A Dominion Energy employee surveys the natural gas-fired Greensville County Power Station which began commercial operations in December 2018. (Dominion Energy)
This September, Gov. Ralph Northam took the stage at the inaugural Virginia Clean Energy Summit to announce he was committing the state to a carbon-free grid by 2050.
“I always say that I want Virginia to be a welcoming place, with our lights on and our doors open,” he said. “Well, I also want those lights to be powered by clean energy.”
But as the governor received a standing ovation, elsewhere in the commonwealth work was underway to massively expand infrastructure supporting a very different — and decidedly not carbon-free — type of energy: natural gas.
The past year has seen a flow of investments in natural gas in Virginia, from ongoing work on the Mountain Valley Pipeline and continued efforts to construct the Atlantic Coast Pipeline to plans by state utilities and private investors to build up to 12 new natural gas plants.
Now, as the General Assembly prepares to convene this January under new Democratic leadership, lawmakers are struggling to chart a course for Virginia’s energy policy in a state split between carbon-free goals and intensive natural gas investment.
“I would rather we not (build new natural gas plants),” said Sen. Jennifer McClellan, D-Richmond, shortly after she and Democratic Dels. Rip Sullivan of Fairfax, Jennifer Carroll Foy of Prince William and Alfonso Lopez of Arlington introduced a sweeping proposal to transition Virginia to clean energy. “But I think we are going to have to make sure that while we’re in this transition, we can meet demand.”
Utilities, and a handful of private investors, have contended that to meet that demand and keep Virginia’s lights on, natural gas is a necessary bridge. But many clean energy advocates and industry analysts say there are other options — and that continuing to build out the natural gas grid bears environmental and financial risks for the state.
“The economics in and of itself would seem to indicate that we’re transitioning away” from traditional forms of generation, said Harry Godfrey, executive director of Virginia Advanced Energy Economy, an industry group that advocates for clean energy on economic and business grounds.
“I think that should raise real questions in regulators’ minds and in the minds of consumers about whether or not investing in a set of assets whose economics are increasingly in question makes the most sense for the benefit of ratepayers,” he said. “Is the only way to meet an identified need by building a new power plant, or are there other responses?”
A bridge to renewables — or nowhere?
Over the past five years, Virginia has seen a burst of interest in renewables: across the state more than 17 gigawatts of solar are in various stages of development, Dominion Energy is gearing up to build a 2.6-gigawatt offshore wind farm (set to be the nation’s largest), and even onshore wind is gathering steam with projects in Botetourt and Pulaski counties.
Simultaneously, however, investment is continuing to pour into natural gas.
Two large-scale interstate pipelines, the 303-mile Mountain Valley and the 600-mile Atlantic Coast, have grabbed most of the attention. Controversial projects both, the pipelines have been justified by developers as necessary to meet mounting energy demand.
But the pipelines are only the tip of the iceberg. Statewide, natural gas plant construction has accelerated. Over the past decade, Dominion has poured billions into new facilities powered with natural gas, including the Brunswick, Greensville and Warren County power stations, while also converting coal units to gas. More are on the way: plans submitted by the utility to the state since 2018 have called for the construction of eight to 10 natural gas plants over the next few decades, with specific projects announced in Pittsylvania and Chesterfield.
Private investors have also taken notice: in Charles City County, two projects are underway by separate backers to build the 1,600-megawatt Chickahominy Power Station and the 1,060-megawatt C4GT plant, both natural gas-fueled merchant generators betting that their gamble on the fuel will reap dividends.
Dominion declined to provide comments for this story, citing its ongoing policy of not speaking with the Virginia Mercury. But in statements to other news outlets, the utility has justified the need for new natural gas plants to “fill the gap of the intermittency of renewables” and meet demand.
Whether that demand exists is questionable — an investigation earlier this month by S&P Global Market Intelligence found that the utility “has consistently over-forecast” the need for new capacity. (Dominion abruptly and without explanation canceled a request for proposals to add 1.5 gigawatts of energy to its fleet the day after the report.) Nevertheless, lawmakers have historically left such technical determinations to the company itself and regulators at the State Corporation Commission to resolve.
Until now. With climate change increasing public attention to energy, the once-arcane field of policy is rapidly becoming fertile ground for politics. And on no issue may Virginia legislators face as much tension as natural gas, where the gap between the state’s carbon goals and its actions is unusually wide.
‘One or the other’
For legislators, if the state’s natural gas expansion is the rock, then Northam’s September executive order committing Virginia to a carbon-free grid by 2050 puts them in a hard place. If the state is to meet that goal, all of its currently operating natural gas plants have only 30 years left in their lives, while those still in the planning pipeline will have less, perhaps just over two decades.
For natural gas plants, that’s an unusually short amount of time. While the U.S. Energy Information Administration puts the average age of such plants nationwide at 22 years, PJM has reported that on average, natural gas units within its territory last 48 years, and Dominion has a number of facilities powered by the fuel that were built in the early 1990s and are still in operation.
What that means, said Will Cleveland, a lawyer with the Southern Environmental Law Center who has challenged many of Dominion’s plans before the State Corporation Commission, is that new natural gas facilities are likely to become “stranded costs” — infrastructure that has been built but becomes either useless or redundant before the end of its life, and before users have finished paying it off. In simple terms, a facility might no longer be running, but its cost would still be factored into a customer’s bill.
When it comes to such new plants, said Cleveland, either “you are knowingly and deliberately saddling customers with a stranded cost, or you’re not serious about meeting the governor’s objectives. It’s one or the other.”
Long-term, “gas has a lot more problems in it than the industry and lawmakers have addressed,” said Thomas Hadwin, a former utility executive who now lives in Waynesboro. “We’re going to be paying for these things a long, long time whether they’re useful or not.”
Northam’s office did not respond to requests for comment on how natural gas development fits with the governor’s goals.
Further complicating the picture is the prospect of Virginia joining the Regional Greenhouse Gas Initiative, a cap-and-trade market that seeks to reduce carbon emissions throughout New England and the Mid-Atlantic. Republicans blocked the state’s membership last year, but new Democratic majorities make it likely that Virginia will commit to the coalition in 2020.
Under RGGI, all major carbon emitters in the power sector would be required to purchase emissions allowances at auction. Not only would that add extra costs to any natural gas facility, but, Hadwin warned, carbon-emitting private generators like the Chickahominy Power Station and C4GT could put further strain on utilities by cutting into the pool of allowances.
“These two merchant generators going in would cost utility ratepayers in the state a lot in excess charges if they have to buy offsets for the carbon plants,” said Hadwin. “There’s a lot of downsides that I don’t think the regulator has considered.”
But in a regulatory environment that largely assesses risk in financial rather than environmental terms, few mechanisms exist to determine the true costs of new fossil fuel development.
That’s particularly true when the development is being undertaken by private investors rather than utilities. Merchant generators still must obtain a certificate of public convenience and necessity from the State Corporation Commission before embarking on a project, but the scrutiny they face and the standards they must meet are far less than those borne by utilities.
The logic is that the investors themselves, rather than ordinary people paying electric bills, bear the brunt of the risks if the effort fails. As hearing examiner Ann Berkebile wrote in her report on C4GT’s application for its certificate in 2017, “unlike a regulated public utility whose costs of constructing a generation facility are passed on to ratepayers, C4GT is not required to establish that the facility is required by the public convenience and necessity as a condition of approval.”
But in a world where emissions have a price, and where they are increasingly seen as a public burden that taxpayer funds must go to reduce, the calculations have shifted.
That’s evident in McClellan’s own stance: in 2017, the senator wrote a letter in support of the C4GT plant in Charles City County, citing the economic benefits it would bring. Since then, however, she said her views have changed in light of residents’ concerns and the announcement of the neighboring Chickahominy plant.
Still, to some residents and clean energy advocates, the impression left is that no one in Virginia is minding the store.
“We ought to be asking all the hard questions, and we’re not doing it,” said Lynn Wilson, a Henrico resident who opposes the Chickahominy Power Station and C4GT projects. “There’s not even a mechanism for doing it.”
One such mechanism that’s already been proposed is a dramatic one: an outright ban on further fossil fuel development. The idea is part of Green New Deal legislation put forward by Sam Rasoul, D-Roanoke, and groups like Food and Water Watch are also supporting such a measure.
But whether a moratorium has enough political currency to pass the General Assembly is uncertain; notably, the Clean Economy Act being championed by McClellan, Carroll Foy, Sullivan and Lopez contains no such prohibition.
“This bill doesn’t necessarily preclude” new natural gas plant construction, said Carroll Foy. “We leave that open.”
CORRECTION: This story has been updated to correct Lynn Wilson’s residence. She lives in Henrico, not Charles City County.
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