This past week, SolUnesco’s CEO , participated in a session entitled “The Rubin Group: Lessons from Virginia at Solar Power International. During the session, Hodsoll discussed how Virginia has rapidly become a clean energy state. In addition, Hodsoll discussed the challenges and opportunities that still exist for solar energy development in the Commonwealth of Virginia.
Virginia’s Painfully Slow Start
Francis outlined three key interrelated challenges that the industry is facing:
- Inertia: Virginia is inhibited by an outdated regulatory system that was designed 100 years ago to address concerns about monopolies. Change to this system is painfully slow. As a result, the regulated rate of return paradigm is enabling utilities’ shareholders to generate wealth at essentially no risk on the back of the ratepayers. However, blame cannot be placed on the utilities who are fulfilling their fiduciary obligation to maximize wealth for their shareholders. Instead, politicians should be held accountable for perpetuating this system of laws and regulations resulting in an unjustified transfer of wealth from ratepayers to utilities.
- Politics: Within the Commonwealth of Virginia, we have an unfortunate political climate whereby any Republican who supports a “traditionally Democratic” issue is immediately at risk for his or her political future. However, during the Administrations of Reagan and both Bush 41 and Bush 43, it was Republicans that pushed for the use of full cost price signals and competitive markets to address the negative externalities of pollution.
- Re-constructed regulations: What we are referring to here is the redesign of Virginia statutes to regulate electricity. The result has been increased complexity that inhibits change.
In addition, Francis pointed out that fossil-fired power plants pollute with not only carbon, but also NOx , sulfur, and hazardous particulates. He has first-hand experience with operating these facilities.
Despite these challenges, there are significant opportunities that solar developers can be optimistic about. First, despite the inertia, difficult political climate, and byzantine regulations referenced above, the good news is that economics favor solar, corporate sustainability initiatives favor solar, and a majority of Americans are in favor of solar. Having a diversity of energy options, while addressing what Pope Francis refers to as the moral issue of our time, benefits companies and ratepayers alike.
Companies that have put the right team in place have been able to overcome the challenges and seize these opportunities. The low barriers to entry and potential for significant wealth creation has resulted in an uber-competitive business climate where only the fittest survive. While this competition creates challenges and at times mind-numbingly unhelpful market dynamics, the competition also serves to deliver lower costs to energy users, including both corporate giants and everyday households. .
Recent Steps Forward
Over the last few years, the industry has had a number of accomplishments that will contribute to moving forward. We have successfully formed The Rubin Group, that consists of representatives from the electric utilities (Investor Owned Utilities and Cooperatives), the solar industry trade association, the manufacturers association, the Southern Environmental Law Center, advocates for ratepayers, and ad hoc engagement from various stakeholders.,. The Rubin Group members are working together to obtain consensus on laws and regulations that will advance the interests of the public, and, by extension, the use of solar. We have also created complementary working groups for both utility-scale solar and distributed generation that provide market insights and analytical horsepower in the development of the solar industry’s negotiating position within the Rubin Group. Through the Rubin Group we have developed numerous new policies and laws such as determining that 5,000 MWs of solar energy is in the Public Interest, clarifications of local permitting processes, a new categorization of energy generation allowing farmers to deploy clean energy generation at sufficient scale to be meaningful, and a electric-utility administered community solar program.
These concentrated efforts are now paying off and resulting in momentum for the solar industry. As highlighted in a recent SolUnesco blog and ongoing news releases, an increasing number of large enterprises, military, and higher education organizations are partnering with solar developers to meet their goals for sustainability and clean energy use. For example, the University of Richmond is partnering with sPower to meet 100% of its electricity needs with solar energy. The Oceana Naval Air Station solar farm, in partnership with Dominion is nearing completion. In addition to the Amazon and Microsoft deals mentioned in our previous blog, Apple and Facebook have also implemented and led initiatives to increase adoption of solar.
New Challenges for Virginia in Deploying Solar
Utility-scale solar’s large footprint is causing communities and citizens to have questions and concerns about appropriate land use. In many cases, these concerns encompass determining the upper limit of land use for solar; the impact on the land over a three-to-four-decade project; and whether the project will fulfill the promised commitment.
The solar industry is responding to these issues. However, we need to do more to address local communities’ concerns and highlight the significant benefits, such as workforce training programs and increased tax revenue for districts. We need to be systematic and diligent to make sure we are credible. We cannot allow unfounded concerns to derail the momentum we have built.
Furthermore, we need to move the demand from our product beyond the highly sophisticated energy user, such as data centers with wholesale energy procurement and risk management capabilities. The solar industry and traditional wholesale energy players need to create clean energy offerings that address the procurement and risk management needs of the average business with an interest in procuring clean, fixed price electricity.
We have come a long way and we have tremendous talent and passion within our industry necessary to keep driving forward.