Virginia Clean Economy Act Update


During its 2020 Session, the General Assembly passed and Governor Northam signed into law HB 1526/SB 851, the Virginia Clean Economy Act (VCEA or Act). The VCEA codified the clean energy directives included in Executive Order 43, issued in September of 2019. It facilitated Virginia’s entry into the Regional Greenhouse Gas Initiative (RGGI), incorporated Environmental Justice concepts into permitting processes, and required new measures to promote energy efficiency including setting a timetable for closing old fossil-fuel power plants and requiring energy to come from 100% renewable sources such as solar or wind.

The Act imposes penalties on energy producers that fail to meet guidelines and requires part of the proceeds of such penalties to fund job training and renewable energy programs in historically disadvantaged communities.

[clear]Specifically, the VCEA set the following goals:

  • Renewable Portfolio Standards ─ The Act requires Dominion Energy Virginia to be 100% carbon-free by 2045 and Appalachian Power to be 100% carbon-free by 2050. It also requires nearly all coal-fired plants to close by year-end 2024.
  • Energy Efficiency Standards ─ The Act declares energy efficiency pilot programs to be in the public interest and creates a new program to reduce the energy burden for low-income customers. The VCEA also sets an energy efficiency resource standard, requiring third-party review of whether energy companies meet savings goals.
  • Offshore Wind ─ The Act provides that 5,200 megawatts (MW) of offshore wind generation is in the public interest and requires Dominion Energy Virginia to prioritize hiring local workers from historically disadvantaged communities to work with the Commonwealth to advance apprenticeship and training. It also directs development of an environmental and fisheries mitigation plan.
  • Solar and Distributed Generation ─ The Act establishes that 16,000 MW of solar and onshore wind power is in the public interest. The VCEA expands “net metering” to advance rooftop solar across Virginia. It also requires Virginia’s largest energy companies to construct or acquire more than 3,100 MW of energy storage capacity (i.e., 2,700 MW and 400 MW for Dominion Energy Virginia and Appalachian power, respectively).

Energy Storage Regulations

On December 18, 2020, to further the VCEA’s energy storage goals and as required by Va. Code §56.1-585.5 E, the Virginia State Corporation Commission (SCC or Commission) publicized 20 VAC 5 Chapter 335 (Energy Storage Regulations or Regulations) governing deployment of energy storage resources.

The Energy Storage Regulations comply with the requirements of Subdivisions 1 and 2 of the VCEA by setting interim energy storage deployment targets, updating existing utility planning and procurement rules, and including programs and mechanisms to facilitate deployment of the energy storage resources, including competitive solicitations, behind-the-meter incentives, non-wire alternatives programs, and peak demand reduction programs.

Notably, the Regulations also provide for permitting and construction of non-utility-owned energy storage facilities to meet the requirements of Code §56.1-585.5 E that, after July 1, 2020, at least 35% of energy storage facilities placed into service be “(i) purchased by the public utility or (ii) owned by a party other than a public utility.

General Assembly 2021 Session: VCEA-Related Energy Storage Legislation

The 2021 General Assembly Session enacted a number of measures implementing the VCEA and facilitating energy storage deployment, including the following:

SB 1284 (Favola) ─ Commonwealth Clean Energy Policy. Establishes the Commonwealth Clean Energy Policy, replacing the Commonwealth Energy Policy. The bill sets out the energy policy and objectives of the Policy, which include: (i) the Commonwealth recognizes that effectively addressing climate change and enhancing resilience will advance the health, welfare, and safety of the residents of the Commonwealth and addressing climate change requires reducing greenhouse gas emissions across the Commonwealth's economy sufficient to reach net-zero emission by 2045 in all sectors, including the electric power, transportation, industrial, agricultural, building, and infrastructure sectors; (ii) the Commonwealth recognizes the need to promote environmental justice and ensure it is carried out throughout the Commonwealth and the need to address and prevent energy inequities in historically economically disadvantaged communities; and (iii) the Commonwealth must continue to prioritize economic competitiveness and workforce development in an equitable manner.

SB 1282 (Morrissey) ─ Greenhouse gas emissions inventory; regulations. Directs the Department of Environmental Quality (DEQ) to conduct a statewide baseline and projection inventory of all greenhouse gas emissions and to update such inventory every four years. The bill requires the inventory be published and included in the annual report of the State Air Pollution Control Board. It also authorizes the Board to adopt regulations necessary to collect the data needed to conduct, update, and maintain the inventory. The bill further exempts proprietary information collected by the DEQ from the mandatory disclosure requirements of the Virginia Freedom of Information Act.

HB 2148 (Willet) ─ Small renewable energy projects; energy storage. Includes in the definition of a "small renewable energy project" certain energy storage facilities and projects that include storage facility components. The bill provides that such facilities are eligible for “permit-by-rule” authorization and special review, and inspection requirements. It directs the DEQ to publish initial implementing regulations by January 1, 2022.

HB 2006 (Heretick)/SB1201 (Petersen) ─ Tax exemptions for energy storage systems. Declares that energy storage systems are included in the definition of certified pollution control equipment and facilities, making energy storage systems exempt from state and local taxation. The bill defines "energy storage system" as equipment, facilities, or devices that are capable of absorbing energy, storing it for a period of time, and redelivering the energy after storage.” The tax exemption applies only to certain projects with alternating current (AC) storage capacity of more than 5 MW and less than 150 MW.

The bill also allows localities to assess a revenue-share of up to $1400 per MW on energy storage systems. It provides that, on July 1, 2026, and every five years thereafter, the maximum amount of the revenue-share that a locality may impose on energy storage systems, as well as certain solar energy projects, shall be increased by 10%. No increase may be made to any revenue-share imposed by a locality on a solar energy project or energy storage systems for which an application has been filed with the locality and regarding which such application has been approved prior to January 1, 2021. The bill defines energy storage systems as electric suppliers whose property shall be assessed by the State Corporation Commission.

HB 2201 (Jones)/SB 1207 (Barker) ─ Solar and energy storage projects; siting agreements and special exceptions throughout the Commonwealth. Expands existing provisions related to siting agreements and zoning special exceptions for solar projects located in an opportunity zone to include energy storage projects and makes the provisions statewide. The bill’s provisions shall not apply to any energy storage project that has received zoning and site plan approval, preliminary or otherwise, from the host locality prior to January 1, 2021. The bill also provides that its provisions shall not become effective with respect to energy storage projects unless the General Assembly approves legislation that authorizes localities to adopt an ordinance for taxation of energy storage projects, such as solar projects with a local option for machinery and tools tax or solar revenue share.


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