The Virginia General Assembly has passed legislation that aims to promote new energy storage investments in the commonwealth.
Energy storage facilities store electricity during off-peak hours when it’s cheaper to generate and deploy it during high-demand periods when it would be more expensive to generate otherwise.
Supporters say such facilities can help smooth out the highs and lows of electricity demand — particularly as more energy comes from renewable sources such as solar and wind that generate power intermittently — and could potentially reduce the need for new power plants.
“With the long-term benefits of this technology, it’s important that Virginia find ways to attract these technologies into the commonwealth, and it’s my belief that the act of passing this bill will go a long way in doing that,” Del. Rip Sullivan Jr., D-Fairfax County, said at a Jan. 28 House subcommittee meeting during discussion of his HB 2537.
The push for more storage comes as Virginia faces rapidly rising electricity demand, thanks largely to the growth in data centers and artificial intelligence.
Sullivan’s bill and a companion bill, SB 1394, by Sen. Lamont Bagby, D-Richmond, raise the targets for how much new energy storage Virginia’s two largest electric utilities, Dominion Energy and Appalachian Power, must propose to add to their portfolios over the next 20 years.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
Energy storage technologies vary and include using batteries, storing heat or cold for later use, or managing reservoirs of water or compressed air that can be released as needed to spin electricity-generating turbines.
Energy storage systems can be used regularly to manage the ups and downs of electricity demand, or they can be specialized to provide extra reliability and backup power for specific buildings or more outage-prone parts of the grid.
Hydropower energy storage — in which water is pumped into a reservoir, then released to spin turbines — has been around for decades. Two notable examples in Virginia are Dominion Energy’s Bath County Pumped Storage Station and Appalachian Power’s Smith Mountain Project.
As battery technology becomes more sophisticated, batteries are becoming more commonly used in energy storage. Among the first utility-scale battery energy storage systems to come online in Virginia were a 2-megawatt, eight-hour Rappahannock Electric Cooperative-owned project in Spotsylvania County in 2021 and a 12-megawatt project at a Dominion Energy solar facility in Powhatan County in 2022. Appalachian Power last year received state regulatory approval to build a battery energy storage system in Southwest Virginia.
Energy storage targets are higher but flexible
Dominion Energy and Appalachian Power already have goals for planning to build, acquire or procure new energy storage that are legally mandated by the Virginia Clean Economy Act, passed in 2020.
Sullivan’s and Bagby’s bills more than triple the amount of storage that the utilities must propose to state regulators over the next two decades.
The bills also create a distinction in Virginia law between short-duration energy storage and long-duration energy storage. Generally speaking, long-duration storage holds power for more than 10 hours, while short-duration storage holds it for less time.
Appalachian and Dominion’s combined target now increases from adding 3,100 megawatts of new energy storage by the end of 2035 to adding 10,000 megawatts of short- and long-duration energy storage by the end of 2045.
The target is not set in stone. The new law gives the State Corporation Commission, which regulates utilities in Virginia, the oversight to change the utilities’ goals depending on how “technically viable” the storage technology is and how “reasonably achievable” the goals turn out to be.
Chrissy Noonan, representing Dominion Energy, said at a Jan. 28 House subcommittee meeting that long-duration energy storage “could be an important tool for reliability going forward” and praised how the legislation would handle the new targets.
“What this bill does is it allows us to really study long-duration energy storage technology, and ultimately, after that technology demonstration, the [State Corporation Commission] will have full authority to agree with the targets that are set in the code or alter them up or down,” Noonan said. “And we think that’s the right approach.”
Following its passage in the House and Senate, the legislation now heads to Gov. Glenn Youngkin for him to sign, veto or amend.
Dominion, Appalachian developing energy storage
Dominion Energy already operates a massive energy storage facility that is one of the largest pumped hydropower storage stations in the world: the Bath County Pumped Storage Station.
It first began operating in 1985. The station has a maximum generation capacity of about 3,000 megawatts and helps balance electricity demand for millions of homes and businesses across six states, according to Dominion.
It consists of two reservoirs. Water is pumped up into the upper reservoir during off-peak hours, then released into the lower reservoir — spinning turbines along the way — during periods of higher demand.
Appalachian Power has been operating the 636-megawatt Smith Mountain Project, the pumped storage hydroelectric facility that created Smith Mountain and Leesville lakes for its two reservoirs, since the 1960s.
When it comes to newer battery energy storage, Dominion has four facilities that are operational, but all of them, except for a 20-megawatt, four-hour system in Chesterfield County, pre-date the Virginia Clean Economy Act and therefore don’t count toward the law’s targets.
In late 2023, the utility broke ground on a 50-megawatt storage system at the Dulles International Airport that will be paired with 100 megawatts of solar generation capacity.
Three other Dominion projects recently received state approval, including two that focus on long-duration energy storage.
One is an 8.94-megawatt battery that will be capable of discharging electricity for 100 hours at a gas-fired power plant in Chesterfield County.
The other is a 1.5-megawatt battery to provide 10 hours of backup power for Virginia State University’s multipurpose center.
In all, Dominion has asked the State Corporation Commission, which regulates utilities in Virginia, for permission to build about 98 megawatts of company-owned energy storage and another 459 megawatts to be bought through power purchase agreements in order to meet VCEA goals.
Appalachian Power is set to build a 7.5-megawatt, four-hour battery energy storage project across two sites in Grayson and Smyth counties. The utility says it will improve reliability for customers on its Glade-Whitetop circuit.
Both utilities are actively soliciting bids for new energy storage projects.
Sullivan said that passing his and Bagby’s legislation increasing energy storage targets sends a signal to developers that Virginia wants to be “a real national leader” in this area.
Technology expanding beyond batteries
One example of such a developer is Toronto-based Hydrostor. Rather than focusing on batteries, it specializes in long-duration compressed-air storage, in which air is pumped into large underground spaces and then released to spin turbines.
“We compress that air, remove the heat, take that cold air and push it into a purpose-built cavern below ground where it will be stored,” said Scott Bolton, Hydrostor’s executive vice president for global policy and regulatory affairs. “When it’s time to generate electricity, we’ll release some water into that cavern. That’s going to push that air back up, recombine with the heat, and spin a turbine and make electricity.”
Hydrostor’s facilities would be connected to the electric grid. While they, like other energy storage solutions, would use more electricity than they would provide later, the idea is that they would take in cheaper electricity and push it back out later when it would otherwise be more expensive to generate, such as in the evenings when consumer demand is high but solar facilities no longer produce power.
Solar and wind power sources only produce electricity when the sun is shining or the wind is blowing. Storage helps make that produced energy available during other times, but as electricity demand increases, storage capacity will need to increase to help meet that demand, Bolton said.
“Electricity has always had that disadvantage of not being stored. You have to use it in real time. … The storage in electricity has been a holy grail item since the invention of the light bulb,” he said.
Hydrostor has an operational 2-megawatt facility in Canada that it uses to demonstrate its technology.
It’s also developing a facility in Australia and a 500-megawatt energy storage facility in California called the Willow Rock Energy Center.
Bolton said Hydrostor has an eye on Virginia, too.
“It has a lot of growth in demand and certainly it’s starting to lay the groundwork from a public policy basis to send signals to storage developers that Virginia’s open for business,” he said.
The company’s 500-megawatt facility requires an above-ground footprint of about 100 acres, Bolton said.
As local governments increasingly resist approving new solar projects, one oft-cited reason is that such projects use up rural land, which is valued for its beauty and agricultural use. Solar projects vary in size, but it’s not uncommon for a facility of hundreds of megawatts to require thousands of acres of land.
Energy storage facilities could reduce the need for new sources of power generation such as solar farms, which means they also could help reduce the amount of land impacted, said Greg Habeeb, president of Gentry Locke Consulting and a lobbyist for Hydrostor.
“The idea of being able to site a 500-megawatt facility on 100 acres instead of 3,000 acres is very intriguing to me,” Habeeb said.
The question of cost remains
Everything comes with a price tag, and one important question is how much it will cost to build new long-duration energy storage in Virginia.
Bolton said while Hydrostor could produce such facilities at various sizes to match market demand, the company sees 500-megawatt facilities, such as Willow Rock in California, as the company’s standard.
That project has an estimated price tag of $1.5 billion. It’s backed by a $1.76 billion loan commitment from the U.S. Department of Energy to cover the principal cost plus interest.
That conditional loan commitment was announced in early January, before President Donald Trump took office. One of Trump’s first executive orders was to pause federal funding of renewable energy projects pending further administrative review.
Hydrostor spokesperson Emily Smith said that the company ultimately expects that the Department of Energy will support Willow Rock’s loan “based on its contributions to energy reliability and resiliency throughout the region.”
“If we aren’t able to execute on the conditional loan commitment, we would look to the alternative debt options for funding on the project,” Smith said.
At the January House subcommittee meeting, Brett Vassey, president and CEO of the Virginia Manufacturers Association, said his organization represents more than 6,000 manufacturing facilities, including some involved in energy storage technology.
Without referencing any specific project or proposal, he urged lawmakers to ensure that cost controls are in place.
“It’s a great idea to experiment with new technology if it’s your money, but you’re experimenting with our money because it passes directly through to the consumer,” Vassey said.
As a Senate committee discussed the legislation in February, Sen. Bill DeSteph, R-Virginia Beach, asked how much energy storage projects would cost.
His question echoed a concern frequently voiced by Republican lawmakers during this General Assembly session that the requirements of the Virginia Clean Economy Act are raising energy prices for Virginians.
“We do know that the costs are going to be passed on to the ratepayers,” DeSteph said.
Democrats have maintained that transitioning to renewable energy will, among other things, lower energy prices in the long run by reducing fuel costs and making the commonwealth less reliant on imported electricity.
“The answer is, it depends,” Senate Majority Leader Scott Surovell, D-Fairfax County, said in reply to DeSteph’s question. “We’ve directed the SCC to figure out whether this is feasible at a reasonable cost.”
Correction, 9:10 a.m., Feb. 25: A previous version of this story incorrectly spelled the first name of Brett Vassey, president and CEO of the Virginia Manufacturers Association.