Last week, a broad environmental coalition and multiple Virginia state legislators coalesced for the announcement of the “Virginia Clean Economy Act” (VCEA). When one sees organizations like CCAN and its climate hawk founder/director Mike Tidwell pushing hard to build momentum for the VCEA, the presumption has to be that this is serious action that would put Virginia well on the path to doing what is possible and necessary for the Commonwealth to do to address the climate crisis. Compared to what had been possible when fossil-foolish, climate-science denying Virginia Republicans controlled the legislature, there is no question that this Act’s objective to have a 100% clean power system by 2050 (60% by 2036) is a breath of fresh air.
While there are many aspects of (and certainly the intent of many promoting) the legislation that merit praise, seemingly unambitious targets have caused many to scratch their heads asking why the objectives and requirements weren’t (far, far) more ambitious: ‘What is going on here?’ ‘Is there something that I don’t understand?’
For starters, a simple back-of-the-envelope calculation suggests that a 60 percent clean electrons Virginia electricity supply could well be achieved without anyone at the wheel by 2030. This would occur simply due to already announced clean (renewable) electricity projects (such as Dominion’s September 2019 announcement of a 2.6 gigawatt offshore wind project and Fairfax County going forward with more than 100 rooftop installations) and reasonable supposition as to what the market will naturally do due to the continuing plummeting of clean electron prices.
Asking around as to ‘how were the core targets arrived at’, a number of people sent me to “Virginia’s Energy Transition: Charting the Benefits and Tradeoffs of Virginia’s Transition to a 100% Clean Grid” (pdf). Published in September 2019 by Advanced Energy Economy, this report provides a detailed analytical look at the requirements for and payoffs from achieving a 100% clean power sector by 2030, 2040, or 2050. In all three cases, the analysis makes clear that Virginia and Virginia electricity ratepayers would do far better with moving to a clean electricity system rather than remaining on a fossil-foolish business as usual path. While analysis shows that the largest total benefits would occur from the most aggressive path (2030), the report concludes that this would drive up near-term homeowner costs and thus leads to a conclusion that a slower path would work better politically even if the full benefit streams would not be as high.
Reading through the report led to head scratching and concerns that issues in the report foster a misguided understanding of the status that helped drive an unambitious approach in developing the VCEE. Here are three issues along with potential implications from them:
Remaining Stove-Piped and Not Proposing Ways to Solve Logjams
The study analysis concludes that acting to achieve the 2030 target (putting aside for the moment the two following issues) would drive up household electricity bills in the mid-2020s and leave homeowners without total electricity savings until almost 2040 due to capital investment requirements (both for new clean electricity production and for paying off early retired fossil fuel systems). Not just politically, if true, this is a real issue that would be an obstacle to achieving a clean power system.
What the study failed to do, likely because of limitations in their charter, is provide options for addressing (eliminating or, at least, ameliorating) this issue. For example, the benefits of the clean electrons will accrue not just to power users. We will all have cleaner air to breath. There will be more and higher-paying jobs. The Commonwealth will have more tax revenue. Hmmm, think about that last. Couldn’t (a portion of) the additional revenues be used to eliminate that identified early cost hit? Perhaps, for example, the Commonwealth could provide borrowing authority so that renewable energy projects will have lower interest and longer term loans? Thinking outside the box to solve identified problems weren’t, however, likely in the study contract.
Using rejected Dominion Integrated Resource Plan (IRP) as key source
Long ago, an econometrics professor (who headed, btw, the CIA’s econometrics team) pounded into me the importance to reading, following, and asking questions of study footnotes. In wondering about this report’s conclusions, Appendix A’s Footnote 1 seemed sort of odd.
Footnote 1 refers to Dominion’s May 2018 Integrated Resource Plan which was submitted to the State Corporation Commission (SCC) for review. If one is unfamiliar with the Commonwealth’s energy situation and interactions with Dominion, this would seem a very reasonable basis for doing analysis and planning. After all, Dominion provides the majority of the Commonwealth’s electricity and the IRP is the required reporting about what Dominion sees over the coming 15 years.
However, those who follow Virginia energy policy should be well aware that this report was highly unusual in Commonwealth history. In December 2018, the SCC rejected the IRP due to significant disagreements with Dominion’s future forecast for Virginia electricity demand.
As one critic put it in May 2018,
Dominion continually insists on using outdated modeling practices to predict future electricity demand, and it doubles down on this error by proposing to satisfy that demand in a non-economic fashion. This approach marginalizes lower-cost options like energy efficiency and solar in favor of expensive, company-owned, customer-financed natural gas infrastructure—an approach that will force unnecessary costs on customers while allowing Dominion to earn high rates of returns to the benefit of its shareholders.
Dominion was required to rework elements of the IRP and returned in March 2019 with a significantly lower (though almost certain still exaggerated) forecast for future electricity demand in Dominion territory. As far as can be determined (and after having sent requests Friday to multiple people seeking to confirm this without, as of this writing, any response), the report relied solely on the May 2018 IRP’s highly inflated forecasts of electricity demand rather than using the somewhat less inflated March 2019 numbers.
Basing requirements planning with a (MUCH) higher total makes bridging the gap between today’s roughly 39 percent clean power (electricity) and a 100 clean power system (MUCH) more difficult.
If, as seems to be the case, this report relied on the rejected March 2018 IRP for its projection of future Virginia electricity demand, then it started from a (far) more pessimistic starting point than reasonable.
OBE means overtaken by events
Conducting analysis and writing a substantive report can take real resources and time. These aren’t overnight events. And, real-world events can make a report OBE even before it is printed. This report was released in September 2019. Also in September 2019: Dominion’s announcement of plans for 2.6 gigawatts of offshore wind to be installed and operating before the end of 2026. As of September 2019, therefore, a major portion (roughly 10 percent) of current Virginia electricity annual demand will be wind power by 2026. As it is an announced plan, that should make it part of ‘business as usual’ forecasting. Not surprising, this major wind project (along with other recent clean energy announcements) isn’t reflected in the report.
Dominion’s Offshore Wind announcement made this table OBE
Further dissection might reveal
While it might appear otherwise, the above are just a few points from an initial, cursory look at the report. It might well be that more detailed dissection would reveal additional ways in which this report provides a (highly) pessimistic basis for planning a Virginia Clean Economy.