And uh get started today so uh good morning uh thank you so much for joining us I’m Victoria Higgins I’m the Virginia director with chesap climate Action Network and ccan action fund our advocacy arm uh we are a primarily Grassroots organization dedicated exclusively to fighting climate change
In the Chesapeake region of Maryland DC and Virginia of course we’re here talking about Virginia today um seen and seein action fund as well as uh many of our 35,000 members in Virginia U some of which are on here today with us uh were intimately involved in in the passing of
The Virginia clean economy act in 2020 and have been involved in defending and implementing that law since um the context here is that in in May of this year Dominion Energy filed its 2023 integrated resource plan and we were alarmed to see that several of the plans
Were totally out of alignment uh with the clean economy act including by calling for up to 9 gaw of methane gas fired generation and declining to retire Coal Fired units that had been previously scheduled for retirement and are required to be retired for the VCA um this is a major departure from the
Utilities prior plans in the wake of the VCA as recently as December 2022 uh Dominion had actually filed a climate report that called for retiring All coold Fired units by 2030 uh and a decreasing Reliance on methane gas um we were also alarmed to see that Governor
Glenn yunan and Dominion sent out very similar press releases within hours of each other on the night of the IRP filing both of which praised the IRP as as an all of the above energy plan in accordance with the governor’s 2022 energy plan uh which called for repealing key key climate policies and
Uh call for new methane gas fire generation and then finally you know we were dismayed to see uh Dominion submit just months later documents outlining an intention to build a one 1,000 megawatt which is very large methane gas plant in Chesterfield County uh this is their first proposal for a new fossil fuel
Plant since the signing of the VCA and unfortunately evidenced that the IRP scenarios that that are most out of alignment uh with the clean economy act are the preferred plans so this plan alone would actually increase Dominion Virginia emissions by 133% compared to 2021 uh we understand that the state is
Seeing increased demand uh primarily tied to data centers in Northern Virginia um but the bottom line is that we have as a state committed to 100% clean energy and it is incumbent upon our utilities to plan for that Net Zero future uh we’ve just had a summer of of
Record heat all over the world a summer where we were hiding inside because of air pollution from wild fires not just in Canada but also here on the east coast and so we believe that we have to be working together to overcome whatever challenges we face on the demand side
Because not achieving zero emissions not doing our part to preserve a stable climate for future and frankly current Generations is not an option we’re going to get to zero because we need to and the truth of the matter is that meeting Demand with clean energy is now cheaper
Than fossil fuels per unit of electricity produced and that doesn’t even factor in the cost that we bear as consequences for that pollution in terms of extreme weather and having to rebuild after disasters in terms of the burdens on our medical system from extreme heat uh from Lost agricultural production and
So forth uh so climate change is unimaginably expensive and planning to warm the planet is in line with that incredibly fiscally irresponsible uh on top of just incompatible with preserving a stable planet um so the IRP itself is subject to review by the SEC and numerous parties filed concerns before that body
Um but we saw the need for a public facing report that detailed the discrepancies between the IRP and our State climate laws and then provided recommendations for how to meet projected electricity Demand with clean energy um I will will say that this research you know really looks at the
Supply side in terms of what do we need to meet that demand and not the demand side in terms of what policy tools could be used to curve demand so that’s a whole additional conversation um we were really excited to ask uh Gable Associates to prepare this report
Drawing from reputable public data uh and I’ll pass it off to Adrian uh who spearheaded the report to walk through uh their methodology and their major findings um and I’ll just add please feel free to use the Q&A function to submit questions as they come up we’re
Going to leave plenty of time uh after Adrian is done um presenting his report to to answer whatever questions that you do have so thanks again for joining us thank you Victoria and this is Adrien Kimbro with Gable Associates I’m a senior vice president with the firm and
I specialize in regulatory analytics um and power markets forecasting emissions analysis and accounting and so um what we’ve done here is to um sorry just one second what we’ve done here is to look at Dominion’s um IRP its forecasted load its supply side resources and long-term resource plans to get an understanding
Of how its long-term resource plans align with uh the vcea and Virginia’s need for a cleaner energy resource mix and to do that we first started with um the just get to the slides here we started with a look at what the projected load is for dominion and how
That compares with the um low trends of the other zones within pjm and one of the interesting things that we um that we found and it’s pretty clear from from this chart here that we’re highlighting is that um PGM is projecting a pretty rapid increase in dominions load over
Over time over the next 10 15 20 years and if you look at that and you compare it with the average uh zonal load for the other uh major utilities throughout pjm what you’ll notice is that PGM is projecting a really flat uh load growth
Over you know the next 10 years um and so that contrasts with this rapid expansion in load which really highlights the need for um increasing pressure on Dominion to make sure that they’re doing all that they can to um to honor um uh the VCA in Virginia’s commitment to clean energy policies so
With that being said we started to look at the supply side resources and to understand okay well what are the implications of um Virginia’s or excuse me of Dominion’s increasing load and what does that mean for the Commonwealth and one of the things that we looked at was what are the requirements for
Dominion to um improve its uh long-term resource plans and align it with the vcea and the first thing that we looked at was uh the vca’s renewable portfolio standards basically saying how much uh renewable energy does dominion need to procure over time and what this is
Showing is that there’s going to be a rapid increase in the amount of clean energy that that Dominion needs to procure um you know starting at 23% uh next year and then increasing to 52% over the next 10 years and then climbing all the way up to 100% um starting in
2045 and so that means that if Dominion is unable to hit those targets there could be pretty steep penalties um for for Virginia not just in terms of the direct costs that rate pairs will bear in the form of RPS deficiency penalties but also in terms of the the sweeping
Societal damage that Victoria mentioned earlier on here in terms of the release of additional emissions that could otherwise be avoided and so that’s just a really critical feature here was saying what is the RPS Target can Dominion hit that um is its long-term resource plan consistent with these RPS
Requirements and so with that being said we looked at okay well what are the long-term resource plans show for Dominion its own plans and how do those align with um the uh Virginia clean economy act and what we’re showing here on this slide is that there’s going to
Be a rapid increase not only in terms of these RPS requirements but because of Dominion’s current resource Supply mix which does not have a lot of clean energy resources in it and its long-term plans which do not procure um sufficient amounts of clean energy resources there
Will be a massive uh shortfall over time and that’s indicated by this um dotted Gray Line on the chart showing that there’s going to be you know climbing from um 20 terawatt hours of uh clean energy shortfall um next year climbing up to north of 80 90 terawatt hours over
The next 10 years and so that could lead to massive consequences for the Commonwealth if um Dominion is unable to comply with the VCA or ensure that it’s doing more to um increase its clean energy Supply resource uh mix and so to understand some of the most advantageous and efficient ways Dominion
Could do that we looked at um again these RPS penalties to say well what are the consequences if Dominion fails to to reach those those targets and you know the most direct consequence is going to come in this form of this RPS deficiency penalty so that means if Dominion does
Not procure um its mandated clean energy Supply consistent with the the vcea it will incur penalties ranging from $45 per megawatt hour to $75 per per megawatt hour and so even using these conservative assumptions of $45 per megawatt hour so taking the low end of this statutory requirement um it’s clear
That the shortfalls that we were just looking at can lead to massive consequences in the form of direct costs that could otherwise be avoided so taking that into consideration we then looked at what are the the easiest most cost efficient solutions for Dominion to avoid those uh potentially massive
Penalties and the most straightforward way to do that is to look at um obviously the retiring of Aging fossil fuel um resources and replacing those Resources with cleaner um newer um solar when battery storage Technologies and so one of the interesting things that we discovered in reviewing the Dominion
Long-term resource plans um is that Dominion isn’t planning on retiring any fossil fuel generators over the next 10 years um despite the fact that it has a fleet of uh aging older fossil fuel resources that have likely already been fully recovered um because they’ve been operating for you know 20 plus years and
So given those facts we said okay well if if these resources assuming these resources have fully recovered their costs which is likely given that a standard assumption in in Project Finance is a 20 or 30y year useful life is sufficient time to allow for a full recovery of the capital
Investment which of these resources can we identify and retire on a year-to-year basis and then replace with uh newer cleaner resources and what we’re showing here in this chart is that there are um you know it’s significant amounts of resources gigawatts of of Aging fossil fuel capacity that can be retired um but
Wasn’t other under the Dominion plan and you can see that with um you know starting in 2024 there is already 1.4 gaws of um aging fossil fuel capacity that had already operated or will have already operated for at least 20 years climbing up to 2.5 gws in 2025 and again climbing
Up again to 2.8 gws in 2026 and so that’s a significant amount of capacity that can be retired from the market um without risk risking stranded costs which means these resources um wouldn’t be or the investors in these resources Dominion wouldn’t have the opportunity to fully recover their costs um only
Setting this trigger to a 20-year period ensures that you’re minimizing that risk of strand costs meaning you’re allowing Dominion to fully recover its um its investment in these resources and Expediting the transition to a cleaner um resource mix and so this is a really important facet of the analysis and
Looking at one of the core differences is uh between the two plans meaning dominions preferred plan under the IRP Plan B and this alternative plan that we’re prop proposing through this analysis is looking at those aging fossil fuel resources retiring them earlier than Dominion has planned and then replacing those retiring aging
Fossil fuel Resources with a combination of solar and storage resources so what this chart is showing is under the um Dominion plan they’re not projecting again any fossil field retirement M you can see that with the kind of straight um Gray Line up top and a minimal increase in solar while it’s commendable
That they are planning on increasing solar it’s also necessary that they do so um but the amount of solar that they’re projecting to add to the system is woefully insufficient um compared with the need to reduce emissions to reduce the the potential for RPS penalties and societal damages resulting
From all of the emissions that would other otherwise be released and so by retiring fossil fuel generators earlier than Dominion is planned but again allowing for them to fully recover their investment costs we’ve freed up significant amounts of capacity um in the Dominion system to quickly and efficiently replace um these resources
Now importantly this isn’t just um you know a pipe dren this is something that pjm offers as a viable um opportunity for any resource in the market that has an existing interconnection into the grid um pjm allows for all of these resources to be replaced and transferred excuse me the interconnection rates
Transferred to a new resource effectively circumventing the new Services queue and all the associated risks that come with that and so one of the big uh challenges in interconnecting new uh Renewables to the grid is the lengthy process of interconnection all of the permitting uncertainty the interconnection uncertainty but if you
Have these existing established points of interconnection that can be transferred to new resources you can effectively by bypass that entire process it’s a much shorter uh process it provides much more certainty much more low cost and ultimately provides significant benefits to the grid because of the expedited um review and
Implementation of U the capacity interconnection transfers and so this is really uh the Crux of the analysis and and highlights the viability of of this plan replacing aging resources after they’ve been fully recovered and uh using this generat replacement process or capacity interconnection rights transfer process to quickly add new
Resources new renewable resources to the grid um and another element of this um analysis that we looked at was how do we then um uh smooth out or improve the ability of Renewables newly interconnected Renewables um how do we improve their ability to uh maintain or bolster system reliability and the fact
Fastest way to do that is to pair it with storage which we can get into in a second but to look at how that’s even possible uh pjm offers another opportunity to um expedite that process and that’s called the Surplus interconnection uh service process again this is um mandated or allowed for in
Their Open Access transmission tariff it’s something that’s used um by resources um throughout pjm and what we’re showing here in this example is that you can add batteries uh battery storage resources to existing point interconnection for example solar which is what we’re showing here um not only
To help smooth out the variability and intermittency of these um renewable generators but also to again circumvent the the risky um highly uncertain and slow process of interconnecting new resources to the grid by adding them to existing points of interconnection without requiring any sort of updates to to new infrastructure or permitting
Processes you can um again just bolster the capacity and uh the the smoothness of the ability of solar to generate constantly throughout the day or even Night by arbitraging the ability of solar’s power to um generate a lot of power during the day save that power and
Then once the peak periods hit as solar starts to wind down or as the sun stops um shining throughout the day you can use the battery to dispatch that stored solar energy back into the grid and this is a CR critical element again using the Surplus interconnection process and this
Interconnection transfer rights process combining these two elements together really allows Dominion to um significantly increase the amount of solar and storage that they can add to the grid and mitigate a lot of the risks that I think a lot of utilities and developers may see when they’re trying
To interconnect new resources to new points of interconnection you don’t necessarily need to do that if you can retire the existing aging fossil fuel supply and so that’s again a really core elements of the analysis that we looked at and so to again kind of reiterate the
Point that I was um highlighting earlier is well how reliable is solar and storage and what pjm does to measure um reliability of resources at least recently is to use a measurement known as the effective load carrying capability and it’s kind of a jargony way of saying how reliable is solar or
How reliable is wind how much of peak demand can it reliably serve over time and intuitively um what you would think is solar and wind and renewable resources um aren’t um on their own as Standalone resources they may struggle to U provide consistent amounts of reliable power but by adding storage to
These Resources by creating these hybrid uh solar Plus Storage or wind Plus Storage resources you can significantly improve the reliability and ability to carry um Peak demand or critical demand over time and so as you pair storage with these resources um what you can see here is that pjm is projecting a
Significant contribution reliability over time such that as more Renewables come online the more you pair them with storage the more reliable these resources and the more reliable the system becomes and so that’s a core feature a critical element of the analysis as well so moving ahead here um
One of the things that we looked at next was okay now that we’ve established the viable Pathways to interconnect um more Renewables more stores to the grid well what does that mean in terms of um the monetary impacts the the costs um to to the system and so we looked at this from
A couple Vantage points one was um what are the costs to uh Virginia rate payers um if uh dominions Plan B for example is is implemented what are the costs if dominions Plan B is not implemented and something more aggressive on the renewable side like this alternative
Plan is implemented instead and one of the ways to measure the impacts is by looking at what’s known as the social cost of carbon or the social cost of greenhouse gases and this is um it’s it’s a measurement an economic measurement of the long-term societal damages caused by the release of these
Types of emissions here we’re looking at carbon dioxide and so this talks about or this considers um both kind of the the health consequences The Economic Consequences of every ton of um emission of carbon dioxide that’s released in the grid and this isn’t important just because the EPA has Quantified these
Numbers it’s important because the Virginia code mandates that uh Dominion consider uh the social cost of carbon when it’s um developing a new long-term resource plan because if you think about um when you’re trying to assess the viability of a new investment if you’re trying to decide between let’s say a
Solar storage resource or a new gas resource if you have to consider the social cost of carbon or the social cost of greenhouse gases it can dramatically change the economics um and long-term viability of a new fossil fuel resource it could significantly increase the costs um by um you know preventing them
From cost shifting these negative externalities onto uh rate payers by making them consider them upfront and so given that Dominion is uh required to look at these or consider these uh these costs we wanted to um identify well what are those costs today um and what will
They be over the next 10 years and uh uh you know um coincidentally over the past last uh couple of weeks um the EPA finalized its uh new rules on the social cost of carbon and this is important because um it not only um you know sets
In stone what these um amounts are going forward but it uh really U highlights the need and potential impacts the need for clean energy and potential impacts for um continued fossil fuel generation and so what we’re showing here in this chart is that um you know the existing uh social cost
Of carbon estimates that um uh were in place prior to this change a couple of weeks ago were significantly lower than the values that were um just instituted or just finalized over the past few weeks you know previously um the the starting value for the social cost of
Carbon was at about 5051 per ton and that’s increased to $190 per ton um and so just that that change Alone um has massive consequences for uh Dominion um in terms of its ability to um implement or build new new gas fired facilities because if they
Have to factor in $190 per ton value um of its carbon dioxide emissions then that should make these resources um uneconomic or not competitive when compared with clean energy resources that have no emissions that wouldn’t uh release these types of of harmful pollutants into the air and cause these
Types of societal damages and so that’s really a core element to consider here and it’s it’s just a really important fact that or important feature that um the EPA again just updated these values so with that being said while the Virginia code focuses specifically on the social cost of carbon what we also
Looked at was the the more comprehensive social cost of greenhouse gases this is the same framework that the EPA developed um I think most people commonly think of the social cost of carbon as um you know the the sole element of of the epa’s societal damages
Analysis but it’s not it includes a host of other um sources of emissions from particulate matter to um to methane um and so we looked at all of these other sources of emissions that the EPA has Quantified and we found that they’re they comprise about 20% of the total
Value stack of the societal damages and so um again while the Virginia code focused specifically on the social cost of carbon we looked at both the social cost of carbon and the social cost of greenhouse gases to provide a more comprehensive assessment of the full impacts the negative externalities of
What dominions long-term resource plans um could do to to the Commonwealth and so um looking at that this really gets us to uh the punchline of our analysis so what we’re showing here is that when you look at the Dominion’s long-term resource plans and it’s um um it’s it’s
Willingness to retire its fossil fuel resources continued Reliance on these resources to generate power to um to to to feed its demand it is releasing significant amounts of emissions significant amounts of emissions that will result in billions of dollars in RPS penalties and societal damages and so by making these simple changes that
We’ve outlined previously which is replacing dominions aging fossil fuel generators with new solar and storage resources um using the Surplus interconnection process and the interconnection transfer rights process Within pjm These two like this simple change can reduce 52 million tons of emissions over the next 10 years that is a
Significant amount of emissions from um a really quick and costeffective change that Dominion can and should consider uh but more than that by avoiding these 52 million tons of emissions that also means that the Commonwealth wouldn’t incur you know nearly 9 billion in RPS penalties meaning this plan avoids saves
Virginia rate payers up to $9 billion in RPS penalties over the next 10 years and importantly it avoids uh more than $20 billion in emissions related damages and again we’ve separated those two values here to give you a sense of what’s driving the emissions related to cital damages as we said before Virginia
Mandates the consideration of CO2 related damages and to rep planify those separately and that’s um approximately 17 billion in avoided damages that um this change can make but if you consider the full um the full spectrum of greenhouse gas emissions and and air pollutants that would be another $4
Billion dollar of um social damages that could be avoided by making this simple change and so it’s critical that um Dominion do all that it can and um we hope that it can um consider these uh these opportunities to um quickly transition into um a cleaner uh more reliable grid by taking
Advantage of these opportunities that pjm provides that other resources and utilities take advantage of um regularly to to um interconnect new resources to the Grid at a faster Pace with more certainty um at a lower cost that unlocks a host of benefits that are known and measurable um that can save
The the Commonwealth significant amounts of money over the next 10 years and and and avoid these costs that rate paays would otherwise um be on the hook for so that being said I’ll turn it back to Victoria and um happy to answer any questions that you guys may have thank you very
Much hey thank you so much Adrien we do have a lot of questions so I am just going to read them off for you here um could you expand a little bit on the monetary penalties that if a Dominion doesn’t meet the VCA targets the extent
To which they can pass can be passed on to Consumers um yeah can you just expand a little bit there what does that process look like is that at 100% uh pass off is there any opportunity for the SEC to moderate the extent to which those costs
Are passed off um Etc that’s a great question I don’t have a lot of details on that unfortunately but from my read of the bcea it looks like those costs can be passed on to Virginia rate payers the the SEC may have um mechanisms in place or the opportunity to uh mitigate
Those those costs to some extent um but you know I’m not really sure what um you know to what extent the SEC can or will um um mitigate those damages uh you know just based upon the text of um this section of the VA code that we’re
Looking at here it’s clear that if Dominion doesn’t um uh honor the RPS requirements it will incur these penalties and those penalties can be passed on um to rate Pairs and so if that’s if that does come to pass then that prevents or presents a serious risk to rate pairs in
The form of new costs that effectively just allows Dominion to cost shift the negative externalities of these foso Fiel resources to rate payers in a way that they really shouldn’t be able to given that there’s all of these opportunities for them to interconnect and transition to new cleaner
Resources yeah and you know I’ll add here even if the SEC to some extent uh did moderate the amount of these costs that are passed off Dominion themselves incurring these costs is also not good we want a solvent utility that has the capital to build new resources uh to to
Build new clean resources so rate payers incurring full cost obviously is bad uh Dominion incurring those costs is is also bad so the answer is that they need to avoid incurring those costs by seriously focusing uh on clean energy um let me give you another question here um Adrian what modeling method they
Mentioned stochastic discreet Etc and tooling enrail Sienna was undertaken to to come up with the recommended energy generation and storage mix yeah so for for purposes of this analysis we didn’t rely on any sort of production cost modeling I think if you were going to perform a more detailed
Analysis a production cost model be it stochastic or otherwise would be um critical because it gives you a more precise estimate this is more of an indicative estimate based upon some of the data ources that were’re just referenced so enr among them um looking at all right well what is the current
Resource Supply mix um in in Dominion territory and so for that we relied on eia data let’s see if we have that here I don’t think we have that cited um in this um section but eia provides a list of um dominions existing resources um by fuel type by uh commercial operation
Date so using that data we can identify all of the resources that have operated for at least 20 years and then we can identify which of those resources um can and should be retired and then using the data that was just referenced so the enr um annual technology Baseline we can
Develop cost estimates to identify um which resources provide the most cost-effective method for replacing uh dominions um uh dominions aging fossil fuel resources and then ensuring that there’s a capacity alignment with um the replacement of these resources and the the new resources that would be added to the retirement resources so again
There’s no production cost model involved here so there’s no stochastic modeling um but there is um an analysis based upon real world data from the eia uh in terms of the resource Supply mix from Dominion Zone IRP in terms of um how much of uh their renewable capacity
They plan on procuring from third parties how much they plan on um installing behind the meter instead of these larger and front ofthe meter utility scale resources so the data that we’re relying on comes from a variet of resources eia dominion andreil and ultimately this is an economic analysis not a production
Cost analysis but I do think that in the future production cost analysis would be helpful to get a more robust and granular look at um the precise uh uh types of resources that can and should be built at different points along the grid thanks Adrian um next question is
How does the offshore wind that’s being built and planned fit into the need for increased Renewables yeah I mean I think that having a diverse resource Supply is is always going to be better to to hedge away some of the intermittency or the geographic disparities between resources that are located throughout
The Commonwealth or even offshore and so this um plan doesn’t look at offshore wind specifically um given some of the um challenges relating to the development of these resources the lands um or excuse me the the the leasing rights to um the territory that would be
Needed to um build and and house these types of offshore R resources um but we’re not opposed to them in any way it’s just not something that we um uh focused on specifically I will note that we don’t have any difference um between Dominion’s plan in terms of its
Treatment of wind and our look at wind we’re only highlighting um thermal or fossil fuel resources in solar here because that’s really the the primary area of difference and so um dominions Plan B does include a small um amount of new um offshore wind capacity and again we’re not treating that any differently
We just consider the exact same we don’t change that we don’t lower it reduce it it’s it’s all the same really the only difference here is what are you doing with older um fossil fuel resources and our solution proposed solution for this analysis is to use or rely on um a
Combination of solar and storage both from utility scale behind the meter and contracted third parties and I’ll add just a little bit of color here you know of course the Dominion plan as well as this plan expects that this first batch of offshore wind will be built over the
Next several years that second batch uh is also on the horizon in the next 10 years but because this is a 10-year plan and those are being built in batches doesn’t get to a further projection on offshore wind beyond what is mandated by the BCA and the reason we focus on 10
Years is because the energy demand picture does change uh fairly significantly we’re currently looking at a snapshot in time for what demand will look like um but projecting Beyond 10 years there’s just an enormous amount of uncertainty um next question for you Adrien what’s the definition of
Recovering costs from an asset and are there is there any data that show running a fossil fuel facility for at least 20 years allows for that yeah let me just get back to that slide where we talk about the 20 years so can you repeat the first part of that question
Victorian what is the definition of recovering costs from an asset and is there data that shows running a fossil fuel facility for at least 20 years allows for that okay got it thanks so I’m I’m not sure there’s a technical definition for recovering costs from an asset when I’m talking about stranded
Costs here it’s um it’s really just talking about the um the ability of resources to fully recover their costs and I know that’s kind of a topology here but let me try to explain what I’m talking about so when you build a new resource um you have the fixed upfront
Investment costs in uh the plant and then you have the ongoing fixed um operating costs to uh you know maintain that resource over time and so one of the ways to look at uh the ability to uh recover those costs is to say um what are the revenues that these resources
Can and do earn on a year-to-year basis and is that enough for how much how long of a period of time is needed for that revenue for those revenues to sum up to a point that allows the resource to effectively break even so after a certain point in time these resources
Will have fully recovered their fixed investment costs so the the amount of um debt and Equity that they’ve sunk into the project to to build it to develop it um to finance it um you know after these resources again have been operating for 20 plus years typically that allows them
Sufficient time to recover those costs and so 20 years is a standard industry Benchmark that pjm uses um for its analysis of what they call a new entry resource um it’s also used throughout the US by ISO New England calaso um and then when you look at um resources like
The ones that was mentioned earlier the national renewable energy laboratory they also have something called liliz cost of energy analysis within their annual technology Baseline that looks at a capital recovery period of somewhere between 20 to 35 years depending upon the resource type and so again what that
Means from the enr perspective is they assume that these resources will earn enough revenues over that period to break even with their initial investment costs and their fixed investment costs and operating costs over the life of the asset so a 20-year period is again a standard industry Benchmark to um to
Allow for these resources to to fully recuperate their uh their their fixed uh their sunk costs effectively and uh the second part of the question is do we or have we looked at this from or analysis or have we modeled this and that’s something that we Gable Associates do
Regularly we perform um valuations of various types of resources um for project finance and development support as well as in litigated proceedings throughout the US and it’s it’s a big part of what we do and we would say that 20 years is not only a standard industry
Benchmark but it um it is an economically viable Break Even point for most of the resources that we look at now with respect to dominions specific resource mix and these individual resources we don’t have um you know the proprietary or confidential um financing data that um um some of these resources
May have some of it probably could be pulled from um elements like Fork form one or other public regulatory filings um but again that was I would say um not necessarily going to lead to any addition analysis here or additional changes to the analysis um so this is
Really kind of a simplifying proxy assumption For What on average value would be to allow for these resources to fully recover their Sun costs a question from Jerry Paulson that I’ll take a stab at answering and if you want to add anything Adrian feel free uh the governor has been talking a lot
About small modular reactors um but you’re saying there’s no plans for any new nuclear will the push for small nuclear outlive the current governor so the the 10-e window that we’re looking at Dominion uh I believe in their IRP did not call for uh any uh new small
Modular reactors uh in that time period it was beyond that in their IRP so it came later um this will be an ongoing conversation I imagine part of the reason it’s not modeled here is because there’s basically no data on what it would cost to build uh and to generate
Electricity from a small modular reactor there aren’t any in the construction phase in the United States so absent uh really any reliable data to work from uh both you know there’s a whole environmental conversation on the side of this but just from an economic standpoint we don’t have the information
That we would need or Adrian doesn’t have the information that he would even need to model that and let me know if that’s accurate Adrian oh that’s that’s absolutely right and I would just reiterate one of the points that you led with which is um there’s really no difference between our plan or
Alternative plan and dominions um uh Plan B um neither plan includes any small modular nuclear reactor builds over the next 10 years Dominion um I think does include um U some small modular nuclear reactors after that point but again to Victoria’s point because these resources are so new and
Unproven you need that extensive amount of time to really work through um the potential development risks and concerns related to these assets and so that’s why there’s no difference between the plans here it’s just it’s it’s such a new and unproven resource that you need that time and that’s just beyond the
Scope of this t your cycle that we’re looking at Adrian there’s a couple questions about the intersection of the RPS penalties and Reggie because Dominion uh does have to pay for every short ton of emissions of carbon they produce uh in accordance with Reggie uh do you have
Any response to how that might inflate uh the cost that that Ray pairs are bearing if Dominion does not meet its clean energy goals yeah that’s a really interesting question that’s not something that I looked at um I don’t know if there is any sort of inter player overlap between
The two but um I would note that the uh Reggie um the the Reggie costs are significantly lower than the current value of these RPS penalties and have been fairly low for you know since since Reggie was first implemented I’m not aware of any plans for Reggie to significantly or materially increase the
Value of of their um of their uh carbon allowances um or penalties but um I would say that uh even if um let’s say you could use some of the RPS penalties or excuse me if there was overlap between the two and you would net out the the Reggie costs from the RPS
Penalties presumably there would still be a pretty significant Gap um um uh for the RPS penalties being much higher than the Reggie uh costs that you would still incur some additional costs here so all that’s being equal you would assume that at the very least this $45 per megawatt
Hour um value would still be the floor rather than um a cap thanks Adrien um question here do do you have the figure for how many uh in terms of gigawatt hours not gwatt capacity uh was recommended for storage uh I I don’t I would say that um
Typically when we look at this or at least when we U modeled the costs of the resources we looked at um 4our uh storage resources and the cost data that we pulled from was the enr ATB that was flagged earlier by one of the previous questioners thanks Adrian um a question
From maredith and I know we have uh many more questions here we may not have time for them all um but watching a federal legislation that will require regions to increase their inter Regional transfer capacity to 30% of peak load that would put pressure on utilities to improve Energy Efficiency and decreased Peak
Load is there any consideration by Dominion of federal drivers uh for integrated resource plants and we’re getting real wonky here so bear with us um yeah I think that um maybe the there’s two answers to this question one yeah I think Dominion’s plans do consider both inter Regional transfers
And Energy Efficiency that’s not something that we looked at necessarily um just because those are really those are much smaller drivers of the overall ability of dominion to improve its ability to comply with the vcea um the the fastest and you know most cost-effective way is this um um interconnection transfer process and
Surplus interconnection process replacing these older Resources with new resources but yeah I think that’s a completely valid question it’s just not something that we considered um given the the scope and potential impact of those types of changes thank you um Adrien question for you do you believe existing Battery Technology can fulfill
The needs you describe in your report so I think you know this report is looking at four hour uh in in term in terms of actually meeting demand do we need to look at longer duration Etc yeah I think that longer duration would always be better and um that is
Something that pjm is starting to consider in terms of their elcc analysis looking at um anything ranging from a two-hour battery storage project to a 10-hour battery storage project we focused on four just because it’s kind of the the industry standard right now but I do think that over over the you
Know next five to 10 years as storage uh technology continues to improve um it would be better and more advantageous to shift from the shorter duration 2 hour or 4 Hour B battery storage resources to longer duration storage because that not only increases the elcc ability or the
Load carrying capability of the solar or wind resources to which the batteries would be attached but it really just provides just a much more meaningful hedge against uh the Vari the variability of um sun and when so yeah I think that’s a completely valid question I would say this is really just
Dependent upon uh the maturity of the market over the next five to 10 years and to the extent that um those costs continue to decline and the technology matures it would be much much better to include the long duration storage resources and I think that even considering the the relatively higher
Costs of those resources you would still um uh get significant dividends in terms of um the benefits that they would provide relative to the alternative let’s say um new gas resources like the the one Victoria mentioned earlier that’s going to be put in place in Chesterfield in terms of the reliability
These resources provide the overall costs when you consider uh the social cost of carbon or the social cost of greenhouse gases so yeah 10 10 10 hour batteries would be I think the gold standard but that’s just just not um something that we modeled given kind of
The the state of the market right now thank you um question what sources and time spans and I’m I’m not 100% sure I understand the question but what sources and time spans of solar and wind variability data was included in the modeling maybe you understand that uh no
I’m not sure that I understand sources and time spans of the wind variability so I I think maybe there’s two ways to look at this one is just kind of the um uh the capacity Factor of these resources so what share of the day or the year are these resources able to um
Provide Power and then the second is the effective load carrying capability which I flagged a couple of times here which is um how much of um the uh Renewables uh capacity what share of that capacity can be expected to reliably contribute to critical peak hours and so there’s
Two ways to look at it we looked at both um to to get an assessment of um you know which resources provide the most meaningful cont contribution to grid reliability and ultimately that’s why we focused on the combination of uh battery storage and uh solar rather than Standalone solar or Standalone um wind
Or again Standalone battery storage resources um Adrian were you able to include some reflection of the federal funding available no but that’s that’s a fantastic point I think that um that highlights one of the one of the elements of this analysis that kind of illustrates the conservative nature of
The analysis right which is um we’re not really considering the the tax credits or the the IRA uh policies I think that if we were to do that it would show significant reductions in the comparative costs of these resources relative to let’s say building new fossil fuel resources uh we assumed kind
Of the full value of these costs based upon the enrail um cost assumptions cost forecasts um regardless of what the potential Ira cost impacts would be so to assum let’s say a 30 or 40 plus perc reduction in the cost basis of new solar or new battery given um what the IRA
Allows for and so I think that that’s a really really important question and it just it highlights the fact that this this analysis while um it seems aggressive in the sense that we’re advocating for a significant increase in in solar and wind it doesn’t consider um the significant benefits that the IRA
Provides and can um uh yield in terms of the cost reductions or cost savings um for these types of resources so yeah I think that’s a critical element that I would strongly recommend um uh be reflected in any subsequent analysis thank you um have any utilities used the methods you identified to avoid
Permitting delays yes I don’t I don’t have a list of um those utilities but um there’s quite a bit of research um publicly available um online um that PGM has provided um by resources that have used or can use these types of um opportunities but the extent to which
That has happened or you know what amount of capacity has been um added using the uh transfer process or the Surplus interconnection process I don’t know I will just say that Gable Associates as a firm we’ve been working with quite a few um developers and um IPS um throughout pjm over the past
Several years on the interconnection rights transfers um it’s a pretty active Market um and um it doesn’t often involve um you know a single IP or you uh um replacing its own resource with a new resource often times it involves let’s say utility or an IP that is
Exiting the market and then you have somebody else um taking over um you know their their Market position or the their point of interconnection and so it’s more of an economic play than it is kind of um um a fast efficient way to interconnect but they can be used in
Either circumstance and they have been used in the past and that’s something that um we Gable and others have have been involved in um a question from Andrew that I’ll take a stab at and if you want to add anything Adrienne feel free uh if Dominion can pass off penalties to
Consumers how can we motivate them to take this issue seriously um you know part of this happens through uh we’re going to see I imagine policy proposals through through the legislature um that will be good or bad for for rate payers as in terms of their
Compliance with the VCA and uh we will notify you of opportunities certainly uh to to uh contact your legislators to to advocate for a position that protects repairs and and moves us uh forward on a clean energy future also on a project by project basis so there’s a fairly
Organized group of residents um and some nonprofits uh in Chesterfield uh that are trying to fight the proposed Chesterfield gas plant there um so I think just showing up um every time that uh there’s infrastructure being proposed or built that is going to increase our emissions decrease our ability to meet
That clean energy Target and comply with the VCA and really take us backwards on our climate Journey um we need folks who who are uh affected uh in the area as well as Statewide to to really be organizing uh with us and many of these residents are organizing themselves um
But but we are here to help um so um we’re we’re you know pretty vociferously saying no to new fossil fuel infrastructure and anytime that we see it we we are going to have a response and and we will offer you the opportunity uh to work with us uh to to
Levy your position so uh please just keep up with us basically um whenever we’re looking at proposals for new fossil fuel infrastructure um and and stay tuned for for the upcoming General Assembly session um a question can you explain why the solar reliability elcc goes down
Over the years so this may be a technical modeling question yeah yeah it’s it’s a good question and it’s it is pretty Technical and I’ll try not to get too wonky here but the idea is that as you add more solar to the grid and it comprises a larger share of the Total
Resource Supply mix solar’s ability to um uh as a standalone resource to contribute to those critical Peak periods goes down because there are fewer resources that are able to um carry the load during those hours and so absent storage when you have let’s say if the grid was 100% solar no storage no
Wind um then it could challenging for the grid to um uh be to to have a reliable source of Supply if the sun isn’t shining which is why a diverse resource Supply mix is critical going back to the offshore wind question um and adding as much storage as possible
Is also critical because it allows these intermittent resources to hedge that intermittency so with one solar resource on the grid um you know it it doesn’t create as big of a challenge for the grid to maintain reliability but as solar increases without the benefits of storage or a diverse res resource Supply
Mix it becomes increasingly challenging and so that’s why you see this Divergence between the orange and the green lines as the or orange line goes down you pair it with storage and it kind of goes back up um because you’re really just saying all right um solar’s
Inter intermittency is is reduced um and its impact on the grid is reduced even though it comprises a larger and larger share of the grid capacity thanks Adrien um in terms of the uh you know we have a a long history of using battery storage often in much
Much smaller uh amounts historically how is the efficacy of Battery Technology going these days uh the efficacy I’m not sure I understand that question um they’re asking about developments in battery storage technology what what is that looking like right now um where has progress been made uh how effective are
Our utility scale battery storage at this point oh got it got it okay yeah so I would say that this is still a relatively uh new market in terms of its share of the grid uh Supply mix and so that’s kind of evident in Dominion’s current uh amount of battery storage
That it has online right um pjm historically has been one of the first movers in battery storage Technologies to uh serve as ancillary service um resources so meaning how do you Shore up these quick uh birth of power that are needed to balance supply and demand and
So those were more shortterm or shorter duration energy storage resources um that have been used but over the past 5 10 years uh PGM has been transitioning away from those shorter duration resources to much longer duration resources like these four hour plus uh battery storage products that are
Increasingly common and I would say um established enough that there really isn’t um the same sort of project financing risk or interconnection risk that you would um historically have experienced other markets as well like Cal ISO um New York ISO have very robust uh storage procurement mandates and an
Ongoing uh development process that have really um helped to um uh push down the the cost curves and reli and push up the reliability of these projects over time so it’s not just pjm that is driving um the advancements in battery storage it’s it’s pretty much the entire Market or
The entire landscape across the us all of the RTO and utility Landscapes that are doing this but I would say 4 Hour storage is is um established enough technology right now that it’s not really considered um newer unproven in the same way that let’s say longer duration product uh products
Maybe um but with respect to the underlying Technologies of the different types of chemistries that um batteries can um batteries can include that’s not really something that that we’re as familiar with or that I look at that’s more of an engineering analysis and I think it’s a really great question it’s
Just um I would say a little bit beyond the scope of what we’re focused on here thanks Adrian I have one more question that that I’ll take a stab at and then we will need to wrap up here uh if you have questions we haven’t gotten
To um I will put my email in the chat so please feel free to reach out to me and we’ll make sure that we respond to you um this question is about how solar Farms impact forests or canopy trees in Virginia I will say this report looks
Really specifically at one tool which is replacing these aging uh fossil fuel facilities with new solar and storage facilities so for that reason I would imagine there would be fairly minimal impact on these sites uh to forests or canopy trees obviously uh this is Project Specific so uh it’s hard to have
Sort of a just a blank response in general because it does depend uh on the project um and there’s there is state level legislation that is still uh in its final stages of coming to recommendations um that deals with with impacts on Forest um so basically my answer is Project Specific because of
The very limited scope that we asked Adrien to look at here which is this simple tool for retiring these fossil fuel facilities and getting Renewables and storage online quickly um I can’t imagine that there would be a major impact of what we’re recommending um but for solar at large um it’s certainly Project
Specific Adrian is there anything you want to add there no I think that was yeah you covered it really well thank you okay um thanks so much for joining us guys we are running out of time here and again let me go ahead and put right
Now my email in the chat we will of course send out the recording as well as again the link to the report itself um certainly encourage you uh to to download it print it um talk to your lawmakers about the options that are available uh for for Dominion to meet uh
Electricity Demand with clean energy and the benefits that are associated with that um but if you have any questions uh this is the email that you can reach out to and if it’s super technical I will pass you off to Adrien um so thanks so much guys uh I I really appreciate you
You’re joining us this morning and thanks Adrian thanks all appreciate it okay bye