In 2020, Virginia became the seventh US state to adopt energy storage procurement goals for utilities. This was achieved with the passage of the Virginia Clean Economy Act (VCEA) by the General Assembly. The Act aims to get the state to zero carbon emissions by 2050 and the state utilities to generate electricity from 100 per cent renewable energy sources by 2045. The Act also set one of the country’s largest energy storage targets at 3.1 GW by 2035 and directed the Virginia State Corporation Commission (SCC) to approve new energy storage projects up to the target. The target is split among the state’s two largest utilities—Appalachian Power Company (APCo) (American Electric Power utility) and Virginia Electric and Power Company (Dominion) (Dominion Energy utility)—with each of them required to petition the SCC for approval to construct or acquire 400 MW and 2,700 MW of energy storage resources (ESR) respectively by 2035.
In line with VCEA, the SCC started the energy storage rulemaking proceedings in June 2020 and published draft regulations in September 2020. In December 2020, the SCC adopted new regulations to ensure that the state’s utilities meet the VCEA storage targets. The regulations set interim targets and provide a framework for its implementation including competitive solicitations, behind-the-meter incentives, non-wires alternatives programmes (projects that uses non-traditional solutions, such as energy storage, to delay or remove the need for upgrade of transmission infrastructure) and peak demand reduction programmes (projects aimed at shifting time of use of electricity from one period to another for the grid’s overall economic and reliability benefit). The SCC has adopted a technology-neutral definition of energy storage referring to any technology that is capable of absorbing energy, storing that energy for a period of time, and re-delivering that energy after storage.
As per the regulations, APCo must construct or purchase 25 MW of energy storage capacity by December 31, 2025, followed by an additional 125 MW by the end of 2030 and a further 250 MW by the end of 2035. Meanwhile, Dominion must meet interim energy storage targets of 250 MW in 2025, 1,200 MW in 2030 and 2,700 MW in 2035. The regulations state that at least 35 per cent of energy storage facilities placed into service by APCo or Dominion must be purchased from a party other than the utility or owned by a party other than APCo or Dominion, with the capacity from such facilities sold to the utility.Although some stakeholders argued that the back-end loading of deployment targets may result in missing benefits of early deployment of energy storage, the SCC stated that the targets are designed to provide continuous development complementary to the VCEA. Also, the utilities are free to seek approval for amounts of energy storage above the interim targets.
Beginning in 2021, each utility will have to sponsor at least one competitive solicitation for energy storage resources per calendar year. It provides that the request for proposals (RfPs) must be available for public review for at least 60 days and provide information related to the size, type and timing of ESRs the utility is looking to contract. It must also provide bidders with access to relevant electric system data with confidentially safeguards. Given that distributed energy storage use on the electric system represents a largely new technology, the SCC found it reasonable to adopt a 60-day minimum notice period for RFPs instead of the 45 days proposed earlier. The utility may evaluate RfP responses based on any criteria it deems reasonable while considering the developer’s financial viability and capability, as well as the project’s location and impact on transmission system among other things.
APCo or Dominion must also submit annual renewable portfolio standard plans that include their progress toward meeting interim storage targets, and their goals of installing at least 10 per cent of such projects behind the meter. Behind-the-meter storage systems refer to energy storage systems that can provide energy directly to homes or businesses without going through an electric meter or interacting with the electric grid.
Utilities have to seek SCC approval for behind-the-meter incentives, the non-wires alternative programme and the peak demand reduction programme related to energy storage. In case the utility proposes to offer such incentives to customers through a demand-side management programme, the utility may seek approval through any existing processes for such programmes. Demand-side management programmes refer to energy efficiency, demand response, or peak shaving programmes for pilots approved by SCC that a utility may offer to customers.
All non-utility energy storage facilities (1 MW and above) have to obtain an SCC permit. Notably, the threshold for triggering permitting requirements for such facilities is set at 1 MW instead of 100 kW as originally proposed to appropriately balance the burden of compliance with the need to determine and monitor the full impact of these resources on the electric system. The conditions for an energy storage facility to obtain SCC approval are that it will not adversely impact the reliability of electric service provided by any regulated public utility, or any goal established by the Virginia Environmental Justice Act; and it is not contrary to the public interest. Such developers must establish their financial and technical capabilities as well as the details of the proposed project.
A licence must be obtained by any person seeking to conduct business as an energy storage aggregator from the SCC by submitting the requisite information as part of the application filing, including a USD250 registration fee. Further, the aggregator must comply with all initial and continuing requirements of the commission’s licensure process and any reasonable registration processes required by the utility in whose certificated service territory the aggregator intends to operate.
The SCC notes that it is aware that the Federal Energy Regulatory Commission’s proposed Order 2222 (which paves the way for aggregated distributed energy resources through aggregators to participate in wholesale power markets) will impact the deployment of energy storage and the participation of Virginia-sited energy storage in the wholesale markets, including through aggregation of smaller resources and behind-the-meter incentives.
The SCC will create a legislatively mandated task force to evaluate and analyse the regulatory, market and local barriers to the deployment of distribution and transmission-connected bulk ESRs to help integrate renewable energy into the grid, reduce costs for the electricity system, allow customers to deploy storage technologies to reduce their energy costs, and allow customers to participate in electricity markets for energy, capacity and ancillary services. The SCC has stated that the issues raised by the stakeholders during the proceeding of these regulations will be further addressed and evaluated by the task force. Net, net, Virginia is well poised to achieve its energy storage goals in the years to come.