Dominion’s Wires Are Its Only Natural Monopoly; Let Engineering Firms Build Low-Cost Solar, Wind

By Will Driscoll

Many firms have more experience than Dominion Energy in building solar and wind farms and connecting them to the grid.  And these other firms provide the lowest prices for solar and wind, as seen in Tucson’s and Austin’s recent solar costs below 3 cents per kilowatt-hour, and Lazard’s estimated 3 to 6 cents per kilowatt-hour for onshore wind.

Dominion’s relative strength is in maintaining the electrical transmission and distribution grid.  There is no sense in building a second grid, so Dominion has a natural monopoly there.

State legislation can promote low-cost renewable electricity by starting from this foundation. Let big, reliable firms that can build low-cost solar and wind for Virginia do so, competing with each other to provide the lowest cost. Let Dominion run the grid.  And to make sure we get the lowest prices for solar and wind, don’t allow Dominion to bid, so that it can’t rig the bid requirements in its favor. (A Dominion subsidiary could still bid on solar and wind farms in other electric utility territories.)

Dominion has become better qualified to run the grid, as it has recently adopted a renewables-friendly grid planning and management software called PLEXOS.  With this sophisticated tool, Dominion should no longer have the difficulties its executive Robert Thomas expressed in 2016 when he said a high-solar option “could create reliability issues.” Now, Dominion can use PLEXOS to plan a renewables-integrated grid.  And each day Dominion can take day-ahead weather forecasts and run them through PLEXOS to develop a round-the-clock “unit commitment” plan for the following day. With this new capability, Dominion can join the ranks of well-managed high-renewables utilities in Iowa, South Dakota, California and Europe.  Adding cost-effective storage to the grid, from the likes of Virginia’s AES, will make running the grid even easier, by helping to balance solar generation and end-use demand.

State legislators can do their part to bring low renewable electricity prices to Virginia, like those seen in Tucson and Austin.  The key is to pass laws that focus Dominion on running the grid, and that leave solar and wind farm development to firms specializing in EPC (engineering, procurement and construction) that are willing to bid in an unfettered competition.