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Dominion Energy Virginia must shut down its 1,032-MW Chesterfield coal plant within the next five years under a new Virginia law that essentially phases out the state's coal-fired generation.

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The Virginia Clean Economy Act, signed into law on April 12 by Governor Ralph Northam, requires "all coal-fired electric generating units operating in the Commonwealth" to be retired by the end of 2024 with limited exceptions. The governor also signed legislation that will lay the groundwork for the state to join the Regional Greenhouse Gas Initiative.

"These new clean energy laws propel Virginia to leadership among the states in fighting climate change," Northam said in an April 12 news release. "They advance environmental justice and help create clean energy jobs. In Virginia, we are proving that a clean environment and a strong economy go hand-in-hand."

The Virginia Clean Economy Act requires Dominion Energy Virginia, known legally as Virginia Electric and Power Co., and American Electric Power Co. Inc. utility Appalachian Power Co. to "retire all other electric generating units located in the Commonwealth that emit carbon as a by-product of combusting fuel to generate electricity" by Dec. 31, 2045.

The act replaces the state's voluntary renewable portfolio standard with mandatory annual benchmarks that would eventually require electricity suppliers to produce 100% of their electricity from renewable sources.

Appalachian Power must procure 100% of its electricity from renewable resources by 2050, while Dominion Energy Inc. subsidiary Dominion Energy Virginia must hit that benchmark by 2045.

Dominion Energy Virginia and Appalachian Power must "retire all generating units principally fueled by oil with a rated capacity in excess of 500 [MW] and all coal-fired electric generating units operating in the Commonwealth" by Dec. 31, 2024. The bill provides an exception for coal plants co-owned with a cooperative utility and for Dominion Energy Virginia's 624-MW Virginia City Hybrid Energy Center.

SIX COAL PLANTS

An S&P Global Market Intelligence analysis showed there are six coal-fired power plants operating in Virginia, with a total combined output of 2,927 MW. Dominion owns two and co-owns a third, the 881-MW Clover plant, with Old Dominion Electric Cooperative.

The remaining three coal plants are small with the 105-MW Spruance Genco unit owned by asset manager Ares Owners Holdings LP set to be retired later this year.

Appalachian Power retired the 335-MW Glen Lyn coal plant and the last coal unit at its 705-MW Clinch River plant in Virginia in May 2015.

"The Virginia Clean Economy Act sends a clear message to polluters in Virginia and possibly beyond: investments in fossil fuels are not only immoral, they are uneconomical," Harrison Wallace, Virginia Director of the Chesapeake Climate Action Network's Action Fund, said in a written statement. "Now, with the passage of this historic legislation, we have the opportunity to bring thousands of Virginians to work in a new energy economy that will clean up our air and improve public health."

Northam signed an executive order in September 2019 calling for 30% of the state's electricity to be generated from renewable resources by 2030 and 100% of Virginia's electricity to be produced by carbon-free resources by 2050.

In February, Dominion Energy said it would shut down coal plants and ramp up renewable investments to achieve net-zero carbon dioxide and methane emissions by 2050 for both its power generation and natural gas operations.

In a recent filing with the Virginia State Corporation Commission, Dominion said that "significant build-out of natural gas generation facilities is not currently viable" under the Virginia Clean Economy Act.

Dominion did not indicate whether it would abandon any gas-fired generation plans in its 2020 integrated resource plan.

The company laid out plans to add at least eight new natural gas-fired plants, totaling nearly 3,700 MW, by 2033 in its 2018 integrated resource plan.

"Natural gas remains an important part of the around the clock reliability our customers rely on," Dominion Energy spokesman Jeremy Slayton said in a written statement.

In addition to phasing out fossil fuels, the Virginia Clean Economy Act adopts a target for energy storage deployment of 3,100 MW by the end of 2035. A new energy efficiency standard also would apply to both utilities with a 5% energy savings target for Dominion and a 2% target for Appalachian Power by 2025, both from 2019 levels.

The legislation establishes that 16,100 MW of solar and onshore wind, including 100 MW of rooftop solar, is in the public interest.

"The construction or purchase" of offshore wind facilities up to 5,200 MW off the Virginia shoreline by Dec. 31, 2024, also is in the public interest.

Dominion Energy Virginia in September 2019 announced plans to build the "largest offshore wind project" in the U.S. off the coast of Virginia Beach in three phases of 880 MW each. If approved, the first phase of the $8 billion project would be completed in 2024, with the final phases expected to come online in 2025 and 2026.