Virginia Solar Developers Face Grid Upgrade Costs After Bill Fails

Virginia solar developers are facing a challenge in connecting their small-scale projects to the electric grid, after a bill that would have shifted or split the costs of grid upgrades with the utilities failed to pass in the state legislature.

The Problem of Grid Upgrades

Small solar projects, such as rooftop solar panels or community solar gardens, can provide clean and affordable energy to customers who want to reduce their carbon footprint and save money on their electricity bills. However, these projects often require upgrades to the electric grid, such as new transformers, substations, or wires, to ensure the safe and reliable delivery of power.

The costs of these upgrades can be significant, ranging from tens of thousands to millions of dollars, depending on the size and location of the project. In Virginia, the current policy is that the solar developer is responsible for paying the full cost of the grid upgrades, regardless of whether the upgrades benefit other customers or the utility.

This policy creates a barrier for small solar projects, especially in rural areas where the grid is older and weaker, and the upgrade costs are higher. Many solar developers have to abandon or delay their projects due to the high costs, or pass them on to their customers, making solar less competitive and accessible.

Virginia Solar Developers Face Grid Upgrade Costs After Bill Fails

The Proposed Solution

To address this problem, a bill was introduced in the Virginia General Assembly this year that would have changed the way grid upgrade costs are allocated for small solar projects. The bill, HB 1925, was sponsored by Delegate Mark Keam, a Democrat from Fairfax County, and supported by several clean energy groups, such as the Solar Energy Industries Association, the Virginia Renewable Energy Alliance, and the Chesapeake Climate Action Network.

The bill would have required the utilities, Dominion Energy and Appalachian Power, to pay for a portion of the grid upgrade costs, based on a formula that considers the size of the project, the location of the project, the age of the grid, and the benefits of the upgrades to other customers and the utility. The bill would have also capped the grid upgrade costs for small solar projects at 2.5% of the project cost, or $50,000, whichever is lower.

The bill aimed to create a more fair and transparent process for grid upgrade costs, and to encourage more small solar projects in Virginia, in line with the state’s ambitious clean energy goals. The bill was based on similar policies in other states, such as Maryland, New York, and Minnesota, where grid upgrade costs are shared or capped for small solar projects.

The Outcome of the Bill

The bill, however, faced opposition from the utilities, who argued that the bill would shift the costs of grid upgrades from the solar developers to the utility customers, resulting in higher rates for everyone. The utilities also claimed that the bill would create technical and operational challenges for the grid, and that the current policy is consistent with the federal and state regulations.

The bill passed the House of Delegates in January, but failed to advance in the Senate, where it was referred to the Commission on Electric Utility Regulation, a joint legislative committee that studies utility issues. The commission will review the bill and make recommendations for the next session, which starts in January 2024.

The supporters of the bill expressed disappointment and frustration with the outcome, and vowed to continue their advocacy for the bill. They said that the bill is necessary to remove the grid barrier for small solar projects, and to make solar more affordable and accessible for all Virginians. They also said that the bill would benefit the utility customers and the grid, by reducing the reliance on fossil fuels, increasing the resilience of the grid, and creating jobs and economic opportunities in the solar industry.

The opponents of the bill said that they are open to further discussions and negotiations on the bill, but that they have serious concerns about the bill’s feasibility and impact on the utility customers and the grid. They said that the bill would unfairly subsidize the solar developers, and that the current policy is fair and reasonable, as it ensures that the solar developers pay for the costs they cause to the grid.

The Future of Small Solar in Virginia

The fate of the bill and the future of small solar in Virginia remain uncertain, as the commission will study the bill and hear from various stakeholders in the coming months. The commission is expected to issue a report and make recommendations by November 2024, before the next session of the General Assembly.

The bill’s supporters hope that the commission will recognize the need and the benefits of the bill, and that the bill will be reintroduced and passed in the next session. They also hope that the utilities will cooperate and compromise on the bill, and that the state regulators will support and implement the bill.

The bill’s opponents hope that the commission will validate their concerns and reject the bill, or propose significant changes to the bill. They also hope that the solar developers will abide by the current policy and pay for the grid upgrade costs, and that the state regulators will enforce and uphold the current policy.

The outcome of the bill will have a significant impact on the growth and development of small solar in Virginia, which is a key component of the state’s clean energy transition. According to the Solar Energy Industries Association, Virginia ranked 10th in the nation for solar installations in 2023, with 1,097 megawatts of solar capacity, enough to power 146,000 homes. However, only 12% of that capacity came from small solar projects, compared to the national average of 30%.

Virginia has set a goal of achieving 100% clean energy by 2050, and has enacted several policies and programs to support and incentivize solar energy, such as the Virginia Clean Economy Act, the Solar Freedom Act, and the Shared Solar Program. However, without addressing the grid upgrade costs for small solar projects, the state may fall short of its goal, and miss out on the benefits of solar energy for its economy, environment, and society.


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