Solar Energy
Virginia’s energy future is at a crossroads. Despite having some of the highest solar potential in the mid Atlantic, currently less than one percent of Virginia’s electricity comes from solar energy.
Statement of Issue
Solar energy is the fastest growing industry in the U.S., yet it makes up much less than one percent of Virginia’s electricity supply. According to a study by Virginia Tech in 2005, Virginia could meet 16-19% of its annual electrical energy demand with rooftop photovoltaic power alone.1Exploiting this potential would create jobs and attract new business to the Commonwealth, in addition to providing our residents with the health and environmental benefits of clean energy.
Virginia should set ambitious but achievable goals that will make solar power—in all its forms, including small and large solar photovoltaic (PV) systems and solar hot water technologies—a significant portion of Virginia’s energy economy. With the right policies in place, Virginia could install 2,000 MW of solar photovoltaic capacity by 2030, powering 50,000 homes and businesses.
Solar energy is the fastest growing industry in the U.S., yet it makes up much less than one percent of Virginia’s electricity supply.
The central challenge that has prevented solar power from becoming a more substantial component of Virginia’s energy economy is the upfront investment coupled with a lack of understanding of the long-term benefits of solar. However, targeted incentives, rebates, tax credits and local real estate tax exemptions have proven to be effective in multiple states in stimulating high-volume solar installments at very attractive payback rates.
In addition to offering financial incentives, Virginia should adopt regulations that encourage third-party financing, and should reject utility efforts to impose burdensome stand-by charges. A streamlined and standardized permitting process would lower installation costs. Finally, demand could be increased through opening up the state’s “green power” program to competition, encouraging providers to offer customers in-state solar and wind energy in place of existing utility programs that offer only renewable energy certificates purchased from out of state.
Background
According to the Solar Energy Industries Association, solar energy is currently the fastest-growing industry in the country, with a work force of over 100,000 Americans. The price of solar energy has also declined steeply in recent years, and is forecast to continue this trend. But solar photovoltaic electricity is still more expensive than existing fossil fuel sources in Virginia, and our lack of solar incentives means local companies are struggling. Consequently, we are losing the race for new jobs and economic development in this growing market to neighbor states. New Jersey, Pennsylvania, North Carolina, Tennessee, Maryland and D.C. all have in place stronger solar incentives that lower costs, create jobs and draw in new business.
Rebate programs, tax credits and grants are proven mechanisms that increase solar investments by home and business owners. North Carolina has enacted a 35 percent tax credit for both commercial and residential solar, in addition to rebate programs and incentives and a solar carve-out as part of a mandatory renewable portfolio standards. As a result, Duke Energy has already invested in more than 27 megawatts of solar power in the state, enough for over 3900 homes.
Other states have also been aggressive. Maryland’s solar requirement has brought its total installed solar capacity to 10.9 megawatts, more than three times that of Virginia, at 2.8. As of mid-2011, New Jersey’s solar mandate has already resulted in more than 10,000 solar installations totaling over 380 megawatts, according to the state’s Board of Public Utilities.
Businesses within the solar industry have said they are eager to locate and grow in states that incentivize solar energy through mandatory renewable portfolio standards, as well as laws that allow third-party financing and follow industry best practices on permitting, interconnection, and net-metering. In the absence of a mandatory renewable portfolio standard, then, Virginia must develop aggressive incentives, tax credits, rebates and grant programs to demonstrate our commitment to solar technology, and must remove barriers to growth.
1. www.energy.vt.edu/Publications/Incr_Use_Renew_Energy_VA _rev1.pdf
Recommendations
The General Assembly should establish a mandatory renewable portfolio standards (RPS) to recognize the benefits of clean energy to the state and rewards investments in solar. In the absence of a mandatory RPS, however, there remain a number of steps the Commonwealth can take that will encourage the growth of solar energy:
- Adopt incentives in the form of tax credits to incentivize/subsidize solar development and installations on commercial and residential homes.
- Lower installation costs by creating a model permitting process and encouraging localities to adopt it statewide.
- Create a true “green power” program for utility customers by encouraging providers of solar and wind energy generated within Virginia to compete with utilities that currently offer only renewable energy certificates representing energy generated outside the state; and if necessary, clarify that such competitive green power may provide all or only a portion of the customer’s total electric demand.
- Ensure that any "stand-by" charges imposed by utilities on owners of solar arrays reflect a full cost-benefit analysis, weighing additional utility infrastructure costs against the benefits to utilities and ratepayers from solar distributed generation, including the value of peak generation, reduction of transmission costs, and reduction of pollution.
- Amend the state’s existing voluntary renewable energy standard to include more power from solar and wind energy generated within Virginia. (See the white paper on the Renewable Portfolio Standards.)
- Authorize the State Corporation Commission to consider external costs of fuel sources, such as health and environmental impacts, to level the playing field for alternative fuel sources like solar.
- Similarly, ensure that the State Corporation Commission and Virginia’s investor-owned utilities fully consider the monetary benefits to consumers of the price stability of renewable energy versus the price volatility of non-renewable energy.