Energy demands, regulations and federal funding challenge Virginia Clean Economy Act

By Shannon Heckt, Virginia Mercury

In July 2020, the Virginia Clean Economy Act went into effect, setting the commonwealth on a path towards zero-emissions in its energy production by 2050. The lofty goals were designed to combat climate change and prepare Virginia to fulfill future electricity demands. 

Now as the state grapples with energy needs that have expanded since the passage of the bill — and with looming changes to federal energy policy — there are questions about if, and how, the law should be changed.

Where it started

The law, first proposed by Del. Rip Sullivan, D-Fairfax, put Virginia ahead of the curve concerning decarbonization of the grid. It was voted into law largely across party lines with only a few Republicans joining Democrats, who held control of both chambers at the time. 

A foundational component of the law focuses on the state’s two largest utility companies: Dominion Energy, which serves 2.7 million customers in Virginia; and Appalachian Power Company that serves nearly 530,000 customers statewide. The law requires the companies to produce their energy from 100% renewable sources by 2045 and 2050, respectively.

Solar and offshore wind must make up two-thirds of energy production by 2035. VCEA mandated 16,100 MW of solar and onshore wind, 5,200 MW of offshore wind, 2,700 MW of energy storage capacity  be generated in the public interest.

To that end, Dominion is aiming to have 80% of its new power generation come from renewable energy sources in the next 15 years, distributed as follows:

Solar: 45%

Natural Gas: 20%

Battery Storage: 15%

Offshore Wind: 15%

Nuclear (Small Modular Reactors): 5%

Dominion is currently building the largest offshore wind projects in the country off the shores of Virginia Beach. The utility states the 2600 megawatt project will be able to power 660,000 homes at peak output. The cost of the project has steadily increased as construction progressed and now totals over $10 billion dollars, adding an estimated 43 cents to customers’ monthly bills. Dominion is required by the law to petition the SCC for approval of 5200MW of wind power by 2035; the offshore wind project will bring the company halfway to that goal.

The VCEA also ordered reductions in energy sales through efficiency programs. This was partially helped through the Regional Greenhouse Gas Initiative, which brought in hundreds of millions of dollars to the state for efficiency programs through selling pollution credits over the cap of carbon emissions implemented on energy facilities. 

However, Gov. Glenn Youngkin removed the state from RGGI, claiming the cost that was ultimately added to utility bills was a tax on consumers. Courts have ruled his removal was unlawful. Virginia has not been added back into RGGI while appeals play out. It is likely the state’s membership in the program will not be determined until a new governor takes office in 2026.

“When the VCEA was initially passed, it was really about replacing power generation with newer, cleaner forms of power generation,” said Aaron Ruby, Director of Virginia and offshore wind media for Dominion Energy. “Today in Virginia, we’re not replacing generation. We’re adding new generation. We need as much power generation as we can get from every source.”

Since the implementation of the law, each year has benchmark requirements for Phase I and Phase II utilities to  use renewable energy. In 2026, Phase I utilities must be at 17% and Phase II must be at 29% otherwise they must buy renewable energy credits or face penalties of $45 per megawatt hour.

Dominion reports they have petitioned the SCC for 4500 MW of solar power of the 16100MW required by the VCEA. As for energy battery storage, Dominion has petitioned for 550 MW out of the 2700MW requirements.

Relatedly, in 2021, the General Assembly passed the Clean Cars Standard as part of the state’s goals of cutting emissions. The law mirrored California’s standard that banned the sale of gas-only cars after 2035. Virginia’s law ramped up percentages of new cars and trucks required to be zero emissions vehicles along the same time as California. 

The challenge

Since the VCEA was passed, Virginia’s electricity needs have exploded due to the construction of power-hungry data centers and more extreme temperatures that put a strain on the grid. Virginia is the home to over a third of the world’s data centers, with more being proposed across the state.

There is a growing concern as more come online that the cost of that energy use will ultimately land in the laps of consumers. Expanding the energy profile in the state through renewables is a slow-moving process, as county governments debate solar siting ordinances and where transmission lines should be built.

Republicans in the statehouse want to see more natural gas plants and small nuclear reactors built to meet the demand. They see gas as a more reliable energy source in extreme weather that creates more jobs than a solar farm would.

“This can’t really be a piecemeal approach. I think we really got to look at the whole scheme here that was put in place with the VCEA,” said Del. Chris Obenshain, R-Montgomery. “I think we’ve got to go back to the drawing board. I think the VCEA is totally unrealistic. It was implemented without really a plan to make it workable and that the cost of it is being passed on to consumers.”

Democrats acknowledge the fluidity of Virginia’s power needs but say the VCEA is still a valuable tool to help meet those needs responsibly. 

“We understood at the outset that we were setting a 30-year goal and that conditions and technology would change in ways we couldn’t anticipate in 2020. We knew that it would need to evolve and adapt, while keeping with the spirit of the legislation, and that we’d have to address those issues throughout the life of the law,” Sullivan said in a statement. “Indeed, we have made adjustments to the VCEA since it passed.”

The General Assembly has been unable to pass statewide regulations for solar farms and data centers. This has led to fierce debate in counties over whether both large scale solar farms and small community arrays should be allowed to be built. City and county officials also have had to determine rules for data centers as stress on local transmission lines becomes a growing concern.

“We can still achieve those targets through varying forms of solar, wind and storage, but because of the increased level of electrification across the state commonwealth, we need to plus-up on storage components,” said Jim Purekal, Director of Advanced Energy United, a group that was integral in passing the 2020 law.

Dominion has warned that with the increased demand they need to build multiple natural gas plants to serve during peak energy use times. Those plans, including a proposal to build a natural gas plant in Chesterfield, have often met community opposition since it would move the needle back on the carbon neutral goals the VCEA lays out. Others believe investing in energy storage is the right path to meet those peak demands.

“I don’t believe we have had a local government deny a permit for a solar project, we have seen counties impose various different limitations on solar development or restrictions for a certain project,” Ruby said. “At a certain point, we decided not to pursue a given project any further at least for the time being.”

What’s next

There have been numerous attempts to revise or outright repeal the VCEA. The latest attempts in the 2025 legislative session aimed to add hydrogen and fossil fuels to the state’s Renewable Portfolio Standard, expand nuclear power, lessening the requirements for emission reductions, and removing the financial incentives to comply with the RPS. All of those bills failed during the session.

“All of those efforts have been struck down, have been pushed to the side, in some cases haven’t even been considered or haven’t even been given a hearing… we’ve continued to try to get our colleagues to understand the problems that the VCEA has created and specifically how those hurt our constituents,” Obenshain said.

There have also been efforts to strengthen the law in its goals for emission reduction and meeting the power demand. Sullivan passed legislation this year that would expand power storage for the two large utility companies. 

“I tried to improve the VCEA during the last session of the General Assembly, with a bill that would have accelerated and expanded its energy storage provisions, enhancing reliability and helping to lower energy costs for Virginia’s families,” Sullivan noted. “But the Governor chose to veto it.”

Gov. Glenn Youngkin first offered an amendment that completely repealed the VCEA, which the General Assembly ultimately rejected. The bill then met Youngkin’s veto pen. 

“Adding in requirements for the petitioning of additional storage technologies will not change the fact that the law is misguided and does not work. Long-duration energy storage is an expensive technology and if utilities believed it to be the best technology to meet demand, they would be actively seeking permission to build them,” Youngkin said in his veto message.

Advanced Energy United, an advocacy group that represents businesses and energy companies and lobbies for public policies on consumer costs and grid reliability, believes like Sullivan that more energy storage will enable the state to meet its energy demand in peak usage times or after storms.

As for the Clean Car Standard, its future is uncertain after President Donald Trump signed multiple bills to rescind the California law that Virginia’s legislation is tied to. The build out of electric vehicle charging stations in the state has also been put almost entirely on hold after funding for the projects was cut.

The state was set to receive $100 million over five years to build charging stations along every 50 miles of the interstate. Fifty-one of the 53 projects lost their funding, marking a significant setback for the state’s shift towards zero-emission vehicles.

Ruby said Dominion is one of many stakeholders invested in the implementation of the VCEA. With a new slate of legislators and a new governor coming in next year, the utility plans to meet with them to determine how to best move forward with the law.

This article first appeared on Virginia Mercury and is republished here with permission. Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence.