Chalk One Up for the Utility Companies Against Solar Energy

Last Wednesday, Virginia's State Corporation Commission announced that Dominion Virginia Power would be able to charge a standby fee for large-scale solar residential owners who use net metering. In another solar news story, we discussed the implications of such a charge. Solar power advocates worry that this will deter solar energy installations, dealing a blow to the solar energy industry in Virginia.

The decision allows Dominion to charge any residential customer with solar systems that produce between ten and twenty kilowatts up to $60 per month, or $4.19 per kilowatt for a solar customer's average peak usage of Dominion's electricity each month. The idea is to pay for infrastructure costs associated with developing net metering: the charge covers costs to keep the power flowing to solar customers at times when the sun does not shine. Today, this charge affects only one customer in Virginia, but will deter any other large-scale installations from being built.

This announcement worries solar advocates because it will deter potential customers from installing solar energy installations who fear that the charge may be extended to small-scale solar energy users. The typical residential installation generates between three and four kilowatts. At the moment, the law does not allow for discrimination against small-scale net-metering users in Virginia, but this might open a precedent for other utility companies around the nation. In addition, this charge effectively punishes large-scale solar energy users. Dugger, the one customer affected by the charge, feels punished: "It's like Dominion Power is going, 'Yeah, that's fine, but we want to set up our template so if people jump on board and set up a good-sized system, we're going to penalize you,'" he said.

Virginia lags behind many states in providing solar energy incentives. Besides the 30% federal tax credit, residential customers with solar installations in Virginia have access to a Tennessee Valley Authority performance-based incentive, in which TVA pays a customer a certain amount for each kilowatt-hour, net-metering, and property tax exemption for solar energy. The last allows a county to fully or partly exempt a solar installation from property taxes, but depends on the county-currently, the counties and cities of Albemarle, Alexandria, Charlottesville, Chesterfield, Hampton, Hanover, Henrico, Isle of Wight, King and Queen, Loudoun, Lynchburg, Prince William, Pulaski, Spotsylvania, Warren, Wichester and Wise offer this. Virginia has an optional renewable energy standard of 15% of 2007 electricity sales by 2025, which is less stringent than states that, for example, require utility companies to generate 25% of their electricity from renewable energy by 2025, such as California. Virginia has, in the past, offered PACE financing, but currently no counties or cities offer the program, due to a Federal Housing Finance Agency announcement disqualifying homes with PACE financing to receive mortgages from Fannie Mae or Freddie Mac.

Virginia does not currently have a viable SREC market, as there is no solar carve-out in its Renewable Portfolio Standard. However, solar owners in Virginia may be eligible to participate in the Pennsylvania SREC market. This is because Pennsylvania allows for solar energy systems to be cross-listed. Virginia SRECs can be traded within the PJM region, which is a Regional Transmission Organization and which includes Wisconsin, Illinois, Indiana, Kentucky, Michigan, Tennessee, North Carolina, Virginia, West Virginia, Ohio, Pennsylvania, DC, Maryland, New Jersey, Delaware, New Jersey, New York and Massachusetts. However, some states have closed SREC markets, meaning that utility companies in those states only buy SRECs from solar installations located in that state. These include DC, New Jersey, Massachusetts and Delaware. Ohio accepts 50% of its SRECs from out of state applications, but only from contiguous states, including Pennsylvania. Thus, Virginia SREC owners can sell SRECs in Ohio, Maryland (which buys only from the PJM region until 2012), North Carolina and Pennsylvania. The other states in the PJM region do not buy SRECs.