Climate Polluter, or Climate Solver? IRP Puts Dominion at a Crossroads

Staring down the steadily-swelling risk of human and economic body blows from carbon-driven extreme weather catastrophes and the fiscal imbalance that accompany them, Dominion's latest IRP, released yesterday, is worth paying attention to. The IRP (integrated resource plan) posits one possible future among many, rendered through a varied prism of Dominion's specifically-chosen assumptions, overriding investor strategies, and institutional inertias. It is a paper exercise that merits at least one close read, as it reveals where Virginia's single-largest energy provider, carbon emitter, and distribution grid operator may theoretically go over the next 15 years.

So here's a rundown of the good, the bad, and the swings-and-misses, and finally where Dominion and Richmond's policymakers should go from here, now that we have this theoretical starting point to work from.

[Note: at this time, significant components of the IRP are not yet available; as further IRP materials become available, we will provide further observation separately.]

First, the good:

Dominion's more transparent, streamlined, and user-friendly IRP clearly leans into a renewables- and storage-centric future. It envisions record-breaking levels of wind, solar, and battery storage, and those smart investments are a welcome turn toward energy-price stability and net savings. (IRP at )Dominion's past fossil fuel-centric investments left ratepayers' pocketbooks over-exposed to recurrent commodity price shocks. Because the fossil fuels Dominion burns are imported from out-of-state, those fossil infrastructure investment decisions also impaired Virginia's energy independence; every renewable energy addition begins to restore it. While there's reason to believe there's even more clean energy out there on the PJM grid for Dominion to tap into than their "capacity constrained" IRP broadly assumes, Dominion's focus on renewables and storage looks very good.

Now, for the bad:

Dominion plans to increase its carbon pollution.

That is the central, disqualifying fact of this IRP. (IRP at ) Increasing Virginia's climate risk and exposure is flatly incompatible with state law, full stop. (Safeguards in Virginia law require zero smokestack pollution by 2050, with gradually-decreasing annual limits between now and then.) For that sole reason alone, Dominion's presumptuous plan to disregard Virginia's legal guardrails should not be acceptable to any responsible Virginia policymaker concerned about Virginians' exposure to increasingly-extreme elements and about the durability of our economy.

The human and fiscal toll of climate catastrophe, driven further into the red every day by power plant emissions, has finally come into unrelenting focus. Not just in the ominous impact of Helene and the prospect of Virginia taking a similar direct hit from warming Atlantic waters in the next few years (perhaps even weeks). The impact was already clear in the 12 $1 billion+ extreme weather disasters that have already hit Virginia in the last decade, with much worse to come, on top of Virginian farmers' staggering $190 million in losses just from Helene alone.

Given that loudly-ticking climate bomb, Virginia's energy system should and could be the very nexus of how Virginia, as a model to rest of the nation, ingenuitively solves for the very worst climate disorder and displacement. This IRP was a chance to lay out that (admittedly ambitious) solution set. Instead, the plan never once references climate change or its solutions, and instead breezily takes a "planning-to-fail" approach to statutory compliance.

In full fairness to Dominion, there are legitimate challenges that must be accounted for by all policymakers, if we are to thoughtfully decarbonize our economy in an orderly way. First, data center load growth is a cold reality (even if its full extent remains unquantified, and may just as likely prove to be a bubble). Reliability is non-negotiable, and I know I certainly expect the lights to stay on. Second, increasing statewide denials of solar projects endanger the deployment of the lowest-cost, carbon-free energy Virginia sorely needs. And third, much-needed reforms at PJM have yet to bear fruit. Taken together, it is fair to say that Virginia is in a bit of a pickle: our statutory carbon arrow points down, yet demand points up, all while cheap solar energy additions are stuck right around the middle.

But even if data centers are the widely-acknowledged crux of the issue, they can only wag the dog just so far: if Dominion and other Virginia utilities cannot meet both reliability standards and the state's existing statutory obligation of a steadily-cleaner glidepath to zero-carbon-by-2050, then in-state data center growth will be checked. Because when it comes to addressing climate change, Virginia's carbon limits are the law of the land, and neither it, nor reliability, may be compromised for any single set of users.

But regardless of what happens with data center load, even if it's not a game-of-telephone induced bubble, until Dominion puts forth plans to meet Virginia's zero-carbon emissions by 2050 marker, the SCC cannot reasonably sign off on a plan that openly goes in reverse of the law.

With those good/bad fundamentals out of the way, there are a few more nuanced swings-and-misses, where Dominion touches on the right solutions, but still leaves most $20 bills lying on the sidewalk/its best opportunities unrealized.

Dominion's bill-lowering energy efficiency resources remain nil:

Despite what Dominion calls a "capacity-constrained" system, amid all that vociferous data center load growth, home and business efficiency upgrades remain a mere static afterthought in this plan. (IRP at ) Reality reflects this stasis: Dominion only reaches a tiny fraction of customers with its money- and energy-saving efficiency programs, at about just 4%. If its grave concerns about a "capacity-constrained" system are sincere, then Dominion must commit to at a minimum quintupling that 4% figure, with an emphasis on hitting low-income homes in environmental justice and fenceline communities first. That would free up much-needed energy and help many more, if not most, of their customers lower their bills with efficiency upgrades.

And if Dominion sincerely believes its load growth predictions will come true will be realized, then it should decuple their 4% figure, over the next 15 years. Until Dominion squeezes out every reachable drop of efficiency across its system, with it is not meeting their mission to deliver low-cost energy and cannot credibly wring their hands about load growth and reliability.

Dominion's peak-shaving demand response is close to nil:

Given load growth is the widely-acknowledged tail wagging Virginia's energy-sector dog, and that hitting summer and winter capacity peaks is the very nub of that purported problem, then demand response (DR) screams out to be a vigorously harvested resource, all across the grid and especially in winter. Yet, Dominion will grow their DR resources by a scanty 239 MW over the next 5 years. (IRP at ) This is the time to double down on DR investment, with a focus on increasing grid flexibility, to manage load growth and ensure a reliable, affordable system.

Instead, given they are Virginia's largest distribution grid operator, Dominion is oddly passive about their load management all across this IRP. For example, Dominion frets about high summer peak demand from the "charging of EVs, combined with air conditioners trying to keep up with high temperature." (IRP at 12) But, Dominion, that is not a mysterious, unsolvable issue!

Dominion knows well it can tackle this through demand response and cycling programs, rate design, vehicle-to-grid, and other smart-charging programs and incentives. Rather than look on nervously from its own sideline as load climbs, Dominion must make the demand-side a core part of the equation - not a static, unchangeable value - so it can more flexibly meet the needs of its growing energy system in the best way for its customers.

But until Dominion dramatically scales up its DR programs (particularly in winter), this IRP is evincing one seriously glaring resource gap.

Dominion unnecessarily lowballs its utilization of the PJM grid:

By sharply constraining both their ability to import energy and to build new clean resources across the grid in any given year (IRP at X), Dominion restricts itself to far fewer, less-optimized resources. That increases both system costs (from less flexible and optimized resource choices) and pollution (because fossil plants must make up the difference of fewer clean options).

To be fair, PJM is in dire need of reform, both in how well it builds transmission and how adeptly it interconnects clean resources to the grid. But rather than take those constraints lying down, Dominion should dust itself off and join the rest of us in doing everything in our power to drive PJM's reforms forward, for the lasting benefit to Virginians. This reform imperative is especially true in interconnection reform, to ensure higher annual levels of newly-added power. That will serve Dominion' s customers - and the climate - far better than boxing ourselves into what is an unnecessarily inflexible and highly-constrained IRP.

Dominion does not tap the modern, dynamic grid to its full capacity:

It is worth reiterating that Dominion cannot simply build its way out of either load growth or statutory carbon limits. But that is the sum approach of its inflexible IRP, one that largely overlooks the full panoply of grid innovations now available to forward-looking utilities.

Operating a modern, higher-capacity grid means going big on the grid-wide deployment of: relentless demand response harvesting; battery storage and demand response paired with utility, commercial, and residential scale solar, and aggregating them as dispatchable virtual power plants; diverse and universally-offered time-of-use rates; cost-saving weatherization upgrades, with priority given to the most energy-intensive low-income homes; storage-plus-renewable replacements at the same location as retiring fossil resources to maintain resource adequacy; transmission uprates and reconductoring; managed EV-charging and peak vehicle-to-grid deployment; grid-enhancing technologies; building electrification for more cost-effective grid utilization; EV-charging incentives and infrastructure, particularly at apartment buildings; and data center efficiency and innovative clean-energy tariffs.

While the IRP mentions many of these grid opportunities, it still largely assumes an underlying inflexible grid that "dumbly" only ramps up or down in large MW-increment addition or subtraction. Instead, Dominion should double down on actual "grid transformation," to enable the smooth, more granular and wave-like two-way power flows with nimble, grid-dispersed resources.

In short, this isn't our grandfather's grid; yet, newly-accessible grid-capacities-as-a-resource are largely absent, in both substance and intent, from Dominion's IRP.

To summarize the IRP's swings and misses, Dominion largely overlooks the full utilization of these three very ripe opportunities: (1) fully awakening the "sleeping giant" of Virginia's energy sector: efficiency and demand-response resources; (2) eliminating PJM bottlenecks to widespread deployment of carbon-zero energy and its efficient movement across PJM; and (3) unleashing the full menu of grid innovations now available to forward-looking utilities. In leaving these advantages fallow, Dominion's IRP limits itself to an unnecessarily inflexible and therefore overly resource-build intensive plan.

Where Do We Go from Here?

Now that the IRP is out, a veritable cottage industry will spring up over at the SCC to fight over it. And, one day, the Commission will give it either a thumbs up or a thumbs down (incidentally, given the IRP evinces no concerted effort to decrease pollution as required by statute, and simply assumes endless load growth and a completely inflexible grid as two immovable objects, the Commission might consider the latter). In any event, both Virginians and Dominion will now continue to go about their actual daily business.

In the meantime, it will never be too late for Virginia's largest institutions, including Dominion, to proactively exert climate and energy leadership, in a way that, yes, accommodates some level of load growth.

With no shortage of zero-carbon solutions, there is happily also no shortage of talent and institutions to put them in place:

The Virginia SCC is now fully constituted, with fresh, clear-eyed leadership and expertise at the top, and hopefully an engaged staff ready to follow their lead in seizing new opportunities to meet these challenges head-on. That fresh look should include revisiting whether Virginia's fusty utility business model of yesteryear could use a much-needed refresh (something the SCC has recently explored).

Over at the legislature, its blue-ribbon Energy Commission (the CEUR, pronounced The Cure) is now fully staffed up with top-shelf talent, and the General Assembly itself is teeming with leaders steadfastly committed to ensuring Virginia's climate action delivers. The state energy office, Virginia Energy, is also replete with ace public servants, who with their subject-matter expertise and non-partisan civic dedication have made huge strides for everyday Virginians, and will continue to do so.

Rather than the lackadaisical shrug at climate risk evinced in this IRP, Dominion too can still exert its deep wells of in-house talent toward a less-scattershot, more-targeted business model, one predicated on slashing, not swelling, carbon emissions. There are ready and willing partners across Virginia's landscape who will work tirelessly to ensure that climate success also means business success for all concerned.

Large institutions, like ocean-faring ships, do not turn on a dime. But, Dominion can be nimble and agile, if it seizes the vibrant business opportunity of building and managing a modern and actually clean 21^st century-style grid. In doing so, Dominion's ship would no longer be adrift on yesteryear's build-it-bigger utility business model. Instead, Dominion could easily and profitably steer away from Youngkin-style climate nihilism, and go from being Virginia's biggest climate-polluter, to Virginia's biggest climate-solver.

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