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Appalachian Power deal lifts public entities’ solar cap


Tony Smith knew he and his allies needed to smash some intransigent obstacles to follow through on a vow last summer to deliver 20 solar projects in the coalfield counties of southwest Virginia by 2023.

The solar trailblazer is beaming now that a giant blockage has been shattered.

Appalachian Power announced Wednesday that a deal it has negotiated with public, or non-jurisdictional, customers in its territory will significantly boost long-stalled access to less-expensive solar. 

Now it’s up to the 162 public entities represented in the negotiations to sign individual contracts with the utility. The four-year pact is retroactive to January.

“It’s very big — a tectonic shift,” said Smith, president of Secure Futures Solar in Staunton, noting the utility opposition and regulatory and legislative barriers to solar in the state’s not too distant past. “Appalachian Power was the most reluctant to get on the solar bandwagon.”

The new contract aligns with more generous parameters for net metering and third-party power purchase agreements outlined in the 2020 Virginia Clean Economy and the Solar Freedom acts, which Democratic Gov. Ralph Northam signed into law. 

Until now, the cap on net metering for schools and municipalities in Appalachian Power’s service area stood at puny 3 megawatts, a limit that maxed out by 2019. Now, that cap is 6% of peak load or about 201 MW. Of those, 1% are reserved for low-income customers and roughly 167 MW are available to everybody else.

Also, a single project can be as large as 3 MW, a threefold increase over the previous limit.

In tandem, a pilot program covering third-party power purchase agreements is capped at 40 MW. The last contract was restrictive and unclear on that front, saying only that public ratepayers must own and operate their solar array. That’s cost-prohibitive for schools and local governments.

Briefly, net metering allows customers to offset electric bills by sending energy their solar panels generate back to the grid.

Power purchase agreements, or PPAs, let a third party own, operate and maintain solar arrays on behalf of a customer. They are crucial for tax-exempt and public entities without the upfront capital to invest in panels or the ability to claim tax credits that make the projects financially viable.

Smith is convinced Appalachian Power was swayed into cooperating because Secure Futures, Appalachian Voices and other kindred spirits shepherded measures through the General Assembly this year clarifying that localities are eligible for the solar PPA pilot program spelled out in the 2020 law.

Two Democrats, Sen. John Edwards of Roanoke and Del. Chris Hurst of Blacksburg, sponsored legislation in their respective chambers. Both Senate Bill 1420 and House Bill 2034 passed unanimously, emerging as one law.  

“Appalachian Power wasn’t going to step up. Senate Bill 1420 helped us wield the club we needed,” Smith said about the investor-owned utility. “Had it not been for that, the utility would have told the public authorities, ‘We’ll give you a few megawatts of net metering but you will have to pay for it.’”

The Clean Economy Act requires Appalachian Power to procure 600 MW of solar by 2030. Appalachian Power, a subsidiary of American Electric Power, serves 537,055 Virginia customers via 556,999 meters. 

After the contract announcement, Appalachian Power spokesperson Teresa Hamilton Hall said it reflects the utility’s commitment to providing public authority customers with reliable service at a reasonable price “during the transition to a 100% renewable future.”

Many Virginians are unaware that schools, town halls, libraries, landfills, jails, wastewater treatment plants and other public authorities have to negotiate their own energy contracts with utilities. Utility contracts with public authorities are privately negotiated and the content supersedes state code.

Smith and others were pleased when negotiators in Dominion Energy territory settled on what they called an elegant solution during their latest contract talks. Public authorities are allowed to follow net metering and PPA measures that apply to residential, commercial and other everyday, or jurisdictional, customers.

Across the country, Smith said, public schools and municipalities have trended as the earliest adopters of solar and lead the way with power purchase agreements.

“Public school systems, especially, are cash-starved,” he said. “Utilities need to recognize that these are tools to help some of their biggest customers get more sustainable.”

Workers install solar panels at Washington and Lee University in Lexington, Virginia. Credit: Secure Futures / Courtesy

Building a solar economy

Will Cleveland, a senior attorney with the Southern Environmental Law Center’s Charlottesville office, called the contract a “big win” because, in addition to saving schools and other entities money, it can help to resurrect a struggling economy with steady, high-paying jobs.

He noted that while the legislation might or might not have prompted Appalachian Power to act, “there was a lot more interest in solar in the negotiating room” because schools and municipalities have educated themselves about its possibilities.

The Edwards-Hurst law, he said, “is just one example of a growing interest in allowing localities to reap the benefits of going solar.”

Cleveland wasn’t at the digital negotiating table but he did attend the webinar where Appalachian Power announced contract details. 

At one point, Jennifer Sebastian, the utility’s regulatory case manager, pointed out that net metering inflicts extra costs on those not participating in the program. Net metering customers are not paying fixed costs “and those fixed costs can be significant and shifted to other customers.”  

Cleveland, Smith and others have long maintained that net metering customers are not placing any financial burden on other customers.

“Utilities are still weaponizing the talking point that distributed generation requires a cost shift, even though they have no data to prove that,” Cleveland said. “Virginia utilities have not yet fully realized the value solar can provide to them and their operations.”

Net metering numbers built into the contract will be reviewed by the State Corporation Commission in 2024 or when capacity reaches half of the 6% allowed, whichever comes first. The Clean Economy Act requires utility regulators to conduct a full spectrum review. For example, commissioners will evaluate whether the cap is too high or too low. 

The Virginia Municipal League and the Virginia Association of Counties created the steering committee in 1978 to represent localities in negotiations with Appalachian Power.

The previous four-year contract expired a year ago. Talks over the new one dragged on longer than expected, partially due to the havoc brought on by the coronavirus pandemic. The contract took a back seat when the health crisis forced government leaders to juggle their budgets. 

Carol Davis, the sustainability manager for the town of Blacksburg, joined the steering committee last fall. She moved up from vice chair to acting chair a few months ago after Rocky Mount town manager C. James Ervin retired in April. 

“People seemed to have a lot of mistrust and concern that at the last minute, Appalachian Power would snatch away the ball,” Davis said about fears public entities would lose out on net metering and power purchase agreements. “But absolutely nothing I saw said that those would be at risk.”

All along, she said, the utility had maintained the new contract would honor the parameters laid out in the Clean Economy Act.

The new contract gives public authorities leeway to comply with state laws enacted during its duration. For instance, Davis said, municipalities would be able to act if the General Assembly enabled virtual net metering for solar on capped landfills.

“That way we won’t get into that bind again,” she said.

Just 22 kW of the nearly 34,000 kW of solar installed at K-12 schools across Virginia is in Appalachian Power territory, according to research by the nonprofit Generation 180. Credit: Generation 180 / Courtesy

‘Huge weight off our shoulders’

Chelsea Barnes, who has risen to legislative director for Appalachian Voices, has pursued solar equity for southwest Virginians since the advocacy organization hired her in January 2019.

“I’m ecstatic,” said Barnes, who lives in Wise County. “This is a huge weight off our shoulders. It will break open the floodgates for solar here.”

She expects to see a big burst of solar activity this summer. 

A portion of that will be the projects Smith’s company, Secure Futures, is developing at the behest of the Solar Workgroup of Southwest Virginia. The solar developer is a good fit for that geography because it’s west of Charlottesville in the Blue Ridge Mountains. 

In early September, Smith announced a 5-5-10 “plan of attack.” That is, the public-private partnership plans to construct 12 MW of solar arrays at five commercial buildings, five multifamily housing units and 10 schools across the seven counties by 2023.

Barnes’ colleague, Wise County native Adam Wells, spearheaded the workgroup in 2016, intent on turning solar into an economic catalyst in a coal-rich region called upon to power a country that now often regards it as an afterthought.

Appalachian Voices and the rest of the workgroup pivoted to the new collaborative initiative, appropriately named Securing Solar for Southwest Virginia, after their initial efforts to install 18 solar projects totaling 4.2 MW were stymied over and over by a raft of legislative, regulatory and cultural hurdles. They persevered because they insisted their seven-county region deserved to partake of the fastest-growing energy source in the country.

One original project that will in all likelihood advance because of the new contract is a 720-kilowatt array destined for the roof of Ridgeview High School. It has been on hold since 2018, thus delaying the opportunity for Dickenson County Public Schools to save an estimated $10,000 a year on utility bills and offer hands-on training for more than 1,000 students.

Middle and high schoolers are housed in separate wings of a building constructed in 2015 to accommodate both academic and technical career tracks. Rooftop solar would be an educational boon for students enrolled in electives such as robotics, pre-engineering, and sustainable and renewable technologies.

Tish Tablan, who directs the Solar for All Schools program at Charlottesville-based Generation 180, is thrilled that schools in southwest Virginia have the opportunity to catch up with solar progress in the rest of the state.

As it stands now, just 22 kW of the nearly 34,000 kW of solar installed at K-12 schools across Virginia are in Appalachian Power territory. That’s not even 1% of the total, according to research conducted through January by Generation 180.

“Communities in southwest Virginia have been unfairly denied equal access to solar for years,” Tablan said. “As a result, the amount of solar installed on all the schools in the region is less than what I could install on my own home.” 

Smith, who founded Secure Futures in 2004, has been immersed in solar since 1978 when he created his first job in the industry with the Philadelphia Solar Energy Association.

He has watched power purchase agreements gain a toehold in more than half the states since California “invented” them almost two decades ago. In 2011, his company completed the first such deal in Virginia at Eastern Mennonite University in Harrisonburg before the state even had an official policy.

Smith is optimistic that the recent headway in southwest Virginia will percolate across the country’s southeastern states.

“PPA legislation is critical to building up the market for solar,” he said. “States that have them have higher market penetration.”

Utilities need to stop dismissing solar as an “if you’re getting something, we’re losing something” proposition, Smith said. Instead of clinging to a monopoly model, they need to embrace a smart grid that fosters a transition to distributed generation.

“It’s the wave of the future,” he said. “And it’s happening very fast.”

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