Senior Northam administration officials say state should not ban new fossil fuel power plants

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In a New Year’s Day letter to Gov. Ralph Northam, two senior Virginia officials recommended that the General Assembly not ban new carbon-emitting power plants “yet”, saying the state can achieve its ambitious decarbonization targets without a moratorium.

“The goal of carbon-free electricity production in 2045 can be achieved through existing natural gas infrastructure, existing nuclear energy installations (with renewed permits) and New renewable energy investments, ”wrote Secretary of Commerce and Commerce Brian Ball and Secretary of Natural and Historic Resources Ann Jennings (emphasis added). “A moratorium on new carbon emission production units is not needed to meet clean energy goals.

Further, they warned that “a moratorium may prove counterproductive if it prohibits vital reliability projects and stifles other forms of clean energy innovation.”

A ban is unlikely to accelerate the expansion of the clean energy industry in Virginia, as carbon-free sources will continue to be strongly favored by the provisions of the [Virginia Clean Economy Act] and by market dynamics, ”they concluded.

The Democrat-backed Virginia Clean Economy Act commits the state’s electricity grid to become carbon-free by 2045, both by forcing the state’s two largest electric utilities to source electricity. increasing percentage of their electricity from renewable energies and by making compulsory the development of wind, solar and battery. storage.

But the law has been controversial. Some critics on the left have denounced its lack of ban on the development of new fossil fuels like a loophole that undermines the State’s commitments to decarbonise. And lawmakers on both sides of the aisle have expressed concerns about the costs the VCEA will impose on taxpayers, with Republicans stressing a 2020 estimate from the State Corporation Commission that it will increase the annual costs of the average residential customer by $ 800 by 2030. In August, Crown Corporations Commission judge Judith Jagdmann expressed concern in an order about “potential costly duplications.” between the VCEA and the overlapping legislation allowing Virginia to participate in the regional greenhouse gas program. Initiative, a carbon market involving 10 other Mid-Atlantic and New England states.

The VCEA demanded that both issues be investigated, ordering the secretaries to issue a report by January 1, 2022, on the issue of the moratorium and how decarbonization could be achieved “at the lowest cost to taxpayers.” Until the publication of this report, the State Corporation Commission was prohibited from approving any new carbon-emitting power plant proposed by any utility-owned investor.

Of the. Sam Rasoul, D-Roanoke, one of the strongest supporters of the ban on future fossil fuel power plants, said the secretariats’ recommendation was “unfortunate” and Virginia already had ways of ensuring reliability thanks to its participation in the PJM regional electricity network.

“We have the ability to have purchasing power through PJM or other markets in the event of a supply disruption,” he said.

The Leatherwood Solar Project in Henry County, Va. (Appalachian Power Company)

How to get to zero at the lowest cost

When it comes to achieving decarbonization at the lowest cost to taxpayers, “flexibility is king,” said William Shobe, economist and director of the Center for Economic and Policy at the University’s Weldon Cooper Center for Public Service. de Virginie, who was responsible for carrying out the least cost study commissioned by the VCEA.

The final report, titled “Achieve clean electricity production at the lowest cost for taxpayers by 2045”, concluded that decarbonization costs could be significantly reduced by replacing mandates focused on particular technologies, such as solar and wind power, or geographic areas with “a more flexible approach specifically targeting [carbon dioxide] emissions.

“Market-based instruments like the RGGI are the best way we know of to provide maximum flexibility,” said Shobe.

Republican governor-elect Glenn Youngkin has pledged to remove Virginia from the RGGI by executive decision once he takes office in January, a move that, according to Shobe, “seems backward to me as an economist.

“If the goal is to cut costs, you want to stay in RGGI and relax some of these other specific provisions of the law that allow a certain type of technology to be built on a certain date. It will almost certainly cost more, ”he said.

Among the provisions of the VCEA that the Weldon Cooper study finds likely to increase costs to taxpayers are statutory mandates for Dominion and Appalachian Power to deliver large amounts of solar, wind and storage power. The modeling researchers concluded that these warrants could cost taxpayers more than $ 250 million per year by 2035 and $ 450 million per year by 2040 compared to a “least cost” scenario. Wind power and storage in particular have proven to be more expensive than other options like solar power.

Instead, the report found that relying on the VCEA’s renewable energy portfolio standard – a requirement that an increasing percentage of every utility’s non-nuclear generation portfolio come from renewables – thus that on the RGGI could reduce costs.

“Eliminating capacity targets for extended offshore wind and electricity storage, and allowing the deployment of these resources to be guided by investor decisions on how to cost-effectively meet RPS and RGGI requirements will allow likely to save taxpayer money, ”the authors wrote.

In a guidance note released with the Weldon Cooper report, the Virginia Department of Energy acknowledged that the capacity targets “are not economically optimal,” the agency argued that “removing them could send a negative signal to industries. already investing in Virginia.

“Offshore wind is the clearest example of this dynamic – Virginia’s capacity goal and commitment have already spurred long-term investment in the Commonwealth,” the department wrote. “Without the capacity target, this investment would be delayed, which could, in turn, delay cost reductions resulting from early investment in the technology.”

Other cost-cutting suggestions made in the Weldon Cooper report included authorization to acquire renewable energy certificates – a negotiable credit for renewable energy production that can be bought and sold – from other states in the United States. regional network; remove all remaining coal-fired power plants, including the Virginia City Hybrid Energy Center in Wise County by 2025; and building frameworks for regional transport planning and energy efficiency monitoring.

The coal-fired units at Dominion Energy’s Chesterfield Power Plant would shut down by 2024 under the Clean Economy Act which was passed by the General Assembly in 2020 (Ryan M. Kelly / For the Virginia Mercury)

Transportation planning is “the biggest elephant in the room” in terms of cost, Shobe said. Major investments will be required as power grids move away from their traditional design of a smaller number of centralized power plants where electricity only flows in one direction to one with thousands of production sites, a more intermittent electricity generation and customers who both generate and consume electricity.

“Trying to do this as a state-by-state regulatory issue rather than a multi-state planning effort would be very, very expensive,” said Shobe, who encouraged Virginia to work with other states on the transmission. “Doing this alone means increasing our own costs. ”


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