Dominion Energy’s latest integrated resource plan (IRP) for its Virginia electric utility raises more questions than it answers, according to a new analysis by the Institute for Energy Economics and Financial Analysis. Veteran analyst Dennis Wamsted recommends that the Virginia State Corporation Commission, the state’s utility regulator, reject the plan unless the Richmond-based company makes major revisions.
The Dominion 2023 revision to its 2020 15-year, filed in May, “is replete with questionable assumptions and highly uncertain projections for the 15 years (from 2024 through 2038) that the plan covers. Nothing illustrates this better than the utility’s incandescent estimates for energy demand growth from data centers in its service territory—an average increase of roughly 11% a year for 15 years,” says the IEEFA analysis.
The report adds “that there are many other shortcomings in the company’s 2023 integrated resource plan (IRP), which is now pending before the Virginia State Corporation Commission (SCC).”
The IRP forecast relies on an unrealistic projection for rapid growth of electricity-hungry data centers, which IEEFA says “will jump from an estimated 21,000 gigawatt-hours (GWh) this year to 100,000 GWh in 2038—a 376% increase that would amount to an average annual rise of 11%.”
The assumed growth in data centers, says the analysis, “would essentially transform Dominion into a data center generation subsidiary. By 2038, 83.6% of its commercial sales and 56.6% of its total sales would be consumed by data centers, according to the company’s estimates—hardly a scenario for balanced growth.”
Dominion also assumes an “extremely high capacity price forecast for the PJM power market,” which justifies arguing for keeping the company’s old, dirty fossil fuel generation plants in service. “Dominion assumes that capacity prices will start climbing in the next PJM auction, currently scheduled for June 2024 for the 2025-26 delivery year (PJM power delivery years run from May 31-June 1), and continue rising through 2038.”
While prices in PJM’s troubled capacity market have “declined consistently in recent years,” Dominion predicts the PJM capacity prices over the 15 years covered in the IRP will average $161/MW-day. This figure is “close to the highest base prices ever seen in the capacity auctions—with prices well above that average beginning in 2031 and continuing through the end of the forecast. These projections are much higher than the PJM-wide average of $91/MW-day over the last 15 years.”
Dominion Energy’s latest integrated resource plan (IRP) for its Virginia electric utility raises more questions than it answers, according to a new analysis by the Institute for Energy Economics and Financial Analysis. Veteran nalyst Dennis Wamsted recommends that the Virginia State Corporation Commission, the state’s utility regulator, reject the plan unless the Richmond-based company makes major revisions.
The Dominion’s 2023 revision to its 2020 15-year, filed in May, “is replete with questionable assumptions and highly uncertain projections for the 15 years (from 2024 through 2038) that the plan covers. Nothing illustrates this better than the utility’s incandescent estimates for energy demand growth from data centers in its service territory—an average increase of roughly 11% a year for 15 years,” says the IEEFA analysis.
The report adds “that there are many other shortcomings in the company’s 2023 integrated resource plan (IRP), which is now pending before the Virginia State Corporation Commission (SCC).”
The IRP forecast relies on an unrealistic projection for rapid growth of electricity-hungry data centers, which IEEFA says “will jump from an estimated 21,000 gigawatt-hours (GWh) this year to 100,000 GWh in 2038—a 376% increase that would amount to an average annual rise of 11%.”
The assumed growth in data centers, says the analysis, “would essentially transform Dominion into a data center generation subsidiary. By 2038, 83.6% of its commercial sales and 56.6% of its total sales would be consumed by data centers, according to the company’s estimates—hardly a scenario for balanced growth.”
Dominion also assumes an “extremely high capacity price forecast for the PJM power market,” which justifies arguing for keeping the company’s old, dirty fossil fuel generation plants in service. “Dominion assumes that capacity prices will start climbing in the next PJM auction, currently scheduled for June 2024 for the 2025-26 delivery year (PJM power delivery years run from May 31-June 1), and continue rising through 2038.”
While prices in PJM’s troubled capacity market have “declined consistently in recent years,” Dominion predicts the PJM capacity prices over the 15 years covered in the IRP will average $161/MW-day. This figure is “close to the highest base prices ever seen in the capacity auctions—with prices well above that average beginning in 2031 and continuing through the end of the forecast. These projections are much higher than the PJM-wide average of $91/MW-day over the last 15 years.”
Regardless of the PJM prices, “Dominion’s analysis also strains credulity in its assumptions about future generation from both its existing coal plants and its fleet of combined cycle gas turbine (CCGT) facilities,” says IEEFA. For example, Dominion assumes its 1,600-MW, three-unit coal-fired Mt. Storm plant in West Virginia “will continue operating through 2038—and that they will generate more power in the future than they do today.” Dominion assumes the plant’s capacity factor will exceed 50% in 2035, although the units will be more than 60 years old by then. “Mount Storm’s average annual capacity factor has been below 50% since 2016.”
Dominion’s hope placed on hydrogen is also misplaced, says IEEFA. Dominion is proposing to build a four unit, 975-MW gas-fired combustion turbine plant which assumes will be able to convert to hydrogen by 2045, “but the details on that are spotty, at best. The 2045 date is important since existing Virginia law requires the state’s utilities to retire all carbon emitting generation resources by then unless they have secured explicit state approval to continue operating a particular resource.”
Dominion estimates it will cost $485 million to convert the plant from natural gas to hydrogen. IEEFA comments, “But that is little more than a guess, the company acknowledged: ‘The estimated costs to convert facilities for hydrogen blending in 2045 is not yet known … Therefore, the company used the $500/kW estimated…as a high-level proxy value.’ On top of that, the company said its estimate does not include any projected costs for fuel, hydrogen distribution or hydrogen infrastructure beyond the plant fence line. In other words, the company has no idea what the conversion would cost or if it is even feasible.”
Dominion’s latest IRP update also downplays the earlier commitment the company made toward renewable energy and away from coal. In its 2020 IRP, the company proposed “adding 23,700 MW of solar, wind and battery storage to its system in the following 15 years. None of the five alternatives in the 2023 plan include more than 17,050 MW of renewables.” When it comes to coal, Dominion has about-faced on retiring its 877-MW, two-unit, coal-fired Clover plant. “It also now expects significantly more output from Mount Storm and its third plant, the 624-MW Virginia City Hybrid Energy Center (VCHEC). In its 2020 plan, Dominion projected that both those facilities would still be online in 2035, but that they essentially would not be used.”
The bottom line: “Virginia regulators should ask for new, more realistic modeling on all of these issues. As it stands, Dominion’s IRP contains significant long-term risks for the utility’s ratepayers and Virginia’s energy security.”
–Kennedy Maize
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