Energy in Virginia

On October 14, 2014 Governor Terry McAuliffe released the 2014 Virginia Energy Plan that contained a snapshot of energy use in Virginia today using data from the Department of Energy’s Energy Information Administration (EIA). I thought I would share some of the highlights so you, too, can see who we are. Even as the energy mix for Virginia changes, it should not be forgotten that Virginia’s Appalachian Plain is coal country. Virginia accounted for 4.5% of U.S. coal production east of the Mississippi River in 2012, and the seaport at Norfolk is America's largest coal export facility that processed and shipped over 38% of U.S. coal exports in 2012. More than half of the energy used in Virginia is imported from outside the Commonwealth. Petroleum for transportation is a big part of that number, but we also import a significant portion of our electricity from out of state.

from EIA

Virginia’s net energy balance is negative, which also is the case for most other states. The big oil producing states and foreign countries provide most of the United Sates with petroleum products for transportation, heating and household use. The Commonwealth imported about 55% of total energy used in 2012, all of the 31.7% of energy used for transportation, in addition to the petroleum products used for heating, but also a significant portion of our electricity which in Virginia is used for lighting, heating, and cooling. Petroleum for all uses represented more than 34% of energy consumed in Virginia last year. Practically all the rest of the energy used, 66% was in the form of electricity from the various sources. The total energy used in Virginia in 2013 came from the following basic energy sources:

• 34% from petroleum (heating and household use and transportation)
• 20% from electricity generated outside Virginia
• 18% from natural gas
• 13% from nuclear-based electricity generation
• 9% from coal
• 6% from hydro, biomass, and other renewable sources 

The average Virginia residential electricity customer uses 14 megawatt hours per year of electricity that costs them an average of $1,584 per year. Virginia households use more electricity than the national average because electricity is used for space heating. Virginians use of electricity is similar to the use in neighboring states where electricity is also the most common heating fuel, according to EIA's Residential Energy Consumption Survey.

Virginia’s retail electric customers are served by three publically traded investor owned utilities (providing 84.1% of electricity used in the state), 13 electric cooperatives (providing 11.5% of electricity) and 16 municipal utilities (providing 4.4% of electricity). Virginia’s utilities own in-state and out-of-state generation facilities, and make contractual purchases of electricity from in-state and out-of-state producers, and spot purchases of electricity from the PJM wholesale market. Virginia’s utilities imported about 37% of the state’s 2012 electricity consumption from generation facilities outside of Virginia.

Electric utilities in Virginia are members of an interstate transmission operator known as PJM which provides independent operation of the wholesale bulk power market for our region. This system increases the reliability of the electric grid at the lowest cost by managing regional supply from lowest cost to highest cost to meet demand. This system has historically put coal powered electrical generation in the “baseload” (lowest cost and most plentiful) category, but that has been changing in response to U.S. Environmental Protection Agency (EPA) regulations targeting coal fired power plants in recent years ( Mercury and Air Toxics Standards, Cross-State Air Pollution Rule, and the Annual Fine Particle Health Standard). In addition, EPA’s recently proposed Clean Power Plan assigns CO2 targets for each state to be phased in between 2020 and 2030. To meet these CO2 limits Virginia will have to further reduce the use of coal generated electricity.

Electricity generated in Virginia in 2013 came from a variety of sources including:

• 35.7% from nuclear
• 29.7% from natural gas
• 28.7% came from coal
• 4.5% from renewables
• 1.2% from hydroelectric
• 0.2 % petroleum entirely imported in Virginia and represents about also is the case for most other states. 

The electricity generated in Virginia represents only about 64% of the electricity used in Virginia. In 2012 Virginia produced 70,739,235 megawatt hours of electricity, but used 109,876,345 megawatts. Nuclear generation provided approximately 40% of the electricity used in Virginia most from our two nuclear power plants the remainder from the PMJ purchases. The available nuclear generated power has not changed in decades, but there are projects that may be completed within the Commonwealth and PMJ in the future.

In 2002, coal provided approximately 52% of the electric power for Virginia but had fallen to 21% in 2013 due to the increasing regulations on coal fired power plants and the extended period of relatively inexpensive natural gas. As the economics and regulatory requirements for coal-fired power have changed, retirements, fuel switches and new natural gas capacity have been announced and are expected to continue under the EPA Clean Power Plan. Total generation in the Commonwealth has shifted from 82% of total megawatt hours produced from coal and nuclear in 2008 to 76% of total megawatt hours produced from natural gas and nuclear in 2012.

The energy generation mix in Virginia continues to change as natural gas becomes more abundant and available, less expensive and prices have enjoyed a period of stable low prices. However, oil and gas prices have historically been very volatile and this is likely to occur again. Saudi Arabia with the financial reserves to withstand a multiyear price war is currently attempting to maintain their world market share of petroleum products against Kurd and ISIS black market sales, Russian and Venezuelan cash flow needs and diminishing world demand as growth in the emerging markets slows even as new techniques increase recoverable gas and oil. Oil and gas prices will fall significantly in the short term even as winter demand is upon us. It will be interesting to see what the composition of the base load will be in the next 15 years, remember before the oil supply crisis in the 1970’s petroleum, not coal made up the lion’s share of our nation’s electricity base load.

in energy equivalent units