“Virginia is leading by example and demonstrating how states can step up to combat climate change and advance a clean energy economy,” Northam said in a news release.
The deal calls for Dominion to supply state government facilities with 420 megawatts of renewable energy, which the governor’s office said is enough to power 100,000 homes. The bulk of the purchase — 345 megawatts — will come from solar installations owned by Dominion.
An additional 75 megawatts will come from a new wind energy project planned for a mountaintop in Botetourt County by Charlottesville’s Apex Clean Energy.
Environmental advocates praised the effort but said it doesn’t make up for Dominion’s overall reliance on fossil fuels.
“Today’s announcement is like a moment of sunshine on a rainy day,” Sierra Club Virginia chapter director Kate Addleson said via email. “If Dominion wants to do right by the customers and communities they serve, then they will cancel projects like the fracked gas Atlantic Coast Pipeline and Union Hill compressor station, support access to customer-owned solar, and stop opposing pollution reduction plans.”
The $7.8 billion Atlantic Coast Pipeline is being built across the middle of the state, with a key component slated for the historic African American community of Union Hill in rural Buckingham County. Pipeline construction is on hold after opponents won federal court decisions saying that permits had been awarded hastily and improperly.
Virginia has been relatively slow to move into renewable energy. It is one of only nine states that have no installed wind turbines, according to the American Wind Energy Association.
Earlier this year, a roster of major technology companies including Microsoft, Amazon and Apple expressed frustration to Virginia’s utility regulator, the State Corporation Commission, faulting Dominion for failing to transition to renewables. (Amazon founder Jeff Bezos owns The Washington Post.)
To help jump-start the effort while maintaining its grip as the state’s biggest electricity monopoly, Dominion worked with the General Assembly last year to overhaul the state’s regulatory laws. The changes limited the commission’s oversight role and gave Dominion leeway to invest excess profits in developing renewable energy instead of returning the money to ratepayers.
Since then, Dominion has begun expanding its push into renewables. Last month, the company announced plans for the nation’s largest offshore wind farm, now under development 27 miles off the coast of Virginia Beach.
Friday’s announcement requires the state to purchase all the energy produced by several Dominion solar facilities, minus any amount the utility sells to other customers. Essentially, it guarantees the company a customer for its product while the regulatory overhaul ensures a stream of revenue for creating such facilities in the first place.
Environmental advocates have supported that arrangement as a way to make the transition away from fossil fuels financially attractive.
Northam’s office said the rates agreed to in the 20-year contract are a bargain for taxpayers. The agreement sets out base rates of $34 per megawatt-hour for the solar and $35 per megawatt-hour for the first five years of the wind energy. The wind base rate jumps to $53 in the sixth year and then rises over time.
Extra “rider” rates can be added to cover facility costs.
Those base rates are in line with industry averages.
“Based on market projections and safety built into the contract, we expect the state will save millions over the contract term,” Northam spokeswoman Alena Yarmosky said via email. “We view this as a win win — not only are we investing in renewable energy and moving towards a cleaner energy economy, we are saving the state money at the same time.”
The governor’s office asked the National Governors Association to compare the contract with practices around the country, and the organization said it “appears to be the largest single” agreement to purchase renewable energy undertaken by any state.