Virginia regulators order Dominion to open solar build to competitive bids

Dive Brief:

The Virginia State Corporation Commission (VSCC) ordered Dominion Virginia power this week to look to third party developers to build its first utility-scale solar project, rather than building the new array itself with ratepayer dollars. A new state law requires the vertically integrated utility to show regulators whether it has lower-cost options.
Dominion proposed acting as its own developer in building a 20 MW solar installation at a cost of $2,350/kW. It projected the project would have a 22% capacity factor. Because the utility did not submit any competing offers with this proposal, the commission voted to reject it, and ordered the utility to issue a request for bids from independent developers.
The VSCC order clarifies the regulators’ position on the issue by specifically indicating an independent developer may build and own the solar project, and contract with Dominion for its output. The project would be the first solar power purchase agreement in Virginia.

Dive Insight:

Advocates argue the price of solar is low enough to generate less costly electricity than Dominion’s plans call for, especially after the regulated utility’s rate of return on the project is added. Others argue independent power producers will not be able to compete because Virginia does not have net energy metering or renewable energy credits.

The commission was concerned with the installation’s capacity factor, which is the percent of the year’s total hours the installation will generate electricity. In 2014, U.S. nuclear plants’ average capacity factor was 91.7%, while coal plants hit 60.9%. Wind was at 33.9%. Utility-scale solar photovoltaic plants like the one Dominion proposed were at 27.8%.

Solar backers point out that because PV plants peak their generation during midday, they can meet a significant portion of the utility's daytime demand cheaper and with fewer emissions than natural gas peaker plants.

Dominion can still pursue the option to build the 20 MW installation itself, but will now have to compete with third party providers to offer the lowest price.