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Economics, carbon bills push Dominion to boost renewables output in Virginia

New York — Dominion Energy Virginia's plan to comply with sweeping energy legislation that was recently enacted includes a commitment to develop 3,000 MW of solar and wind power, along with the pursuit of offshore wind development, to reduce emissions and strengthen the grid.

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Virginia's Grid Transformation & Security Act that became effective July 1 facilitates long-term, sustainable energy investment and grid modernization, while unwinding a rate freeze on Dominion and Appalachian Power that had been in effect since 2015.

"Thanks to the Grid Transformation & Security Act, Dominion Energy plans to develop a system that meets the increasingly complex demands and expectations of our customers," Ed Baine, senior vice president of power delivery, said in a Tuesday statement regarding the filing of their plan with utility regulator State Corporation Commission.

"And we are doing it with more renewable energy," Baine added.

Dominion is proposing to have 3,000 MW of incremental wind and solar power in operation or under development by the beginning of 2022 through a combination of assets developed and procured by the company.

The roughly 250-page petition for approval filed Tuesday, which covers the first three years of Dominion's 10-year plan, will focus on seven components of its overall Grid Transformation Plan, laying the groundwork for a grid that incorporates more renewable energy resources. "The plan is designed to help build a smarter, greener, stronger electric grid, which will enable more renewable solar and wind power going forward," spokesman David Botkins said in an email Wednesday.

In a related SCC filing Tuesday, Dominion sought approval to add 240 MW of solar energy in Virginia. Specifically, the company proposes to build and operate the 142-MW Colonial Trail West Solar facility and 98-MW Spring Grove 1 Solar facility, both in Surry County. The company expects CTW Solar to be in service by December 2019, and SGI Solar to be in service by October 2020.

In addition, part of the company's 2018 integrated resource plan includes constructing 960 MW of solar through 2021. EMISSIONS

Recent legislative, economic and regulatory developments have "coalesced to support increasing the amount of carbon-free, renewable generation" Dominion provides and these factors make this an "opportune time" to move forward with the 240 MW of solar projects, according to the filing.

The projects are also needed to meet potential carbon regulation, the company said, as future regulations restricting CO2 emissions are "likely, and indeed underway, within the Commonwealth." Dominion also anticipates there will be "some level" of federal carbon regulation in the future.

Starting construction before December 31, 2019, will allow the company to maximize the federal investment tax credits available for solar facilities, resulting in a roughly $56 million overall customer cost reduction, according to the filing.

A Facebook subsidiary has committed to purchasing the environmental attributes, including renewable energy certificates, associated with the proposed projects at a fixed price.

Dominion conducted an economic analysis that compared the solar projects to the PJM Interconnection power market, a natural gas-fired combustion turbine, a gas-fired combined-cycle unit and an onshore wind unit. The analysis showed the solar projects "provide greater value than all of the alternatives," the company said. OFFSHORE WIND

Dominion will seek SCC approval for its proposed 12-MW Coastal Virginia Offshore Wind project later this summer, it said in the statement. Located in a federal lease area about 27 miles off the coast of Virginia Beach, the two-turbine test project is being developed in partnership with Danish company Orsted Energy. The project "will provide valuable information that could lead to more extensive wind development," Dominion said.

The company's generation mix currently consists of 26.5% coal, 33.6% gas, 33.8% nuclear, 5.6% renewable energy and 0.5% oil.

The next step is for the SCC to issue a procedural order "in the coming weeks" that will set out the schedule for parties who want to participate in the case through public comments and hearings, spokesman Andy Farmer said in a phone call Wednesday. -- Jared Anderson, jared.anderson@spglobal.com

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