August 24, 2018
John Warren
Director, Virginia Department of Mines, Minerals and Energy
1100 Bank St., 8th Floor
Richmond, VA 23219
RE: Ceres Comments on 2018 Virginia Energy Plan Development
Dear Director Warren:
Ceres is a nonprofit organization that works with the most influential investors and companies to build leadership and drive solutions throughout the nation’s economy. Through powerful networks and advocacy, Ceres strives to transform the economy and build a sustainable future for people and the planet. Energy transformation plays a key role in the development of a more sustainable economy.
Ceres operates a network of major employers and large energy users, across the United States, committed to climate and clean energy policy action. This group, called Ceres Business for Innovative Climate and Energy Policy (BICEP) Network, is made up of a diverse group of businesses, many with operations and employees in Virginia [1] who recognize the value of clean energy and low-carbon solutions in reducing costs and building a reliable and affordable electric grid. Many BICEP Network members also operate or own their own vehicle fleets and are leading in the adoption of electric fleets and clean transportation. As forward-thinking companies, BICEP Network members understand the importance of planning ahead and the urgency required to mitigate the worst impacts of climate change.
Ceres encourages the Northam Administration to develop a bold vision for clean energy and a low-carbon future in the 2018 Virginia Energy Plan. The 2018 Virginia Energy Plan provides the Virginia Department of Mines, Minerals and Energy an important opportunity to drive the Commonwealth on a path toward a thriving, low-carbon economic future. As you develop the 2018 Energy Plan, Ceres encourages you to include specific goals and strategies that will help Virginia embrace clean energy and the transition to a low-carbon economy. In particular, Ceres encourages you to prioritize increased renewable energy deployment and access, energy efficiency, clean transportation, and emerging clean energy technologies—all of which are key to driving greenhouse gas emissions reductions. We appreciate the opportunity to propose the following recommendations:
A. Increase the deployment of and access to renewable energy across the Commonwealth. The increased deployment of renewable energy resources can help Virginia’s economy thrive for the years to come. To date, Virginia lags behind its neighbors—North Carolina, Maryland, and West Virginia—in the deployment of solar, wind, and non-woody biomass resources.[2] A strong vision and smart policies to increase the deployment of and access to renewable energy resources will help Virginia keep electricity rates low, reduce emissions, and stay competitive in the 21st century economy. States across the U.S. are succeeding in generating low-cost clean energy resources through policy mechanisms that send a strong signal or provide incentives for local renewable energy development. Virginia can replicate other states’ successes by implementing a mandatory Renewable Portfolio Standard and/or by issuing state-directed Requests for Proposals (RFPs) for renewable energy resources (such as the recent offshore wind RFPs set by the Massachusetts legislature and the Rhode Island Governor’s office); by setting goals for state government renewable energy procurement; by facilitating the offering of community solar that allows many types of participants to financially benefit as part owners or lessees of a shared solar project; and by increasing customer choice and access to renewable energy procurement.
In-state renewable energy deployment is a major driver of job growth, tax revenue, and healthier local communities. Renewable energy investment is particularly beneficial in low-income communities—providing valuable job and job retraining opportunities, new income prospects for landowners, and tax revenue for local schools and communities. In addition, the offshore wind industry represents an area of significant economic potential for Virginia’s coastal communities. While the proposed 12-MW offshore wind pilot project filed on August 3rd is a step in the right direction, Virginia should continue sending strong signals to the offshore wind energy industry by developing an offshore wind master plan that would guide the development of offshore wind off Virginia’s coast and the creation of a local offshore wind industry in the Commonwealth. Strong signals that draw the offshore wind supply chain to Virginia would attract millions in capital investment as well as thousands of jobs on or near the coast.[3]
A key ingredient for increasing renewable energy deployment in the Commonwealth is to increase access and choice for large energy users such as businesses, hospitals, and universities to procure cost-competitive renewable energy. Corporate renewable energy procurement is a major driver of renewable energy deployment across the country. More than 43 major Virginia businesses have committed to powering their operations with 100 percent renewable energy, and many more have set other ambitious renewable energy procurement goals.[4] To stay competitive, Virginia should offer a range of choices for large customers to access and procure renewables from both utility and non-utility providers. Virginia should encourage utilities to offer flexible, cost-competitive renewable energy options such as green tariff programs that reflect the actual cost of service to provide that renewable energy to the customer. Current proposals for existing load customers have included a cost premium, inhibiting participation by large energy users interested in the opportunity to hedge or save money by locking in a long term clean energy contract with their utility. At the same time, Virginia should allow customers to access power purchase agreements (PPAs) through competitive service providers and provide legal clarity around third-party financing in order to keep Virginia’s renewable energy market competitive and satisfy different customer preferences and needs. Large energy users in Virginia should also be able to aggregate their load and procure less than 100 percent renewable energy if they so wish, regardless of whether or not there is an approved utility green tariff option.
Lastly, lawmakers and regulators should carefully consider the need for and potential stranded costs when reviewing new non-clean energy generation projects. With the cost of new renewable energy generation now competitive with or lower than fossil fuel generation prices—and also not subject to fuel price volatility—renewable energy should be an easy choice. In addition, the majority of Virginia’s projected load growth comes from data centers, a sector that has made very strong commitments to renewable energy procurement.[5] As such, the build-out of non-renewable, heavy-infrastructure utility projects could turn into stranded assets that would burden ratepayers for many years to come.
B. Better utilize energy efficiency opportunities. Businesses are making major investments in energy efficiency because it allows them to cut energy waste, save money, and quickly gain a return on investment. Reducing energy waste and operating more efficiently makes business sense, and states and localities can learn from the examples set by the private sector. However, the presence of structural barriers and disincentives to energy efficiency investment necessitate the enactment of smart policies to help drive these investments.
Unfortunately, Virginia to-date has not realized its full energy savings potential. The Commonwealth currently falls well below the national average on energy efficiency program investments and resulting energy savings.[6] Smart policies and guidance can capture this missed potential. For instance, while the Grid Transformation and Security Act of 2018 outlines good intentions for energy efficiency, lawmakers and regulators must ensure that the law fosters additional utility energy efficiency investments as it intended. Energy efficiency cost-effectiveness reform may be necessary in order to properly account for all the reasonable economic, social, and environmental costs and benefits that accompany proposed energy efficiency investments.
Virginia should initiate a process or a committee to study best practices in other states, as there are a number of state-level policies that are drastically reducing energy waste while saving consumers money. Virginia should follow the lead of 26 other states in adopting a binding Energy Efficiency Resource Standard (EERS) that requires utilities to meet energy-savings requirements. Studies show that states with an EERS have average energy efficiency spending and savings levels that are more than three times as high as states without an EERS.[7] Virginia can also create incentives for electric utilities to reduce energy waste through utility business model reforms that are being implemented in other states, such as revenue decoupling, program cost recovery, and performance-based incentives.
C. Embrace clean transportation options. With the transportation sector surpassing the electric power sector as the largest contributor to Virginia’s greenhouse gas emissions, Virginia faces added urgency to encourage and invest in low-carbon transportation solutions. Virginia should set a strong vision for clean transportation and the electrification of the transportation sector. This includes policies and initiatives that spur the deployment of public and private electric vehicle (EV) charging infrastructure, workplace charging, and maximizing VW Settlement spending on EV infrastructure and the electrification of state and municipal fleets.[8] Virginia should also invest in robust pedestrian and cycling infrastructure as well as low-carbon public transit infrastructure. Strong leadership on transportation would help Virginia stay at the forefront of innovation and meet the mobility needs of a thriving 21st century economy—all while creating more livable, walkable, and safe cities and towns.
In addition, Virginia can and should lead by adopting the Advanced Clean Car (ACC) program, which has already been adopted by twelve states plus Washington D.C. The ACC program includes both Low-Emission Vehicles (LEV) standards, which limit greenhouse gas and smog-forming pollutant emissions from light-duty vehicles, as well as the Zero Emission Vehicles (ZEV) program, which requires about eight percent of new car sales to be zero emission or plug-in electric vehicles by 2025. We urge Virginia to adopt the full ACC program as well as incentives such as EV tax credits, rebates, and discounts that would help stimulate demand for electric vehicles.
D. Foster leadership in emerging clean energy technologies. Virginia can become a leader in clean energy technology and innovation by implementing strong directives, voluntary targets, tax incentives and more to encourage new clean energy technologies to flourish. Untapped technologies such as energy storage allow the grid to effectively integrate more renewable energy and improve grid reliability during storms—ensuring that businesses and institutions can keep their doors open to meet the needs of the community. Virginia should take the time to study energy storage and the benefits it can provide to the grid. Large energy users such as data center facilities are increasingly utilizing energy storage to shift their load and maintain reliability. Lawmakers should also encourage the uptake of smart grid technologies that provide customers access to their energy data and incentivize customers to curtail their energy usage during peak demand times. Providing and enabling customers to access their data, combined with energy storage technologies and demand incentives, can help electricity consumers save money while reducing the need to build and utilize “peaker” power plants, which are often more expensive and more harmful to the environment and public health. Innovation in energy is essential to Virginia’s competitiveness and can ensure that Commonwealth’s electric grid is poised to meet the needs of the future.
E. Continue to drive meaningful emissions reductions. Virginia should seek to meet the energy needs of the 21st century by continuing to drive reductions in emissions. The BICEP Network applauds the Virginia Department of Environmental Quality for the development of market-based regulations to cap and reduce carbon emissions from the state’s electric power sector, and we encourage the administration to move forward with ambitious, final regulations in a timely manner. Strong and clear carbon-reduction policies provide important market signals that help businesses plan and invest for the future. Policymakers should also maximize carbon-reduction benefits through the energy-efficiency set aside and ensure that the carbon allowance revenues received by utilities are reinvested to maximize customer benefit through low-income energy efficiency programs and other initiatives.
Furthermore, all decisions concerning Virginia’s energy future should consider the impact on greenhouse gas emissions. State government should continue to lead by example by pursuing its own emissions reductions, and lawmakers should examine opportunities to reduce emissions in other high-emitting sectors. We encourage Virginia to support its own as well as regional efforts to drive emissions reductions in the electric power and transportation sectors.
Smart policies and a bold vision for Virginia’s energy future will provide certainty for businesses to invest in the future. Renewables, energy efficiency, clean transportation, and a modern, technology-savvy grid are the way of the future. Embracing these opportunities through a strong vision in the 2018 Virginia Energy Plan will help ensure that Virginia’s economy can thrive for the years to come.
Thank you for the opportunity to provide recommendations for the 2018 Virginia Energy Plan. Please feel free to reach out with any questions.
Sincerely,
Alli Gold Roberts
Senior Manager, State Policy
Ceres
[1] BICEP Network members with operations in Virginia include Adobe, Autodesk, CA Technologies, eBay Inc., Gap Inc., IKEA USA, JLL, Kaiser Permanente, LinkedIn, Mars Incorporated, Microsoft Corporation, Nestlé USA, Salesforce.com, Starbucks, Unilever, and Worthen Industries. For more information, please visit www.ceres.org/BICEP.
[2] According to 2017 Energy Information Administration (EIA) data, the net electric power generation of solar, wind, and non-woody biomass resources relative to total net generation (as a percent) in Maryland; West Virginia; North Carolina; and Virginia, respectively, was 3.76%, 2.22%, 5.03%, and 1.1%.
[3] BVG Associates. Virginia offshore wind port readiness evaluation—Part 3: High-impact investment opportunities. June 2015. https://www.dmme.virginia.gov/de/LinkDocuments/OffshoreWind/PortsStudy-Report3.pdf.
[4] Companies with operations in Virginia that have committed to 100% renewable energy include: ABInBev, Adobe, AkzoNobel, Amazon, Apple, AstraZeneca, Autodesk, AXA, Bank of America, Bloomberg, Citi, DanoneWave, eBay Inc., Equinix, Facebook, Goldman Sachs, Google, H&M, Hewlett Packard Enterprise, HSBC, IKEA, Iron Mountain, Kingspan, Mars Incorporated, Microsoft, Morgan Stanley, Nestlé, Nike, Pearson, Rackspace, Salesforce.com, SAP, Schneider Electric, SGS, Starbucks Corporation, TDBank Group, Unilever, Visa, VMware, Voya Financial, Walmart, and Wells Fargo.
[5] See data center company letter submitted to the Virginia State Corporation Commission regarding Dominion Energy’s proposed 2017 Integrated Resource Plan on September 25, 2017 for more information: http://www.scc.virginia.gov/docketsearch/DOCS/3hzz01!.PDF#page=2.
[6] ACEEE State Scorecard: Virginia. July 2018. https://database.aceee.org/state/virginia.
[7] ACEEE. State Energy Efficiency Resource Standard (EERS) Activity. 9 January 2017. http://aceee.org/policy-brief/state-energy-efficiency-resource-standard-activity.
[8] See “AchiEVe: Model State & Local Policies to Accelerate Electric Vehicle Adoption” for specific policy recommendations. Released June 2018. https://pluginamerica.org/wp-content/uploads/2018/06/AchiEVe-Policy-Toolkit-2.0_2018.pdf.