W. Va. creates special districts that open way for renewable microgrids in coal country
The Public Service Commission (PSC) of West Virginia is known for choosing coal over clean energy, which can give backers of proposed renewable microgrids in the state reason to pause.
Under existing state law, independent power producers must form public utilities regulated by the PSC to serve more than one customer, said Evan Hansen, a delegate of the West Virginia House of Delegates and president of Downstream Strategies, which does energy consulting.
Being regulated by a pro-coal PSC isn’t attractive to renewable energy and microgrid producers in the state, said James Van Nostrand, director of the Center for Energy and Sustainable Development at West Virginia University College of Law and author of the book, “The Coal Trap: How West Virginia Was Left Behind in the Clean Energy Revolution.”
“The West Virginia PSC is the most pro-coal, anti-renewable, anti-consumer PSC in the country,” said Van Nostrand, who has handled cases before 10 different PSCs as an energy regulatory attorney.
But legislation that passed the state legislature and became effective Sept. 12 — SB 4001 — overcomes the need for independent power producers to be regulated by the PSC. This paves the way for a solar microgrid from Berkshire Hathaway Energy Renewables that will serve Precision Castparts, a titanium producer owned by Berkshire Hathaway. Like more and more manufacturers with sustainability goals, Precision Castparts wants to purchase only 100% renewables.
No fossil fuel zones
SB 4001 created two “industrial business expansion development” districts in which independent power producers can provide renewable energy to serve businesses in the districts. Fossil-fired power plants are not allowed in the district under the legislation, said Hansen.
“Berkshire Hathaway Energy Renewables is a very sophisticated organization that does its due diligence before making such a major investment, and it would not have made such an investment in West Virginia if it were subject to PSC regulation,” said Van Nostrand.
The path to the passage of SB 4001 began when West Virginia Sen. Glenn Jeffries, D-Putnam, wrote a letter to Berkshire Hathaway Energy Renewables promoting the state and asking whether the company would look at siting facilities in West Virginia, explained Hansen.
In response, Berkshire Hathaway started looking at opportunities, and the state offered the company incentives for locating facilities in West Virginia, said Hansen. Berkshire Hathaway decided it wanted to site the Precision Castparts facility in the state and provide renewable power — through Berkshire Hathaway Energy Renewables — to Precision Castparts, Hansen said.
It’s unclear who will site facilities or provide power in the second of the two districts, he added.
Hansen said that SB 4001 is good public policy because it helps attract manufacturers to the state that require renewable energy to meet sustainability goals. “This is one of several pieces of legislation that allow the state to finally diversify its energy mix,” he said. Hansen has been a prime backer of three other successful pieces of energy legislation.
The first required electric utilities to each develop up to 200 MW of solar and offer solar tariffs — which will allow industrial customers with sustainability goals to acquire renewable energy. A second bill backed by Hansen allows for third-party ownership of rooftop solar, which paves the way for utility customers to acquire solar without upfront investments. A third bill corrected a punitive tax on large solar arrays built by independent power producers that want to sell power to the grid, he said. All of these measures could positively affect microgrid development in the state.
Berkshire Hathaway Energy Renewables, through spokesman Dan Winters, declined to comment on its microgrid project. But a press statement released by the company in September announced that Berkshire Hathaway Energy Renewables is purchasing more than 2,000 acres of land in Ravenswood, West Virginia, to be developed as a “first-of-its-kind renewable energy microgrid-powered industrial site.” Precision Castparts, the press release said, will be the first company located at the industrial site.
Berkshire Hathaway Energy Renewables will work with the West Virginia Economic Development Authority to attract additional businesses to the site, according to the release.
Susan Small, spokesperson for the PSC, said that the commission “does not have the authority to pick and choose what it regulates.” She added that the PSC is not opposed to renewable energy and that it has never rejected or denied an application for a certificate of convenience for a renewables project.
But Van Nostrand has another view of the PSC’s efforts in West Virginia.
Hard road for renewables in coal country
While most states have been investing in renewables, the West Virginia PSC doubled down on coal, he said. “These acquisitions left no space in the utilities’ resource portfolio for natural gas, wind, solar or energy efficiency, all of which were cheaper paths for consumers than the coal-dependent path,” Van Nostrand said. As a result, average retail electricity prices in West Virginia increased at a rate that was five times the national average between the years 2008 and 2020, he said.
In fact, the PSC has rejected utility requests to diversify into renewable energy sources, Van Nostrand said. In May 2018, for example, the PSC rejected a request from Appalachian Power — a subsidiary of AEP Renewables — to purchase two wind projects, he said. “The PSC denied approval of the resource acquisition,” said Van Nostrand.
Other ways to bring renewable microgrids to West Virginia?
But SB 4001 isn’t the right path for bringing microgrids to the state, said Van Nostrand.
Instead, the PSC should require utilities to offer standard terms and conditions for microgrids through tariffs and to establish rules under which microgrids would operate in the state, he said.
That’s the strategy from California and Hawaii, which have established microgrid tariffs.
In spite of the lack of microgrid tariffs, slowly but surely, West Virginia is moving toward bringing more renewables — and microgrids — to the state, said Hansen.
“There’s more and more recognition among the leadership of both [Democratic and Republican] parties that the manufacturing jobs of the future will require renewable energy and if West Virginia wants to compete, they have to embrace change,” he said.
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