Virginia’s 2022 Energy Plan

Much of the below is extracted from the 2022 Virginia Energy Plan, the new event and the Press Release

Every four years Virginia Energy develops a comprehensive Virginia Energy Plan. On October 3, 2022 Virginia released its 2022 Energy Plan at an event held at the Delta Star facility in Lynchburg, Va. The theme of the plan was “all of the above.”

In 2020, the General Assembly passed the Virginia Clean Economy Act (VCEA), which mandated a goal of 100% zero-carbon energy generation by 2050 and prescribed increasingly strict Renewable Portfolio Standards (RPS) for Virginia's investor-owned electric utilities that are according to the Governor inflexible and unattainable.

Under the VCEA, Virginia is legally required to retire all baseload generation, except for the existing nuclear power plants, in favor of intermittent renewable generation. The VCEA will require additional solar panels enough to cover an area the size of Fairfax County. With the retirement of baseload generation which is dispatchable and always on-demand, utility scale storage is required to manage power demand when the sun isn’t shining and the wind isn’t blowing. Such battery storage is not yet cost effective.

On September 1, 2021, the SCC released their annual report on implementation of the Virginia Electric Utility Regulation Act, as required by statute. This report concluded VCEA will increase energy bills for Virginia ratepayers over $50 per month (almost $660 annually) between 2020 and 2030 with an expected rate increase of almost 6% annually over the next five years. The report concluded that electricity prices have risen and will rise substantially in Virginia.

In addition, in 2007, the General Assembly passed the Re[1]Regulation Act, allowing utilities to request to recover certain costs outside of their base rates through rate adjustment clauses (RACs) or riders. Since 2007, Virginia ratepayers have seen an increasing number of RACs accumulate on their monthly power bills. (The latest one increased my cost per kilowatt hour from 11.34 cents to 12.29 cents.)

In 2010, Virginia generated only 59% of all electricity used in Virginia the rest was purchased from other states in Virginia’s Regional Transmission Organization (RTO), PJM, which Virginia joined in 2005. Largely driven by the addition of natural gas generation facilities, Virginia grew in state electricity generation to 81.6% of consumption by 2020, allowing Virginia to supply lower cost power instead of importing power from other states.

According to the Governor there is simply no path for Virginia to successfully meet the requirements and timeline of the VCEA with even the existing demand for electricity. The energy needs of the Commonwealth, its businesses and its families are changing – and growing. Virginia is already the data center capital of the world and the industry is exploding along with the demand of 24 hours a day 7 days a week power needed to run them. Data centers require power all the time even when the wind does not blow or the sun does not shine, requiring greater and greater amounts of backup power supply and storage under the VCEA, capping the number of data centers allowed in the Commonwealth or a recasting of the VCEA timeline and goals.

In 2018 power demand for data centers was just over 1 gigawatt of power, by this past September that had reached 2.6 gigawatt of power (according to a Dominion Energy earning report in September 2022) and is projected to reach 5 gigawatts by 2025 with projects already under way. Data Centers will have an outsized impact on the electric grid in Virginia.

The changing energy ecosystem presents stark contrasts between the reliability of baseload generation needed for data centers on one hand and reduction of carbon emissions on the other. Between these dueling objectives is a debate over the relative cost to consumers of continuous baseload versus intermittent energy generation technologies. Baseload generators, like nuclear power stations and combined cycle natural gas, operate continuously and consistently over time to meet the peaks and troughs of power demand. Intermittent generators, such as solar and wind, can only operate when the sun shining or the wind blowing.

Reliability is predicated on sufficient baseload and the ability to meet peak demand with additional on-call or dispatchable generating power sources. Grid reliability is also impacted by the interactions between customers, utilities, the SCC and PJM (the regional grid operator) when it comes to planning for tomorrow’s energy needs. 

Today, the vast majority of electricity demand in Virginia is met by continuous and dispatchable generation sources, primarily natural gas, nuclear, and to a much lesser extent coal. Since 2010 Virginia reduced carbon dioxide emissions by 20%, sulfur oxides emissions by 91% and nitrogen oxides emissions by 58% primarily due to this shift from coal to lower-emission natural gas generation.

Renewable energy sources, such as solar and wind, provide electricity with a low variable cost, but on an intermittent basis. The output from these sources varies across seasons, weather systems and time of day, rendering them challenging to meet consistent energy demands – as experienced in recent years in California and Western Europe. VCEA requires the Commonwealth to retire its natural gas power plants by 2045 (Dominion) and 2050 (Appalachian Power). These facilities currently comprise 67% of the current baseload generation as well as 100% of the power plants that meet peak demand. This switch mandated by VCEA has not been successfully accomplished anywhere in the world, yet. We cannot mandate technological hope, we must instead push forward innovation.

During the foreseeable future, intermittent energy generation cannot meet all of our energy needs. Some of this capability could come from utility scale battery storage, but the reliability, cost, safety, and availability of raw materials to incorporate this technology is at odds with the timeline constraints of the current VCEA requirements. At this time, solar and wind generation are affordable in many locations, but battery storage systems required to turn these generation sources into dispatchable energy are cost prohibitive. At the same time the extraordinary growth in electricity demand by the exploding number of data centers under development in Virginia requires that the Commonwealth increase the effective base load.

To meet Virginians’ round-the-clock energy needs, full compliance with VCEA will require a reliance on other PJM states to produce the baseload generation capacity for the Commonwealth absent incorporation of currently unavailable grid storage, nuclear, or hydrogen technologies. As of December 2021, the total capacity mix of PJM includes significantly more coal at 27%, and lower amounts of natural gas (44%). 

In short, VCEA depends on Virginia outsourcing reliable baseload capacity to other states, many of which have a high percentage of coal and natural gas generation, and increasing Virginia’s dependence on electricity imports. As a result, supply and transmission of energy to Virginia homes and businesses has the potential to become less reliable than today.

“A growing Virginia must have reliable, affordable and clean energy for Virginia’s families and businesses. We need to shift to realistic and dynamic plans. The 2022 Energy Plan will meet the power demands of a growing economy and ensures Virginia has that reliable, affordable, clean and growing supply of power by embracing an all-of-the-above energy plan that includes natural gas, nuclear, renewables and the exploration of emerging sources to satisfy the growing needs of Commonwealth residents and businesses," said Governor Glenn Youngkin.

With that comment, the Governor proposed recasting the VCEA in the next legislative session and a “moonshot” goal of developing and building a small modular nuclear reactor in southwest Virginia.