Legislation aims to reduce barriers for energy storage projects

In 2020, lawmakers seeking to speed the development of renewables and wean Virginia off fossil fuels made a host of changes to state law that aimed to smooth local approvals of large-scale solar farms. This year, they’re wielding the same tools to encourage the growth of energy storage. 

“This is really a logical next step,” said Del. Rodney Willett, D-Henrico, a patron of one of the measures. “Battery storage is a key element in the broader clean energy picture.”

A rapidly evolving technology, storage — a label that encompasses not only batteries but also more traditional approaches like reservoir-based pumped storage — is seen as the linchpin of a renewable energy grid. Utilities have long struggled with the intermittency of solar and wind—  their ability to generate power based on when and how much the sun is shining or the wind blowing. Storage, because of its ability to retain energy and then dispatch it on command, has become one of the most popular solutions to fill that gap and is increasingly being coupled with solar as renewables companies develop new projects.

During the 2020 session, Democratic majorities in the House of Delegates and Senate declared the development of 3,100 megawatts of energy storage by 2035 to be in the public interest as part of the sweeping Virginia Clean Economy Act. But while state agencies have over the past decade formulated a set of regulations and policies for reviewing and permitting wind and solar, equivalents largely don’t exist for energy storage. 

Willett’s House Bill 2148 would extend an existing form of state review, the permit by rule program, to the new technology. Initially devised for smaller-scale wind projects and later extended to solar, the PBR framework was intended to allow renewable projects up to a certain threshold in size — today, 150 megawatts — to sidestep the more prolonged approval process overseen by the State Corporation Commission. 

As solar costs have fallen, the PBR program has become more popular. In 2015, the Department of Environmental Quality, which oversees the program, received a single application for the permit by rule; in 2020, it received more than 70 notices of intent to apply for solar projects. 

“It’s proven to be a very efficient process, and it’s worked for solar and for wind,” said Willett. 

With the program’s growing popularity, though, have come bottlenecks, including a shortage of employees. Today, the PBR process is coordinated largely by one DEQ employee. A budget proposal from Del. David Reid, D-Loudoun, would add $115,000 to the department’s budget for a new position dedicated to storage projects undergoing PBR review. 

Local review

State approvals are only one of the hoops renewable projects must jump through. In Virginia, most of the hardest-fought and highest-profile battles over solar have swirled around local permits, granted by boards of supervisors and city councils in the commonwealth’s 95 counties and 38 independent cities. 

As renewables began to proliferate over the past five years, tensions rose. Many local governments complained state tax exemptions for solar unfairly deprived communities of revenue while tying up large amounts of land, often in service of data centers being built in wealthier parts of the state. 

Lawmakers in 2020 ultimately signed off on a package of laws that aimed to ease those concerns. The tax exemptions were tweaked to decline over time; alternately, local governments were given the choice of instead adopting a “revenue sharing” system in which they could impose an energy tax of up to $1,400 per megawatt for a project. Finally, localities were given the right to negotiate site agreements with solar developers that could include certain incentives, like broadband investments, as long as the project was located in a federally recognized “opportunity zone.” 

Taken together, “that’s the model we are trying to emulate” for storage this session, said Del. Stephen Heretick, D-Portsmouth.  

Heretick’s House Bill 2006 would extend both the revenue sharing model and the declining tax exemptions to energy storage projects with the goal of, he said, “trying to do the right thing by localities.” Another measure, carried by Del. Jay Jones, D-Norfolk, in the House and by Sen. George Barker, D-Fairfax, in the Senate would allow local governments to strike the same kind of siting agreements now permitted for solar projects with storage developers. A separate provision would eliminate the requirement that such a project be located in an opportunity zone. 

An enactment clause included in both Jones’ and Barker’s bills would prohibit them from going into effect unless the General Assembly also passed legislation authorizing local governments to adopt either the revenue-sharing or declining tax exemption system of compensation.

Barker’s measure cleared the Senate Committee on Local Government Monday but must still pass the Senate Finance Committee before it can be taken up by the full body. 

Meanwhile, negotiations continue behind the scenes. 

Many renewables advocates favor the measures, which Harry Godfrey, executive director of clean energy business group Virginia Advanced Energy Economy, described as aiming to ensure “storage is able to move as smoothly as wind and solar are in Virginia.” 

“Storage has arrived in Virginia and arrived at a scale where we are rapidly moving past where we were three years ago,” he said. “Now we’re going to see this, whether it’s in conjunction as part of a hybrid project or as a standalone (project).”

Local governments have taken a more cautious approach.

“We’re still evaluating them, and I know a lot of our members are still evaluating them,” said Joe Lerch, director of local government policy for the Virginia Association of Counties. Particularly of interest, he said, is the overlap between the proposals “and how they all work together.”

This story has been updated to correct Joe Lerch’s position with VACo.