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Virginia legislation opens door to over 5 GW of renewable energy

Recently passed legislation in Virginia shifts the renewable energylandscape by finding 5.5 GW of solar and wind energy are in the publicinterest and expediting the state's renewable energy project regulatoryapproval process.

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"The Virginia legislation is a really good start that sets out atrajectory for where solar should go in the state," Maggie Clark,southeast state affairs manager at trade group Solar Energy IndustriesAssociation, said in a phone call Tuesday.

Acknowledging that you do not always get everything you want innegotiations, Clark said the solar industry is "relatively pleased" withthe result.

Virginia Governor Ralph Northam signed the 2018 omnibus energy bill intolaw Friday. Known as Senate Bill 966, the legislation includes provisionsfor energy efficiency and energy storage, in addition to wind and solar. THE BILL UNFREEZES UTILITY RATES

The law also ends a utility rate freeze that has been in effect since2015. The CPP plan is a measure introduced by the Obama administrationdesigned to reduced power plant emissions. It faced legal uncertainty andthe Trump administration is taking steps to reduce its scope. Dominionand AES subsidiary Appalachian Power are Virginia's two largestutilities.

"One of the reasons we felt this legislation necessary was due to therate freeze in place that resulted from expected cost increasesassociated with the Clean Power Plan," Dominion spokesman Rayhan Daudanisaid in a phone call. "We now feel the risk and uncertainty associatedwith it [the CPP] has been mitigated, making it appropriate to moveforward on this legislation," he added. The bill was the result of a broad stakeholder process that included theutilities, environmental groups and other interested parties. The ideawas to facilitate a consensus-driven approach to policy in which allparties had to sign off.

In a perfect world the result would be more similar to a North Carolinaprogram enacted in July 2017 that includes mandatory procurement goals,Clark said. The solar industry wants to make sure that when Virginia'sprocess gets underway "we see the type of volume procured that the solarindustry is able to provide," she said.

The 5.5 GW of renewable energy in Virginia is not a mandatory target orprocurement, but serves as a regulatory greenlight for achieving thatvolume.

Others agreed that while the law is a step in the right direction towarda cleaner energy system, more could be done. Will Cleveland, a staffattorney with the Southern Environmental Law Center said in a phone callthat the law is "a little more than business as usual but a gooddemonstration of the fact that solar is growing for economic reasons."

If done right, Virginia could see real growth in savings from energyefficiency that would both lower people's bills and lower the demandcurve which would delay or make large investments in new baseload powerplants unnecessary, Cleveland said.

The law increases funding for both utility- and shareholder-funded energyefficiency programs.

"So the hope is that by marrying renewable energy growth, energyefficiency and storage you suppress the need for incremental fossilgeneration and still have customers come out ahead economically,"Cleveland said. DECLINING SOLAR COSTS COULD BOOST INSTALLATIONS, SAVE CUSTOMERS MONEY

Dominion listed utility-scale solar as its least-cost resource in itslatest Integrated Resource Plan, Clark pointed out. Indeed, the companyhad already contemplated adding 5.2 GW of solar by 2042 in its IRP,Daudani said.

So while roughly 5 GW by 2024 is a more aggressive goal, "we think it'sachievable especially given cost decreases associated with solar," hesaid. Increased volumes of solar could result in fuel cost reductions,which can provide "substantial savings to industrial customers, inparticular, but also residential customers," he added. -- Jared Anderson, jared.anderson@spglobal.com

-- Edited by Matt Eversman, newsdesk@spglobal.com