By Matthew Crosby, Policy Director, Coronal Energy and Ryan Gilchrist, Manager, Project Development, Coronal Energy. Original post here.
We joined more than 400 industry colleagues in Washington, DC, last week for Solar Focus 2017, the most-recent annual East Coast energy conference hosted by MDV-SEIA, which serves the solar industry across the Maryland, District of Columbia, Delaware, and Virginia region. With Virginia’s statewide and municipal elections held the same day as the opening of the conference, it was an especially exciting time for the industry to come together, assess the landscape, and—true to this year’s conference theme of “Sustaining Momentum”—look ahead to 2018. At least eight key themes emerged for Virginia’s evolving clean energy landscape:
1. Political leadership and clean energy champions: Virginia’s solar industry has had a strong champion in outgoing Governor Terry McAuliffe, with 2017 serving as a particular poignant crescendo for his four years in office. In March, he announced that Virginia saw 65% growth in solar industry-related jobs in 2016; the Solar Energy Industries Association (SEIA) likewise ranked Virginia among its top states climbing the rankings. In April, McAuliffe signed 11 bipartisan bills supporting solar and other clean energy options, from advancing community solar programs to expanding Virginia’s Solar Energy Development Authority to include storage. And this summer, McAuliffe applauded the University of Virginia—as well as project partners Dominion Energy and Coronal Energy—for a utility-scale solar project that will support the university’s sustainability goals.
Now, incoming Governor-elect Ralph Northam brings a strong stance on fighting climate change in the Commonwealth, including prioritizing renewable energy and clean energy innovation. With a sea change in the Virginia House as well, the Commonwealth is poised to continue leading among East Coast states.
States like Virginia are adopting the mantel of leadership on climate, creating formidable blocks of the country that are committing to increased renewable portfolio standards, incentives for carbon emissions reductions, and advancing electric vehicles and other alternatives to fossil-fueled transportation. When it comes to solar energy, state leadership is as much about low-cost, fixed-price energy attracting economic development as it is about climate, coastal resilience, and other environmental concerns. In fact, solar is often the least-cost resource, even as it’s a no-carbon resource (through new market rules under consideration by the Federal Energy Regulatory Commission and tariffs under consideration by the U.S. International Trade Commission could hurt solar’s economics in the short term).
2. Action on climate and carbon: Earlier this month, the Virginia Department of Environmental Quality unveiled proposed carbon regulations and an official link with the Regional Greenhouse Gas Initiative, a cooperative effort of nine Mid-Atlantic, Northeast, and New England states (Virginia would make the tenth). Just yesterday, Virginia’s State Air Pollution Control Board unanimously approved the draft regulation, which could become final sometime next year.
RGGI, along with California’s cap-and-trade system, creates a long-term framework for pricing carbon. The market (through insurance companies, the Pentagon, and others) has long priced carbon. Now governments—including Virginia most recently—are taking action to price what was once written off simply as an externality.
3. Corporate demand: Virginia is home to some of the highest data center traffic in the country. And for companies owning and operating those data centers, low-cost, fixed-price, zero-carbon renewable energy has often proven as important as fiber access. Just witness the likes of Amazon, Microsoft, and just announced last month, Facebook all undertaking various partnerships with the State, utility Dominion, and solar developers to get more utility-scale solar built.
4. Creativity: Growing and diversifying customer demand—including from but not limited to big corporate players—is prompting innovation in the solar industry’s offerings… utility vs. third-party ownership of solar projects, market-based rates, contracts for differences (sometimes called virtual power purchase agreements), and other structures, not to mention changes to the traditional utility business model.
5. Uncertain financial impacts: Amidst the positive news that solar is increasingly cost-competitive and winning on pure economic merits that outlast political terms (instead of winning solely on its positive climate and environmental merits), there’s also looming uncertainty from the price impacts of influences such as the solar trade case, the Tax Cuts and Jobs Act, and possible investment tax credit (ITC) stepdown adjustments. Through action at the federal level, the U.S. is risking harming American workers—both with artificial price increases on imported panels, which will ultimately depress demand for solar installer services, and through subsidies for aging coal and nuclear plants that are otherwise uneconomic. The U.S. still has the opportunity to continue to lead the globe in the transition toward a clean-energy-powered economy, but it must quickly reconsider the broader impacts of its actions to the domestic and global economy. Within this context, U.S. states—including Virginia—desiring to continue competing globally are responding to the market demand, and leveraging clean, resilient power systems to attract today’s and tomorrow’s businesses.
6. Strengthening pipeline: According to several panelists, there’s roughly 6 GW of supply in PJM’s queue. Dominion, for its part, is calling for an impressive 5 GW of new solar over next 20 years in its integrated resource plan (IRP), which identifies solar as the least-cost resource. This is positive news for the state’s solar industry, and also for strengthening Virginia’s jobs outlook, particularly in parts of the region that have recently been struggling, such as in Appalachia.
7. Collaboration: Groups like Solar Focus conference host MDV-SEIA, the “Rubin Group”, and utilities such as Dominion, have been collaborating to drive policy and legislation on the clean energy front. That spirit of collaboration has worked well for the Commonwealth, and signs are that it will continue, whether under a current mantle or new leadership.
8. Grid modernization and flexibility: As more solar, wind, and other renewables come onto the system, there’s a growing need for grid modernization and flexibility. A modern, flexible grid will enable even better grid integration of renewable energy at scale, including solar.
In short, Virginia is an exciting, dynamic market—just yesterday joining 9 other states in the Regional Greenhouse Gas Initiative (RGGI) when state regulators unanimously approved capping emissions for a 30% reduction by 2030—and one to watch in 2018 for its heightening leadership role when it comes to solar specifically, clean/renewable energy generally, and climate action and carbon emissions reductions.