Virginia Natural Gas appreciates the opportunity to comment on the 2018 Virginia Energy Plan and supports recommendations made by the Energy Working Group within the Commerce and Trade Transition Committee for Governor Northam. In addition to these four recommendations from the Energy Working Group outlined below, Virginia Natural Gas offers two recommendations related to new technologies:
Recognize the benefit of natural gas as electric generation fuel to support the development of renewable technology.
Examine the current regulatory structure to promote the use of renewable natural gas.
As discussed in the report from the Transition Policy Council on Commerce and Trade and inserted below, the Energy Working Group identified four primary areas of focus for Governor Northam to consider. These are 1) an All-of-the-Above Energy Approach, 2) Energy as an Economic Development Tool, 3) Grid Modernization and New Technology, and 4) the Value of the Energy Economy to Rural Virginia.
I. All-of-the-Above Energy Approach
Security – Enhancing the diversification of Virginia’s generation mix is important for economic security and to hedge against fuel and commodity market volatility. Sources that have no fuel costs (solar, wind) and sources that reduce overall consumption (energy efficiency) are important mechanisms for security enhancement.
What is a Fuel Source – Members of the group brought up the issue of including energy efficiency in addition to other fuels in the conversation about what sources are in the fuel mix. It was stated that energy efficiency should be considered a resource in Virginia’s fuel mix. This includes efficiency throughout the entire energy value chain, from individual energy consumption to ensuring the appropriate fuel is being used for the right purpose (business and individual). There was also discussion about this in the context of business/industrial consumption both onsite and offsite.
Regional Impacts of Diversification – It is important to understand how a transitioning and diversified fuel mix impacts different regions of the Commonwealth. Some areas may benefit from increased utilization of certain sources like solar, onshore wind, and offshore wind while other areas may be challenged by decreased usage of sources such as coal. These issues include workforce and skills development, tax base impacts from increased or decreased economic activity, and the creation or loss of jobs. For the areas impacted negatively, it is imperative that the administration finds ways to facilitate a smooth transition to a more diversified fuel mix. Certain sources, such as solar, wind, energy efficiency and natural gas can be developed or enhanced in rural areas. This can bring new jobs, facilitate skills training and re-training, power existing and new industries, and grow the tax base.
Customer Choice – With all sources, there is a question of how to provide customers choice given factors such as who can offer services and where, cost, and reliability. Some areas have robust access to sources through existing entities, but may feel denied the opportunity to choose a provider based on price and source preference. Other areas may be “energy poor” and lack meaningful options to ensure competitive costs and/or reliability. Virginia is a regulated utility environment which can be a factor in choices while lack of infrastructure may be a reason for a lack of options.
Recommendations Received:
Promote policies that continue to drive fuel mix diversity and an overall reduction in energy consumption within Virginia. This includes energy efficiency and zero-carbon renewable sources. Virginia’s regulated fuel mix currently has less than 1 percent of renewable resourcesincluded.
When promoting the increase use of clean energy sources, the impacts to all parts of the Commonwealth should be considered. This includes areas that have been adversely affected by the decrease use of fossil fuels such ascoal.
Make changes to Virginia code that allow for increased customer choice in what resources are used to generate electricity, where that electricity is generated, and how that electricity is consumed.This could include greater access to financing tools to lower the cost of onsite small-scale solar generation, more robust utility-sponsored energy efficiency programs for residents, or more flexibility for companies to offer reliable service in areas with no infrastructure.
II. Energy as Economic Development Tool
Energy Ready Sites – There is a challenge in Virginia of companies being able to make upfront investments to site, permit, and build energy infrastructure at or near economic development sites to attract economic development prospects. This is an especially acute issue in rural Virginia. There needs to be the ability to invest without needing the customer, more easily site and acquire rights of way, and better understand resource sensitivities that are not easily mapped. Virginia has a small inventory of business-ready development sites and part of the reason is the challenge of getting energy infrastructure in place. Additionally, the ability for existing large volume users to deploy technologies onsite can help reduce the need for significant infrastructure investments offsite. These technologies include Combined Heat and Power, which is an efficient means of generating electricity while reducing heat-waste. This is a tool that can be used by both private sector companies and the public sector.
Greening the Virginia economy – There are many ways to characterize this issue. One is that using clean energy to power operations is a business attraction tool that must be enhanced. Another is that driving growth in the clean energy industry itself creates jobs, drives capital investment, and diversifies the economy. Both are equally important and when coupled together amplify each one’s impact on the economy. Virginia continues to attract energy-intensive sectors such as data centers and they are increasingly demanding access to 100% renewable energy. Providing these companies with access to solar energy when the sun is shining and offshore and onshore wind when the wind is blowing is a powerful economic development tool. This becomes even more effective when these resources are built and operated within the Commonwealth or off Virginia’s coast. The construction of solar and wind generation assets creates jobs in Virginia. Virginia has seen growth in solar the last three years and the corresponding jobs and investment. A large, untapped opportunity is the construction of offshore wind off the coast of Virginia. Virginia’s port assets and shipbuilding capabilities already provide a value add to the industry. The duel value of attracting an industry that does not currently exist in the U.S. to Virginia and the ability to provide businesses with an efficient renewable resource is tremendous. Another area of opportunity is pushing greater efficiency in the energy that is consumed, whether or not that energy is renewable. Of the current clean energy sectors in Virginia, energy efficiency is by far the largest, employing over 75,000 people.
Skilled Workforce – The growth in the clean energy industry in Virginia necessitates having a workforce that can fill the jobs needed by solar, wind, and energy efficiency businesses. These jobs range from HVAC technicians and energy auditors, to electricians and welders for solar, to mechatronic technicians and engineers for offshore wind. It will be important that there are multiple tools available for the training and re-training of the workforce. This includes non-credit certifications through the community colleges as well as apprenticeship and training programs offered through trade associations and the private sector. The need for a skilled workforce is not limited to the clean energy industry. Building energy infrastructure for economic development sites need welders, engineers, and heavy equipment operators. And many of these skills are transferrable between industries.
Role of the State Corporation Commission (SCC) - The SCC can play an important role in driving economic development benefits through programs and projects proposed by the utilities they regulate. Utilities have faced significant challenges to getting programs approved that allow for upfront investment in infrastructure, increase energy efficiency incentives for ratepayers, and the deployment of renewable energy as part of Virginia’s fuel mix. It is important that the SCC consider the economic benefits to ratepayers and the Commonwealth when deciding which programs to approve. These benefits often fall outside the traditional view of direct ratepayer impact, but are nonetheless very important to the overall value of programs to Virginia ratepayers.
Recommendations Received:
Develop a strategy to map out “corridors of development” for energy infrastructure to be built to economic development sites. This strategy could include identifying assets that may be of local significance, but are not formally labeled as such. It could also include identifying existing rights of way that could be used to minimize impact on areas that don’t currently host energy infrastructure. This could be done through VEDP’s existing Business Ready Sites Program. This is intended to streamline energy infrastructure to economic development sites, NOT to identify areas for development of large-scale transmission infrastructure.
Develop a streamlined process and regulatory framework that ensures utilities can make necessary infrastructure investments to sites in a timely manner.It is critical to have this infrastructure in place in order to attract a customer.
Develop policies that increase the use of Combined Heat and Power in both the public and private sectors. In the public sector, higher education institutions are prime candidates for use of this technology given their centralized campus footprint and high energy use. In the private sector, work with the Virginia Manufacturers Association and the regulated utilities to develop a model that educates the business about CHP and gives the utilities an incentive to promote the use of CHP onsite of large volume consumers. A model for consideration is Kentucky.
Recommend that the Governor sign an Executive Order declaring a goal for Virginia to develop Virginia’s entire commercial offshore wind area by 2025. Stated or mandated goals for offshore wind development in Massachusetts, New York, New Jersey, and Maryland total over 8,000 megawatts by 2030. There are also approved commercial areas off the coasts of Delaware and North Carolina. To attract the supply chain, Virginia must send a signal that the Commonwealth can be the Southeast hub for the industry. Included in the executive order should be a directive to the Virginia Offshore Wind Development Authority (VOWDA) to collaborate with relevant state agencies, private sector partners, and potential developers to attract the supply chain.
Promote policies that make more certain the regulatory landscape for large-scale electricity consumers to access 100 percent renewable energy. There has been a lot of success by Dominion in providing the necessary solution to consumers like Amazon and Facebook for their renewable energy needs. However, it is still unclear to other users how they can best navigate the process of using energy that comes 100 percent from renewable energy.
Adopt the most updated version of Virginia’s Building Codes to reflect the need for an energy efficient new building stock. The 2015 codes are currently in the final stages of regulatory approval and include increased efficiency standards for new construction of residential homes. Finalizing these regulations will imbed efficiency improvements in building standard for the next five years.
Require that the SCC more transparently values the economic development benefits of utility investments such as renewable, energy efficiency, research and development, and grid modernization. It is important that the economic benefits of investing in technologies that will drive supply chain investment, create jobs in all parts the Commonwealth, reduce customer bills, and upgrade the electric grid. Many of these are investments that provide significant long-term value to the ratepayer that is not as easily recognized in the current proceeding model.
Double Governor McAuliffe’s 8 percent state renewable procurement goal to 16% by the end of the Northam administration. This would facilitate the construction of at least an additional 110 megawatts of both utility-scaleand on-site small-scale solar. This should include a declaration that state agencies can use power purchase agreements to finance the onsite projects.
III. Grid Modernization and New Technology
Grid Modernization – A more adaptable and dynamic grid has many benefits to Virginians and the Virginia economy. It can more effectively integrate new sources of energy of varying generation capacities from multiple locations. This includes small-scale solar on a consumer’s home, energy storage facilities in Southwest Virginia, medium-sized wind farms on ridge tops, and large-scale offshore wind off the Virginia coast. A modern grid can also empower customers to choose how they consume energy and understand what impact that usage has on their wallets. Through an interactive grid, utilities will be able to better respond to consumer needs, minimize impacts of outages, better protect physical assets from weather events, and better protect all grid users with enhanced cybersecurity.
New Technology – As the grid transforms, so does the technology that interacts with, uses, and benefits the system. Virginia has an opportunity to help shape this innovation landscape by fostering research, development, and commercialization of new technologies while rethinking benefits of existing technologies. Virginia should focus on driving development in energy storage, smart meter, energy efficiency, renewable, and electric vehicle technology. These activities can be pushed through higher education institutions in the form of increased research and development investment, resources for incubators and accelerates (both public and private) to drive product and service commercialization, collaboration with Virginia’s federal labs, and regulatory streamlining of SCC approval of electric and gas utility programs that focus on energy efficiency, smart meters, energy storage, electric vehicles, and renewable energy such as wind and solar.
Recommendations Received:
Encourage investment by utilities in customer-empowering grid technologies such as smart meters and electricvehicle infrastructure while also pushing for greater customer access to energy consumption data through online and user- friendly interfaces.
Utilize Virginia’s higher education institutions to drive investments in the research and development of new technologies that will help modernize the grid, reduce energy consumption, increase reliability, and deploy new generation technologies including energy storage. Virginia has tremendous assets within our Higher education system and the resources to invest in these areas.
Create a framework to identify, connect, and support all of Virginia’s incubators and accelerators. While this has value outside of the energy sector, doing this would help better connect startups and entrepreneurs in different partsof Virginia that are working on energy related technologies or services.
Develop a strategy to drive greater collaboration between the Commonwealth and the federal researchlaboratories that are housed in the Commonwealth. Some of this is already taking place through NASA and Jefferson Labs in Hampton Roads, but there must be an increased emphasis on tapping into this knowledge base to drive research, development, and commercialization here in Virginia.
IV. Value of Energy Economy to Rural Virginia
Energy infrastructure for economic development – As with other parts of the state, rural Virginia must reduce barriers and create incentives for investment in getting energy infrastructure to economic development sites. It can often be more expensive to make these investments in rural areas given the fewer number of potential customers per mile and more challenging geography, especially in mountainous areas. Advantages in these areas are also that there are fewer landowners impacted by the deployment of infrastructure to economic development sites and lower cost of land. A strategy for the development of economic development sites in rural Virginia that includes how best to drive the deployment of energy infrastructure with minimum impact would be a valuable roadmap.
Clean energy as an economic development tool – Rural Virginia has many characteristics that are particularly beneficial to driving growth in the clean energy economy, such as an abundance of inexpensive land, a workforce familiar with the energy industry, and an aging housing stock. The deployment of solar and onshore wind in rural Virginia could help attract parts of the supply chain, such as panel assembly or transformer/inverter manufacturing. Some supply chain companies have stated a desire to move their operations to areas of the country where a consistent pipeline of projects exists. The deployment of large volumes of utility-scale solar and onshore wind is not without its challenges regarding land use and tax revenue. These cannot be overlooked and reducing friction between localities and landowners, and solar developers is necessary to creating the pipeline of projects. Rural Virginia is generally considered to have an older housing and building stock than other parts of the Commonwealth. This means the homes are generally less energy efficient and less equipped to take advantage of a smarter grid. The value of this for rural Virginia is that is offers an opportunity to drive energy efficiency, smart grid technology, and distributed solar generation investments. Many of these jobs are inherently local and generate economic benefits through tax revenue higher home and building value.
Recommendations:
Work with localities and solar developers to craft a long-term strategy to facilitate a consistent pipeline of utility-scale solar and wind projects in rural Virginia. This could include reducing land use barriers, alleviate tax revenue concerns, and implement model ordinances in localities regulating utility-scale renewable projects.
Provide rural customers with more creative ways to invest in energy efficiency upgrades to the rural buildingstock. This includes more proactive and centralized support for Commercial Property Assessed Clean Energy (C-PACE) programs and exploring the ability for consumers to use on-bill financing to make upgrades with no upfront costs.
Find creative ways to recapitalize the successful Virginia SAVES program run by the Department of Mines,Minerals and Energy. VASAVES provided low-cost financing to public and private building owners such as schools to make significant energy efficiency upgrades to facilities, most using energy performance contracting.