Virginia enacts regulations to enable US’ largest procurement target for energy storage

Virginia’s clean energy policies introduced during 2020 included the US’ biggest state-level target for deployment of energy storage – and the state’s regulator has now introduced the rules intended to enable achievement of that target.

The Virginia Clean Economy Act (VCEA) passed with the approval of both sides of the state’s political divide in April last year, albeit after lengthy debate and pushback from utilities. The act puts the state on the path to 100% renewable and clean energy by 2050, brought Virginia into the New England and Mid-Atlantic US Regional Greenhouse Gas Initiative (RGGI) alongside 11 other states and introduced a 3.1GW target for energy storage deployment by 2035.

With Virginia now one of seven US states with a form of energy storage target in place, Virginia’s goal slightly outdoes the next largest, New York’s, which was set at 3GW by 2040. With that in mind, the Virginia State Corporation Commission – which has the authority to regulate numerous sectors including everything from utilities to insurance – issued its framework for the state’s two main utilities to adopt in pursuing that goal.

The regulations issued on 18 December 2020 went into force on the first day of this year. They concern the ways in which utilities Appalachian Power Company (APCo) and Dominion should petition the Corporation Commission for approval to “construct or acquire 400MW and 2,700MW, respectively of new utility-owned energy storage resources by 2035”.

The SCC received commentary and input from industry and non-industry stakeholders including the two utilities and groups as it formulated the regulations including the US national Energy Storage Association (ESA) and Solar Energy Industries Association (SEIA), developer GlidePath, Mitsubishi Power Americas and the Virginia Department of Mines, Minerals and Energy as well as environmental groups and others.

In some ways the introduction of the regulations marks the beginning of a long – if rapidly-progressing – journey and they were welcomed by the Energy Storage Association’s CEO Kelly Speakes-Backman as “an important step toward advancing the state’s clean energy future by setting forth rules to guide the nation’s largest state procurement target of energy storage,” Speakes-Backman said.

While the list of regulations is extensive, they include provisions such as that the SCC will create a task force which will evaluate and analyse “regulatory, market and local barriers” to the deployment of bulk energy storage resources connected to the transmission and distribution (T&D) network, with the task force expected to report back to the state’s General Assembly in October.

They also require the utilities to annually submit their plans and petitions for approval for the development of energy storage to meet their targets, alongside corresponding plans for solar and wind generation capacity. This is in addition to providing information on how they plan to meet interim targets for new energy storage deployment.

Dominion should seek approval of 250MW by the end of 2025 and APCo 25MW. With Dominion having only just announced its first 16MW pilot deployment of energy storage projects during last year, the SCC said its commissioners “are mindful of the current nascent stage of energy storage deployment in Virginia” when setting those fairly modest targets. That said, Dominion already issued a Request for Proposals (RFP) for that 250MW of energy storage in May last year as it filed its latest Integrated Resource Plan (IRP) long-term planning document. 

The regulators also said that they were aware that FERC Order 2222, issued by the Federal Energy Regulatory Commission (FERC) and instructing regional grid and electricity market operators across most of the US to allow distributed energy storage resources (DERs) behind-the-meter to participate in wholesale markets, might have an as-yet unknown impact on the deployment of energy storage and participation of energy storage capacity deployed in Virginia in wholesale markets. The VCEA instructs that 10% of energy storage in the state should be behind-the-meter.

The ESA said that the final rules include the adoption of “several recommendations” that the association made in its comments. This includes a recommendation that third parties get access to electric system data in order to develop competitive bids as well as a recommendation that a proposed threshold for distributed energy storage systems and aggregated storage capacity to require permitting be raised to 1MW from 100kW.

The SCC said that as licensing requirements for gas and electric services aggregation are already in place in Virginia and had been introduced and run smoothly, it saw no reason to introduce a similar regime for energy storage. It wanted to maintain a threshold of 1MW, the SCC said, with the broad deployment of distributed energy storage warranting a “cautious approach”.