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During their 2020 session, the General Assembly passed and Governor Northam signed Law HB 1526 / SB 851, the Virginia Clean Economy Act (VCEA or Act). The VCEA codified the guidelines for clean energy contained in Executive Order 43 issued in September 2019. It made it easier for Virginia's accession to the Regional Greenhouse Gas Initiative (RGGI), incorporated concepts of environmental justice into approval processes, and required new measures to promote energy efficiency, including setting a schedule for shutting down old fossil fuel power plants and requiring that energy be 100% off comes from renewable sources such as sun or wind.

The law provides penalties for energy producers who fail to comply with the guidelines and requires a portion of the proceeds from those penalties to fund professional training and renewable energy programs in historically deprived communities.

In particular, the VCEA has set the following goals:

  • Renewable Portfolio Standards The law requires Dominion Energy Virginia to be 100% carbon free by 2045 and Appalachian Power to be 100% carbon free by 2050. In addition, almost all coal-fired power plants must be closed by the end of 2024.
  • Energy efficiency standards ─ The law declares energy efficiency pilot programs in the public interest and creates a new program to reduce energy pollution for low-income customers. The VCEA also sets a standard for energy efficiency resources that requires third party verification that energy companies are achieving their savings targets.
  • Offshore wind The law states that offshore wind generation of 5,200 megawatts (MW) is in the public interest and calls on Dominion Energy Virginia to prioritize recruiting local workers from historically disadvantaged communities to work with the Commonwealth to advance apprenticeship and training. It also regulates the development of an environmental and fisheries reduction plan.
  • Solar and decentralized generation ─ The law states that 16,000 MW solar and onshore wind power are in the public interest. VCEA is expanding net metering to drive rooftop solar energy across Virginia. In addition, the largest Virginia energy companies are required to build or acquire more than 3,100 MW of energy storage capacity (ie 2,700 MW and 400 MW for Dominion Energy Virginia and Appalachian power, respectively).

Energy storage regulations

On December 18, 2020, the Virginia State Corporation Commission (SCC or Commission) published 20 VAC 5 Chapter 335 (Energy Storage Regulations or Regulations) to promote the energy storage goals of the VCEA and under Va. Code §56.1-585.5 E use of energy storage resources.

The Energy Storage Ordinances meet the requirements of subdivisions 1 and 2 of the VCEA by setting preliminary targets for the use of energy storage, updating existing rules for planning and purchasing energy suppliers, and including programs and mechanisms to facilitate the use of energy storage resources, including competition calls. Behind the meter incentives, wireless alternative programs, and peak demand reduction programs.

In particular, the ordinances also provide that energy storage devices that are not owned by a utility company may be approved and built in order to meet the requirements of Code §56.1-585.5 E, according to which, after July 1, 2020, at least 35% of the Operational energy storage must be “(I) purchased from the public utility company, or (ii) owned by a party other than a public utility company.

Meeting of the General Assembly 2021: VCEA-related legislation on energy storage

At the 2021 General Assembly meeting, a number of measures to implement the VCEA and to facilitate the use of energy storage systems were adopted, including:

SB 1284 (Favola) ─ Commonwealth Clean Energy Policy. Establishes the Commonwealth Clean Energy Directive and replaces the Commonwealth Energy Policy. The Bill sets out energy policy and policy objectives, including: (i) The Commonwealth recognizes that effectively combating climate change and improving resilience will promote the health, well-being and safety of the Commonwealth's residents and combat the Climate change requires reductions in greenhouse gas emissions across the Commonwealth of Nations economy sufficient to achieve net zero emissions in all sectors, including electricity, transport, industry, agriculture, construction and infrastructure, by 2045; (ii) the Commonwealth recognizes the need to promote environmental justice and ensure that it is carried out across the Commonwealth and the need to address and prevent energy inequalities in historically disadvantaged communities; and (iii) the Commonwealth must continue to prioritize economic competitiveness and workforce development in an equitable manner.

SB 1282 (Morrissey) ─ Inventory of greenhouse gas emissions; Regulations. Instructs the Department of Environmental Quality (DEQ) to conduct a nationwide baseline and projection inventory of all greenhouse gas emissions and to update this inventory every four years. The bill requires the inventory to be published and included in the State Air Pollution Control Board's annual report. It also empowers the Board of Directors to enact regulations necessary to collect the data necessary to conduct, update and maintain the inventory. The bill also exempts proprietary information collected by the DEQ from the mandatory disclosure requirements of the Virginia Freedom of Information Act.

HB 2148 (Willet) ─ Small projects for renewable energies; Energy storage. In the definition of a “small renewable energy project”, it includes certain energy storage systems and projects that contain components of storage systems. The bill provides that such facilities are eligible for post-regular approval and for special review and inspection requirements. It instructs DEQ to publish the first implementing rules by January 1, 2022.

HB 2006 (Heretick) / SB1201 (Petersen) ─ Tax exemptions for energy storage systems. Explains that energy storage systems are included in the definition of certified pollution control equipment and facilities, thereby exempting energy storage systems from state and local taxation. The draft law defines “energy storage system” as devices, facilities or devices that can absorb energy, store it for a certain period of time and deliver the energy again after it has been stored. “The tax exemption only applies to certain projects with an AC storage capacity of more than 5 MW and less than 150 MW.

The bill also allows municipalities to estimate a revenue share of up to $ 1,400 per MW for energy storage systems. It stipulates that on July 1, 2026, and every five years thereafter, the maximum amount of revenue sharing that a place can impose on energy storage systems and certain solar energy projects will be increased by 10%. No increase may be made in the revenue sharing that a location imposes on a solar energy project or energy storage systems for which an application has been submitted to the location and for which such an application was approved before January 1, 2021. The bill defines energy storage systems as electricity suppliers whose property is assessed by the State Corporation Commission.

HB 2201 (Jones) / SB 1207 (Barker) ─ Solar and energy storage projects; Site agreements and special exceptions throughout the Commonwealth. Adds energy storage projects to the existing regulations regarding site agreements and the exemption for solar projects in an opportunity zone and makes the regulations nationwide. The provisions of the bill do not apply to energy storage projects that have received preliminary or other zoning and site map approval from the host's location prior to January 1, 2021. The bill also stipulates that its provisions regarding energy storage projects will not take effect unless the General Assembly approves laws that empower local authorities to enact an ordinance on taxation of energy storage projects, e.g. B. Solar projects with a local option for taxing machines and tools or sharing solar income.


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