Virginia solar projects stall after Dominion Energy required pricey upgrades

August 31, 2024

correction

A previous version of this article incorrectly described the projects referred to by Aaron Sutch of Solar United Neighbors as larger than 250 megawatts; they are larger than 250 kilowatts. The article has been corrected.

Four years ago, Fairfax County announced a landmark clean energy plan to install solar panels on more than 100 buildings including schools, community centers and government facilities. But progress on that goal — which the county estimated would save $60 million in utility costs over 25 years — has stalled after the state’s biggest utility imposed expensive grid connection requirements that solar proponents say make those midsize projects not viable.

Fairfax had completed six projects before Dominion Energy changed the requirements for midsize solar in December 2022. Since then, the county has downsized two projects to fall below the requirements’ parameters, while five others — including a police station, stormwater complex and library — are on hold. Fairfax is moving ahead with a five-megawatt installation at its landfill complex in Lorton despite an increase of $1.7 million to connect to the grid.

Across the state, the company began requiring upgrades for a “direct transfer trip,” which automatically disconnects a system, on some projects. That includes laying a dark fiber optic transmission line to a substation at a cost of $150,000 to $250,000 per mile and in some cases adding a relay panel that runs $250,000 for projects exceeding 250 kilowatts, raising costs by 20 to 40 percent.

“This is a unique requirement by Dominion for this size system,” said John Morrill, director of Fairfax County’s Office of Environmental and Energy Coordination. “Wouldn’t some other technology that’s less expensive be suitable?”

Dominion says the upgrades are necessary for grid reliability and safety to prevent arc flashes, wildfires or injuries to line workers. Aaron Ruby, a Dominion spokesman, said the upgrades were instituted in response to a 600 percent increase in midsize projects after the 2020 passage of the Virginia Clean Economy Act, which encourages small-scale rooftop solar by third parties.

Solar proponents note that those third-party projects compete with the company’s Dominion Energy Solutions small and midsize business. They say the powerful company’s requirements have halted dozens of small and midsize solar projects throughout the state — notably in socially vulnerable neighborhoods and in schools, which championed solar for the financial benefits and their clean energy goals.

“We went from a worst-case scenario of interconnection fees being about $20,000 — and that was a rare, worst-case scenario — to we’re starting out at half a million and going up from there. They’ve literally shut down midsize solar,” said Alden Cleanthes of Norfolk Solar, which works in low-income communities.

After launching in 2019, her company did more than $2 million in business, including installations on two historically Black churches, a community center and a family-owned roofing company. In 2023, it completed no projects.

Others have similar tales. Prince William County Public Schools held off a plan to put solar panels atop Freedom High School because of an interconnection charge of more than $1 million. Henrico County suspended a 668-kilowatt solar array at the James River Detention Center after Dominion said interconnection costs would be $2.25 million or more.

The Grand Mart grocery chain tapped its Virginia Beach store into the grid without a problem. To connect its Newport News store would run $376,000, according to Dominion, and the lead time for upgrades would be up to 16 months. The project was canceled. Grand Mart owner Chris Lee wrote to the State Corporation Commission, a regulatory agency, that had he known about the unexpected changes, he would have located his grocery in a state more favorable to solar investment.

Since Dominion’s changes, the company and solar proponents have turned to the commission to decide whether the requirements are legal, justified or necessary. Weighing filings from both sides, the commission last year removed the parameters, then months later reimposed many of the original requirements on an interim basis.

The commission has solicited comments and held working group meetings to discuss new rules. More than 100 comments were submitted, the majority in favor of repealing the rules. But there is no deadline for a decision, frustrating solar proponents. A commission spokesman declined to comment, citing the pending case.

Solar proponents say cheaper alternatives required by other states have been effective. They point to states where solar is more robust — including New York, Massachusetts and Hawaii — that have moved to less expensive solutions because fiber optic cable is an outdated technology.

“There are industry best practices that we can really leverage and deploy within Virginia,” said Shay Banton, regulatory program engineer and energy justice policy advocate for the Interstate Renewable Energy Council, who has worked on grid integration since 2017.

Dominion describes cheaper alternatives championed by solar installers as “unproven technology” in commission filings. The company also uses higher-voltage lines than other utilities, making it harder to detect faults without direct transfer trip, Ruby said.

Dominion is exploring three less expensive alternatives. “If we pilot an alternative technology that is just as effective as dark fiber and just as reliable as dark fiber but less expensive, then we’ll adopt it,” he said.

He said the more expensive requirements are imposed only after a study and not for every midsize and large solar project. Since December 2022, Dominion has required direct transfer trip in 33 midsize projects. Before then, it had been required in zero. It has required direct trip transfer for six larger projects.

Fairfax is moving ahead with the Lorton landfill project despite the cost increase, but with the Dominion requirements, the county will have to pay the developer an additional $50,000 annually. For the smaller projects, the cost would double. Final designs for five of those are pending pricing.

“If the cost of interconnection due to the fiber requirement is inordinate, then we may postpone those projects,” said Morrill, of Fairfax’s Office of Environmental and Energy Coordination.

Tony Smith, chair of the Virginia Distributed Solar Alliance and president of Secure Solar Futures, said his company has worked on several school installations but now avoids projects in Dominion territory that would come under these parameters. That means schools won’t reap the benefits they anticipated.

“We’re talking about hundreds of thousands if not millions of dollars over a 25-year period in savings over what they would otherwise pay to the utility,” Smith said. “Of course, the cynic might say, ‘Well, that’s the reason.’”

Smith and other proponents say Dominion has not cited any instance where the old rules caused an injury to a worker or a problem with the grid. According to Ruby, Dominion had no reports of safety incidents under the old rules.

Proponents worry that utilities in neighboring states will follow Dominion’s lead and install similarly expensive requirements.

Aaron Sutch, the Atlantic Southeast regional director for Solar United Neighbors, an advocacy nonprofit, said utility companies know pushing back on midsize solar projects is “political suicide.” He says the requirements are another way to stifle competition.

“There’s nobody that’s against putting solar on schools or churches and municipalities,” Sutch said. “Dominion is purposely blocking larger-scale distributed solar projects [more than 250 kilowatts] because they don’t own them. And instead of saying that, which is an untenable, indefensible position, they’re imposing bureaucratic barriers.”

Ruby denied that Dominion is putting up barriers to maintain its market share, noting that the company’s Dominion Energy Solutions is a leading provider of midsize solar projects.

“We are all in on solar at Dominion Energy,” he said. “We’re fully supportive of customers developing their own solar systems for their homes, or businesses or governmental buildings.”

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