An electric cooperative that operates a biomass electricity-generating plant in Halifax County hopes a proposed legislative amendment will allow the plant to sell its renewable energy credits in Virginia, instead of only out of state.
The roughly 50-megawatt NOVEC Energy Production Halifax County Biomass Plant began operating in 2013. Each year, it acquires 300,000 tons of fuel, primarily bark strippings, limbs and other material left over from forestry work, according to the Northern Virginia Electric Cooperative, which runs the plant through a subsidiary.
Burning that fuel generates enough electricity to power 16,000 homes, NOVEC says.
If state law changes to allow NOVEC to sell its renewable energy credits, or RECs, in Virginia, the not-for-profit co-op would have a new market for sales and the money would help pay the costs of running the plant.
It would also benefit consumers because a higher supply of renewable energy credits would theoretically lower the market price, reducing the cost of electricity, NOVEC says.
NOVEC President and CEO Dave Schleicher declined to offer specific revenue figures for how much money the sale of renewable energy credits currently generates, or an estimate of how being able to sell credits in Virginia might affect revenue.
He said the volatility of the market price of credits and the variable amount of electricity the plant produces based on the market price of other energy sources, such as natural gas, make it difficult to offer specific dollar amounts.
“For the most part, the renewable energy credit, it’s another source of revenue to keep the plant viable,” Schleicher said.
Generally speaking, biomass facilities create electricity by burning organic matter as fuel.
In 2021, there were 30 power generation facilities of varying sizes in Virginia categorized as having biomass as their primary fuel, according to the U.S. Environmental Protection Agency.
Some, like NOVEC’s Halifax plant or Dominion Energy’s Altavista, Hopewell and Southampton power stations, are fueled by wood. Others, such as the I-95 Energy/Resource Recovery Facility in Fairfax County, use garbage as fuel. Still others, such as a municipal facility in Martinsville, use landfill gas.
Biomass electricity generation is not without controversy. Proponents say it reduces dependence on fossil fuels by using renewable materials while benefiting the local economies from which the fuel is purchased. Opponents say it’s expensive and is more harmful to the environment than other sources such as wind or solar, although NOVEC argues its plant was designed to be environmentally friendly.
Because biomass is considered renewable energy, NOVEC can sell the Halifax plant’s output as renewable energy credits – but not in Virginia.
Renewable energy credits and standards
The Virginia Clean Economy Act, signed into law in 2020, mandated Dominion Energy and Appalachian Power, the state’s two largest investor-owned electric utilities, ramp up their carbon-free energy production in the coming decades while phasing out coal and biomass plants.
It also mandated Dominion and Appalachian maintain a certain minimum percentage of energy from renewable sources. This is called the renewable portfolio standard, or RPS.
The act doesn’t apply to NOVEC or other electric cooperatives, so the commonwealth doesn’t require them to maintain an RPS.
Because of that, NOVEC can’t sell its renewable energy credits in state, even though Dominion can sell credits from its biomass plants, Schleicher said. (Disclosure: Dominion is one of our donors but donors have no say in news decisions; see our policy. You can become a donor here.)
Appalachian Power does not own or operate any biomass plants.
“The logic was, if you’re excluded from the RPS standard, then you shouldn’t be able to benefit from the sale of renewable energy credits,” Schleicher said, explaining the history of the policy.
NOVEC says it’s the only utility in Virginia with a biomass plant that produces renewable energy credits but isn’t allowed to sell those credits in state.
Renewable energy credits are essentially a way of certifying the source and other characteristics of electricity generated by renewable methods.
Utilities can buy the credits to meet their renewable portfolio standards, or companies can buy them to meet their own voluntary goals or reduce their greenhouse gas emissions, according to the U.S. Energy Information Administration.
NOVEC primarily sells its Halifax plant’s credits to utilities in Maryland, but the political future of woody biomass isn’t guaranteed there, as some lawmakers seek to remove it from the list of energy sources that can count toward renewable portfolio standards.
The governor’s amendment
A bill that passed the Virginia General Assembly this year removes the requirement from the Virginia Clean Economy Act that Dominion retire its biomass electric generation facilities by the end of 2028.
The bill also lays out conditions for how such facilities can count as renewable energy sources for RPS purposes.
Furthermore, the legislation instructs the state Department of Forestry to convene an advisory panel to study the use of materials for biomass facilities and develop best practices for sustainable harvesting of biomass.
Del. Israel O’Quinn, R-Bristol, was the chief patron of the bill in the Virginia House; a companion bill introduced by Sen. Lynwood Lewis Jr., D-Accomack County, passed the Senate.
On Wednesday, Virginia legislators are scheduled to meet in Richmond to consider Gov. Glenn Youngkin’s vetoes and recommended amendments to bills.
One of four proposed amendments to the bill in question is geared toward NOVEC, not Dominion or Appalachian.
It would allow NOVEC to count the Halifax plant’s output as renewable energy in Virginia – if the co-op has at least 148 megawatts of renewable energy online elsewhere.
Schleicher, the co-op’s CEO, said the 148-megawatt requirement would essentially create the utility’s own renewable portfolio standard, akin to the mandates in place for Dominion and APCo.
If the amendment passes, what’s next?
The question remains: Where would NOVEC get another 148 megawatts of renewable energy?
“That’s what we have to go figure out. It’s not just sitting out there,” Schleicher said.
Excluding the Halifax plant, renewables currently account for little of NOVEC’s portfolio.
The new sources wouldn’t have to come from facilities owned by NOVEC, or even facilities within NOVEC’s service area of more than 175,000 homes and businesses in Northern Virginia.
They would just have to come from sources connected to PJM, the massive regional transmission network that coordinates the movement of wholesale electricity across all or part of 13 states plus Washington, D.C.
Schleicher said NOVEC would need to find a developer on a renewable energy project to work with. The developer would need to go through a standard process of having its project studied by PJM and added to the transmission system.
Schleicher said that likely would take at least three or four years.
Biomass and the environment
Looking at the bigger picture, biomass is not a large part of Virginia’s energy mix.
Its value as a source of renewable energy is a matter of debate.
Opponents of biomass electricity generation argue renewables are meant to be cleaner sources of energy such as solar and wind, not burning material.
Ivy Main is a lawyer who volunteers with the Virginia chapter of the Sierra Club, a nonprofit environmental advocacy organization, and serves as the chapter’s renewable energy co-chair. She has written about Virginia energy policy for more than 10 years on her website, Power for the People VA.
Main said that while woody biomass is renewable, it is highly polluting and expensive.
“It can’t compete with wind, solar, or methane gas, so no one is building new biomass plants today,” Main said in an email.
Selling renewable energy credits is the only way burning biomass makes financial sense for a utility, she said.
“The burning of woody biomass is bad for the climate, so the Sierra Club believes it should not earn any kind of subsidy from utility customers,” Main said.
She said the Sierra Club opposed allowing more woody biomass to qualify as renewable energy for RPS purposes and opposed removing the requirement that Dominion’s biomass plants close.
Furthermore, Main said the governor’s proposed amendment makes the new legislation worse.
“Not only does it encourage the burning of a carbon-intense fuel, but it asks Dominion and Appalachian Power customers to subsidize NOVEC’s biomass burning. The REC revenues would keep NOVEC’s rates lower, courtesy of Dominion and Appalachian customers,” Main said.
Other individuals and groups have criticized biomass facilities in general.
The Charlottesville-based Southern Environmental Law Center, for example, says wood-fuel biomass electricity generation is expensive, can pollute at least as much as coal-burning plants, and contributes to deforestation.
NOVEC says the Halifax facility was designed with the environment in mind – it meets stringent air-emissions regulations in part by capturing the particulate matter from burning fuel and turning that into fly ash, which it sells to farmers to improve their soil. It also uses effluent water from a nearby wastewater plant, rather than fresh water, to cool the facility.
The Halifax plant uses only leftovers from forestry operations, not newly cut timber, and the plant benefits the local economy by buying material from local businesses and landowners, saving them from having to dispose of it themselves, NOVEC says.
Without the Halifax plant, landowners likely would simply burn the leftover wood themselves, creating pollution, or let it rot in the field, creating methane, NOVEC says.
“The plant does have an environmental impact,” Schleicher said, “but our position is, compared to the alternatives for the local lumbering and forestry economy, the alternative would be open burning or decomposition out in the field, and we think this offers a more environmentally friendly alternative.”