Virginia Solar Pathways Project Report

Virginia Solar Pathways Project December 4, 2017 Report 2 Virginia Solar Pathways Project 2017

Contents

Introduction...... 3

Background and Project Objectives...... 5

Developing and Implementing the Solar Strategy...... 6 Challenges...... 6 Solar Economics...... 6 Generation, Transmission, and Distribution...... 7 Community Solar...... 8 Core Elements of the Statewide Solar Strategy...... 9 Customer Programs and Distributed Generation...... 10 Large-scale Solar...... 17 Community Solar...... 19 Long-term Forecast for Solar to Serve Dominion Energy Virginia’s Customers...... 20

Overcoming Challenges to a Successful Solar Strategy...... 21 Federal Tax Policy...... 21 State and Market Distinctions...... 22 Cost and “Least Cost Standard” in Virginia...... 22 Permit by Rule...... 23

Emerging Challenges and Opportunities...... 23 Uncertainty Around Carbon Regulation...... 23 International Trade Developments...... 23 Aging Grid Infrastructure and the Opportunity for Grid Modernization...... 24 Local Pushback and Other Siting/Permitting Challenges...... 24 Fiber Optic/Communication Availability...... 25 Lack of Wide Deployment of Energy Storage...... 25

Solar Workforce Development Strategy...... 27

Findings and Recommendations for Replicating the Virginia Solar Pathways Strategy for Sustainable Solar Deployment...... 28 Engage in Stakeholder Collaboration...... 28 Work to Avoid Unintended Adverse Consequences of State Policy Changes...... 29 Foster and Maintain Dialogue with Large Customers...... 29 Listen to Customer Preferences and Match Them to Resource Availability/Attributes...... 30 Develop Customized Approaches to Modeling and Planning for Solar Integration...... 30 Prioritize Grid Modernization and Customer Empowerment...... 31

Acknowledgments...... 33

List of Acronyms and Descriptions...... 33

Endnotes...... 35

This work is based upon work supported by the U.S. Department of Energy Solar Energy Technologies Office, under Award Number DE-EE0006914.

This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof.

Dominion Energy, Inc. (formerly Dominion Resources, Inc.) (Dominion Energy) currently has more than 27 solar generating installations either operational or under development in Virginia. This equates to approximately 744 megawatts (MW) of solar capacity, enough to power more than 186,000 homes at peak solar output.

However, at the end of 2014, before the grant- term began, the situation was very different. At that time, Dominion Energy’s generation fleet in Virginia included only four solar distributed generation (DG) facilities (listed in yellow below) totaling a little more than one megawatt with FIGURE 1: DOMINION ENERGY SOLAR ASSETS IN VIRGINIA AS OF no large-scale solar facilities operational in the DEC. 4, 2017 Commonwealth. Since then, Dominion Energy has announced 23 additional solar generation 1 facilities that are either operational or under 7 development in Virginia. (See figure 1 for the 27 2 total facilities.) In addition, Virginia Electric and Power Company (Dominion Energy Virginia or 3 the Company) is expanding its renewable-related programs and tariffs for customers from 7 to 4 5 12 12, and its current 2017 long-range integrated 10 11 26 resource plan (IRP) includes up to 5,280 MW of 1 additional solar capacity by 2042. 13 17 27 6 8 9 14 18 15 16

20 21 24 23 25 22

Solar in operation or under development 9. Scott 17 MW 21. Woodland 19 MW (includes power purchase agreements): 10. RMC 0.05 MW 22. Southampton 100 MW** Up to 744 MW 11. UVA Hollyfield 17 MW 23. Western Branch HS 0.8 MW Initial four facilities in yellow (1.18 MW) 12. Essex 20 MW* 24. ODU 0.13 MW 1. Clarke 10 MW 13. VUU 0.05 MW 25. Oceana 18 MW 2. Remington 20 MW 14. New Kent 20 MW** 26. Accomack 80 MW** 3. Merck 1.5 MW 15. Capital One 0.5 MW 27. Cherrydale 20 MW 4. UVA 0.4 MW 16. Philip Morris 2 MW 5. Whitehouse Solar 20 MW 17. UVA Puller 15 MW * Reflects power purchase agreement 6. Buckingham 20 MW** 18. Canon 0.5 MW executed with Dominion Energy Virginia 7. Prologis 0.74 MW 19. Canon 1 MW ** Amazon Solar Farm Virginia 8. Scott II 20 MW** 20. Sappony 20 MW**

Note: 300 MW of solar generation under development in partnership with Facebook, not reflected on map.

WHITEHOUSE SOLAR 4 Virginia Solar Pathways Project 2017

Dominion Energy’s recent rapid expansion of solar how it has implemented its solar strategy to-date and capacity in Virginia is the result of a comprehensive solar providing recommendations to other utilities who wish strategy. This report is the result of a three-year project, to adopt this strategy, the pages that follow also offer the the Virginia Solar Pathways Project, funded by the Solar Company’s take on how best to answer this question. Energy Technologies Office of the U.S. Department of Energy (DOE). This paper also documents how Dominion Energy’s strategy has allowed it to surpass its goal three years A central goal of the Virginia Solar Pathways Project early to have 400 MW of large-scale solar under was to develop workable models for sustainable solar development in Virginia by 2020.3 Dominion Energy is deployment that are appropriate for states with policy now ranked 6th in the nation among investor-owned and program frameworks similar to the Commonwealth. utility holding companies in terms of ownership of Primarily, these are southeastern states that share operating and planned solar capacity. The Virginia Virginia’s policy model of vertically integrated utilities Solar Pathways Project puts forth a model for other with low retail electric rates. With solar generation now utilities that wish to increase their ability to manage cost competitive with conventional energy sources,2 and administer solar programs and sustainably expand utilities will need to adapt to a new paradigm in large-scale and distributed solar capacity. electricity generation. In three short years, Dominion Energy has made strides in adapting to this new model, and it continues to execute its strategy to expand the use of solar power in Virginia.

The Company now faces this question: “How do we build an environment around this expanding technology that sustainably supports it?” In addition to documenting

AMAZON SOLAR FARM VIRGINIA–BUCKINGHAM Virginia Solar Pathways Project 2017 5

Background and Project Objectives The Virginia Solar Pathways Project’s primary goal was development of a utility- administered solar strategy for Virginia through a collaborative process.

To accomplish this, Dominion Energy both large-scale solar and solar installation company. They included: Virginia sought to establish a policy and distributed generation and equitable • Bay Electric, Co. program framework that would integrate recovery of costs to support all existing solar programs with new options customers whether they choose to • City of Virginia Beach appropriate for the Commonwealth’s self-generate or not. • Metropolitan Washington Council of policy environment and broader • Recognize that Dominion Energy Governments economic development objectives; Virginia’s existing utility grid was • National Renewable Energy Laboratory promote wider deployment of solar within not designed for the two-way flow a low retail electric rate environment; • Northern Virginia Community College of power and that increased solar and serve as a sustainable, utility- (participated through spring of 2017) deployment may require additional administered solar model that could be utility investment to offer enhanced • Old Dominion University replicated in other states with similar access to information, choice, and policy environments, including, but not • Piedmont Environmental Council control that customers seek, while limited to, the entire Southeast region. (participated through summer of 2016) ensuring the same or better levels of • Virginia Department of Mines, service reliability. The resulting Virginia Solar Pathways Minerals, and Energy Utility-Administered Solar Strategy Dominion Energy also recognized that was developed based on the following The success of the Virginia Solar through the collaborative process, foundational objectives: Pathways Project depended upon several items needed to be addressed: valuable input from diverse perspectives • Be achieved within Virginia’s fully (1) an assessment of Dominion Energy’s and experiences. From the outset, regulated utility framework; existing solar programs and their Dominion Energy implemented a potential for wider-scale deployment; (2) • Be informed by input from a broad collaborative process with procedures the performance of technical engineering range of stakeholders and encourage to drive consensus decision-making. and business planning studies to identify continuation of the collaborative At the beginning of the project, the solar photovoltaic (PV) integration process; Advisory Team and the Dominion Energy impacts across the generation, representatives sought to develop • Involve data-driven decision-making, transmission and distribution systems; governing principles to ensure that including studies conducted as part and (3) an economic study of utility- members had the opportunity to take of the project along with data analysis administered solar, inclusive of an part in the development of a utility- and input from subject matter experts; evaluation of the impacts of tax policy administered strategy. The governing on solar deployment and an assessment • Support sustainable expansion principles outlined key criteria for of soft cost reduction opportunities. To of solar generation that promotes fostering discussion and promoting that end, the Virginia Solar Pathways affordable electric rates and Virginia’s collaboration among all participants. Project’s results were also guided by the economy and economic development; synthesis of conclusions and findings In addition to the Advisory Team, • Focus on the customer through: from a set of comprehensive studies. Dominion Energy provided additional • Fair allocation of quantifiable costs opportunities to receive input from and benefits through properly CORE ADVISORY TEAM and share information on project designed rate structures, while One key component of the Virginia Solar accomplishments with other interested providing enhanced access to Pathways Project was collaboration stakeholders through the Rubin Solar information, choice, and control; among stakeholders and participants Collaborative discussed later in this in the development of a comprehensive document. This approach best served • Program structures that offer solar strategy. The project engaged the objective of resolving differences solar options for customers in all a Core Advisory Team (Advisory in perspective and interests relating to customer classes and maximum Team) made up of a diverse group solar deployment within Virginia. flexibility with respect to opt-in/ of stakeholders, consisting of a state opt-out, especially for residential government agency, an environmental Transparency customers; and organization, local community The Advisory Team committed to • Equitable distribution of quantifiable representatives, research and making information about the Virginia costs and benefits associated with educational institutions, and a solar Solar Pathways Project available to 6 Virginia Solar Pathways Project 2017

all its members. Additionally, efforts • Seek to be brief and focus on facts, not acknowledged that consensus does were made to share knowledge opinions; not require unanimity. Additionally, and information with the broader all Advisory Team members agreed • Place an emphasis on open and that Dominion Energy maintains public under a communication and honest communication; dissemination plan, except where responsibility over the project confidential or sensitive information • Emphasize collaboration and respect deliverables and that Dominion Energy required protection from public for all positions on important has ultimate decision-making authority decisions and issues; disclosure. after input was received from all members. • Agree to practice flexibility and Communication & Ground Rules assume good intent from members Evidence-Based Decision-Making The Advisory Team agreed to the when disagreement arises; To the greatest extent possible, the following set of guidelines to promote • Work together to solve problems; Advisory Team agreed to utilize data to well-ordered, effective, and efficient inform decision-making. discussions during all meetings: • Value the diversity of the Advisory Team members; and • Make best efforts to start and end on Documentation time; • Stay open to constructive reminders Minutes of meeting were maintained to adhere to these guidelines. and distributed to all Advisory Team • Ensure that all members are given an members for review. opportunity to speak while at the same Collaborative Decision-Making time respecting the Advisory Team’s The Advisory Team agreed to seek time and the meeting timetables; consensus where possible and

Developing and Implementing the Solar Strategy

CHALLENGES a community solar offering in Virginia, Soft costs, such as financing, customer but the Company needed a policy acquisition, permitting, zoning, and In developing and implementing a and regulatory framework to make planning also made the economics of solar strategy, Dominion Energy faced community solar workable. solar difficult. Consequences of federal significant challenges in 2014. Key tax policy, including tax normalization, challenges addressed in this section Dominion Energy met these challenges tilted the playing field away from included: head-on, and through collaboration, solar and towards traditional energy • Solar economics, innovation, and a favorable change generation. Dominion Energy confronted in market forces, has created a viable these challenges, and creatively worked • The integration of solar into the grid, path forward for the development of through them to eliminate barriers and and additional large-scale and distributed streamline processes. The primary driver • Developing a framework for solar generation projects and their of solar economics—falling solar panel community solar. integration into the transmission and prices—coupled with creative solutions distribution grids. to reduce soft costs, have currently In 2014, the economics of solar were not made solar energy not only economically as viable in Virginia as they are today competitive but also economically SOLAR ECONOMICS and Dominion Energy lacked experience advantageous. The dramatic price with large-scale solar development in the Absent financial incentive mechanisms, reductions of solar panels, coupled with Commonwealth. To support sustainable the high costs of solar development their increasing efficiency, were among growth of solar in Virginia, Dominion in the Southeast made electricity the principal reasons that solar energy Energy Virginia needed the ability to generation from solar unfavorable crossed a critical economic threshold in integrate large amounts of this variable compared with traditional sources of the Company’s Virginia service territory resource into its distribution system that energy like coal or natural gas. As a as described in its 2017 IRP.4 delivers power to customer homes and result, until recently solar development businesses, and also into the upstream was more often driven by its ability to To aid in its strategy to address transmission and generation systems help organizations and individuals meet the economic challenges of solar where the bulk of electricity is generated, environmental goals and greenhouse gas deployment, Dominion Energy Virginia transported, and interconnected to the emission reduction targets, and projects contracted with the National Renewable multistate regional grid. Finally, the were often relatively limited in size or Energy Laboratory (NREL) to complete Company knew there was an appetite for were implemented as pilot projects. a Utility-Administered Solar Economic Virginia Solar Pathways Project 2017 7

Study which was published in June 3. The financial impacts of tax The DG interconnection process, grid 2016.5 Emerson Reiter, this study’s normalization policy on utility-led protection, operational safety, grid lead author, represented NREL on the solar development. Tax normalization stability, telecommunication and data Project’s Core Advisory Team. Three continues to have a relatively large transfer, and emerging technology all major topics are considered in the impact on soft costs of utility- affect solar integration into the electric report: developed solar, given the federal grid. In addition to these other challenges, tax credits currently available for it is difficult to predict the location of 1. The potential for soft cost reductions solar. In fact, one NREL finding was solar DG projects moving forward, which through utility-administered solar. that if “all other factors are equal, can impact grid planning and operation. Soft costs are all non-hardware [tax normalization] has the ultimate costs associated with the installation effect of increasing the cost of solar To examine these challenges at the of solar systems. Major types energy from utility-owned facilities distribution level, Navigant Consulting of soft costs include installation as compared to those developed by (Navigant) conducted a study 7 examining labor, customer acquisition, an outside entity.”6 Tax normalization how increasing penetration of solar DG financing, permitting, inspections, requires electric utilities to spread may impact grid stability, operability and and interconnection. This study the benefit of the federal investment reliability on Dominion Energy Virginia’s assessed the ability to reduce “soft tax credit (ITC) of a utility-owned distribution system. Completed in April costs” through increased utility solar installation over the life of 2016, the study identified the levels of involvement in the development the asset. Due to the time value of solar penetration and the distribution of solar generation systems. After money, this increases costs relative system upgrades required to ensure conducting surveys of several utilities to non-utility owned projects, which thermal loading, performance, and with current solar programs, NREL can realize the benefits of the ITC and operational standards would be within identified customer acquisition accelerated depreciation in the year acceptable limits. The results of this and insurance costs as areas with that they occur. Ultimately, Dominion study provide a partial analysis and a significant potential for cost savings. Energy was successful in obtaining a roadmap for Dominion Energy Virginia to The study’s findings can assist first-of-its kind Private Letter Ruling safely and reliably integrate increasing community solar programs as well, (PLR) from the U.S. Internal Revenue amounts of solar DG capacity into its by applying economies of scale Service (IRS) to address the challenge distribution system. resulting in additional cost savings of tax normalization’s impacts on for individual consumers. However, the economics of solar facilities Some key takeaways from the report the report concluded that the ability developed by the utility, as discussed include: in more depth later in this paper. to gain regulatory approval of these • There is no single approach or programs could be a hurdle to their standard associated with system success. With the enactment of GENERATION, TRANSMISSION, protection practices; 2017 legislation calling for utility- AND DISTRIBUTION administered community solar pilot With increasing amounts of solar • There are industry-wide concerns programs in Virginia, the General energy being integrated into the about the potential of dynamic Assembly sought to remove barriers grid, all utilities—including Dominion impacts, including short-term voltage to community solar programs in the Energy Virginia—face concerns and and stability; Commonwealth. challenges relating to interconnection, • System upgrade costs are highly performance, operational safety, and locational; 2. Utility involvement in community grid stability at all levels: generation, • Hosting capacity of circuits decreases solar development in the Southeast. transmission, and distribution. Since when dynamic effects are considered; This topic was chosen because of its grid infrastructure is built to carry and (1) potential to reduce solar energy electricity at steady voltage and costs through the economies of frequency levels, electric utilities must • Energy storage and other emerging scale of large installations and (2) find ways to understand and address technologies have the potential to ability to reach customers who might technical issues associated with solar enhance the ability to integrate greater not be able to procure solar energy energy’s variability. Furthermore, what amounts of solar DG and increase the through other means, such as those was designed as a one-way grid now benefits associated with such DG. living in multifamily housing or faces challenges in adapting to the whose property is heavily shaded. new reality of customer generation At the transmission and generation NREL developed a set of regional and two-way flow of electricity. levels, a second study8 from Navigant, “readiness criteria” for community Overarching principles associated with also completed in April 2016, focused on solar that incorporates information the connection of any generation source impacts and challenges of both large- about state-level deployment of solar or technology are reliability, safety, and scale and distributed solar penetration energy technologies generally, as performance, which must be maintained at the upstream transmission and well as community solar programs for Dominion Energy Virginia’s system generation system levels. The study was specifically. and customers. designed to provide a framework under 8 Virginia Solar Pathways Project 2017

which Dominion Energy Virginia and Navigant documented the processes and lessons learned from the programs’ other regional utilities could evaluate and assumptions for the commercial implementation. Once the utility solar impacts with greater rigor and simulation models (SynerGi, PSS/E, interviews were completed, surveys detail, including the dynamic analysis and PROMOD) that were used in the were distributed to utility customers of solar impacts and their effects on net technical studies. Model inputs, outputs, taking part in each program. Through benefits and costs to utility operations. and key assumptions were discussed, these surveys, the project team could so that team members understood how better understand customer perspective, Some key takeaways from the report they provide the basis for the charts and feedback, and recommendations for include: tables that appeared in the technical future project improvements. studies. Training materials have been • At this upstream level, impacts similar developed including clear instructions Some key takeaways from the report to those at the distribution level on developing the model inputs and include: can occur, just at larger scale and outputs, as well as a user guide that • Many customers want sustainable magnitude; explains each step in the overall solutions; • High penetrations of solar generation methodology developed by Navigant. can impact not just the transmission • Design and implementation of system itself, but also how and when COMMUNITY SOLAR community solar programs can be major upstream generation facilities While community solar has the potential complex; run; and to reduce soft costs through the • Programs benefit from stakeholder economies of scale of larger installations • Many utilities participate in multistate collaboration, especially early in the and the ability to reach customers who transmission networks. These design process; might not otherwise be able to procure generally enhance reliability, but add solar energy, Virginia did not have a • Information Technology integration, additional layers of complexity in policy framework in 2014 to support especially the billing process, is understanding solar impacts. it. The Company sought to survey a considerably significant and programs in other states and at other challenging task; The two studies conducted by Navigant utilities to inform community solar created an iterative process for evaluating • Customers respond to simplicity and program development in Virginia. As solar penetration on the distribution, flexibility in program design. They a key part of this effort, the Company also like to see benefits earlier in the transmission, and generation systems commissioned the Smart Electric Power process rather than later; as solar penetration levels increase. Alliance (SEPA) to provide information This process can be repeated as solar about how utilities in other states have • Economies of scale must be leveraged installations grow, and can be further designed and administered community to keep programs affordable and refined as solar sites are selected and solar programs. This information accessible to the widest variety of developed in Virginia. Additionally, since would help lay the groundwork for the customers; and these studies were completed nearly two development of a community solar • Over-promising and under-delivering years ago, they are based on assumptions program in Virginia. for community solar programs were about Dominion Energy Virginia’s system, the main customer complaint. the bulk power system, commodity and As the August 2016 SEPA report9 fuel costs, and solar generation and noted, community solar programs This information is being used in the integration costs that are not current. are structured differently around development of Dominion Energy Therefore, the conclusions reached in the country, but the basic concept of Virginia’s Community Solar program, these studies should be viewed only in community solar is relatively similar: which is described further in the next the context of each full study report and many different individual customers section. the timing of the assumptions and inputs can have a proportional ownership of that went into them. (or subscription to) a commercial-size or larger solar installation located in or In addition to the above-referenced near their community. This concept is studies, on Nov. 16–17, 2016, Navigant very popular with customers who cannot provided training to Advisory Team (or choose not to) install solar on their members and Dominion Energy residences or businesses (e.g., they employees in Richmond. The two- may live in multi-family housing or rent, day training session provided training instead of owning, their homes). and documentation of the process Navigant went through to develop solar SEPA conducted interviews with utilities scenarios and assess their impact on that have fully-implemented community Dominion Energy Virginia’s distribution, solar programs. Topics addressed in transmission, and generation systems, as the utility survey included solar asset included in their two technical studies. management, program management, Virginia Solar Pathways Project 2017 9

CORE ELEMENTS OF solar portfolio in Virginia consisted distribution circuits with selective THE STATEWIDE SOLAR of four solar DG facilities totaling just criteria. Just three years later, Dominion over 1 MW in capacity. These facilities Energy now has more than 27 facilities STRATEGY were all developed as part of the totaling 744 MW of solar generation Dominion Energy’s solar capacity is Company’s Solar Partnership Program,10 operational or under development in the expanding rapidly. When the grant a demonstration program approved Commonwealth. project began at the end of 2014, in 2013 aimed at assessing the impact Dominion Energy had no large-scale and potential benefits of strategically Similarly, Dominion Energy Virginia is solar facilities in Virginia. Its entire siting solar DG facilities on targeted working to expand its suite of programs

FIGURE 2: DOMINION ENERGY NATIONWIDE SOLAR PORTFOLIO AS OF DEC. 4, 2017

2 3

19 25 20 26 21 33 31 22 27 34 28 23 24 29 32 30 35 1 17 18

16 14

6 13 11 15

10 7 9 Note: 300 MW of solar generation under development in Virginia in partnership with Facebook, not reflected on map.

Solar in operation or under development 14. Freemont 5 MW 30. Southampton 100 MW**** (includes power purchase agreements): 15. Moorings 2, 5 MW 31. UVA Puller 15 MW Up to 2,528 MW 16. NC Solar 540 MW** 32. Woodland 19 MW 1. CA Solar 311 MW*** 17. Morgans Corner 20 MW 33. Accomack 80 MW**** 2. 4 Brothers Solar 320 MW*** 18. Summit Farms 60 MW 34. Cherrydale 20 MW 3. Three Cedars 210 MW*** 19. Clarke 10 MW 35. Oceana 18 MW 4. Pavant Solar 50 MW*** 20. Remington 20 MW 36. Somers Solar Center 5 MW*** 5. Indy Solar 28.6 MW*** 21. Whitehouse Solar 20 MW 6. TN Solar 32 MW*** 22. Buckingham 20 MW**** * Reflects power purchase agreement 7. Richland 20 MW*** 23. Scott II 20 MW**** executed with Dominion Energy Virginia 8. Azalea Solar 7.7 MW*** 24. Scott 17 MW ** Reflects multiple power purchase 9. Ridgeland Solar 10 MW 25. VA Solar Partnership Program 8 MW agreements executed with Dominion 10. Solvay Solar 71.4 MW 26. Essex 20 MW* Energy North Carolina 11. IS37 79 MW 27. UVA Hollyfield 17 MW *** Capacity (MW) reflects Dominion Energy 12. Clipperton 5 MW 28. New Kent 20 MW**** ownership in whole or in part 13. Pikeville 5 MW 29. Sappony 20 MW**** **** Amazon Solar Farm Virginia 10 Virginia Solar Pathways Project 2017

allowing customers to adopt and Power Plan was imminent, solar costs however, in terms of what customers promote solar and renewable energy. continued to fall, and governmental and themselves define as renewable sources, At the end of 2014, seven customer business customers were signaling a solutions often vary widely. programs existed with a total of 26,570 higher demand for renewable energy. customers participating and 10.2 MW of In February 2015, Dominion Energy With institutional desires for renewable renewable energy installed. For calendar committed to investing $700 million to energy options continuing to grow, a few year 2014, annual energy production support development of multiple solar years ago the World Resources Institute from these programs totaled 773,000 projects in the Commonwealth totaling (WRI) and World Wildlife Federation kilowatt-hours (kWh). Currently, the 400 MW by 2020.12 (WWF) collectively undertook a formal Company has 12 customer programs effort to convene institutional and or select tariffs either implemented or Dominion Energy has surpassed the corporate interests and develop a set of planned with a total of 28,654 customers 400 MW goal three years early with Corporate Buyers Principles.14 Dominion participating in programs and 32.4 MW 744 MW of solar generation currently Energy has been engaged with WRI installed. For calendar year 2016, annual under development or operational in the and WWF since 2015 in response to energy production for these programs Commonwealth. Furthermore, because this effort. In fact, WRI has recognized totaled 8,414,000 kWh.11 Dominion of significant reductions in the overall Dominion Energy Virginia’s Schedule Energy Green Power® participation cost of solar generation development, the RG tariff as an innovative customized numbers vary from year to year as Company has reached the point where solution for helping institutional reflected later in the report in Figure 8 solar resources in Virginia are now cost- customers adopt renewable energy.15 on page 14. This variability accounts for competitive with conventional generation. The Company remains engaged with the relatively small change in customer As discussed later in State and Market WRI and WWF and with its customers participation numbers at the current Distinctions, solar costs have decreased seeking customized solutions. time compared with the participation approximately 18 percent in the past year numbers at the end of 2014. as reflected in the Company’s most recent As evidenced by the Company’s IRP.13 In large part because of favorable numerous partnerships with large Although Dominion Energy had no economics, the IRP model results reflect customers and its suite of existing and large-scale solar projects in Virginia that Dominion Energy Virginia could planned customer programs detailed in at the beginning of grant term, it had potentially develop up to 5,280 MW of later sections of this report, developing already begun developing large-scale solar generation by 2042. and delivering solutions to meet solar generation outside the state a year customer demands for renewable energy before it applied for the grant project. In addition to favorable economics, remains a top priority. Dominion Energy entered the solar customer preferences continue to development business in 2013 with five be a significant catalyst for solar CUSTOMER PROGRAMS AND projects totaling 42 MW in certain states growth. Over the past several years, DISTRIBUTED GENERATION outside Virginia where, at the time, large corporate and organizational Dominion Energy Virginia has multiple solar was considered cost-effective. customers around the country have customer renewable programs and Its strategy was to learn the solar increasingly sought options to increase has learned a great deal through public development business in states where the sustainability of their operations, participation and feedback over the solar generation was cost-effective with including decreasing their carbon course of the grant term. Ongoing the goal of bringing large-scale solar footprint and increasing adoption of engagement and dialogue with its development to Virginia. Dominion renewable energy. These customers customers has been integral to the Energy has continued to expand its fleet expect their electricity providers to be process of evaluating existing customer of solar facilities around the country integral partners in these efforts, and programs for potential expansion. since that time, and its solar investments Dominion Energy Virginia has a long Engagement and dialogue are also have supported more than 2,500 MW history of customer engagement. One essential in helping the Company of large-scale solar facilities either of the Company’s first responses was propose new programs giving customers operational or under development in creation of its original Schedule RG tariff additional renewable energy options. nine states. (See Figure 2 on page 9.) intended to empower large institutional and corporate customers to meet a EXISTING PROGRAMS In 2014, after Dominion Energy larger portion of their energy needs with Both the number of options and number established itself as a leading solar renewable energy. of customers participating in Company owner in states outside Virginia, an renewable energy programs have internal strategic review indicated In charting a path forward, Dominion grown since the beginning of the grant that solar made economic sense for Energy recognizes the continued need term. At its beginning, seven customer customers in Virginia, where electric to formulate customized solutions for programs existed for the Company’s rates are significantly lower than regional customers based on their size, needs, Virginia customers: the Solar Partnership and national averages. Drivers were and preferences. There is strong Program, the Solar Purchase Program, maturing—e.g., the U.S. Environmental customer demand for renewable energy traditional net metering, agricultural net Protection Agency’s (EPA) Clean solutions, including solar generation; metering, Schedule RG, the Dominion Virginia Solar Pathways Project 2017 11

FIGURE 3: EXISTING CUSTOMER PROGRAMS AND SELECT TARIFFS AS OF DECEMBER 2014

Customer Group Size Limitations

Current Renewable Small Large Participation/ Brief Description Residential Industrial Individual Program Program Commercial Commercial Capacity (as of Sept. 30, 2017)

Demonstration program in which the Company Solar 7.7 MW at 11 constructs and operates solar DG facilities on • • • 500 kW – 2 MW 30 MW Partnership sites leased customer property

Demonstration program in which the Company Solar Res: ≤ 20 kW 1.8 MW at 146 purchases output and RECs from participants • • 3 MW Purchase Non-res: ≤ 50 kW customer sites at a premium rate; alternative to net metering

Dominion Allows customers to purchase RECs equal to 25,934 customer Energy Green • • • • None None a portion or 100% of their usage participants Power

Renewable Energy (Third- Allows qualified customers to enter into a PPA 1.5 MW at 10 • • • • 50 kW – 1 MW 50 MW Party PPA) with a third party renewable energy supplier sites Pilot

1% of adjusted peak Allows eligible customer-generators producing Res: 20 kW Net Metering • • • • load forecast for renewable energy to offset their own usage Non-res: 1 MW 21.4 MW prior year with 2,553 Allows eligible agricultural customers to net participating Agricultural Within Net meter across multiple accounts on • • • 500 kW customers Net Metering* Metering Cap contiguous property

Allows eligible large non-residential customers 100 customers and N/A pilot Rate Schedule 1,000 to 24,000 to meet a greater portion of their energy • • 240,000 MWh program has RG Pilot** MWh per year requirements with renewable energy per year expired

* Size Cap is 1.5 MW if customer is participating under the “Small Agricultural Generating Facility” Option VA Code § 56-594.2. ** Pilot program expired April 1, 2017. FIGURE 4: SOLAR PARTNERSHIP PROGRAM INSTALLATIONS AS OF SEPT. 30, 2017

Study Type Status/ Energy Green Power Program, and Map (Circuit Size Size Site In-service Location Characteristic/ (kW DC) (kW AC) Date the Renewable Energy Pilot Program. Demonstration) (See Figure 3 above.) Today, a total A Canon – Gloucester Heavily Loaded 521 500 6/14/14 of 12 programs or select tariffs are B Old Dominion University Demonstration 151 125 7/3/14 either implemented or planned. These C Capital One Heavily Loaded 633 500 12/17/14 include all programs in existence at the beginning of the grant term except the D Virginia Union University Demonstration 69 50 12/31/14 Company’s original Schedule RG tariff. E Randolph-Macon College Demonstration 69 50 3/31/15 While the original Schedule RG tariff was F Prologis – Concorde Center Heavily Loaded 859 746 3/31/15 a pilot program that was not renewed, G Philip Morris Park 500 Lightly Loaded 2,450 2,000 3/31/16 the Company submitted a petition to H Western Branch High School Heavily Loaded 1,003 806 4/25/16 the State Corporation Commission of I Merck Heavily Loaded 2,211 1,512 6/20/17

Virginia (VA SCC) on Dec. 1, 2017 to offer J University of Virginia Demonstration 452 364 3/3/17 a Schedule RG tariff as discussed later K Canon – Newport News Heavily Loaded 1,235 1,000 9/5/17 in this report. Below is a discussion of 9,653 Total 7,653 Total accomplishments and lessons learned from existing programs as well as plans for new programs, which are in varying FIGURE 5: SOLAR PARTNERSHIP stages of development. PROGRAM MAP LOCATIONS F

Solar Partnership Program 2014 I Approved by regulators in 2012, 2015 the Solar Partnership Program is a J multiyear pilot program designed to 2016 E D expand Dominion Energy Virginia’s 2017 A understanding of solar DG by studying C G K its impact and assessing its benefits H B while supporting and encouraging solar energy growth in Virginia. The current installed capacity of the program is 7.7 MW alternating current (AC). 12 Virginia Solar Pathways Project 2017

Under the Solar Partnership Program, This includes conducting circuit As of Sept. 30, 2017, the Solar Purchase Dominion Energy Virginia is authorized to analysis in advance (one of the largest program has 146 active participants construct and operate a limited amount barriers). This growing experience (116 residential and 30 non-residential) of Company-owned solar generation has allowed Dominion Energy Virginia with a total of 1,784 kW in capacity, capacity on leased rooftops or on the to leverage legal and procurement and an additional 17 participants in grounds of commercial businesses expertise and create form agreements, progress. (See Figure 6 below.) and public properties throughout its easing the overall siting process. Virginia service area. Installations range Participating customers install and own in size from 50 kilowatts (kW) to 2 MW. Further study and additional installation the solar generation systems located (See Figures 4 and 5 on page 11.) This operating information is required to on their property, but sell the electricity program was intended as a rolling five- determine if long-term benefits accrue and solar RECs back to the Company year demonstration program to study from solar DG by reducing line losses at a premium rate of 15 cents per kWh. the benefits and impacts of solar DG from on-site electricity production, Participating customers purchase all on targeted distribution circuits. Under and whether increasing the amount of of the electricity for their home or the program, each facility is studied electricity distributed through certain business from the Company on their for five years from the date it becomes targeted circuits or other specifically current rate schedule. The Company operational. identified areas of the Company’s has not determined if the program will grid produces meaningful or tangible be renewed at the end of its term. If the Accomplishments and Lessons Learned benefits to customers. The Company will program is not renewed, customers will The Solar Partnership Program has continue with efforts to understand how be notified and given the option to move provided Dominion Energy Virginia smaller, locally-sited solar generation to another program or go back to their with initial insight into the process of will affect the grid in the future. regular residential or commercial rate. integrating limited targeted amounts of relatively small solar DG facilities Solar Purchase Program Accomplishments and Lessons Learned into the distribution system. As the Approved as a demonstration program There were several challenges to program has continued to grow, by regulators in 2013, the Solar address in implementing this program. performance improvements to solar Purchase Program facilitates customer- First, the application process had to arrays and inverters have been made, owned solar DG as an alternative to ensure fairness. Dominion Energy and operational performance routinely net metering. As participants in the Virginia determined that each participant exceeds 95 percent at all participant Solar Purchase Program, qualifying must have an existing customer sites. New and larger solar PV sites have homeowners and businesses generate account. Customers can have multiple begun to introduce reverse power flow and sell electricity and solar Renewable agreements if they have multiple scenarios, reduction in circuit line losses, Energy Certificates (RECs) directly to accounts. Secondly, the Company had and peak shaving load support. Dominion Energy Virginia. The program to modify the billing system to pay was designed to help customers cover customers for generation received (up Among the biggest challenges in the cost of installing solar generation to this point, the Company had typically implementing the program have been while also promoting more local solar billed customers only for usage). In finding suitable sites, meeting circuit energy production. Dominion Energy addressing this issue, the Company had requirements, and negotiating lease Green Power directly supports the Solar to adjust its meters, in that the meter terms. Additionally, the Company Purchase Program through the purchase used to measure solar generated had found that it needed to define its and retirement of produced solar RECs. to be wired in a manner that is opposite target audience early and explain the qualifications, as it had a great deal of early interest from ineligible customers. Because of these challenges, the program’s greatest successes have FIGURE 6: SOLAR PURCHASE PROGRAM AS OF SEPT. 30, 2017 been with universities, schools, and 921 kW publicly-traded companies. In general, they have sought the installation of solar DG facilities to demonstrate their commitment to green energy, not Total 116 because of potential financial gain. Meters set: 146 kW installed: 1,784 863 kW Meters set kW reserved The Company has learned to enter Net metering transfer plus installed: 2,723 30 into a lease option before final lease 10 12 In progress negotiation. A lease option allows kW available: 277 4 5 Residential Non-residential Dominion Energy Virginia access to the site to optimize due diligence activities before a final lease is executed. Virginia Solar Pathways Project 2017 13

from usage meters. Any detection of load on the generation meter at night signals that it was wired backwards. FIGURE 7: NET METERING CUSTOMER GROWTH AS OF SEPT. 30, 2017 Lastly, since customer participation in Dominion Energy Green Power provided 2016 (YTD) 2017 (YTD) 21,405 funding for purchase of the energy from Customer growth +319 +452 customers participating in the Solar Capacity growth (kW) +3,428 +4,505 16,900 Purchase Program, the Dominion Energy Green Power vendor encountered challenges in balancing the financial 12,365 linkages between these two programs. kW AC In striking a balance, the Company Cumulative customers established a process for grouping 8,220 6,523 approvals for customer participation 5,753 in the Solar Purchase Program in 4,235 incremental segments to better align 2,553 2,101 2,173 1,654 with timing of the REC transactions 912 1,190 419 603 762 associated with Dominion Energy Green 2001-2010 2011 2012 2013 2014 2015 2016 2017 Power. However, as the Solar Purchase Program has progressed, the customer enrollment/fulfillment process has created an approval segmentation period that led to a much slower installation process than anticipated. Despite that the five-year term of purchase total installed capacity of approximately attempts at balancing transactional agreements under this program may 21.4 MW. For comparison purposes, timing between the two programs, the be perceived by some residential the one percent of adjusted peak load slower installation process has created customers as not providing enough forecast cap for Dominion Energy forecasting difficulties for the Dominion certainty to justify investment in rooftop Virginia’s service territory would Energy Green Power vendor in balancing solar. Lastly, customers also complained currently equate to approximately 200 the mix of RECs that support the funding about the issuance of a 1099 tax MW based on the Company’s 2016 of the Solar Purchase Program. form if the value of energy generated adjusted peak load. Net metering is an exceeded $600, an IRS requirement ongoing offering to customers. (See The Company was pleased that related to taxable income. Upfront Figure 7 above.) its customers were satisfied with communication about this potential the transparency, consistency, and impact has helped resolve this issue. Accomplishments and Lessons Learned predictability of the program. Superior As practiced currently, net metering is and proactive communication are key; Net Metering a billing mechanism that credits solar for example, Dominion Energy Virginia Traditional net metering has been in energy system owners for the electricity created an electrical guide in response place in Virginia since the year 2000, they add to the grid. Customers are only to confusion regarding metering subject to an overall cap of one percent billed for their “net” energy use, are and wiring. Additionally, Dominion of the adjusted peak load forecast for credited at the retail rate for the energy Energy Virginia recognized that it was each utility for the previous year, and their systems place on the grid, and in communicating with two very different allows eligible customer-generators some cases, they only pay the basic parties: the customer and the installer/ producing renewable generation to monthly charge, taxes, and fees. With a electrician. Appropriate communication offset all or part of their own electricity growing number of customers interested with both is critical to success. usage consistent with Va. Code § in net metering, challenges for utilities 56-594 and regulations governing net begin to increase. Because they pay Among the most notable complaints metering in the Virginia Administrative no charges for their kWh consumption were the upfront wiring costs for Code (20 VAC 5-315-10, et seq.). While that is offset by their onsite generation, second metering, which averaged net metering participation in Dominion many net metering customers do not approximately $1,200. The Company Energy Virginia’s service territory is well understand how they are still using the believes that this led to fewer below the one percent cap, the Company grid (HVAC systems, for example, cannot conversions from net metering than has experienced steady growth in net start without the surge provided by had been anticipated; large customers metering participation. As of Sept. 30, grid connection). But utilities still have didn’t migrate from net metering to the 2017, out of the Company’s total 2.6 the costs associated with building and program, and none of its customers million customer base in Virginia and maintaining wires, transformers, poles, subject to standby charge have North Carolina, there are 2,553 net line workers, trucks, and other assorted converted. It has also been conveyed metering customer-generators with a costs related to grid maintenance. This 14 Virginia Solar Pathways Project 2017

maintenance has a cost which is partially incorporated in customer rates, but net metering allows FIGURE 8: DOMINION ENERGY GREEN POWER PARTICIPATION Total Option customers to avoid paying some AS OF SEPT. 30, 2017 MWh 26,973 25,934 of these costs, which then must 25,307 2009 22,995 Option Total 24,104 be borne by other customers not 2010 81,968 100% 54% participating in net metering. 20,033 2011 116,576 Block 46% 2012 151,845 Net metering highlights the 15,288 13,884 2013 164,333 need for additional customer 12,100 2014 244,855 communication to explain these 2015 345,226 issues surrounding net metering 6,104 and grid modifications. It also 2016 336,917 highlights a need to develop 2017 205,181 collaborative and cooperative Total 1,669,896 2009 2010 2011 2012 2013 2014 2015 2016 2017 approaches to addressing these challenges and the need for advanced metering infrastructure (AMI), which can provide better data collection to help and expands the size of eligible solar Accomplishments and Lessons Learned quantify the impacts of net metering. projects to 1.5 MW and 150 percent of Throughout the Schedule RG pilot A debate regarding the extent of the farm’s usage. Eligible customers program, several customers expressed costs and benefits associated with may elect to interconnect through interest, but the program concluded net metering is ongoing around the the new offering or the traditional with no participants. Through customer country. Net metering, by its nature, agricultural net metering offering. feedback, the Company learned that is dependent on the underlying rate As of Sept. 30, 2017, one customer is the primary barrier to participation was structure, so cost recovery issues participating in agricultural net metering. the premium purchase price for the may be addressed through changes to renewable energy and the associated the underlying retail rate design. Net Accomplishments and Lessons Learned RECs. Customers also said that the metering policies have already been Options for agricultural generators are administrative costs were too high. modified in several states. Other states being expanded to offer an additional Taking into consideration this and other are examining the structure of net compensation mechanism as an feedback from customers, the Company metering to consider modifications to alternative to conventional agricultural filed a petition with the VA SCC on the structure of the billing mechanism. net metering. Also, under this additional December 1, 2017 for approval to offer a 16 The grid modernization plan currently mechanism, agricultural generators revised version of Schedule RG. As part under development by the Company will be able to install significantly of its ongoing commitment to provide includes the deployment of smart larger systems than permitted under programs that meet its customers’ meters, which will allow more precise conventional agricultural net metering. needs, the Company has also proposed data collection on a sub-hourly basis several additional program offerings of the customer’s usage of energy from Renewable Energy Supply Service and select tariffs, since the initial version the grid. In some states, smart meter —Schedule RG of Schedule RG was approved in 2013. data has helped inform a new structure Approved by regulators in late 2013, Rate Figure 9 on page 15 provides a matrix of for net metering to address some of Schedule RG (Renewable Generation) new Dominion Energy Virginia programs the above-referenced challenges. was a pilot program that provided and select tariffs (implemented or qualifying large non-residential under development since 2014). Agricultural Net-Metering customers in Virginia with the option to In 2013, the Virginia General Assembly meet a greater portion of their energy Dominion Energy Green Power enacted agricultural net metering to requirements with renewable energy. Dominion Energy Green Power allows allow agricultural customers to net Eligible customers would elect to sign customers to promote renewable meter across multiple accounts on a contract for the Company to purchase energy by purchasing, through the contiguous property. During the 2017 additional amounts of renewable energy Company, RECs in discrete blocks Virginia legislative session, additional from a third party as determined by the equal to 100 percent of their usage or options were made available to customer. As designed, the program a portion of their usage. The Company agricultural customer-generators. was capped at 240,000 megawatt-hours purchases and retires RECs on behalf of The legislation allows farm owners (MWh), 100 customers, or three-year participants. There are approximately to enter into agreements with utilities enrollment period, whichever occurred 25,934 customers participating in this to sell their on-site solar output at first. The original Schedule RG pilot program as of Sept. 30, 2017. (See Figure market price plus a capacity credit program concluded on April 1, 2017. 8 above.) Dominion Energy Green Power Virginia Solar Pathways Project 2017 15

FIGURE 9: NEW CUSTOMER PROGRAMS AND SELECT TARIFFS (IMPLEMENTED OR UNDER DEVELOPMENT SINCE 2014)

Customer Group Size Limitations

New Renewable Small Large Brief Description Residential Industrial Individual Program Program/Tariff Commercial Commercial

Community Solar Allows customers to purchase energy and RECs from solar Each site: Program: 10 • • •** •** Pilot* facilities in communities in Virginia service area ≤ 2 MW MW

100% Renewable Must = 100% Option—Large • • of customer None Commercial* Allows eligible customers to purchase energy, capacity, and load 100% Renewable RECs to meet 100% of their energy usage 100% of the time Must = 100% Initial cap = Option—Residential • • of customer 25 MW of peak and Small Commercial* load customer load

Allows eligible large non-residential customers to meet a greater Up to 100% of Initial cap = 50 Revised Schedule RG* • • • portion of their energy requirements with renewable energy customer load customers

Allows customers to take service under rate schedules Market Based Rate ≥ 5 MW and that more closely match pricing in the wholesale market to (MBR) Schedule • • ≥ 85% load 200 MW*** financially correlate wholesale renewable energy purchases (Experimental) factor with their retail billing

Allows customers to promote development of new Each customer Schedule RF renewable energy generation facilities by enhancing their must add ≥ • • None (Experimental)* cost effectiveness for all customers in exchange for the 30,000 MWh of environmental attributes for up to 100% of the facility new load

* Programs are proposed and not yet approved. Design parameters are preliminary and subject to change. ** Potential participation as program sponsor. *** Applies to the Experimental MBR approved by the VA SCC in 2016 in Docket No. PUE-2015-00108. is Green-e® Energy certified, and meets capacity of approximately 1.5 MW (either the environmental attributes. New the environmental and consumer- operational or under construction). This offerings of experimental Market-based protection standards set forth by the Program is administered through the VA Rate (MBR) Schedules have also been nonprofit Center for Resource Solutions. SCC. Dominion Energy Virginia, as a pilot approved by the VA SCC since the This program is ongoing. utility, tracks program participation and inception of the Virginia Solar Pathways complies with Commission reporting Project. The MBR Schedules allow Accomplishments and Lessons Learned requirements. The 2013 legislation that large non-residential customers to take According to the National Renewable established the Renewable Energy Pilot service under rate schedules that more Energy Laboratory’s “Top 10” rankings Program in Dominion Energy Virginia’s closely match pricing in the wholesale for Utility Green Power Programs for service territory did not contain a sunset market to financially correlate wholesale 2016, Dominion Energy ranked 6th for date for the pilot in the Company’s renewable energy purchases with their customer green power participation, service territory; however, the legislation retail billing. Figure 9 above describes with 24,104 customers participating, does require the VA SCC to review the new programs. and ranked 7th in customer green the pilot program every two years to power sales, with 336,917 MWh/ determine whether certain limitations Community Solar year in sales. Dominion Energy Green of the legislation should be expanded, Working through a stakeholder process Power demonstrates that customers reduced, or continued. in 2016 helped to establish a community are interested in supporting renewable solar framework. Legislation requiring energy, even at a premium. There is a NEW PROGRAMS AND utility-administered community solar substantial and growing appetite for SELECT TARIFFS pilot programs was approved during sustainable, green energy solutions The additional customer programs and the 2017 Virginia legislative session. among all customer classifications. select tariffs currently proposed include Dominion Energy Virginia anticipates community solar pilot, a 100 percent requesting VA SCC approval of a Renewable Energy (Third-Party PPA) renewable energy option for large community solar pilot by the end of Pilot commercial customers, a 100 percent 2017 or in early 2018. An expanded Facilitated by 2013 Virginia legislation, renewable energy option for residential description of the program, as well as the Renewable Energy Pilot Program17 and small commercial customers, and the stakeholder process which was allows qualified customers to enter into a new version of Schedule RG designed implemented to develop the program, is a Power Purchase Agreement (“PPA”) to allow non-residential customers to described later on page 19. with a third-party renewable energy meet a larger portion of their energy supplier. The energy supplied must requirements with renewable energy Continuous Renewable Generation (CRG) come from a wind or solar generator from a dedicated resource. Schedule RF, (Tariff for 100 percent renewable energy located on the customer’s premises. The another newly proposed experimental 100 percent of the time) program includes an aggregate cap of 50 tariff, would allow large non-residential Large energy users have become MW. As of Sept. 30, 2017, 10 customers customers to promote development increasingly interested and sophisticated are participating with a total installed of renewable energy in exchange for regarding renewable energy 16 Virginia Solar Pathways Project 2017

procurement. Many of the Company’s Specifically, the Company’s proposed of accounts, whereas the revised largest users have set their own goals CRG Rate Schedules are designed to Schedule RG permits a single customer for vastly increasing their support serve eligible customers who wish to to aggregate multiple accounts. Third, of renewable energy. Some large displace 100 percent of their traditional the administrative charge under the customers are setting goals to achieve tariff electricity supply from the original Schedule RG Pilot Program was 100 percent renewable energy within Company with the supply of renewable $500 per month per account served. just a few years. Additionally, many large energy provided by the Company on By contrast, the revised Schedule RG energy users are working together and a continuous hourly basis through administrative charge is assessed for with their respective utilities to, among a portfolio of resources assembled each customer per renewable generation other things, expand their choices for by the Company on behalf of such facility, which may serve multiple buying renewable energy. customers.18 In May 2017, the Company accounts for the same customer. filed for regulatory approval of CRG Fourth, unlike the original Schedule RG In response to this growing interest, the Rate Schedules for large commercial Pilot Program which restricted each Company is continually engaged with customers. A 100 percent renewable customer’s renewable energy purchases its customers to learn about their needs energy tariff option for residential, to a maximum of 24,000 MWh per year, and desires, and to provide solutions small commercial, or other customers the revised Schedule RG only limits where appropriate. The Company’s not meeting the CRG Rate Schedule participating customers’ renewable goals in working through these solutions renewable energy demand threshold energy purchases to the customer’s include both serving these customer for large commercial customers was actual annual energy load. Because needs and supporting renewable filed in November 2017.19 Both CRG Rate these improvements were based generation and economic development Schedule petitions are currently pending on discussions with customers, the in the Commonwealth. For commercial before the VA SCC. Company believes they will significantly and industrial customers, the Company increase customer interest in the revised currently offers renewable energy Revised Schedule RG Schedule RG. program options including, among As referenced earlier, on Dec. 1, 2017, others, Dominion Energy Green Power, Dominion Energy Virginia filed a Market Based Rate Schedules which allows customers to support petition20 seeking approval of an offering In 2016, the VA SCC approved Dominion renewable energy through the purchase that would improve upon its original Energy Virginia’s petition to establish of RECs in varying increments, and the Schedule RG Pilot Program, which is experimental MBR Rate Schedules. The Solar Purchase Program, which allows described earlier in the report and which Experimental MBR Rate Schedules were the Company to purchase the output ended in early 2017. The revised Schedule designed for customers with a high and associated RECs of participating RG is intended to allow eligible non- load factor who may be interested in customers’ privately-owned solar residential customers to meet a greater rate schedules that more closely match generation at a fixed premium rate. portion (up to 100 percent) of their energy pricing in the wholesale market. The requirements with renewable energy. optional MBR Rate Schedules allow In recent years, the Company has The revised Schedule RG is proposed to customers, who may be considering also completed transactions with have an initial aggregate participation or actively making investments of their large customers, including the cap of 50 customers, but the Company own in renewable generation at the U.S. Department of the Navy, the has asked to reserve the right to propose wholesale level, to financially correlate Commonwealth of Virginia, and a large an increase of the initial customer cap in their wholesale PJM electric market university, which have supported their the future, if needed. participation with their retail billing. This renewable energy development goals. structure has been publicly recognized as At present, the Company continues to The revised Schedule RG makes four an innovative renewable energy solution. be engaged with several other existing significant improvements upon the and prospective customers with similar original Schedule RG Pilot Program. The MBR Rate Schedules contain requirements. To date, these customers First, under the original Schedule RG a margin intended to cover any have uniquely been interested in solar Pilot Program, the billing adjustment differences between the MBR and the energy, where the Company has seen received by participating customers actual marginal PJM costs for serving very favorable cost reductions in recent was a credit primarily based on the participating customers, and provide years. However, a typical solar output Company’s fuel rider charge for the some contribution toward the Company’s profile does not match any customer’s quantity of renewable energy purchased. administrative and fixed costs. The MBR load profile, and using solar alone Under the revised Schedule RG, a Rate Schedules are available to any to achieve a 100 percent load offset participating customer will see a billing customers eligible for the Company’s creates volume balancing challenges adjustment reflecting the market Rate Schedules GS-3 or GS-4, have a for these customers. With the CRG Rate value of renewable energy purchased measured peak demand of 5 MW or Schedules, the Company intends to from specified renewable energy more, have a qualifying average monthly secure a volume matching 100 percent resources under the rate schedule. load factor of at least 85 percent, provide renewable energy portfolio for its Second, the original Schedule RG Pilot a signed officer certification affidavit, and customers who desire such a solution. Program did not permit aggregation meet the additional criteria set forth in Virginia Solar Pathways Project 2017 17

the MBR Rate Schedules. The MBR Rate conventional rate-based cost-of-service in a state, such as Virginia, with Schedules have a combined aggregate ratemaking process works well in the vertically integrated utilities, is through participation cap of 200 MW. The MBR case of generation assets intended to the use of a cost-of-service rate-based Rate Schedules contain a minimum serve an entire customer base, since approach. Dominion Energy Virginia three-year term with automatic renewals, costs are shared across the entire has taken the regulated rate-based on a year-to-year basis, subject to certain customer base for the life of the asset. approach with three of its large-scale qualifications and requirements, with the In addition, in recent years, Dominion facilities: the Whitehouse Solar facility overall term of the MBR Rate Schedules Energy Virginia has been approached by (20 MW in Louisa County), Woodland proposed to expire on Dec. 31, 2022. certain large customers in Virginia who Solar facility (19 MW in Isle of Wight have expressed a desire for a greater County), and the Scott Solar facility (17 Schedule RF portion of solar energy assets dedicated MW in Powhatan County), which were On Oct. 23, 2017, Dominion Energy to the customers’ specific needs. Thus, approved by regulators in June 2016 and Virginia filed a petition with the VA SCC Dominion Energy has established became operational in December of that seeking approval for Schedule RF, an additional financing pathways to same year to serve Dominion Energy’s experimental, voluntary companion provide dedicated solar generation for 2.6 million customers in its Virginia and tariff available to eligible existing or new specific customers. These additional North Carolina service territories. commercial and industrial customers financing pathways are structured to Under this approach, a utility identifies who (1) will bring incremental load to ensure that costs to provide dedicated the need for more electric generation the Company’s system that will support solar generation to specific customers to serve all customers in its entire the development of new renewable are borne only by the respective electric service territory. The utility generation facilities and (2) commit customers to whom the solar generation then evaluates alternative options for to support the development of such is dedicated, since it would not be meeting that need, either through the renewable generation facilities by equitable to allocate these costs to the purchase of power in the market (e.g., enhancing their cost-effectiveness remainder of the customer base. from PJM or third-parties) or building for all customers in exchange for the new generation. If the evaluation environmental attributes associated Below is an overview of the three indicates that building new generation with these new facilities in an amount pathways Dominion Energy has utilized is in the best interest of customers and that corresponds to up to 100 percent of to achieve the rapid expansion of solar aligns with the state’s policy goals, the energy the facilities produce.21 capacity in Virginia since 2015: (1) then the utility files a petition with its regulated rate-based facilities under regulator for a Certificate of Public Any customer wishing to participate a cost-of-service model; (2) regulated Convenience and Necessity (CPCN). In a in the proposed Schedule RF must “ring-fenced” facilities; and (3) merchant CPCN proceeding, the utility must prove add new load of at least 30,000,000 solar developed by an unregulated that the proposed electric generation kWh at one account or in total across Dominion Energy affiliate. facility is the appropriate option, among multiple accounts. The customer the available alternatives, for supplying would also be required to execute a Regulated Rate-Based Facilities (Cost- additional electricity to its customers. separate contractual agreement with of-Service) the Company committing to purchase The conventional path for developing The VA SCC, which regulates Dominion environmental attributes from one large-scale electric generation projects Energy Virginia and other public utilities or more new renewable generation WOODLAND SOLAR facilities associated with the customer’s incremental energy and capacity needs.

Scout Development LLC, a subsidiary of Facebook, Inc. (Facebook) has already made a provisional commitment to subscribe to Schedule RF, if approved by the VA SCC. The commitment from Facebook is the first of what the Company hopes will be multiple commitments of its kind.

LARGE-SCALE SOLAR A key to Dominion Energy’s success in rapidly expanding large-scale solar in Virginia has been the use of multiple regulatory and financing structures customized to align with the needs of different customer segments. The 18 Virginia Solar Pathways Project 2017

in Virginia, has a 9-month period to with Dominion Energy Virginia that falls with renewable energy, which equates consider a small renewable energy outside the jurisdiction of the VA SCC to about 110 MW of solar energy. In project like a typical solar facility for which regulates its service with non- early 2016, Dominion Energy Virginia approval; however, from the time the governmental retail customers. The non- and the Commonwealth signed a utility begins to prepare its filing to the jurisdictional nature of these contracts cooperative agreement to help reach time the regulator rules on its CPCN, allowed Dominion Energy Virginia to this goal. Dominion Energy Virginia the process can take a year or more. develop a novel “ring-fencing” structure will develop approximately 75 percent The CPCN process is robust for good whereby the Company builds a regulated of this capacity through large-scale reason. The regulator must compare asset that is dedicated to one or more solar facilities with the remaining the cost and resource characteristics specific customers, with costs for the 25 percent being provided by third- of the proposed facility, such as a asset segregated and assigned only to party solar developers in the form of large-scale solar facility, with the cost the dedicated customer(s). smaller scale solar facilities. Dominion and resource characteristics of other Energy Virginia is currently developing types of generation: e.g., coal, natural Up until the 2017 Virginia General additional solar facilities in partnership gas, nuclear, and other renewables. Assembly session, Dominion Energy with the Commonwealth of Virginia. To approve the CPCN, the regulator Virginia was still required to undergo Located in Fauquier County, the 20 must ensure that the proposed facility, a full CPCN process even for ring- MW Remington Solar Facility has been in this case a solar installation, is the fenced facilities; however, since each approved by regulators, and it became appropriate option among all the ring-fenced facility is dedicated to one operational on Oct. 1, 2017. Microsoft available options and that the cost customer who bears the full cost of the has agreed to purchase the renewable of constructing it is reasonable and asset, while all other customers are attributes from the facility, which prudent. Improving solar economics left neutral from a cost perspective, lowers the overall cost of the project have been integral to the success of this the CPCN proceedings for ring-fenced to the benefit of the Commonwealth, approach. facilities have been non-controversial. which is purchasing the output from In 2017, the Virginia General Assembly Dominion Energy Virginia under a As discussed earlier, Dominion Energy approved legislation that expands long-term agreement. Virginia recently filed a petition with an expedited “Permit by Rule” (PBR) • Oceana – In Aug. 2016, Dominion the VA SCC for Rate Schedule RF, which process for seeking approval of Energy Virginia announced the 18 would allow qualifying customers renewable facilities that fall outside of MW Oceana Solar installation, which to support the development of new VA SCC jurisdiction, such as ring-fenced was approved by state regulators in renewable energy facilities by enhancing assets for non-jurisdictional customers. March 2017. The facility located at their cost-effectiveness for all customers Naval Air Station Oceana in Virginia in exchange for the environmental Under the PBR process, the utility will Beach became operational on Dec. attributes associated with these new now be able to forgo the lengthier 1, 2017. The Commonwealth will facilities in an amount up to 100 percent CPCN process in favor of a streamlined purchase the energy output as well of the energy they produce. Through permitting process through the Virginia as the renewable attributes from the the proposed Schedule RF, Facebook Department of Environmental Quality facility, and the Navy will receive an has indicated the desire to support (DEQ) for large ring-fenced solar alternative electric feed, which will the development of new renewable facilities. This means that permitting increase resiliency on the base. resources equivalent to the energy of these facilities can be done faster usage at a new data center it plans and more efficiently, resulting in lower • UVA Hollyfield — In Nov. 2016, to build in Henrico County, Va. The administrative costs and more rapid Dominion Energy Virginia announced Facebook commitment is expected to growth of dedicated solar customers. the 17 MW UVA Hollyfield Solar facility lead to the development of up to 300 under development in King William MW of solar generation being added to Since late 2015, Dominion Energy County, Virginia. The University of the grid in Dominion Energy Virginia’s Virginia has announced several large- Virginia (UVA) and its Darden School service territory. scale solar facilities that are being of Business will purchase the entire developed to serve its customers under output under long-term agreement, Regulated Ring-Fenced Facilities the ring-fenced model: which represents about 12 percent In recent years certain large customers, of UVA’s electric demand. Having • Morgans Corner — 20 MW facility such as the U.S. Navy and the recently obtained PBR approval, the operational in Pasquotank County, Commonwealth of Virginia, have facility is expected to begin operating NC to serve the U.S. Navy, profiled in approached Dominion Energy Virginia by year 2018. more depth on page 21; to explore ways to contract for a larger • UVA Puller — This 15 MW facility in amount of dedicated solar energy • Remington — In late 2015, the Middlesex County, Va. to serve the to serve their needs. Governmental Commonwealth of Virginia, one of University of Virginia is expected to customers in Virginia are considered Dominion Energy Virginia’s largest come online in 2018. non-jurisdictional, meaning that they utility customers, announced a goal to obtain electric service under a contract meet eight percent of its energy needs Virginia Solar Pathways Project 2017 19

Merchant Solar—Developed by cover approximately 1,000 acres with facilitated by 2017 legislation related to Unregulated Dominion Energy Affiliate a total generating capacity of 80 MW utility-administered community solar In addition to the two regulated collectively utilizing more than 300,000 pilot programs in Virginia. pathways, rate-based and ring-fenced solar panels. Dominion Energy has discussed above, Dominion Energy has signed an engineering, procurement and For several years in Virginia, proposed also begun developing solar in Virginia construction (EPC) contract with Strata legislation involving key topics related via affiliates not regulated by the VA Solar to construct the projects. This to solar and other renewable energy SCC. The term “merchant” is used to announcement also included an additional policies often ended in stalemate due describe a generation facility owned 100 MW solar facility being developed to the divergent and conflicting views by an independent power producer in Southampton County, Va. The five among various impacted stakeholders, not subject to regulation by a state additional facilities are expected to begin including solar advocates and electric public utility commission including generating electricity in late 2017. These utilities. During the 2016 session of the an unregulated affiliate of an electric newly announced projects bring the total Virginia General Assembly, the Chairmen capacity of Dominion Energy’s solar utility. The merchant pathway can only of the House and Senate Commerce and energy alliance with AWS to 260 MW. be used with counterparties, who want Labor Committees (in which the majority to contract for power in the wholesale of energy-related legislation in Virginia Aside from the Amazon Alliance, PJM marketplace. Amazon Web Services is considered) formed a subcommittee Dominion Energy is also utilizing (AWS) is one such counterparty. on renewable energy which requested the merchant pathway in Virginia to a collaborative process with relevant Within the last few years, AWS has construct solar for wholesale customers. stakeholders be convened to discuss sought to rapidly expand the amount For example, the company recently solar policy and legislation. of renewable energy supporting its announced the acquisition of the 20 operations. AWS has publicly shared a MW Cherrydale facility in Northampton To inform the subcommittee, several long-term goal to achieve 100 percent County, Va. and the 10 MW Clarke relevant stakeholders convened with renewable energy usage for its global County facility in White Post, Va. to serve Mark Rubin of the Virginia Center infrastructure. AWS also established a the customers of Old Dominion Electric for Consensus Building at Virginia new target to be powered by 50 percent Cooperative (ODEC). Commonwealth University as their renewable energy by the end of 2017. facilitator. In addition to Dominion Given AWS’ desire for adoption of COMMUNITY SOLAR Energy Virginia, members of the 2016 significant amounts of renewable energy Customer interest in subscribing to Rubin Solar Collaborative (as it came in a relatively quick turnaround time successful and sustainable community to be known) were Appalachian Power combined with their ability to participate solar programs has gained momentum Company (investor-owned utility serving in the PJM wholesale market, Dominion around the country in the past several the southwestern region of Virginia), Energy was able to utilize the merchant years. Community solar programs allow Virginia’s electric cooperatives, the pathway to support AWS’ renewable customers to “go solar” even if they Maryland, Virginia, and DC Solar Energy energy goals. cannot or do not wish to install solar Industries Association (MDV-SEIA), and panels on their homes or businesses. Powered by Facts (a renewable energy In Nov. 2015, Dominion Energy acquired Dominion Energy Virginia began advocacy organization). an 80 MW solar facility located in exploring this option in 2013, and in Accomack County on Virginia’s Eastern Aug. 2015, the VA SCC approved the Shore to increase the renewable energy Company’s proposal to establish a The Rubin Solar Collaborative spent on the electrical grid that supplies both Dominion Community Solar (“DCS”) pilot several months in 2016 educating each current and future AWS data centers. program. The goal of the experimental other on their various points of view and This was the first solar facility acquired Rider DCS was to give residential and identifying areas where they needed by Dominion Energy to serve AWS. commercial customers a convenient further discussion as well as areas Following the completion of that project option to support the development where they thought they could reach in Oct. 2016, a major expansion of its of additional Company-owned solar compromise. They identified several solar energy collaboration with AWS distributed generation facilities in topic areas where they thought they was announced in Nov. 2016, to add Virginia without the personal investment could work together to advance solar 180 MW of solar generating capacity in of installing solar panels and related generation in Virginia. Those areas five Virginia counties. Dominion Energy equipment at their homes or businesses. included: has acquired four 20 MW projects from While the VA SCC ultimately approved • Utility-administered community solar; Virginia Solar LLC and is developing Rider DCS, the Company requested in these facilities in Buckingham, New the spring of 2017 that the Commission • Expansion of self-generation options Kent, Powhatan (Scott II), and Sussex allow it to cancel the experimental for agricultural customers; Counties. program before it became operational. • Streamlined permitting for larger solar The Company sought cancellation of projects; and In total, the solar installations at the program because of its plans to parcels in these four counties will develop a new community solar offering • Others. 20 Virginia Solar Pathways Project 2017

On the community solar topic, the In terms of the regulatory process, discussed above, Dominion Energy Rubin Solar Collaborative needed more the pilot program design, costs, and Virginia is forecasting that solar energy input from subject matter experts to rate schedule(s) are subject to VA SCC will play a major role in meeting further develop a concept for how best review and approval. The legislation the energy needs of customers for to structure community solar programs does not contain a deadline for the VA years into the future. That is because in Virginia. Therefore, they established SCC to act on the Company’s petition to solar technology, for the first time, a Community Solar Working Group launch the Community Solar program; is now cost-competitive with other which consisted of the original Rubin however, the legislation does require more traditional forms of electricity Solar Collaborative members in addition the Company to launch the program generation, primarily because of to other parties. The Community within 6 months of VA SCC approval. In its current favorable economics. As Solar Working Group commissioned designing its community solar program reported in Dominion Energy Virginia’s a request for information (RFI) and structure, Dominion Energy Virginia is 2017 IRP, the installed cost of solar conducted listening sessions around the endeavoring to apply lessons learned PV generation has decreased by Commonwealth.22 from the SEPA community solar study approximately 18 percent since the filing 23 conducted for this grant project. The of its 2016 IRP. Because of the feedback from the SEPA report notes that customers desire community solar listening sessions and flexibility, simplicity, and affordability In the Company’s 2017 IRP, large responses to the RFI, the Rubin Solar as key design attributes for community amounts of solar PV resources are Collaborative worked through several solar programs. Accordingly, the included not only because of their topics at a granular level to determine a Company plans to design its community zero-emissions characteristics, but also conceptual framework for a community solar program in a manner to avoid because of their optimal economics. In solar program structure. Senate Bill both high upfront costs and long-term fact, all but one of the IRP’s modeling 1393, enacted in 2017, requires Dominion participation commitments. plans call for the addition of at least Energy Virginia and Appalachian Power 3,200 MW of additional solar capacity to the Company’s generation fleet by 2032 Company to conduct 3-year community The Company is actively researching and at least 5,280 MW of additional solar solar pilot programs in their respective options for facilitating low-income capacity by the conclusion of a longer, Virginia service areas. Dominion Energy customer participation in community 25-year study period concluding in 2042. Virginia is working with internal and solar. As part of its stakeholder meetings external stakeholders to refine the dedicated to the development of a This solar development builds upon program design within the requirements community solar program, the Company a solid foundation. The Company has of the legislation with the aim to request discussed its intention to evaluate already added 56 MW of solar capacity to VA SCC approval of a community solar options for low-income customer its fleet in Virginia, and has also built or is pilot by the end of 2017 or early 2018. participation in the Community Solar Utility-administered community solar developing other solar facilities serving Pilot and specifically sought input from programs required by Senate Bill the needs of specific governmental and meeting attendees on this topic. The 1393 will allow Virginia retail electric large business customers. Additionally, Company hosted four conference calls customers to subscribe to solar energy Dominion Energy Virginia anticipates in the third quarter of 2017 with entities through a voluntary, companion signing long-term contracts with 990 that are familiar with community solar rate schedule. Program costs will be MW of solar facilities built by non-utility programs and low-income participation recovered through the rate schedule and generators in Virginia and northeastern in such programs to obtain lessons will not be passed to non-participants. North Carolina by 2022. learned and to understand how the programs work. These entities included To supply its community solar program, The 2017 IRP includes, for modeling NREL and non-profit organizations Dominion Energy Virginia has issued a purposes, large-scale solar facilities focused on advancing solar energy and public request for proposals (RFP) for that are assumed to be between 20 MW having specific expertise in low-income all energy and RECs from qualifying and 80 MW in size and predominantly solar programs. Beyond Dominion third-party solar facilities. The RFP interconnected to the Company’s Energy representatives, members of the includes both the price and non-price transmission network. But in reality, expanded Rubin Solar Collaborative with evaluation criteria. Requirements for solar PV can be a collection of different- interest and expertise in low-income qualifying solar facilities are as follows: sized facilities ranging from just a few solar also participated on one or more of they (1) may not be constructed by a kilowatts to 100 MW or more, which may these conference calls. utility; (2) must be placed in service be interconnected along the Company’s on or after July 1, 2017; and (3) must distribution or transmission networks. be sized less than or equal to 2 MW or LONG-TERM FORECAST FOR SOLAR The Company must now prepare for a carve out of up to 2 MW of a larger TO SERVE DOMINION ENERGY a future in which solar PV generation facility. The aggregate generating VIRGINIA’S CUSTOMERS is anticipated to become a major capacity of the eligible generating In addition to the existing and planned contributor to the Company’s overall facilities must be at least 10 MW but solar energy facilities and the existing energy mix. not more than 40 MW. and planned customer programs Virginia Solar Pathways Project 2017 21

Overcoming Challenges to a Successful Solar Strategy Despite Dominion Energy’s interest in solar energy generation and efforts to actively incorporate large-scale solar into its generation portfolio, several challenges specific to large-scale solar and often unique to Virginia stood in its way.

A common challenge to all utilities, the approval for construction and ownership in North Carolina, Dominion Energy economics of solar were particularly of solar assets where cost recovery Virginia’s first regulated large-scale solar difficult in Virginia because of its low follows traditional cost-of-service based project. The structure set in place for retail electric rates. Other issues, ratemaking. Morgans Corner continues to serve as a such as federal tax policy and unique model for additional solar facilities being state policy distinctions had to be To overcome the tax normalization developed in partnership with Dominion overcome. Below is a discussion of challenge, Dominion Energy Virginia Energy Virginia’s large customers in its these challenges and how they were requested and received a PLR from the electric service territory. overcome to allow Dominion Energy’s IRS confirming that the normalization solar portfolio in Virginia to grow to requirement is not applicable if rates are Morgans Corner 744 MW of solar generation either in not established based upon the cost-of- In 2014, the U.S. Navy set a goal to operation or under development in service method. bring one gigawatt of renewable energy Virginia, and to project the development into procurement by the end of 2015 of as much as 5,200 MW of solar in the PRIVATE LETTER RULING and established the Renewable Energy Company’s service territory by 2042, as Dominion Energy Virginia was the Program Office (REPO) to work with described in its 2017 IRP. first utility in the country to seek and receive a PLR from the IRS providing utilities and others to reach this goal. To address their needs, Dominion FEDERAL TAX POLICY for favorable tax treatment which allowed the Company to realize the Energy Virginia selected the Morgans Tax normalization, which requires a financial benefits of the federal ITC in Corner solar facility as the best option utility to spread the benefit of a solar year one as opposed to normalizing the to bring solar to Naval Station Norfolk, installation’s ITC and accelerated tax tax credits over the life of a project so the world’s largest naval station. The depreciation ratably over the life of the long as certain conditions are met. This Company acquired the 20 MW solar asset, poses a challenge to the groundbreaking IRS ruling enhanced facility, already under development, and development of utility-owned solar. The the financial viability of the Company’s entered into a long-term agreement with motivation behind normalization 20 MW Morgans Corner solar facility the Navy to purchase the output. requirements for these tax benefits as promulgated by Congress was to MORGANS CORNER incentivize capital investment and not subsidize ratepayers—thus, normalization respects the cost-of- service method of ratably recovering capital investments. Conversely, an independent power producer (IPP) typically establishes a price for a PPA by incorporating the time value of money— allowing for such tax benefits to be essentially flowed back faster than ratably since IPPs are not subject to normalization requirements. This can result in an increase in the levelized cost of energy over the lifetime of a utility- owned solar project as compared to an IPP-owned facility.

As an additional hurdle, because regulated utilities are generally required to use the least-cost standard as well as tax normalization, utilities experience challenges in obtaining regulatory 22 Virginia Solar Pathways Project 2017

Typically, utilities are required to of government, reflected in the AAA if the utility were to simply purchase normalize the tax credits over the life bond rating it has enjoyed since the power from an IPP. As a result, until of the project in part because rates for 1930s, that has mitigated against recently solar development was a public utility service are established on a adopting some of the state-level means of addressing environmental rate-of-return basis. However, since the incentives employed in other states to concerns and greenhouse gas targets, rate established in the renewable energy encourage solar development, such as or was accomplished only through small supply contract with the Navy was a state tax credits, mandatory RPS, and feasibility pilot projects. Two primary negotiated rate, and not established other subsidies. While these aspects drivers addressed this challenge: on a rate-of-return basis, the IRS PLR presented challenges to solar confirmed that normalization of the development, Dominion Energy has Yancey Legislation ITC over the life of the facility is not overcome these challenges through a In 2015, Virginia Delegate David Yancey required. This groundbreaking IRS ruling mix of creative partnerships, novel sponsored House Bill 2237, which enhanced the financial results of this financing approaches, and a landmark declared 500 MW of solar generation project, and provides long-term cost IRS ruling. constructed or purchased by electric stability and energy savings for the Navy utilities to be in the public interest. over the term of the contract. Unlike many of its neighboring utilities in HB 2237 has helped to catalyze the the Southeast, Dominion Energy Virginia development of solar energy in Virginia. In addition to the PLR, Dominion Energy is a member of the PJM wholesale This legislation also allows utilities to Virginia faced a unique challenge: market.24 Membership in PJM has helped propose an alternative cost recovery “How to provide a greater amount of facilitate the creative partnerships that mechanism, a market index in lieu renewable energy to its largest customer have resulted in the significant growth in of cost-of-service, when proposing without impacting the energy costs solar capacity in Virginia. Dominion construction of a solar facility for of its remaining utility customers?” Energy Virginia’s membership in PJM its customers. The market index Creative problem solving led to the means that a customer can enter into a mechanism, in conjunction with the solution: an innovative “ring-fenced” dedicated regulated, ring-fenced landmark IRS PLR issued to Dominion agreement, which was supported by the contract for solar facilities, as referenced Energy Virginia, provides an avenue groundbreaking IRS ruling. The “ring- on page 18, with the solar output actually for the utility to take the benefit of fence” approach provided a dedicated being cleared in the PJM market which the federal ITC upfront, instead of solar facility that supplies the equivalent can then also be reconciled with the normalizing it over the life of the asset, of 6 percent of Naval Station Norfolk’s customer. PJM membership also enhancing the economics of utility solar energy needs while preventing the facilitates customer adoption of solar development. higher costs of the asset from impacting through a merchant pathway, other ratepayers. described on page 19, by allowing While HB 2237 does not compel the VA SCC to approve construction of entities to enter into wholesale contracts solar generation in Virginia at any STATE AND MARKET and arrange delivery of the energy into cost, the public interest finding does DISTINCTIONS Dominion Energy Virginia’s PJM zone. establish utility solar development Virginia’s regulatory and policy climate as a state policy priority, which the COST AND “LEAST-COST creates an environment for third-party regulator must take into consideration STANDARD” IN VIRGINIA solar development that significantly when evaluating a utility petition to differs from those of deregulated states In Virginia, utilities are required to develop solar generation facilities in or states with higher electricity rates. request a CPCN before commencing the Commonwealth. Costs still must be Two principal aspects of this regulatory construction of large projects. In such a prudent and reasonable, and still must and policy climate—low retail electric proceeding, the utility must demonstrate be comparatively better than the open rates and a regulated, vertically the need for the project and show that market. However, this legislation has integrated utility model—present a the project is a reasonable and cost- served as a valuable tool for determining markedly different landscape for solar effective way to meet that need. The costs and advancing solar generation in developers in Virginia than in states with regulatory compact in Virginia tends to the Commonwealth. deregulated electric systems, mandatory favor the “least-cost standard.” renewable portfolio standards (RPS) with Falling Prices solar carve-outs, high prices, or all three. Until recently, solar generation simply With the dramatic lowering of costs (the did not meet the least-cost standard installed cost of solar PV generation has Historically, comparatively low retail required in Virginia. Dominion Energy decreased by approximately 18 percent25 electric rates have made solar economics Virginia experienced this challenge between the filing of the Dominion challenging in Virginia and thus when utility regulators in Virginia denied Energy Virginia’s 2016 and 2017 IRPs), innovative approaches have been approval for the utility to construct and solar energy generation in many required to grow solar development in rate-base its 20 MW Remington Solar instances is now the least-cost option, the Commonwealth. Virginia also has a Facility in Oct. 2015 because the effect compared with alternatives including conservative fiscal approach in all areas on rates could have been greater than traditional forms of electric generation. Virginia Solar Pathways Project 2017 23

PERMIT BY RULE In 2017, the Virginia General Assembly now be able to forgo the lengthier Permit by rule legislation was enacted approved expanded PBR legislation26 CPCN process in favor of a streamlined in 2009 which provides a streamlined for renewable facilities that fall outside permitting process through the DEQ permitting process in Virginia for what VA SCC jurisdiction, such as ring- for eligible facilities. This means that are considered “small renewable energy fenced assets for non-jurisdictional permitting of these facilities can be done projects”. Prior to the PBR, there were customers. Expansion of the PBR faster and more efficiently, resulting in two permitting authorities for small- legislation increases the size caps for lower administrative costs and more scale solar—the VA SCC and the DEQ. what is considered a small renewable rapid growth of dedicated solar facilities. The PBR allows utilities and other solar energy project. The expanded PBR developers to go through the DEQ has the potential to streamline agency process only, thus streamlining the consideration of each project. permitting of small renewable energy projects as defined by Virginia law. Under the PBR process, the utility will

Emerging Challenges and Opportunities Dominion Energy has already overcome numerous challenges and implemented innovative solutions to support customers interested in deploying solar energy systems on their properties and to build a substantial fleet of large-scale solar generation assets currently either operational or under development in Virginia, but the Company understands that several uncertainties and opportunities lie ahead.

For example, aging grid infrastructure pending the outcome of a legal challenge emissions from power plants. On Nov. 16, presents a challenge with respect to to the rule in the U.S. Court of Appeals for 2017, DEQ received approval from the integration of high penetrations of solar, the District of Columbia Circuit. Virginia SAPCB to proceed with formal but grid modernization and the various Additionally, responding to an executive publication seeking public comment on supporting technologies, such as energy order from President Donald Trump and a its proposed regulation to reduce carbon storage, have the potential to present subsequent review of the rule, the EPA emissions from fossil fuel-fired electric game-changing opportunities to drive issued a notice in October 2017 proposing generating units pursuant to Governor substantial future solar development. to repeal the CPP, stating that the McAuliffe’s Executive Directive 11. The It is difficult to predict the effects of previous administration had exceeded its publication of notice in the Virginia emerging policy and market issues legal authority in promulgating the CPP.28 Register, possibly by early January 2018, on future solar deployment, such as At this time, EPA has not made any will kick off a 60-day comment period on uncertainty of future of carbon policy decision whether it will replace the CPP. the proposed regulation. and potential for international trade Environmental groups and several states tariffs on solar panels. have pledged to challenge the repeal The proposed rule seeks to establish a proposal in federal court. However, even carbon dioxide emissions cap-and-trade UNCERTAINTY AROUND if the CPP is ultimately repealed by EPA or program in Virginia with intended linkage CARBON REGULATION overturned by a court, Dominion Energy to the existing northeast states Regional believes power station carbon regulation Greenhouse Gas Initiative (RGGI) trading There is a great deal of uncertainty is virtually assured in the future, program. The regulation includes most of around carbon regulations and their regardless of the outcome of the CPP’s the elements of the Aug. 2017 RGGI- potential impact for the electric industry, current regulatory and legal challenges. proposed modifications to the RGGI model including Dominion Energy, and the solar rule in order to facilitate this linkage. marketplace in large part due to ongoing Additionally, many states, including regulatory and legal challenges Virginia, are moving forward with their INTERNATIONAL TRADE associated with the federal Clean Power own efforts to address climate change. In DEVELOPMENTS Plan (CPP). The CPP, promulgated in 2015, May 2017, Virginia Governor Terry set the first ever limits on carbon dioxide McAuliffe, issued Executive Directive 1129 One of the primary drivers of increased emissions from existing fossil fueled ordering the DEQ to develop a proposed solar development has been the electric generating units. The rule is regulation for consideration by the precipitous fall in prices of solar panels. currently stayed by a February 2016 Virginia State Air Pollution Control Board As an example, the installed cost of solar order27 of the U.S. Supreme Court (SAPCB) to reduce carbon dioxide PV generation has decreased by about 24 Virginia Solar Pathways Project 2017

18 percent between the filing of the customer demand from the generator, to customers as well as more customer Company’s 2016 and 2017 IRPs.30 the transmission network, then to the interaction with the grid through various distribution network, and finally to the types of distributed energy resources, However, Suniva Inc., a solar customer meter. including customer-sited generation, manufacturer based outside of Atlanta, electric vehicles, and energy storage. and Oregon-based SolarWorld USA filed As the penetration of solar PV generation a petition with the U.S. International facilities continues to rapidly increase, we LOCAL PUSHBACK AND Trade Commission (ITC) requesting that must be prepared to meet a new OTHER SITING/PERMITTING the government immediately impose paradigm. This requires transforming the tariffs on solar cells and modules existing electric delivery system from its CHALLENGES original one-way design to a modern two- imported from around the globe. One growing barrier for solar generation way network capable of facilitating Previous tariffs on China, they argue, is the increased amount of pushback instantaneous energy injections and were circumvented when China moved from the local level. A variety of issues— operations to Thailand, Malaysia, withdrawals at any point along the including land use, line of sight, concerns Vietnam and Canada. On Sept. 22, 2017, network. Paramount in this effort is about reduced local tax revenue and the U.S. ITC upheld the complaint maintaining the highest level of reliability decommissioning of projects—has meant brought by Suniva and SolarWorld USA. and service levels that customers expect that Dominion Energy is sometimes The U.S. ITC has proposed remedies in and deserve. The first step in this facing challenges in getting local response to the harm suffered by the transformation process is the approval for projects. For example, a U.S. solar manufacturers. In crafting modernization of the electric power grid, proposed solar generation facility in their proposal, they sought input from at both the distribution and transmission Chesapeake, Va. was recently denied, solar companies. A decision by the levels, to create a more dynamic system with the local board of supervisors citing President on specific remedies is better able to respond to the growth of line of sight and tax issues. Technical expected by Jan. 2018. large-scale solar facilities, as well as the issues such as lack of sufficient fiber proliferation of smaller, widely-dispersed optic cable have also presented siting While panel price reductions have made solar generation facilities. That challenges in rural areas. solar competitive with other sources of preparation includes a plan to create a electricity on the grid, higher prices more flexible electric power grid that will Land Use would likely slow the rapid uptake of accommodate the highly variable output One factor to consider for large-scale residential rooftop or commercial solar associated with solar PV and other solar installation is the amount of land installations. But the biggest impact of intermittent forms of generation, and new required. For example, approximately 6 higher costs could be on large-scale solar forms of energy storage and dispatch, to 8 acres of land is required for 1 MW of projects. The final structure of the while still maintaining reliability. solar PV; therefore, the installation of remedy could have major implications 1,000 MW of solar requires for the industry and the future of solar The modernized system would need to approximately 6,000 to 8,000 acres of generation, both small-scale and include elements such as (1) “smart” land. Because the amount of land large-scale in the U.S. meters, also known as automated metering infrastructure (AMI); required for large-scale ground mount solar is so large, localities are faced with AGING GRID (2) improved communications network; (3) intelligent devices to monitor, predict difficult decisions in permitting large- INFRASTRUCTURE AND THE and control the grid; (4) distribution scale solar generation facilities. In many OPPORTUNITY FOR GRID substation automation; (5) plans to instances, solar generation faces strong competition from the agricultural and MODERNIZATION replace aging infrastructure; (6) improvements to security; food production industries, which in As a regulated utility, Dominion Energy (7) methods to investigate new addition to providing income, support Virginia has an obligation to serve, with innovative technologies; and (8) an local jobs. Much of this flat, open land is reliability and safety its foremost enhanced customer information platform fertile farmland, and residents and local priorities. Current solar PV technology to enable management of energy usage. officials are reluctant to relinquish this produces variable energy that is non- Together, these essential elements of the land for solar projects. The Remington dispatchable and subject to sudden modernized grid will not only enhance solar facility was the first large-scale changes in generation output along with reliability and resiliency, but also project in Virginia that went before a voltage inconsistencies. Therefore, facilitate adoption of technologies that local commission. There was at least one integrating large volumes of solar PV into give customers more choices and control environmental organization asking the the Company’s grid presents service over their energy usage. Additionally, the board of supervisors to reject the project reliability challenges that the Company dynamic nature of a modernized grid because they believed it was better to continues to examine. Like most of the creates more responsiveness and leave the area as open space rather than industry, the Company’s electric flexibility through greater data approve the siting of solar panels. distribution system was designed for availability and transfer, which facilitates “one-way” delivery of energy to meet more advanced pricing options for Sites that work well for large-scale solar Virginia Solar Pathways Project 2017 25 generation are flat, open, and near solar arrays. Depending on the size of the FIBER OPTIC/ electric infrastructure. However, the same project, solar farms are granted between COMMUNICATION attributes that make these sites good for an 80 to 100 percent exemption from solar generation also make them viable payment of machinery and tool taxes. AVAILABILITY and desirable areas for economic Dominion Energy has recognized that development projects. Localities are These incentives were put in place to even when challenges can be overcome faced with the decision to approve the encourage investment in solar, and they at the local level to purchase land and projects (a 25 to 30-year lease are very advantageous for the developer. resolve permitting issues, there often is commitment), or to hold the land and However, they create little to no not a “perfect” place for solar facilities. wait for economic development projects incentive for localities; in some While an out-of-the-way or remote which can promise both increased tax instances, they can even cause the location may resolve local pushback revenue and the more than the one to locality financial harm. Once a parcel is around line of sight and land use two incremental jobs that operational dedicated to solar, the property tax and concerns, the rural nature of the site often solar facilities typically provide. machinery and tool tax exemption means that basic infrastructure needed to means that localities will receive little tax operate a facility—e.g., fiber optic cable Lastly, historic preservation poses benefit from the facility. Often, local and communication equipment—is not another hurdle in Virginia to governments believe that leaving the already located there. While not appropriately siting solar generation parcel as agricultural land or waiting for insurmountable, lack of communications facilities. Many of the flat, open spaces in other development provides better infrastructure has been a challenge. the Commonwealth are preserved alternatives. For example, if an battlefields, and at least one has agricultural parcel is rezoned for LACK OF WIDE DEPLOYMENT contacted Dominion Energy about solar commercial use, this change can generation, but legal challenges (not to positively impact local funding for OF ENERGY STORAGE mention community goodwill challenges) schools. One of the biggest challenges in are a hurdle. In general, the Company has harnessing power generated from the not reached its upper limit on its ability to A consultant for Mecklenburg County, sun is its variability. Power is needed by find locations for solar, but numerable Va. recently assessed tax impacts from a customers, even when the sun is not complex siting challenges remain. solar installation on agricultural property shining, such as at night or on days with in the locality and concluded that the significant cloud cover. Contrary to what Line of Sight county could see an overall net loss of many customers believe, the energy grid Another issue of local concern is line of nearly $64,000 in revenue after all does not act as a battery and cannot sight. In many localities, residents factors are considered. Although the store electricity for later use. This can simply dislike the look of large-scale county would receive an additional only be accomplished with energy solar facilities, preferring agricultural $84,000 in real property tax receipts, storage devices. This challenge is land or open space. In Currituck County, state educational revenue would illustrated in Figure 10 on the next page. N.C., where Dominion Energy developed decrease by nearly $148,000 given that a solar project last year, the county has the fully-assessed value of that property Energy storage technologies, in addition enacted a moratorium on additional would greatly boost the share of local to fast ramping natural gas generating solar array construction, specifically funding required for the school budget facilities, can also be used to provide grid citing problems with the solar panels under the composite index.31 stability as more renewable generation covering farmland and disturbing nearby sources are integrated into the grid. In residents. To date, the Company has Decommissioning/End of Project Life addition to mitigating issues posed by managed to mitigate some line of sight Concerns the intermittency of wind and solar problems by planting additional trees Another concern for local officials generation resources, energy storage and taking other proactive measures. But involves deciding what happens to these can shift power output from periods of line of sight issues are a growing projects once they reach the ends of low demand to periods of peak demand. concern for locating new projects. their useful lives. Large-scale solar This increases the dispatchability and projects may cover hundreds of acres. flexibility of these resources. Tax Exemptions Local officials, as well as landowners, Localities are faced with difficult need to be sure that a plan and funding One type of energy storage that has decisions relating to permitting solar are in place for decommissioning a attracted significant investment has generation facilities. In Virginia, tax project and remediating the land been battery storage. Batteries serve a exemptions for large-scale solar farms occupied by the facility. This concern has variety of purposes that make them have been in place for several years. At led local officials in many rural areas to attractive options to meet energy needs present, large-scale solar projects are not condition permitting upon the require- in both distributed and large-scale fully tax-exempt, but they do receive ment that the developer establish a applications. Batteries can be used to significant incentives, including property reserve fund that will cover the cost of provide energy for a variety of purposes, tax and machinery and tool tax decommissioning and remediation when such as power station operation, exemptions on the equipment used in the time comes to remove the facility. “blackstart” capability, peak load 26 Virginia Solar Pathways Project 2017

There is also increasing interest in pumped storage hydroelectric power as a FIGURE 10: COMPARISON OF SOLAR SUPPLY AND DEMAND CURVE storage mechanism for the intermittent and highly variable output of electric generation facilities powered by Grid cannot store renewable energy such as solar and energy for later use Peak Evening wind. For example, the 2017 session of Solar Demand the Virginia General Assembly passed Senate Bill 141832 supporting construction of “one or more pumped Morning Demand hydroelectric generation and storage facilities that utilize on-site or off-site renewable energy resources as all or a portion of their power source and such facilities and associated resources are located in the coalfield region of the Commonwealth.” The bill became law, effective July 1, 2017, after the General Assembly adopted the Governor’s amendments to it on April 5, 2017. shaving, frequency regulation services, cost, other factors such as recharge Dominion Energy Virginia is currently or shifting peak load to off-peak periods. times, variance in temperature, energy evaluating two sites in Southwest They vary in size, differ in performance efficiency, and capacity degradation are Virginia as possible locations for a characteristics, and are usable in also important considerations for pumped storage project. On Sept. 2, different locations. Recently, batteries large-scale battery systems. Dominion 2017, the Company filed a preliminary have gained considerable attention due Energy continues to monitor and assess permit with the Federal Energy Regulatory Commission (FERC) for a to their ability to integrate variable battery storage and its capabilities. 4,100-acre site in Tazewell County. The generation sources such as wind and Recently, the Company installed two Company has also contracted with solar onto the grid. Battery storage emerging battery technologies at a Virginia Tech for a study of the possible technology approximates dispatchability rooftop solar facility located at Randolph- use of an abandoned mine near for these variable energy resources. Macon College. These two small Appalachia, Va., as part of a pumped batteries are designed to test the storage facility. Investment in research and development extended capabilities of these new to improve the economics of large-scale devices, and prove the potential benefits energy storage devices has been when integrated with existing solar substantial, but the battery storage generation. Dominion Energy is also industry has not experienced the same testing battery storage as part of a small gains in energy storage as with data microgrid project at its Kitty Hawk storage in recent decades. In addition to district office in North Carolina.

RANDOLPH-MACON COLLEGE Virginia Solar Pathways Project 2017 27

Solar Workforce Development Strategy As part of its Solar Pathways work, the project team committed to develop a solar workforce development strategy. The team evaluated solar jobs in the United States and Virginia to identify trends and gathered real-world data from actual solar installers operating in Virginia to supplement the workforce trend data.

“Solar employment factors” were substantial job numbers and are jobs Summary Recommendations derived to reflect the actual number of that cannot be outsourced. • The Commonwealth should focus jobs created per increment of solar • Operational solar installations provide on emphasizing the skilled trades capacity, and the team worked with very few incremental jobs. In the utility in general, rather than developing a Northern Virginia Community College sector, based on primary research solar-specific curriculum for entry- (NVCC) to analyze job postings conducted by Dominion Energy’s level workers. However, solar-specific referencing “solar” and to develop a Solar Pathways team, for every 20 course work may be beneficial for snapshot of solar-related jobs in Virginia. MW large-scale solar facility, only one employees seeking to advance in Dominion Energy evaluated its own new incremental full-time equivalent their careers beyond the entry- support for existing workforce (FTE) position is needed to carry out level roles. The report suggested development and education initiatives, operations and maintenance functions. that training providers should work and evaluated energy education courses closely with employers to enhance and certificates currently available in • The biggest concern voiced by solar training both pre- and post-hire. Virginia. Lastly, the team made solar installers to the project team Pre-hire training should concentrate recommendations for additional energy was the overall shortage of skilled on a preliminary understanding of education pathways in Virginia. Included tradespeople. The Solar Foundation’s system components and electric here is a synopsis of the team’s work data substantiates what the team basics, safety, and soft skills, and along with key findings and heard from the solar installation should maximize opportunities for recommendations. companies it interviewed. In a report hands-on worksite experience. The issued in April, the Solar Foundation • The majority of solar jobs arise from solar installation companies with indicates that despite increased the solar installation job sector. Solar whom the team spoke echoed these efforts by both public and private jobs fall into four main categories: recommendations. Rather than solar solar training organizations, solar manufacturing, system design, project specific training, they expressed a installation companies around the development, and installation and need for workers trained in the skilled entire country continue to complain operations. As reported by the Solar trades, basic electricity, and soft-skills. of substantial difficulty finding Foundation, the majority of solar In most instances, the installation qualified workers. Specifically, the jobs are created in the installations companies provide on-the-job training report states that in 2016, 84 percent and operations sector.33 Dominion specific to solar installation so there is of solar installers in the U.S. reported Energy’s solar development not a critical need for workers to have challenges with filling open solar experience supports the conclusion specific solar installation training or installation positions. Furthermore, that the majority of incremental certification prior to being hired. more than three-quarters (77.6 job growth results from the actual percent) of all employers report • Any certificate or curriculum construction of new solar facilities. struggles finding candidates with programs to support job-seekers in However, these jobs are temporary any training specific to the position, the solar installation sector should in nature, lasting five to six months, and a similar number (77.9 percent) include two essential components: and once construction of a solar say they cannot find candidates (1) Occupational Safety and Health facility has been completed, minimal with any relevant work experience. Administration (OSHA) training operations and maintenance work is More specifically, the report states and (2) preparation for the NABCEP required to maintain the facility. “Electrical experience, soft skills (work Associate Exam. All energy • Although solar installation jobs ethic, dependability, critical thinking), education programs should include are temporary in nature, a single and roofing experience ranked highest an appropriate level of OSHA safety large-scale project can employ in terms of areas of expertise that training. OSHA recommends Outreach hundreds of temporary workers. are most difficult to find in solar job Training Programs as an orientation Dominion Energy’s own data shows applicants.” It goes on to note that 61 to occupational safety and health for that approximately 145 temporary percent of employers cited experience workers. The North American Board of construction jobs are created for every in a non-solar construction trade as Certified Energy Practitioners (NABCEP, 20 MW solar installation. These are being important to hiring decisions.34 www.nabcep.org) is one of the top 28 Virginia Solar Pathways Project 2017

preferred certifications for renewable knowledge, skills, and abilities that degrees with course options in and solar professionals. Ensuring that describe the aptitudes necessary power systems, nuclear, natural gas, training programs include OSHA and to achieve success in a given field. and renewables to include solar. NABCEP training and preparation for Unfortunately, energy jobs and The AAS degrees may also have a certification benefits both job-seekers the education pathways leading to specific focus such as renewable and employers alike and should be these careers tend to get hidden energy technology or solar energy incorporated into both certificate and in other education clusters, such technology; however, it is critical curriculum programs. as Architecture & Construction, that the AAS degree foundational Manufacturing, and Science, curriculum provide a broad base of • A 17th Career Cluster focused Engineering, Technology and energy industry fundamentals to specifically on the energy industry Mathematics (STEM) because no maximize employment opportunities should be developed. Currently, specific energy-related Career Cluster for students attaining these degrees. federal law mandates that states exists. With the importance of the offer career and technical programs Commonwealth of Virginia’s clean to equip students to successfully energy future, it’s time to have a progress into post-secondary new cluster in Virginia that focuses education or the workplace. on the jobs needed for impending Programs offered by each state may retirements. fall into one or more of 16 career clusters recognized by the Office of • The Virginia Solar Pathways Project Vocational Adult Education (OVAE) Team also recommends that Virginia’s and the National Association for Community Colleges partner with State Directors of Career Technical the industry to implement Associates Education Consortium (NASDCTEC). of Applied Science (AAS) degrees in These clusters consist of occupational Energy Technology. These degrees categories with industry-verified may be general energy technology

Findings and Recommendations for Replicating the Virginia Solar Pathways Strategy for Sustainable Solar Deployment Based on experience and knowledge gained during the grant period from collaboration with stakeholders and the operation of Dominion Energy’s own solar projects, Dominion Energy and the project team offer the following recommendations for replicating the Virginia Solar Pathways strategy for sustainable solar deployment in other states.

ENGAGE IN STAKEHOLDER of deadlock on solar policy issues common ground on additional topics of COLLABORATION between utility interests and interests of importance such as distributed solar advocates. Starting with a focused generation, net metering, and zoning The first recommendation is that group of committed and people with issues. stakeholder collaboration and diverse interests, the Collaborative made engagement are paramount for any progress on many issues from One of the elements that contributed successful solar strategy. Solar energy community solar to the expansion of greatly to the Rubin Solar Collaborative’s generation is a new paradigm with many self-generation options for agricultural success in 2016 was the openness with competing views and interests. customers. which members of the group were Customers (including those of various willing to share information. This sizes), environmental groups, While the Rubin Solar Collaborative willingness likely resulted from the policymakers, and elected officials at the made significant progress in 2016 to decision to execute confidentiality state and local level each have different advance solar in Virginia, they have agreements as a condition of interests, goals, and aims. The Rubin continued their work in 2017 and participation in the group along with an Solar Collaborative’s 2016 successes and expanded the Collaborative to include a agreement not to speak to the media or work so far in 2017 prove that the significant number of additional talk publicly about the topics discussed collaborative process can work, even in a stakeholders. The goal of this continued as part of the collaborative process. state that has experienced several years dialogue and further analysis is to find Virginia Solar Pathways Project 2017 29

To realize significant results, the project For example, in the Emerging Challenges a whole—developers and utilities must team recommends a capable facilitator and Opportunities section of this report be able to demonstrate that a project who fosters an environment of trust. For on page 23, we discuss that the Virginia in a given locality will provide revenue, example, as we try to address concerns legislature has enacted measures especially with growing environmental, relating to land use, our region must allowing for various property and sales line of sight, and land use challenges balance the desire for autonomy on tax exemptions for solar installations facing solar developments. In some behalf of localities with the desire of in the Commonwealth with an installed instances, not only are current solar statewide officeholders to increase the capacity of 20 MW or less. The intent projects not able to offer a tangible amount of solar energy in the state. While of these measures was to reduce the benefit to local jurisdictions, they it is desirable for solar developers to tax burden on solar development and actually pose a potential financial loss. establish some standard processes and lower the overall cost of projects, requirements, it is equally important for thereby enhancing project economics Utilities, solar developers, customers, localities to have options regarding how to facilitate more solar energy projects local officials, and state officeholders they manage their local policy in the Commonwealth. While these tax should come together to address these frameworks. What works for one locality exemptions lower the cost of projects, challenges. In considering solar policy might not be a fit for another. they also lower the amount of tax incentives, the project team urges revenue flowing into local communities. policymakers to seek input from a Similarly, collaboration and cooperation wide swath of stakeholders, especially will be critical in addressing net Rural localities with large tracts of those directly impacted by any revenue metering moving forward. Given the open farmland are often the most implications of those decisions. success with collaboration in the Rubin attractive areas to site large-scale Solar Collaborative last year, the project solar facilities. Unfortunately, they also Summary Recommendations team believes that decisions about net can be most susceptible to revenue • Policymakers and solar stakeholders, metering reform are best addressed challenges due to a lack of industry and including utilities, should continue through a collaborative process aimed at economic development. Policymakers to carefully consider all potential an outcome that will be fair to all parties, in rural areas are under enormous outcomes of policy changes and the including both customer-generators and pressure to approve projects that will effect on all impacted stakeholders customers not engaging in bring tax revenue and jobs to their before determining whether to self-generation. regions; therefore, these local boards of supervisors or town councils tend to support them. Summary Recommendations favor projects that will bring the best • Solar projects must offer localities revenue proposition. By reducing the tangible financial benefits. Don’t • Use stakeholder collaboration, but revenue proposition, a tax exemption for assume reducing the tax burden on only with a strong, respected, and solar can create a disincentive for solar solar developers and lowering the unbiased mediator; development in the eyes of local officials overall cost of projects will drive faced with decisions about whether to • In the beginning, smaller is better. further solar development. It can permit these facilities. Expand the stakeholder group have the opposite effect if it has only once initial progress has been the potential to reduce revenue to While interest in and support for solar achieved; localities in which the proposed solar energy generation projects continues facility will be sited. • Expansion of the stakeholder group to grow at the state and federal levels, is essential to tackling the toughest localities are increasingly becoming issues; and battlegrounds for solar generation FOSTER AND MAINTAIN • Be deliberate and patient. projects. Beyond land use and line of DIALOGUE WITH LARGE sight issues, local tax policy issues are CUSTOMERS some of the main barriers to successfully WORK TO AVOID siting and building new projects. Many of the breakthroughs that UNINTENDED ADVERSE Incentives for developers to invest in Dominion Energy has achieved in the CONSEQUENCES OF STATE solar projects can have the unfortunate past three years have resulted from POLICY CHANGES effect of making localities much less engagement and collaborative problem receptive to siting these projects. solving with its large customers. While The project team has found that energy savings and cost reductions have sometimes policy measures enacted to Development of large-scale solar been key reasons organizations have foster solar development can have the installations in rural areas provides focused on sustainability and energy opposite effect. Therefore, policymakers potential revenue opportunities to efficiency, company culture and values, and solar stakeholders, including utilities, local farmers and other rural property along with corporate reputation and should carefully consider all potential owners and may help preserve open public relations concerns, have outcomes of policy changes before space. However, projects need to offer increasingly risen to the top. To some determining whether to support them. tangible financial benefits to a locality as extent, local, state, and federal 30 Virginia Solar Pathways Project 2017

requirements have provided incentives the Commonwealth of Virginia and World Resources Institute and the World for large customers—including Microsoft. Wildlife Fund were valuable partners in corporations, universities, and fulfilling this role by bringing together government entities—to seek renewable LISTEN TO CUSTOMER large institutional customers operating energy options. PREFERENCES AND MATCH in its service territory and helping give collective voice to their needs. In Virginia, achieving cost-effective THEM TO RESOURCE renewable energy options increasingly AVAILABILITY/ATTRIBUTES Summary Recommendations means solar energy deployment. The project team strongly recommends • Make sure you understand the Dominion Energy has responded customer’s definition of “renewable strategically to customer needs and listening to customers about their energy”. Customers may define it desires by providing innovative solutions preferences. The Company’s experience differently. which have demonstrated that has shown that while some customers specifically demonstrate interest in solar, significant solar deployment can be • Discuss the need to support the others are interested in renewable achieved without impacting the entire variability of non-dispatchable energy of any type. Beyond this, each customer base. This has allowed the resources, such as wind and customer’s definition of “renewable”, as Company to grow solar one large solar, through various mitigations applied to himself or herself, is often customer at a time and may involve measures and technologies, such fluid. For some customers, RECs may be partnering with multiple customers on a as conventional sources of electric a solution; others are interested in more single project. generation and/or energy storage. directly supporting and receiving benefit • Proactively seek out your customers’ As an example, the 20 MW Remington from renewable energy including solar; solar project in Fauquier County, Va., is a and yet others may be interested in preferences with respect to renewable partnership between Dominion Energy projects that are additive—adding more energy offerings. Solving a problem Virginia, the Commonwealth of Virginia, solar capacity to the system and not just for one customer may lead to new and Microsoft and came online in using output from existing systems. program offerings that would be October 2017. Dominion Energy Virginia attractive to many customers. Dominion Energy Virginia’s customer executed a long-term power sales • Don’t assume you must do all the work programs have demonstrated a clear and agreement with the Commonwealth of yourself. Seek help from organizations growing appetite for solar energy in Virginia and all of the renewable dedicated to helping understand the Virginia. Actively communicating with attributes (including solar RECs) from the collective needs of similarly-situated customers is key to connecting them project are being sold to Microsoft. corporate customers and other large with existing programs that meet their Under this unique arrangement, all institutions. parties benefit. The Commonwealth of needs. Dominion Energy Virginia has created a variety of options for its Virginia advances its goal for more solar DEVELOP CUSTOMIZED deployment in the Commonwealth and customers moving forward. Yet directly supports the goals of one of its largest communicating with customers of all APPROACHES TO MODELING businesses. Microsoft, which sought to types can help to develop new and AND PLANNING FOR SOLAR increase its renewable portfolio, can innovative projects and programs that INTEGRATION accomplish its goal through the purchase provide even more options for of RECs, which would not have been customers. As with every other source of possible without the long-term sales electric generation, solar has unique agreement from the Commonwealth. As with customer approaches, there is characteristics, benefits, and challenges. Using its ring-fencing model, Dominion no one-size-fits-all approach for utilities. Developing a successful utility- Energy Virginia could build Remington Instead, utilities must do the work to administered solar strategy requires an for the benefit of the Commonwealth and fully understand what programs, examination of and integration with the Microsoft without spreading costs approaches, and challenges need to be entire electric utility system—generation, among other utility customers. addressed. transmission, and distribution.

Summary Recommendations Undertaking a collaborative stakeholder Each utility must apply the specific process in these efforts is critical to characteristics of its distribution and • Foster and maintain an ongoing provide customers, policymakers, and transmission grid, its market structure dialogue with your largest customers the public with the information for generation, and region-specific to truly understand their goals and necessary to move forward. Where cost data to truly understand the needs. possible, find organizations who can act technical and financial impacts and • Consider partnering with multiple as a clearinghouse to help distill and opportunities. Dominion Energy Virginia customers on a single project that may define the needs of large institutional made progress to this end through the meet differing needs of all customers, customers. As referenced earlier in this two Navigant studies35 on Solar PV such as the example above with report, Dominion Energy found that the Generation System Integration Impacts Virginia Solar Pathways Project 2017 31

FIGURE 11: VARIABILITY IN SOLAR OUTPUT

kW output from solar facility

6:00:15 8:05:15 10:10:15 12:15:15 14:20:15 16:25:15 18:30:15

FIGURE 12: REQUIRED GRID STABILITY

Utility must maintain grid stability

6:00:15 8:05:15 10:10:15 12:15:15 14:20:15 16:25:15

and Distributed Solar Generation useful information, it cannot take the to last for decades, and are decades Integration and Best Practices, both of place of a study customized to your old today. The question remains: What which considered technical and cost utility’s unique architecture, market, should the grid look like in the age characteristics and attributes specific to and policy attributes. of solar, enabling two-way use and Dominion Energy Virginia’s system and generation of energy? • Scenario-driven modeling that makes the PJM region. As robust as they were, use of multiple and differing data the Navigant studies were conducted Currently, at the generation and sets and assumptions is necessary based on static inputs and assumptions. transmission levels, the Company’s to understand the dynamic impacts The Dominion Energy Integrated electric system operators possess related to the integration of solar, Resource Planning team knows that real-time visibility, communications, distributed energy resources, and further study and ongoing modeling will and control. Now is the time to provide other technologies. be necessary to understand impacts similar operational improvement at of solar integration from a dynamic the distribution level. Implementing a perspective. That is why, as referenced PRIORITIZE GRID comprehensive program will not only earlier in this report, the Company had MODERNIZATION AND improve and modernize the distribution Navigant provide training in late 2016 CUSTOMER EMPOWERMENT grid, but make it adaptable to evolving to the Advisory Team and Dominion technological changes. Ultimately, Energy representatives to equip them to A modern energy grid is an essential this sophisticated distribution system conduct additional modeling, utilizing foundation for wide-scale solar of communication and control will the commercial simulation models used deployment and unlocking the benefits be similar to what system operators in the original studies. of solar for customers. Dominion Energy currently utilize at the generation and Virginia has a primary mission to assure transmission levels. Summary Recommendations reliability for all customers and safety, particularly during outage restoration or In a future where potentially tens • When it comes to solar integration, other projects. Utilities in many states, of thousands of distributed energy one size doesn’t fit all. The most including Dominion Energy Virginia, resource devices are located at homes informative and valuable information have expressed the need for a more or businesses throughout Virginia, comes from modeling that is modern grid. Most of the grid, as we system operators will need the ability customized to your utility’s technical know it today, was designed with a one- to monitor these devices to adjust the and market characteristics. way flow of electricity in mind. Many of distribution network appropriately • While secondary research can offer the elements of the grid were designed so that overall electric service 32 Virginia Solar Pathways Project 2017

reliability can be safely and efficiently Summary Recommendations • Methods to leverage new innovative maintained. (Figures 11 and 12 on page technologies; and Initial recommendations for grid 31 demonstrate the variability of solar modernization include: • Enhanced customer information output compared to the necessary platform to enable management of stability that a grid must possess). • Smart metering for all customers; energy usage. In addition to ensuring reliability • Improved communications network, and accommodating integration of including within the distribution distributed energy resources into the system; grid, this modernization program will offer customers a new information • Intelligent devices to monitor, predict platform and opportunities to manage and control the grid; their energy usage. The Company • Automating distribution substation is assessing the details and costs operations; associated with developing a future distribution grid modernization plan that • Aging infrastructure replacement; is stronger, smarter, and greener than • Improvements to security, both cyber today’s network. and physical;

In addition to enhancing the safety SCOTT SOLAR and reliability of the grid, which are two essential components of any path forward, the Company must extend control and communication beyond the substation to the distribution system. To expand benefits to customers most effectively, it would be beneficial for utilities to develop visibility at the distribution level to see what is happening at the feeder/neighborhood level.

Maintaining grid stability and improving reliability will be supported through the installation of intelligent grid devices, improving the communications network and implementing new automated control systems. These resources can react quickly in response to varying intermittent renewable resources, such as solar and wind to support bulk electric grid stability.

Other innovations include real-time pricing options that can result from more modern metering technology and could ensure more responsive pricing aligned with usage, both for what customers take from and deliver to the grid. These types of options will empower Dominion Energy Virginia customers with timely data and ensure they are fairly compensated for energy they create while not creating a subsidy for non-solar customers. The grid modernization plan under development by Dominion Energy Virginia, also includes other customer benefits such as an educational portal, customer self- service, including mobile and web-based tools, and additional rate options. Virginia Solar Pathways Project 2017 33

Acknowledgments

Dominion Energy wishes to thank the Navigant Consulting, Inc. Virginia Community College System following organizations and individuals Eugene Shlatz Craig Herndon for their contribution to the Virginia Solar Steven Tobias Elizabeth Moran Pathways Project. Robert Wilhite Randy Stamper

Bay Electric Co., Inc. Northern Virginia Community College Virginia Department of Mines, Minerals, John Biagas Alex Cooley and Energy Daryl Lanouette Vonzell Mattocks Al Christopher Sheyda Nabaee Ken Jurman City of Virginia Beach Steve Partridge Lori Herrick Bob Matthias Old Dominion University Shirshak Dhali Metropolitan Washington Council of Governments Piedmont Environmental Council Jeff King Rob Marmet Steve Walz Smart Electric Power Alliance National Renewable Energy Laboratory Dan Chwastyk Travis Lowder Nick Esch Shivani Mathur John Sterling Megan Mercer Emerson Reiter

List of Acronyms and Descriptions

AAA: The highest tier in credit or bond ratings, DEQ: Department of Environmental Quality; FERC: Federal Energy Regulatory Commission; denoting “prime,” investment-grade status. the Virginia agency responsible for the federal agency that regulates, monitors, and management of air, land, and water resources, investigates manners related to electricity AAS: Associates of Applied Science; two-year involving permitting and oversight of projects generation and transmission. undergraduate degree focused on entering the affecting such resources. workforce in a technical field. FTE: full-time equivalent; the workload of one DG: distributed generation; the use of small full-time employee. AWS: Amazon Web Services; a subsidiary of grid-connected power generating units Amazon.com that provides cloud computing located close to the place where electricity is HB: House Bill; any bill introduced by the platforms for individuals, companies, and used. Virginia House of Delegates. governments. DOE: U.S. Department of Energy; department HVAC: heating, ventilation, and air CPCN: Certificate of Public Convenience within the Cabinet of the Executive Branch conditioning; the system that regulates and Necessity; a permit issued regarding of the United States responsible for policies indoor air quality. supervision of public facilities, such as public regarding energy and safety in handling utilities, that authorizes the holder to operate a nuclear material. IRP: Integrated Resource Plan; a comprehensive public facility within a particular area. road map for meeting a utility’s objective for EPA: U.S. Environmental Protection Agency; providing electric service. CPP: Clean Power Plan; an Obama federal agency responsible for writing and administration policy introduced in Aug. 2015 enforcing environmental regulations based on IRS: Internal Revenue Service; the U.S. federal that includes new Environmental Protection laws passed by Congress. tax collection agency. Agency standards for reducing carbon emissions from power plants. The plan aims at EPC: engineering, procurement and ITC: investment tax credit; the amount that combating climate change. construction; a contracting arrangement a business is allowed to deduct from taxes in which the contractor is responsible for based on the amount it reinvests in itself. CRG: Continuous Renewable Generation; used design, procurement, construction, and in reference to the Dominion Energy Virginia’s commissioning of a project before handing it ITC: International Trade Commission; the U.S. proposed CRG Rate Schedules. off to the owner. federal agency that provides trade expertise to 34 Virginia Solar Pathways Project 2017

the legislative and executive branches of the PBR: Permit by Rule; provides a streamlined Maryland, Massachusetts, New Hampshire, federal government. DEQ permitting process for small renewable New York, Rhode Island, and Vermont. energy projects as defined in the Code of kW: kilowatt; a measure of 1,000 watts of Virginia. RPS: renewable portfolio standard; regulation electric power. that requires the increased production of PJM: PJM Interconnection, technically energy from renewable energy sources. kWh: kilowatt-hour; a measure of 1,000 watt- Pennsylvania-New Jersey-Maryland hours of energy. Interconnection; regional transmission SEPA: Smart Electric Power Alliance; an organization of energy providers in 13 states, organization aimed at helping utilities develop MBR: Market-Based Rate; refers to rate located primarily along the East Coast, and and deploy clean energy resources. schedules approved by the State Corporation the District of Columbia that oversees the Commission designed to more closely match operation of an interconnected electric market STEM: Science, Engineering, Technology and pricing in the PJM wholesale energy market. across state and utility boundaries. Mathematics; a set of academic disciplines grouped together by their applied approach, often taught in an interdisciplinary method. MDV-SEIA: Maryland, Virginia, and DC Solar PLR: Private Letter Ruling; a written statement Energy Industries Association; solar industry issued to a taxpayer that interprets and applies UVA: University of Virginia; a public research trade association for the Maryland, Virginia, tax laws based on the taxpayer’s set of facts. university in Charlottesville, Va., with a total and Washington D.C. region. PPA: power purchase agreement; a contract enrollment of almost 22,000 students. between two parties in which one party MW: megawatt; 1,000,000 watts or 1,000 generates electricity and the other buys it. VAC: Virginia Administrative Code; state law kilowatts of electric power. consisting of the regulations and decisions PROMOD: a commercial simulation model made by Virginia agencies. MWh: megawatt-hour; 1,000,000 watt-hours designed to simulate an industry-standard or 1,000 kilowatt-hours of energy. electric market for economic planning. VA SCC: State Corporation Commission of Virginia; the regulatory agency in Virginia that NABCEP: North American Board of Certified PSS/E: Power System Simulator for manages and oversees regulations regarding Energy Practitioners; provides professional Engineering; a commercial simulation model utilities, insurance, state-chartered financial certification and company accreditation designed to simulate industry-standard institutions, securities, retail franchising and programs to renewable energy professionals. transmission systems. railroads.

NASDCTEC: National Association for State PV: photovoltaic; a photovoltaic system is WRI: World Resources Institute; a global Directors of Career Technical Education a power system that converts sunlight into research organization dedicated to achieving Consortium; an association that advocates electricity using solar panels. sustainable resource management. for high-quality career technical education programs, which in turn provide students with REC: Renewable Energy Certificate; a tradable WWF: World Wildlife Fund; an international training and education in applied sciences, energy commodity representing proof that organization dedicated to wildlife trades, and modern technologies. 1 MWh of electricity was generated from a conservation as well as reducing human renewable energy source. impact on the environment. NREL: National Renewable Energy Laboratory; a federal laboratory focused on research, REPO: Renewable Energy Program Office; development, commercialization, and office of the U.S. Navy designed to work with deployment of renewable energy and energy utilities and other parties to reach renewable efficiency technologies, located in Colorado. energy procurement goals.

NVCC: Northern Virginia Community College; RF: renewable facility; used in reference to a community college system in Northern Schedule RF. Virginia with a total enrollment of almost 77,000 students. RFI: request for information; often used when a party needs written information necessary ODEC: Old Dominion Electric Cooperative; to confirm the interpretation of details. electric cooperative headquartered in Glen Allen, Virginia, and servicing customers in RFP: public request for proposals; a document Virginia, Maryland, and Delaware through that solicits third party business proposals in eleven partners. order to procure a product or service through the responding proposals. OSHA: Occupational Safety and Health Administration; federal agency that sets and RG: renewable generation; used in reference enforces workplace safety standards. to Schedule RG.

OVAE: Office of Vocational Adult Education; RGGI: Regional Greenhouse Gas Initiative; the subdivision of the U.S. Department of first mandatory market-based program in the Education that manages policies and programs U.S. to reduce greenhouse gas emissions with related to vocational and adult education, current membership made up of the following postsecondary education, and college aid. states: Connecticut, Delaware, Maine, Virginia Solar Pathways Project 2017 35

Endnotes

1 Virginia Electric and Power Company’s Report 05-Dominion-Virginia-Power-Planning-Major- 27 http://www.scotusblog.com/wp-content/ of Its Integrated Resource Plan, VA SCC Case Expansion-of-Large-Scale-Solar-in-Virginia uploads/2016/02/15A773-Clean-Power-Plan-stay- No. PUR-2017-00051, filed May 1, 2017, as accessed Nov. 1, 2017. order.pdf accessed Nov. 5, 2017. subsequently corrected in the proceeding. 13 Virginia Electric and Power Company’s Report 28 https://www.gpo.gov/fdsys/pkg/FR-2017-10-16/ 2 Ibid. of Its Integrated Resource Plan, VA SCC Case pdf/2017-22349.pdf accessed Nov. 5, 2017. No. PUR-2017-00051, filed May 1, 2017, as 3 Dominion Energy News Release: Dominion subsequently corrected in the proceeding. 29 https://governor.virginia.gov/media/9155/ Virginia Power Planning Major Expansion of ed-11-reducing-carbon-dioxide-emissions-from- Large-Scale Solar in Virginia, Feb. 5, 2015. http:// 14 http://buyersprinciples.org/principles/ accessed electric-power-facilities-and-growing-virginias- dominionenergy.mediaroom.com/2015-02- Nov. 2, 2017. clean-energy-economy.pdf accessed Nov. 5, 2017. 05-Dominion-Virginia-Power-Planning-Major- Expansion-of-Large-Scale-Solar-in-Virginia 15 World Resources Institute, Emerging Green Tariffs 30 Virginia Electric and Power Company’s Report accessed Nov. 1, 2017. in U.S. Regulated Electricity Markets, Updated of Its Integrated Resource Plan, VA SCC Case May 2017, http://www.wri.org/sites/default/ No. PUR-2017-00051, filed May 1, 2017, as 4 Virginia Electric and Power Company’s Report files/Emerging_Green_Tariffs_in_US_Reg_Elec_ subsequently corrected in the proceeding. of Its Integrated Resource Plan, VA SCC Case Markets_May_2017_0.pdf accessed Aug. 31, 2017. No. PUR-2017-00051, filed May 1, 2017, as 31 South Boston News & Record and Mecklenburg subsequently corrected in the proceeding. 16 Application of Virginia Electric and Power Sun, Mecklenburg Officials Weigh Budget Pros, Company for approval to establish a companion Cons of Solar Farms, January 18, 2017; http:// 5 Economic Study of Utility-Administered Solar tariff, designated Schedule RG pursuant to § 56- www.sovanow.com/index.php?/news/article/ Programs: Soft Costs, Community Solar, and Tax 234 of the Code of Virginia, Case No. PUR-2017- mecklenburg_officials_weigh_budget_pros_ Normalization Considerations. Emerson Reiter, 00163, Dec. 1, 2017. cons_of_solar_farms/ accessed Aug. 30, 2017. Travis Lowder, Shivani Mathur, and Megan Mercer. Produced under the Company’s direction 17 Renewable Energy Pilot Program established 32 http://leg1.state.va.us/cgi-bin/legp504. by the National Renewable Energy Laboratory under the 2013 Virginia Acts of Assembly— exe?ses=171&typ=bil&val=sb1418 accessed Work for Others Agreement. June 2016. http:// Chapter 382. https://www.scc.virginia.gov/pur/ Sept. 6, 2017. solarmarketpathways.org/project/dominion pilot.aspx accessed Nov. 5, 2017. accessed Nov. 5, 2017. 33 The Solar Foundation, 2016 National Solar Jobs 18 VA SCC Docket No. PUR-2017-00060. Census, January 2017. 6 Ibid. 19 VA SCC Docket No. PUR-2017-00157. 34 The Solar Foundation, 2017 Solar Training and 7 Navigant Consulting, Inc. Virginia Solar Pathways Hiring Insights: A Solar Training Network Research Project Study 1: Distributed Solar Generation 20 Application of Virginia Electric and Power Report, April 2017, pp. 1-2, and 8. Integration and Best Practices Review, April 30, Company for approval to establish a companion 2016. http://solarmarketpathways.org/project/ tariff, designated Schedule RG pursuant to § 56- 35 See Endnotes 7 and 8. dominion accessed Nov. 5, 2017. 234 of the Code of Virginia, Case No. PUR-2017- 00163, Dec. 1, 2017. 8 Navigant Consulting, Inc. Virginia Solar Pathways Project Study 2: Solar PV Generation System 21 VA SCC Docket No. PUR-2017-00137. Integration Impacts, April 30, 2016. http:// solarmarketpathways.org/project/dominion 22 http://solarresearchinstitute.org/wp-content/ accessed Nov. 5, 2017. uploads/2016/10/VA_Report-to-VACSAC_ Summary-of-RFIs-and-Sessions_2016.pdf 9 Smart Electric Power Alliance, Community accessed Nov. 5, 2017. Shared Solar in Real Life: A Summary of Interviews with Utility Program Administrators 23 Virginia Electric and Power Company’s Report at Nine Community Shared Solar Programs and of Its Integrated Resource Plan, VA SCC Case Surveys of Subscribers, August 2016. http:// No. PUR-2017-00051, filed May 1, 2017, as solarmarketpathways.org/project/dominion subsequently corrected in the proceeding. accessed Nov. 5, 2017. 24 For information on the PJM wholesale market 10 See VA SCC Docket No. PUE-2011-00117 for more see: https://www.ferc.gov/market-oversight/ details on the Dominion Energy Virginia’s Solar mkt-electric/pjm.asp accessed Nov. 5, 2017. For Partnership Program. information on all U.S. wholesale energy markets, see: https://www.ferc.gov/market-oversight/ 11 2014 numbers reflect data current as of Dec. 31, mkt-electric/overview.asp accessed Nov. 5, 2017. 2014. Current numbers reflect data as of Sept. 30, 2017, except that total current kWh reflect 25 Virginia Electric and Power Company’s Report annual kWh produced as of Dec. 31, 2016. The of Its Integrated Resource Plan, VA SCC Case kWh figures exclude energy production from net No. PUR-2017-00051, filed May 1, 2017, as metering which is not tracked by the Company. subsequently corrected in the proceeding.

12 Dominion Energy News Release: Dominion 26 Virginia Senate Bill 1395 (2017), http:// Virginia Power Planning Major Expansion of leg1.state.va.us/cgi-bin/legp504. Large-Scale Solar in Virginia, Feb. 5, 2015. http:// exe?ses=171&typ=bil&val=sb1395 accessed dominionenergy.mediaroom.com/2015-02- Dec. 3, 2017. www.DominionEnergy.com

For questions regarding the Virginia Solar Pathways Project or for more information, please visit the Virginia Solar Pathways Project website at sites.wp.odu.edu/virginiasolarpathways or email [email protected].