Gov. Patrick Morrisey is seeking to increase power plant capacity in West Virginia to 50 gigawatts by 2050, tripling our current capacity levels, according to a recent speech. He, and the Legislature, should be cautious and smart about how they embark on such a mission, if they decide to do so.
For those who do not spend a lot of time working on energy issues, “capacity†is the measure of how much power (i.e. how many power plants, and how big) is online and connected to the grid. It is not the actual energy produced, it is just about what plants are online and able to put energy onto the grid. Our regional grid, PJM, requires each utility to have a certain amount of capacity at their disposal, based on the summer peak demand of that utility.
There is no question that some projections show that power costs could increase in our region to pay for new capacity due to increased energy demands from data centers. The average cost of capacity for the next two years is already going to be more than triple the average cost for the 10 years prior. There probably will be new power plants built in the coming years to meet predicted demand.
Maybe there will be appropriate sites for new power plants here. But it concerns me that the governor suggests what he calls “lowering regulatory barriers†as a method for economic development, including getting power plants built. I'm all for streamlining governmental processes, but if this includes removing protections for residents and existing small businesses, like he did for data centers, he's lost me.
We need livable, safe communities, and cannot put our residents at risk for health issues or incursions on property rights in order to satisfy the industries in the state that have the biggest budgets for campaign contributions. The 2025 Microgrid Bill precludes local governments from having any say about where large data centers are sited. The state can and should regulate its power plants to ensure they are located in appropriate places and they act as good neighbors. Let's not abdicate that responsibility, too.
The governor's “Backyard Brawl†– West Virginia competing with surrounding states on economic growth – is a useful concept to guide one policy solution for power plant capacity going forward. Regardless of whether or where new capacity gets built, our utilities need strong tools for managing peak demands that will put them at a competitive advantage with surrounding states’ utilities, given the high capacity prices that we can expect to see.
If our utilities can reduce spikes in demand during winter and summer, it will reduce the capacity requirements for West Virginia utilities determined by the grid operator (PJM), which in turn saves ratepayers money by curtailing the need to buy or build additional capacity.
The best way to do that is through what are called “distributed power plants.†This is a policy tool that creates incentives for residential and small business customers to buy battery storage as backup. In exchange for receiving the incentive, the customers voluntarily allow the utility to switch the customer to the customer’s batteries during certain peak demand events. Instead of adding to an overburdened grid, the customer draws down their own battery.
AEP's West Virginia utilities already have a similar program, curtailing air conditioning during summer peak demand times, which is good, but a battery-based program has the potential for much more significant peak-shaving, and could be implemented in winter, too.
A distributed power plant policy is a win-win.Â
Win 1: Participating customers have a battery backup when power goes out. West Virginia has some of the highest rates of electric interruption in the country.
Win 2: Ratepayers pay less for capacity because our utilities would need less capacity overall.
Win 3: Utilities, and therefore their ratepayers, will pay less for energy because the energy savings occur during peak demand times when energy costs are highest.
Distributed power plant policies have been enacted in a variety of ways in other states, and could also be accomplished in different ways here: the Legislature could put it into state code, the Public Service Commission could direct utilities to create the programs, or the utilities could voluntarily file a request of the PSC for such a program.
If Gov. Morrisey means what he says about there being an “all-of-the-above†approach to meeting his goal of 50 GW of generation capacity by 2050, then distributed power plants are an essential policy priority. Cost-effectively meeting capacity needs will require addressing both sides of the equation: demand and supply.
Emmett Pepper is policy director for Energy Efficient West Virginia.Â
