Virginia’s solar boom over the past five years can be attributed to eager developers that have entered the market to gain market share before the state finalized key solar legislations.
Virginia’s bold RPS goal, combined with lucrative benefits for large-scale solar have made it one of the emerging states for solar today in the United States.
The Virginia Clean Economy Act led to the recent growth in solar across the state. Enacted in 2020, the act established the first renewable portfolio standard (RPS) and solar target for Virginia. The Act requires Virginia’s two largest utilities, Dominion Energy and Appalachian Power, to source 100% of their electricity from renewables by 2040 and 2050 respectively. In addition, Dominion Energy is required to procure at least one percent of their RPS program requirements from solar, wind, or anaerobic digesters each year. Lastly, there is a target to acquire 16,100 megawatt (MW) of solar by 2035 in order to serve public entities, such as schools and municipalities.
The bill has placed measures to ensure that Dominion Energy and Appalachian Power meet their targets on time. If either utility does not meet the requirements by the scheduled year, they will be required to pay a deficiency payment or purchase renewable energy certificates (RECs). From 2021 to 2024, both utilities can source renewable energy credits (REC) from any renewable energy project located in Virginia or within the PJM wholesale electricity market. In addition, the Virginia State Corporation Commission (SSC) is currently in the process of establishing the state’s first solar REC (SREC) market.
Lucrative incentives for utility and large-scale commercial solar projects have attracted many developers to the state. As of Q3 2021, sPower, a solar development company jointly-owned by AES and the Alberta Investment Management Corporation (AIMco), leads the market at 500 MW of solar capacity installed. This is followed by Dominion Energy and Energix, at 474 and 236 MW installed respectively.
While there are many direct incentives for utility and large-scale commercial solar projects, the same is not the case for residential or small-scale commercial solar. This means solar power purchase agreement (PPA) prices are generally unfavorable for residential and small commercial system sizes in Virginia. In addition, relatively low commercial retail prices make it challenging for solar to be competitive in the state.
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Virginia Solar Market Report
The DG+ Virginia Solar Report provides an overview on how new solar incentives and mandates are driving the solar boom in this up-and-coming state.