be watching how it structures offerings for C&I customers.
Though tech companies with big balance sheets and sustainability goals may be willing to pay extra for clean power, Honeyman said there are still questions about the economic competitiveness of green tariff programs. With this RFP, he said, Dominion has already affirmed solar is cost-competitive. It remains less clear how that will impact corporate customers, though Dominion said the “RFP certainly is integral to our information-gathering efforts” related to those customers.
Source: greentechmedia
