Investing in Renewable Energy

Aug 19, 2014

This week, the Richmond Times-Dispatch said the state’s largest electric utility, Dominion Power, was exploring solar energy in Virginia and environmentalists cheered. But the utility isn’t making any promises, and the state lags far behind its neighbors when it comes to green energy.

On its website, Dominion portrays itself as a solid environmental citizen, but the company’s CEO, Tom Farrell, is frank about the fact that solar and wind power are expensive to produce, and his company – which is invested heavily in nuclear, gas and coal-fired plants -- is required by state regulators to keep costs down.

“Our rates are 25% below the national average, and the lowest on the east coast, so we think that’s an important advantage for our customers, and we want to keep it that way.”

What’s more, Dominion recently declared a quarterly dividend of 60 cents per share, proudly paying investors for the 364th consecutive time. Spokesman David Botkins says the company will add solar and wind power to its mix, but it’s not making promises of big investments any time soon.

“We have to balance good public policy with low, affordable, reliable electricity and have an 'all of the above strategy,' whether it’s gas-fired generation or nuclear or renewable or coal based, we’ve got some of all of it, and that’s the best way to keep customers’ lights on day in and day out.”

Dominion has solar plants in five other states where energy prices are higher, and executives say they might build 220 megawatts here beginning in 2017.  But that’s not much when you consider that a single gas-powered plant being built in Virginia will generate six times as much electricity.  Botkins says the investment in renewable energy could be bigger if the legislature provided subsidies for green power during its next session in January.

“It would make it easier for us to proceed with additional solar if that were to occur.”

He knows private companies and individuals want solar energy, and Dominion has partnered with a few firms, leasing their rooftops and installing solar panels. More might sign up if the utility increased pay for the power generated,  but Botkins passes the buck to state regulators when there’s talk of a raise.

“With regards to rates, we’re just going to have to wait and see what will happen as the state’s Corporation Commission makes decisions on those things.”

Reporter Sandy Hausman asked, “But if you wanted to pay more than 15 cents per kilowatt hour, wouldn’t you have to ask the SCC?”

“We would,” Botkins replied, “but we’re not at that point yet, no.”

Today, Virginia homeowners and companies produce about 13 megawatts of solar power.  Maryland produces 12 times as much, and North Carolina claims 45 times as much solar powers.  Those states offer incentives and require their utilities to buy or produce a certain amount of renewable energy.  Virginia has what’s known as a Renewable Portfolio Standard, rewarding Dominion for producing 4 percent of its power from renewables – but that program is voluntary.

“So there’s a whole combination of state policies that make it very challenging to develop solar in Virginia.”

Tony Smith is CEO of Secure Futures – a Staunton firm that develops solar projects in this state.

“Virginia is just not seeing the level of jobs or the dollar investment that we’re seeing in neighboring states.  It’s by far the very weak sister of all the surrounding states.”

Dominion has nearly 2.4 million customers.  Of those, about a thousand have installed solar panels, taking advantage of a federal tax credit, and 20,000 signed up to pay Dominion more for their power in exchange for a promise that the utility would invest in renewable energy.  So far, most of that money has been spent out of state.