W. Va. creates special districts that pave the way for renewable microgrids in coal country

West Virginia’s Public Service Commission (PSC) is known to favor coal over clean energy, which may give supporters of proposed renewable microgrids in the state pause.

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Under current state law, independent power producers must establish public utilities regulated by the PSC to serve more than one customer, said Evan Hansen, a delegate to the West Virginia House of Delegates and president of Downstream Strategies, which provides energy advice.

Regulation by a coal-friendly PSC is not attractive to renewable energy producers and microgrids 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: Like West Virginia lagged behind in the clean energy revolution.”

“The West Virginia PSC is the most anti-coal, anti-renewal and anti-consumer PSC in the country,” said Van Nostrand, an energy regulation attorney who has worked on cases before 10 different PSCs.

But the legislation passed by the state legislature and taking effect on September 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 Berkshire Hathaway titanium producer. Like a growing number of manufacturers with sustainability goals, Precision Castparts wants to source only 100% renewable energy.

No fossil fuel zones

SB 4001 created two “Industrial Enterprise Expansion Development” districts where independent power producers can provide renewable energy to enterprises in the districts. Fossil-fired power plants aren’t allowed by law in the district, Hansen said.

“Berkshire Hathaway Energy Renewables is a very progressive company doing its due diligence before making such a large investment, and it would not have made such an investment in West Virginia if it were subject to PSC regulation,” Van Nostrand said.

The road to passage of SB 4001 began when West Virginia Senator Glenn Jeffries, D-Putnam, wrote a letter to Berkshire Hathaway Energy Renewables to encourage the state and ask if the company would review site facilities in West Virginia , explained Hansen.

In response, Berkshire Hathaway began exploring opportunities, and the state offered incentives for the company to locate facilities in West Virginia, Hansen said. Berkshire Hathaway has decided to locate the Precision Castparts facility in the state and provide renewable energy to Precision Castparts through Berkshire Hathaway Energy Renewables, Hansen said.

It’s unclear who will build facilities or supply electricity in the second of the two districts, he added.

Hansen said SB 4001 is good public policy because it helps attract manufacturers that need renewable energy to meet sustainability goals to the state. “This is one of several pieces of legislation that will allow the state to finally diversify its energy mix,” he said. Hansen was a key supporter of three other successful energy bills.

The first electric utilities each had to tap up to 200 MW of solar and offer solar tariffs – allowing industrial customers with sustainability goals to purchase renewable energy. A second Hansen-backed bill allows third-party ownership of rooftop solar panels, paving the way for utility customers to purchase solar panels with no upfront investment. A third bill corrected a punitive tax on large solar arrays built by independent power producers looking to sell power to the grid, he said. All of these measures could have a positive impact on microgrid development in the country.

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Berkshire Hathaway Energy Renewables declined to comment on its microgrid project through spokesman Dan Winters. But a press release issued by the company in September announced that Berkshire Hathaway Energy Renewables is buying more than 2,000 acres of land in Ravenswood, West Virginia, to develop it as a “first-of-its-kind microgrid renewable energy industrial site.” Precision Castparts, according to the press release, will be the first company to set up shop at the industrial site.

According to the press release, Berkshire Hathaway Energy Renewables will work with the West Virginia Economic Development Authority to bring more companies to the site.

Susan Small, spokeswoman for the PSC, said the commission “does not have the power to 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 advisability for a renewable energy project.

However, Van Nostrand has a different take on the PSC’s efforts in West Virginia.

Hard road for renewables in coal country

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While most states were investing in renewable energy, the West Virginia PSC was doubling its coal, he said. “These acquisitions left no room in the resource portfolio of utilities for natural gas, wind, solar, or energy efficiency, all of which were cheaper avenues for consumers than the coal-dependent path,” Van Nostrand said. As a result, average retail electricity prices in West Virginia rose five times the national average between 2008 and 2020, he said.

In fact, the PSC has rejected utility company requests to diversify into renewable energy sources, Van Nostrand said. For example, in May 2018, the PSC rejected an application by Appalachian Power — a subsidiary of AEP Renewables — to purchase two wind projects, he said. “The PSC refused to authorize the resource acquisition,” said Van Nostrand.

Other ways to bring renewable microgrids to West Virginia?

But SB 4001 isn’t the way to go for bringing microgrids into the state, Van Nostrand said.

Instead, the PSC should require utilities to offer standard terms for microgrids via tariffs and establish rules by which microgrids operate in the state, he said.

This is the strategy from California and Hawaii, which established microgrid tariffs.

Despite the lack of microgrid tariffs, West Virginia is slowly but surely moving towards bringing more renewable energy — and microgrids — into the state, Hansen said.

“There is always more recognition in the leadership of both [Democratic and Republican] Parties that the manufacturing jobs of the future will require renewable energy, and if West Virginia is to be competitive they need to embrace change,” he said.

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