Renewable Portfolio Standards
Virginia’s current RPS does not cover rural electric cooperatives, municipal facilities, and combined heat-and-power facilities.
Statement of Issue
Virginia’s renewable energy goals are a modest 15% of non-nuclear electric generation (approximately 10% of all generation) by 2025, with double credit given for wind and solar and triple credit for offshore wind. While the goals are only voluntary, Virginia law offers incentives to the state’s investor-owned utilities to meet them, and both Dominion Virginia Power and Appalachian Electric Power have indicated an intention to do so.
The law, however, allows utilities to meet the goals by purchasing renewable energy certificates (RECs) from outside the state. In 2010 Dominion purchased more than 1.8 million RECs as part of its RPS compliance plan. These RECs, however, have done very little to encourage new investment in renewable power. The overwhelming majority of REC-supplying power generators (18 out of 28) were from ancient facilities built before World War II! Not even one REC was purchased from any facility built this century.
Our current renewable portfolio standard (RPS) is insufficient to moving Virginia forward on clean energy.
Unfortunately, the result is that all of the money Virginia ratepayers spend on RPS compliance is going to old, existing generators, many of whom are out of state. This denies Virginia businesses the opportunity to participate in this growing sector and create clean energy jobs. In addition, the health benefits associated with generating electricity from renewable energy are not being realized Virginia residents.
The legislature passed the voluntary RPS statute in 2007 because we wanted to see new wind, solar, and clean renewable investments come to Virginia. So far, the law has failed to deliver on that promise. It needs to be revised.
Accordingly, we recommend that the General Assembly amend the Code to provide that the renewable energy used to meet our goals be generated within the Commonwealth of Virginia, or in the federal waters adjacent to our coast. Additional amendments need to be reviewed to ensure that the law succeeds in growing renewable energy projects in Virginia and creating new jobs here at home.
Background
Renewable energy, and especially wind and solar energy, are enjoying explosive rates of growth within the United States. According to the U.S Energy Information Administration, between 2007 and 2008 wind-generated electricity increased by 61% and again increased by 28% between 2008 and 2009. In the U.S., wind energy increased more than any other renewable source of generation in these years—yet none of Virginia’s electricity comes from Virginia wind farms.
Solar continues to be one of the fastest growing sectors of the U.S. economy, employing over 93,000 workers nationwide in 2010, with a projected annual job growth of 26%.1 New Jersey has installed over 10,000 solar arrays, generating more then 380 MW locally, due in part to legislative framework encouraging renewable energy. HB 1686 passed last year to allow Virginia utility companies to own and operate solar facilities and offer tariffs to assist customer’s distributed solar generation. Dominion is now pursuing plans to develop a 4-megawatt solar plant in Halifax, Virginia.
The growth of renewable energy brings with it significant new business opportunities. For example, the National Renewable Energy Laboratory estimates that 1,000 MW of new wind development in Virginia would result in $2.7 million per year in payments to landowners, $9.1 million per year in local property tax revenue. 1,645 new jobs during the construction phase, 230 new long–term jobs, an infusion of $207.4 million into local economies during construction, and $21.2 million [per year] to local economies long-term. All of these figures are for direct impacts only; by including indirect and induced impacts, the total economic benefit over 20 years would rise to $1.2 billion.2
Estimates for the benefit of offshore wind in Virginia are similar. The Virginia Coastal Energy Research Consortium (VCERC) estimates that developing just part of Virginia’s offshore wind resource could provide approximately 10,000 career-length jobs; the Virginia Economic Development Partnership has produced a similar estimate.
As these numbers indicate, renewable energy offers huge opportunities to businesses, workers, landowners and local governments. When Virginia utilities purchase renewable energy certificates from out-of-state producers, other states enjoy these economic and job development benefits, but Virginia does not.
Failing to develop renewable energy within our borders also means a lost opportunity for our young people. Without renewable energy development here, students cannot learn the skills that will allow them to participate in a sector of the economy that continues to grow in importance.
Finally, buying RECs from out of state instead of developing renewable energy projects here denies us other benefits, including fuel diversity within the state, the benefits to the transmission grid of locally-generated electricity, and the price stability afforded by ownership of a wind farm or solar array.
In short, buying out-of-state RECs means we end up paying more for our electricity without enjoying the benefits that accrue from investing in renewable energy here in Virginia.
1. http://www.seia.org/cs/research/industry_data
2. Economic Benefits, Carbon Dioxide (CO2) Emissions Reductions, and Water Conservation Benefits from 1,000 Megawatts (MW) of New Wind Power in Virginia (Fact Sheet). (2008). 2 pp.; NREL Report No. FS-500-43378; DOE/GO-102008-2629.
Recommendations
The Virginia General Assembly should pass a bill requiring that renewable energy be produced within the Commonwealth of Virginia or in the waters off its coast to qualify for a Performance Incentive under the state’s renewable energy goal (VA Code § 56-585.2). By encouraging utilities to generate or buy renewable energy produced within Virginia, we can ensure that Virginia’s own businesses--as well as it workers, students and ratepayers--all benefit as we increase our use of clean energy.