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.
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