Shared solar is coming to Virginia. Just not all of Virginia.

Residents of Community Housing Partners’ 3,300-plus apartments and townhouses that are served by Dominion Energy soon will get the opportunity to buy their electricity from a solar developer.

Residents of the nonprofit’s nearly 1,200 units in Appalachian Power Co.’s service area will not.

Households that switch to solar could see an annual savings of $150 to $200, said Michael Sutphin, spokesman for the Christiansburg-based housing nonprofit.

“That’s especially important for low-income residents like the ones that are living at CHP properties,” he said. “Any amount can help.”

Legislation passed in 2020 by the General Assembly required the creation of a so-called shared solar program in Virginia – but only for Dominion customers.

(Disclosure: Dominion is one of our donors but donors have no say in news decisions; see our policy.)

Calling it a matter of equity, and citing the state’s broader move toward carbon-neutral energy, solar developers and consumer advocates are pushing to get that changed, perhaps as soon as the upcoming legislative session. At the direction of the General Assembly, the State Corporation Commission this fall convened a work group to study what an expansion of shared solar into Southwest Virginia might look like; a report is due to the legislature by the end of the month.

“We should have something available for everybody,” said Carmen Bingham of the Virginia Poverty Law Center, who is part of the work group. “Wherever they are in the commonwealth, people should be able to access some way to mitigate their utility bills, in a way that other people have. And if that means a shared solar subscription, then they should have access to a shared solar subscription. We should make sure that there are no barriers for them to be able to do that.”

The new partnership between Community Housing Partners and Dimension Renewable Energy, which plans to build and operate eight solar arrays, is focused on low-income Virginians. But shared solar – a small but growing component of the nation’s renewables arsenal that in many other states is called community solar – is touted as a way to expand access to solar energy to anyone who can’t put panels on their own roof, whether it’s because they rent an apartment or their house is surrounded by shade trees or they can’t afford a $20,000 solar installation.

Under the shared solar model, customers pay to subscribe to an off-site solar array, which feeds power into the electric grid. Each subscriber gets a monthly credit on their utility bill for their share of that power.

Electric utilities have largely resisted the expansion of shared solar. They, too, say it’s a matter of equity, arguing that customers who don’t want to be part of a solar project shouldn’t be forced to subsidize those who do.

As more customers turn to solar, they say, the cost to maintain the electric grid will shift unfairly to the remaining ratepayers. Solar subscribers still rely on the grid to deliver their electricity, the utilities say, so they should continue to pay for it.

“One of the things that we hold as a primary tenet … is that customers who benefit from a program should pay for a program,” said Larry Jackson, Appalachian’s director of government affairs for Virginia and Tennessee.

Virginia’s 2020 legislation required the SCC to establish a minimum bill to ensure that shared solar subscribers cover their “fair share” of the costs of Dominion’s infrastructure and administrative costs. But what has been less clear to stakeholders is just how to define that “fair share.”

Low- and moderate-income residents are exempt from the minimum bill. But the rate set this summer by the SCC for all other Dominion customers drew pushback from consumer advocates and solar developers, who said it’s so high that it negates any cost savings and will discourage solar developers from launching shared solar projects for anyone other than low-income customers.

As part of their push to expand shared solar to Southwest Virginia, advocates are again focusing on the minimum bill question. They’ve suggested commissioning a study to quantify the actual costs and benefits of shared solar to determine the extent of any cost-shifting; such an analysis wasn’t done before the Dominion rate was set.

They point to Gov. Glenn Youngkin’s recently released energy plan, which says the state should make it easier for consumers to benefit from alternative sources of electricity, such as shared solar.

“What I’m getting from this SCC group is a signal from the General Assembly that your time is up,” said Robert Kell of Appalachian Voices, a nonprofit that participated in the work group and has supported other efforts to expand solar energy into Virginia’s coalfields. “This program is about equity. It should be available to all Virginia customers, not just a few.

“We’re at a moment where we don’t want state policy, we don’t want effective utility lobbying, to hold back our ability to drive the clean industry economy and hold back our region’s ability to tap into the jobs and economic benefits that shared solar would provide for our neck of the woods.” 

* * *

Why the legislation doesn’t cover the whole state

Shared solar proponents said they were caught by surprise when the 2020 legislation left out both Appalachian Power and Old Dominion Power, a unit of Kentucky Utilities that serves a small piece of far Southwest Virginia.

All three of the state’s investor-owned utilities had been part of the original bill to create shared solar programs in Virginia. But by the time the legislation made it through committees and came to a vote, it had been pared back to Dominion only.

“We’re all still kind of scratching our heads about what happened,” said Mark Moormans, director of affordable housing management at People Inc., an Abingdon-based nonprofit. “We’ve been pursuing that as a working group ever since, to kind of even the playing field and make it a fair landscape across the commonwealth.”

Kell, who said he believes that Appalachian and Old Dominion had effective lobbyists working for them in Richmond, said some legislators have told him that they didn’t understand that the program they were voting on wasn’t universal.

State Sen. Scott Surovell, D-Fairfax County, who sponsored the legislation, said Appalachian Power made the case that its customer base is sufficiently different from Dominion’s that a shared solar program would need to be structured differently for its territory. The issue was complex enough to warrant taking more time, he said; with legislators facing a short session and already dealing with the pandemic and the much larger Virginia Clean Economy Act, they decided to focus on Dominion.

“I think there was just a concern whether we had time to really fine-tune it all for both territories, given the time pressures we were under during session,” said Surovell, who had been trying for years to win passage of a shared solar bill.

Dominion is by far the largest producer of electricity in the state and accounts for almost 70% of Virginia’s electric customers, according to the SCC. Appalachian and Old Dominion together represent about 15% of the state’s electric market, including most of Southwest Virginia. The remainder of the state is served by member-owned electric cooperatives or municipal systems.

According to the work group’s draft report, which was circulated to members last week, both Appalachian and Old Dominion emphasized the differences between their service territories and Dominion’s, particularly their smaller size and lower-income customer base.

Appalachian is dealing with a population that continues to decline, Jackson said in an interview, and can’t afford to lose customers.

“Here in Southwest Virginia, where we have low to no load growth, every customer is valuable to us,” he said. “And we need every customer to help us keep the system reliable. If we lost 1% of our customers, that just spreads that 1% of the grid maintenance cost to the other customers. So we cherish every customer and want to keep every customer.”

The Dominion program both waives the minimum bill for low-income customers and mandates that 30% of capacity be set aside for those residents.

Old Dominion spokesman Daniel Lowry said there would be no need for such a carve-out in his utility’s territory, as most residents would already qualify.

“The economic challenges within this area of Virginia are important to consider,” he wrote in an email. “To be workable, any program should strongly consider the economics to ensure there is no cost shifting.”

Appalachian made a similar argument: “APCo argued that given its low-income demographics, a shared solar program should avoid a low/moderate income component,” the report summarized.

There are “already literally dozens” of programs that help these customers, Jackson said. As an example, he cited the Percentage of Income Payment Program, a part of the Clean Economy Act that caps utility bills for low-income customers and is funded through a universal service fee assessed to Dominion and Appalachian Power customers.

If low-income customers were to be exempt from minimum shared solar bills in Appalachian territory, those subsidies should be borne by other participants in the shared solar program, Jackson said.

“I know that would not be a particularly popular premise, but it is what we believe it should be,” he said.

In effect, this approach would turn green energy into a “premium product,” said Carrie Hearne, associate director of renewable energy and energy efficiency for the Virginia Department of Energy, also known as Virginia Energy.

“The question for me comes down to, should we be paying a premium cost – should I be paying extra dollars – to get access to this program?” said Hearne, who has been part of the SCC work group. “Or should everybody benefit and have some type of cost savings that makes it so that more customers want to subscribe and we’re able to fund more shared solar systems, and have the grid benefit from distributed energy that’s placed across the commonwealth?”

She believes that a shared solar program would be most successful if everyone saw some savings – maybe a little more for low-income customers, maybe a little less for market-rate customers, but perhaps a reduction of 10% overall.

Research by the National Renewable Energy Laboratory research has shown that only 2% of customers would pay more for a premium product, she said.

As much as people might talk about wanting to support green energy, the choice of whether to shift to a renewable energy source often comes down to money, Surovell said. “Most consumers aren’t willing to pay more for electricity just for bragging rights that they’ve got a shared solar house,” he said.

He’s been a vocal critic of the Dominion minimum bill, which will run to about $55 a month for an average residential customer, in addition to a monthly administrative fee. Those charges would stack on top of whatever the customer pays for solar-generated electricity.

Recommendations for the minimum monthly bill had ranged from less than $8 – suggested by the Coalition for Community Solar Access – to the roughly $75 requested by Dominion, which said it was necessary to avoid shifting costs to customers who didn’t want to participate. The SCC staff itself offered two very different recommendations, based on different methodologies: $10.95 or $55.10. The hearing examiner opted for the latter and the commission agreed; advocates of shared solar appealed but were unsuccessful.

Charlie Coggeshall, who represents the Coalition for Community Solar Access on the SCC work group, said the $55 minimum bill likely rules out projects that would focus on anything other than low- to moderate-income, or LMI, customers. Two solar developers that are active in Virginia – Atlanta-based Dimension and Apex Clean Energy of Charlottesville, which wants to build a shared-solar facility in the town of Halifax – both intend to focus solely on that segment, their representatives said. 

“It’s not necessarily a bad outcome to have a project be 100% focused on LMI participation,” Coggeshall said. “But the legislative intent … was to enable broad access. We are definitely interested in correcting that issue.”

Bingham isn’t sure that low-income-only programs are sustainable without grants or other investment. 

“If you want to do just a strict low-income program, great. Have the state invest some money, get some grant programs,” she said. “But it’s just like affordable housing. If you really want to make affordable housing affordable, you’ve got to have mixed communities. It’s the only way to really make these things survive, unless it’s a not-for-profit.”

Other members of the work group do appreciate the utilities’ concerns about the financial impact of shared solar, said Josephus Allmond, an attorney with the Southern Environmental Law Center. But they need data to understand the true extent of it, he said.

“We really would like to have good estimates of what that cost shift might be, if any,” he said. “I think a good estimate there will help us come up with what’s reasonable in terms of a minimum bill and figuring out that utility compensation.” 

Hearne said she’d like to see the group’s report lead to just that kind of analysis. Virginia Energy could lead a study that could get to the root of the cost-shifting question, she said, and analyze the true value – both the costs and the benefits – of distributed energy resources like shared solar.

Perhaps shared solar could be opened up in Appalachian and Old Dominion territories at a small scale, and those projects could be studied, she said.

According to the work group’s draft report, most of the nearly three dozen participants supported commissioning such a study.

The report said that neither of the utilities was in that category. But Lowry said Tuesday that Old Dominion supports the concept of a study “as long as any group of customers who choose to participate within such a program be responsible for all costs of the program.”

Appalachian Power believes that the SCC should determine the rate impacts that shared solar projects have, just as it did with Dominion, spokeswoman Teresa Hamilton Hall said Tuesday.

“Appalachian Power views the shared solar issue as an energy-for-energy transaction; therefore, the value of shared solar should be based on the value of energy,” she wrote in an email.

“Under these circumstances, we believe that having other studies ongoing is not beneficial or productive,” she said.

* * *

Youngkin’s energy plan pushes shared solar

On page 24 of Youngkin’s energy plan, in a list of recommendations about how to give customers more choice in where they buy their electricity, is a line that has encouraged proponents of shared solar:

“Remove barriers to distributed generation, including shared solar, and increase the ability of Virginians to install power resources on their property.”

It’s tucked into a section labeled “competition,” which discusses Virginia’s regulated monopoly model – and makes the case that current policy “unnecessarily restricts” some kinds of projects from the energy marketplace.

“Both businesses and residential customers enthusiastic about installing their own solar and wind generation units and purchasing electricity from competitive service providers are overly burdened by regulations that prevent them from exercising energy choice,” the plan says.

The plan, which was released last month, has drawn negative reviews from many in the environmental arena for its push to revise some aspects of the Virginia Clean Economy Act, which was driven by a Democratic majority in the General Assembly and requires the state to move away from fossil fuels.

But some see a reason for optimism in this signal of support for shared solar by the Republican administration.

“I wouldn’t say that the renewable energy industry is applauding the Virginia energy plan, but there is at least an acknowledgement in that plan for shared solar,” Coggeshall said.

“We’re not endorsing or celebrating the entire plan, but we definitely appreciated that recognition from the administration,” he said. “My sense is that this administration values competition, jobs, customer options, consumer options. And I think because of that, it’s also ruffled feathers with the utilities.”

Indeed, Appalachian Power’s Jackson was dismissive when asked about the significance of shared solar’s mention in the governor’s plan.

The section on competition reads like “soundbites,” he said. “So somebody asked him [Youngkin] to put it in, right?” he said. “Of course, I don’t really know. But for us, the barrier to shared solar has always been the cost shifting. If there is a minimum bill, and if all the administrative costs are included, then we would not object.”

His colleague Jon Amores, the utility’s state government affairs manager, acknowledged that customers might be interested in alternative forms of energy if they could save money. But he discounted the idea that choice in and of itself automatically results in lower costs. 

“We agree with the governor, and we understand that people want to shop,” he said. “But I presume the governor’s saying, just as we are, shared solar has a place, but not at all costs, and not to the detriment of the customer.” 

Hearne cautioned against downplaying the inclusion of shared solar in the energy plan. The administration sees it as part of what the governor has called an “all-of-the-above” approach to energy, she said, and its mention should be taken “very seriously.” 

“I think that is a really big signal,” she said. “There’s a lot of things that people may not necessarily see in the energy plan. When there’s mention of shared solar in the energy plan, it’s very intentional.”

Abigail Thompson, a government affairs specialist at Gentry Locke Consulting who works with Dimension, agreed.

“We’re really encouraged that he’s come out in favor of this, and with that kind of directive we hope this will really become a truly bipartisan issue,” she said.

* * *

Advocates see shared solar as a way to capture renewables

Beyond the potential cost savings and the environmental benefits, advocates of expanding shared solar into Southwest Virginia see it as an opportunity to capture part of the renewable energy industry for the state’s coalfield counties, a yearslong effort that could be helped by newly available federal programs.

Through a series of tax incentives, this year’s Inflation Reduction Act is expected to give a significant boost to clean energy projects; the Solar Energy Industries Association predicts that over the next decade, the act will lead to 69% more solar deployment than would otherwise have been expected.

Key to Southwest Virginia could be a $4 billion set-aside for clean energy projects in so-called “energy communities,” places that have long relied on coal mining, oil and gas drilling or fossil fuel-driven power plants.

Such projects would build on existing work in the southwest corner of the state. A project kicked off this year to put solar panels on a dozen schools in Wise and Lee counties and create a pipeline to train installers and technicians. Efforts to determine whether the region’s coal-focused manufacturers could pivot to supplying the energy storage and offshore wind sectors are underway.

Last year, Dominion and The Nature Conservancy announced plans to develop a utility-scale solar project on 1,200 acres of former surface mines in Wise and Dickenson counties. That project is still in the early development phase, with construction expected to start in 2024 or 2025 at the earliest, Dominion spokesman Aaron Ruby said.

Southwest Virginia doesn’t have a lot of sites that could host a project of that size, Kell said. But he counted 252 abandoned coal mines, 12 landfills and 11 other polluted lands from Lee County to Roanoke that could have potential as shared solar sites. 

“Shared solar isn’t simply about the customers,” Kell said. “It’s also about the opportunity to develop brownfield sites. Those sites are often too small for utility-scale solar but are better suited for shared solar programs. Especially in Southwest Virginia, where we have a lot of abandoned mineland, we could put that mineland into productive use with shared solar.”

Siting solar projects on brownfields can be more expensive, and thus less attractive to developers, Coggeshall cautioned. But that doesn’t mean they can’t work, especially with state and federal incentives.

“If you enable incentives – sometimes it’s dollar incentives, sometimes it’s maybe more expedient development or processing timelines or whatever – that works,” he said. He pointed to Maryland’s community solar program, which includes tax and other incentives for brownfields projects. 

Surovell believes that the current backlash in some parts of Virginia against thousand-acre utility-scale solar farms could drive support for shared solar projects, which tend to take 20 to 30 acres.

“I see shared solar as a possible solution that might be more palatable to people that are worried about the visual footprint of utility-scale solar,” he said.

But Appalachian has maintained that the utility-scale solar it has been developing is far more efficient than shared solar, and that despite the recent pushback, large-scale solar developments aren’t dead – they just might need adjustments.

“If we’re focused on the cheapest way to provide renewables, and to make sure the folks that don’t want to engage in that directly don’t want to pay for it, we’re almost driven to the positions we’re taking,” Amores said.

Hearne noted that shared solar should be seen as just one tool in the state’s push toward clean energy, referring again to Youngkin’s “all-of-the-above” approach, which includes utility-scale solar, offshore wind, hydrogen technologies and small nuclear reactors. The Virginia Clean Economy Act mandates that Dominion and Appalachian generate 100% carbon-free electricity by 2045 and 2050, respectively, and it set a target of 16,100 megawatts of solar and onshore wind power for the state. 

“I don’t think we’re going to meet our clean energy goals in the timeframe that we need to and at the cost to keep things affordable if we only look at rooftop solar or shared community solar projects,” Hearne said. “I don’t think that shared solar alone, even within the solar sphere, is the catchall.”

People Inc. has already been exploring the use of solar on its multifamily projects, including a 12-unit apartment building in Dante, a community that straddles the Russell-Dickenson county line. Each unit has its own panels, which provide 40% to 60% of their electricity. The rest comes from Appalachian Power.

“They have realized significant savings, enough that they notice,” Moormans said of the building’s tenants. “It makes it a desirable place for people to live.” 

It also illustrates the need for a more robust solar industry in the region, he said: If the array goes down, it takes hours for a technician to drive in from somewhere else.

“There’s a huge opportunity for people to start local businesses providing that service,” Moormans said.

Not far away, in Old Dominion Power territory, owners of multifamily buildings can install solar arrays and create shared solar programs that tenants can subscribe to, rather than having to designate individual solar panels for each unit. A 2020 law that passed alongside the broader shared solar legislation created this option for Old Dominion and Dominion Energy customers, but not for those in Appalachian Power’s service area.

So far, Lowry said, Old Dominion has had one inquiry about the multifamily program.

* * *

Next up: the General Assembly

The SCC work group, which was created by legislation sponsored by state Sens. Emmett Hanger, R-Augusta County, and John Edwards, D-Roanoke, will send its report to the General Assembly by the end of the month.

It doesn’t reach any conclusions, nor was it designed to. The report was intended to capture participants’ opinions and will leave it up to legislators to decide whether, and how, to expand shared solar into Southwest Virginia.

“What I’d like to see is basically a decision that’s grounded in economic reality,” Appalachian’s Amores said. “There are a lot – on both sides – a lot of laudable things that utility-scale solar provides, that shared solar provides. But for the limited purpose of creating public policy and ultimately paying for that public policy, if you’re not focused on what the ratepayer has to pay, the further you get away from that, the more you open yourself I think to legitimate debate, legitimate disagreement, and imposing your worldview on other people.

“Sometimes that happens. That’s a policy debate. But for our purposes, we’d like to keep our policy … focused on economic reality.”

Brandon Smithwood, senior director of policy at Dimension, believes the political timing is right for expansion.

“We’ll test the overall interest, but in the meetings I’ve had I think there’s genuine bipartisan interest within the General Assembly,” he said.

“I think the fact that there’s basically all parties except the utilities saying we should expand this, and you have the administration – hopefully the utilities come to the table and say, let’s work something out and have a bill we can all feel good about.”