Virginia has inked a 420-megawatt solar and wind power contract, the single largest procurement of renewable energy to power U.S. state government agencies and institutions.
It's the latest sign of growth to come in a burgeoning market for renewables. Thursday’s deal with utility Dominion Virginia includes 75 megawatts of onshore wind power from Apex Clean Energy and 345 megawatts of solar projects.
The announcement comes as part of Governor Ralph Northam’s effort to push the state toward a 100 percent clean energy standard by 2050, with a 30 percent interim target in 2030.
The state government itself is aiming to source 30 percent of its electricity from renewables by 2022.
Northam’s interim targets put Virginia squarely in the middle ranks of states in terms of clean energy ambitions. But in a state where a dominant vertically integrated utility that’s invested heavily in coal, nuclear and natural gas assets has long dominated energy policy, it’s an important step forward, according to clean energy and environmental advocates.
Virginia ranks 18th in installed solar capacity among states, according to the Solar Energy Industries Association, equating to about 1 percent of its electricity supply. It has no wind farms within its borders, mirroring the onshore wind sector's painfully slow progress across the Southeast.
However, Virginia ranks much higher in terms of future market opportunities. Since January 2018, the Virginia Department of Environmental Quality has issued 23 permits for more than 800 megawatts of solar projects, and expects an additional 478 megawatts for seven projects by the end of this year.
Colin Smith, senior utility-scale solar analyst at Wood Mackenzie Power & Renewables, chalks this up to two key factors. First is the state’s rapidly growing data center industry, with corporate customers like Facebook, Apple and Google that demand access to clean energy to meet their sustainability goals. Dominion, which has recently expanded its long-range resource plans to include more renewables, has already drawn the ire of Apple, AWS and Microsoft, which in May wrote an open letter chiding Dominion for neglecting solar power and energy storage in favor of natural-gas capacity.
Second, Virginia is part of the territory of mid-Atlantic grid operator PJM, giving corporate solar projects the opportunity to tap merchant revenue after their contracts expire. "Some of these corporate deals might not be happening if Virginia wasn’t connected to a wholesale power market," Smith said.
Dominion is also exploring the possibility of adding a significant amount of offshore wind power to its portfolio. Last month, the utility outlined plans for a 2.6-gigawatt offshore wind project off the state’s coast, the largest yet proposed in the U.S., as a follow-up to its 12-megawatt Coastal Virginia Offshore Wind pilot project, which recently began construction and is due online next year.
Dominion’s new solar plans haven’t come without their share of controversy. In July, Direct Energy and Calpine accused Dominion of halting the processing of their 100 percent renewable electricity enrollment requests for large customers in recent months, at the same time the utility was telling state regulators that those companies lacked the capacity to sign on new customers.