Shared Solar launches in Virginia but still faces an uphill battle

After years of wrangling, Virginia is finally allowing certain Dominion Energy Virginia customers to purchase solar power from independent providers of shared solar, aka community solar.

But don’t applaud just yet. Dominion has used the rulemaking process and its control over project networking to create hurdles to shared solar power that lawmakers never anticipated. High minimum bills, lengthy connection study requirements, and expensive equipment requirements stall projects and could drive away all but the most die-hard developers.

The shot that received the most attention came during the rulemaking process. The State Corporation Commission ruled that Dominion could impose a minimum bill averaging $55 per month on most customers. The minimum bill is added to the cost of the electricity itself, making solar sharing so expensive that the program is simply not offered to the general public.

However, the legislature had included a provision that exempted low- to middle-income (LMI) participants from the minimum bill requirement. Indeed, the SCC’s order made the joint solar program a program for LMI residents only.

In fact, the first joint solar project for LMI Virginians kicked off November 9 in Dumfries as a partnership between community solar developer Dimension Renewable Energy and low-income housing provider Community Housing Partners. Subscribers are told they can expect savings of 10% on their electricity bills. The partners are now registering participants, but have not yet set up a solar system to serve them.

Senator Scott Surovell, D-Fairfax, the draftsman of the bill creating the joint solar program, attended the opening of Dimension’s project to participate in the celebration. But he still believes the program should be available to everyone. He confirmed to me that he is working with the municipal solar industry to develop legislation that addresses the problem of the minimum bill.

Surovell says he still believes a minimum bill is needed; The question is what fee is “commercially feasible for community solar programs” while also capturing “a significant amount of system costs and legacy costs” borne by Dominion in providing services to subscribers when the solar array isn’t generating electricity.

Connectivity Issues: Delays, High Costs, and “Dark Fiber”

Even if Surovell can thread that needle, the minimum bill is just the most visible problem facing shared solar systems in Dominion territory. The solar arrays need to be connected to the grid, leaving Dominion responsible for the connection process. Developers say they face long delays, high costs, and unreasonable equipment requirements.

Earlier this year, the State Corporation Commission opened a list to seek feedback on the interconnection process — and the result was a spate of complaints.

As noted in comments from the solar industry, Dominion is requiring expensive “dark fiber” for grid protection rather than a much less expensive industry-standard approach. Dominion also lags behind in completing the studies that each new project proposal must undergo at the developer’s expense, resulting in deadlines stretching 16 months or more. Additional facilities that would use the same substation will not be considered until the study process for the first is complete, causing further delays.

Developers are also only told at the final stage how much Dominion expects to charge them for connecting their array – and even then, Dominion adds a disclaimer that its estimate is non-binding. That uncertainty, the industry says, makes projects difficult to fund and risky for developers.

These inefficiencies and unnecessary expenses drive up project costs and make distributed solar more expensive for customers, if at all possible. Tony Smith, president of solar developer Secure Futures, told me his company wants to build a 1-megawatt shared solar system to serve LMI customers in Augusta County. They secured the site and permits before learning Dominion would need Dark Fiber and planned to charge them $1 million for the connection, an amount so high that the project was doomed .

(For context, solar industry estimates put the total cost of developing community-scale solar systems at an average of $1.4 million per megawatt.)

Smith says larger projects may be able to absorb exorbitant connection fees, but smaller projects may not. In any case, high interconnection costs inevitably mean higher costs for customers.

Industry comments point to areas where Dominion has attempted to address issues, particularly to shorten study timelines. But on other demands, especially those with the highest costs, the utility shows little willingness to back down. In some cases, the company even appears to be using its connectivity power to get private developers to bear their own network upgrade costs. It’s hard not to guess that Dominion is perfectly happy making other people’s solar projects more expensive.

The solar industry mandate describes steps that have been taken in other states to make the process fairer, faster and less expensive. But if the Division of Public Utility Regulation’s staff report is any indication, the SCC will take a more slow-paced approach using working groups, pilot studies and a tiered process. Smith says all of this will take many years, by which time the joint solar developers will have abandoned Virginia and moved their business to friendlier states. He wants the General Assembly to address the worst issues.

Surovell says he’s “heard” about the connectivity issues but “hasn’t focused on them yet.” Charlie Coggeshall, mid-Atlantic director of the Coalition for Community Solar Access, told me that “interconnection is a hurdle for shared solar in Virginia and absolutely needs improvement,” but said his organization is focused on the SCC process and has it for now done no plans to pursue a legal solution.

Dominion serves about two-thirds of Virginia’s customers, so solving the minimum billing and connectivity problems would open up a shared solar facility to a broad band of residents across the state. The other third is still missing. Proponents hope to expand the availability of shared solar power into Appalachian Power territory and Virginia’s electric cooperatives.

Some co-ops started their own community solar programs before the pandemic, but most don’t offer one and don’t seem to want to. Appalachian Power has consistently opposed municipal solar, saying it can’t afford to lose customers. (On the other hand, Appalachian Power doesn’t require Dark Fiber to be installed as a condition of interconnection, which makes it friendlier to distributed generation in that regard — just not for shared solar projects.)

Shared solar systems for apartment buildings are a win regardless of income level

While Shared Solar faces an uphill battle, some good news came in a second case where a related program was implemented, this one sanctioned by the Solar Freedom Legislation of 2020 and designed for on-site solar installations in multi-family homes and condos. The Multifamily Shared Solar (MFSS) program allows landlords or homeowners’ associations to install a solar system just for their own residents. This program sits midway between community solar and net metering, and related legislation allows Dominion to charge an administration fee but no minimum bill or other fees.

The SCC had early signaled its willingness to allow Dominion to include the minimum bill components of the common solar law in the MFSS administration fee. That would certainly have been the end of the program at this point. However, a reasonable definition of “administrative fee” prevailed in its final ruling, and the SCC ruled that Dominion could not inject its business expenses into the fee.

The SCC still set the MFSS administration fee at an oddly high $13.40 per month and accepted Dominion’s argument that all of this billing would have to be done manually. The SCC also ruled that customers should pay certain “unavoidable fees” averaging about $3 per month. The law doesn’t allow these charges, but the SCC argued that they don’t ban them either.

Even with Dominion taking in around $16, the economics don’t seem prohibitive. However, the developers warn that the limited subscriber base for any MFSS project makes this program difficult to work with, even if the building is large and the lot can accommodate a decent-sized solar array. And even on-site solar systems aren’t necessarily immune to connectivity issues.

Still, there is a lot of customer interest in the multifamily program, particularly from homeowners’ associations who may be able to fund the projects themselves. With any luck, they will pave the way for others.