VirginiaHB8952026 Regular SessionHouseWALLET

Electric utilities; energy storage requirements, Department of Energy to develop model ordinance.

Sponsored By: Richard C. "Rip" Sullivan, Jr. (Democratic)

Signed by Governor

Summary

Electric utilities; energy storage resources; Department of Energy to develop model ordinances; State Corporation Commission to conduct technology demonstration program. Increases the targets for energy storage capacity that Appalachian Power and Dominion Energy Virginia are required to petition the State Corporation Commission (the Commission) for approval to construct, acquire, or procure and extends the time frame by which such capacity must be met. Under the bill, (i) Appalachian Power shall petition the Commission for approval to construct, acquire, or procure at least 780 megawatts of short-duration energy storage capacity by 2040 and 520 megawatts of long-duration energy storage capacity by 2045 and (ii) Dominion Energy Virginia shall petition the Commission for approval to construct, acquire, or procure at least 16,000 megawatts of short-duration energy storage capacity by 2045 and 4,000 megawatts of long-duration energy storage capacity by 2045. "Long-duration energy storage" and "short-duration energy storage" are defined in the bill. Under the bill, the Commission shall approve an independent auditor to help develop criteria for and to help review requests for proposals for new energy storage resources. The bill requires the Commission to conduct a technology demonstration program for long-duration energy storage resources and initiate a proceeding to determine if such technology is viable and that the targets in the bill are reasonably achievable, for which a final order shall be entered no later than March 1, 2031. Certain provisions of the bill are only effective upon such determination by the Commission. The bill requires the Department of Energy, in consultation with the Department of Environmental Quality and the Department of Fire Programs, to develop model ordinances suggested for use by localities in their regulation of energy storage projects by December 1, 2026. The bill directs the Commission to initiate a technical conference by September 1, 2026, to evaluate safety standards and practices for energy storage development. The bill also includes a provision authorizing the Commission to evaluate energy storage project proposals during annual petitions filed for the development of new renewable generation capacity. This bill is identical to SB 448.

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Bill Overview

Analyzed Economic Effects

14 provisions identified: 4 benefits, 1 costs, 9 mixed.

Phase II utilities expand renewable purchases

Each Phase II utility must seek approval for 16,100 megawatts of Virginia solar or onshore wind by December 31, 2035. The schedule requires 3,000 megawatts by December 31, 2024; 3,000 more by December 31, 2027; 4,000 more by December 31, 2030; and 6,100 more by December 31, 2035. At least 35% of each group must come from facilities not owned by a utility, including qualifying affiliates. The total includes 1,100 megawatts of solar projects no larger than 3 megawatts each, and at least 200 megawatts must use previously developed sites. Utilities must also seek approval for up to 5,200 megawatts of offshore wind; exceeding 16,100 megawatts of solar or onshore wind requires approval. Separately, 1% of renewable compliance must come from projects no larger than 1 megawatt, with no site exceeding 3,000 kilowatts. At least 25% of that share must come from qualifying low-income projects, or eligible public K–12 school projects when those are unavailable.

Utilities face short-duration storage targets

Short-duration storage provides less than 10 hours of generation. Each Phase I utility must seek approval for 780 megawatts by December 31, 2040. Each Phase II utility must seek approval for 4,000 megawatts by December 31, 2030, within a 16,000-megawatt total by December 31, 2045. At least 10% of required capacity must be proposed for cost recovery as electric distribution grid transformation projects. Newly acquired rights to Virginia pumped-storage capacity, and capacity increases from utility investment, count toward these targets. Utilities can seek approval for additional capacity.

Qualifying clean energy buyers avoid charges

Qualifying accelerated renewable energy buyers can contract directly for renewable certificates or bundled clean power covering some or all electricity use. Qualifying generation must be in the PJM grid region and have begun commercial operation after January 1, 2015. Buyers receive covered renewable compliance charge exemptions, except for specified offshore-wind costs. They can also contract for storage capacity within the utility's service area and receive covered exemptions tied to their demand and certificate portfolio. A separate exemption covers specified new renewable and storage net costs for qualifying Phase II customers subscribed on March 1, 2020, to a companion tariff requiring a renewable facilities agreement and at least 2,000 renewable attributes annually. Exempt buyers' contracted certificates do not count toward utility renewable compliance, and their covered electricity use is excluded from utility targets. Buyers and utilities must certify exemption compliance; contracted resource costs cannot be shifted to customers who have not agreed to pay. Contracts allocating no costs to others need no special-rate approval, and the Commission must ensure fair allocation of related distribution and transmission costs.

Utility customers pay clean energy charges

Customers in affected utility areas pay covered renewable energy, storage, and compliance costs, even when choosing another electricity supplier. Exceptions apply to qualifying renewable buyers and specified offshore-wind costs. The law required cost-allocation proceedings by September 1, 2020, and charges for shopping customers by January 1, 2021. Charges receive yearly review and adjustments; Virginia customers bear Virginia compliance costs for utilities serving multiple states. Utilities facing renewable certificate costs above $45 per megawatt-hour, or missing renewable targets, must make shortfall payments. Base payments are $45 per megawatt-hour, or $75 for qualifying Virginia solar, wind, or anaerobic-digester projects of 1 megawatt or less. Payments increase 1% annually after 2021 and can be recovered from customers; the law sets no household bill amount.

Storage projects face new safety standards

Covered utility storage projects must meet the latest published National Fire Protection Association 855 standard and use competitive buying. Utilities must compare buying storage capacity with buying facilities, including costs, risks, ownership, and customer effects. By December 1, 2026, Virginia's Department of Energy must create suggested local ordinances and best-practice guidance tailored to different storage technologies. It must consult environmental and fire agencies, convene a stakeholder group, maintain online education, and update the models every three years; local adoption is optional. The State Corporation Commission must hold a safety standards conference by September 1, 2026, and review bidding rules for applicable 2026 petitions. Those solicitations cannot bar storage acquisition proposals that meet the latest NFPA 855 standard, but compliance does not guarantee selection. Solicitations issued before July 1, 2026, must be revised and reissued when needed; the Commission can direct changes to unreasonable criteria.

Long-duration storage targets need viability approval

Long-duration storage provides at least 10 hours of generation at full rated power. Its targets take effect only after the State Corporation Commission finds the technology viable and the targets reasonably achievable. After receiving the required utility report, the Commission must begin its review and issue a final order by March 1, 2031. The targets require each Phase I utility to seek approval for 520 megawatts and each Phase II utility for 4,000 megawatts by December 31, 2045. Half of each total must be proposed by December 31, 2035; half must provide 10–24 hours of storage and half more than 24 hours. At least 20% of Phase II capacity must be in Virginia's coalfield region, and additional capacity requires approval. The Commission must review short-duration targets, can adjust them for technology availability, customer benefits, and grid reliability, and can set reasonable interim long-duration targets for 2031–2045.

Phase I utilities seek renewable capacity

Each Phase I utility must seek approval for 600 megawatts of Virginia solar or onshore wind. The schedule requires at least 200 megawatts by December 31, 2023, another 200 by December 31, 2027, and another 200 by December 31, 2030. At least 35% of each group must come from facilities owned by someone other than the utility. The utility constructs or acquires the remaining share. Utilities can seek approval for more than 600 megawatts.

Utilities face renewable source eligibility rules

Beginning with 2025 compliance, Phase I and Phase II utilities can use only certificates from listed eligible renewable sources. Sources generally must be in Virginia, the PJM grid region, or qualifying directly connected Atlantic offshore projects. At least 75% of a Phase II utility's certificates must come from eligible Virginia resources. Eligible sources include solar, wind, specified older hydropower, waste-to-energy and landfill gas, geothermal systems, and biomass meeting fuel and sustainability rules. Virginia falling-water facilities also qualify when commercial operations began before July 1, 2024. Listed older hydropower generally must have operated or been contracted before January 1, 2020; specified waste-to-energy and landfill gas must have operated as of that date without fossil waste-heat use. Biomass facilities must have operated as of January 1, 2023, face limits on the share of generation credited, and meet State Forester-enforced harvest standards. Virginia geothermal heating and cooling earn certificates through kilowatt-hour conversion under Commission verification. Renewable targets rise as a share of the prior year's electricity sales, and excess certificates can be used in the current year and next five calendar years.

Utilities get storage rules and limits

The State Corporation Commission must adopt storage deployment rules by January 1, 2027, and update them at least every five years. The rules must cover interim targets for 2031–2045, competitive buying, customer-side storage incentives, alternatives to new wires, and peak-demand reduction. Individual storage projects cannot exceed 500 megawatts, except that a Phase II utility can procure one project up to 800 megawatts. For facilities placed in service after July 1, 2020, at least 35% must involve purchases from outside parties. This share can include facilities bought from outside owners or outside-owned facilities selling capacity to the utility.

Utility buying gets competition and oversight

Phase I and Phase II utilities must seek solar, wind, and storage bids at least annually. Requests must be public and posted online at least 45 days before closing, with resource needs and required bid information. Bid reviews must consider listed project, developer, grid, Virginia-benefit, and environmental factors; utilities seeking solar construction approval must show competitive buying. For every storage bid process, the State Corporation Commission approves an independent auditor from three utility-proposed candidates. The auditor helps design criteria, checks costs, safety, and reliability, and submits a public report with the annual petition. The Commission can direct changes to support affordability, customer savings, and reliability. For covered projects, utilities must competitively buy Virginia- or U.S.-made equipment using domestic materials or components when reasonably available and competitively priced.

Utility projects receive yearly public review

From 2020 through 2045, Phase I and Phase II utilities must file yearly solar, onshore wind, and storage plans. Plans must reflect ownership shares and a goal that at least 10% of covered storage projects sit on customers' side of the meter. The State Corporation Commission reviews costs, renewable goals, carbon cuts, Virginia development, and fuel savings, with final orders due within six months. Storage facility permits require reliability and public-interest findings; covered regulated utility petitions filed after July 1, 2007, also require public convenience and necessity. Other government approvals satisfy Commission requirements for matters those agencies handled, and the Commission cannot add conditions on those matters. Utilities can seek separate approval for extra zero-carbon power based on customer need, fuel costs, Virginia development, and cheaper demand-reduction or storage alternatives. Reviews must also consider state storage-growth policy, renewable integration, and protection of critical electrical systems.

Legacy power buyers keep charge exemptions

A Phase II customer avoids specified utility charges after choosing competitive supply before April 1, 2019. That customer must also have had peak demand above 100 megawatts in 2019. A Phase I customer qualifies after choosing competitive supply before February 1, 2019. The exemption lasts only while the customer does not buy electricity from the utility. Exempt electricity use does not count toward the utility's renewable requirements.

Utilities can test long-duration storage technologies

The State Corporation Commission must establish a long-duration storage demonstration program. A Phase II utility can seek approval for at least three technologies totaling at least 4,000 megawatt-hours of discharge capacity. Existing long-duration storage can count, and the Commission can excuse the targets when enough resources are not reasonably available. The utility must make a good-faith effort to obtain federal Department of Energy funding. It must report progress and outcomes, including costs, supply chains, siting, and performance, by October 1, 2030.

Utility payments fund disadvantaged community programs

Virginia's Department of Energy manages collected renewable shortfall payments in an account that earns interest. It directs 50% to job training and 30% to renewable energy programs in historically economically disadvantaged communities. Another 16% supports energy-saving measures at public facilities, and 4% covers administration. The law sets no total funding amount or direct household payment.

Sponsors & Cosponsors

Sponsor

  • Richard C. "Rip" Sullivan, Jr.

    Democratic • House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 258 • No: 103

House vote • 3/11/2026

Senate substitute agreed to by House

Yes: 68 • No: 30

Senate vote • 3/10/2026

Commerce and Labor Substitute agreed to

Yes: 0 • No: 0

Senate vote • 3/10/2026

Passed Senate with substitute

Yes: 21 • No: 19

Senate vote • 3/9/2026

Passed by for the day Block Vote (Voice Vote)

Yes: 0 • No: 0

Senate vote • 3/9/2026

Constitutional reading dispensed Block Vote (on 2nd reading)

Yes: 40 • No: 0

Senate vote • 3/6/2026

Reported from Finance and Appropriations

Yes: 10 • No: 4

Senate vote • 3/2/2026

Reported from Commerce and Labor with substitute and rereferred to Finance and Appropriations

Yes: 8 • No: 5

House vote • 2/17/2026

Read third time and passed House

Yes: 65 • No: 32

House vote • 2/11/2026

Reported from Appropriations

Yes: 17 • No: 5

House vote • 2/11/2026

Subcommittee recommends reporting

Yes: 6 • No: 1

House vote • 2/10/2026

Reported from Labor and Commerce with substitute and referred to Appropriations

Yes: 17 • No: 5

House vote • 2/5/2026

Subcommittee recommends reporting with substitute and referring to Appropriations

Yes: 6 • No: 2

Actions Timeline

  1. Acts of Assembly Chapter text (CHAP0694)

    4/13/2026Governor
  2. Approved by Governor - Chapter 694 (effective - see bill)

    4/13/2026Governor
  3. Fiscal Impact Statement from Department of Planning and Budget (HB895)

    4/2/2026House
  4. Governor's Action Deadline 11:59 p.m., April 13, 2026

    3/31/2026Governor
  5. Enrolled Bill communicated to Governor on March 31, 2026

    3/31/2026House
  6. Signed by Speaker

    3/31/2026House
  7. Bill text as passed House and Senate (HB895ER)

    3/30/2026House
  8. Enrolled

    3/30/2026House
  9. Signed by President

    3/30/2026Senate
  10. Fiscal Impact Statement from Department of Planning and Budget (HB895)

    3/11/2026House
  11. Senate substitute agreed to by House (68-Y 30-N 0-A)

    3/11/2026House
  12. Passed Senate with substitute (21-Y 19-N 0-A)

    3/10/2026Senate
  13. Commerce and Labor Substitute agreed to

    3/10/2026Senate
  14. Engrossed by Senate - committee substitute

    3/10/2026Senate
  15. Read third time

    3/10/2026Senate
  16. Passed by for the day Block Vote (Voice Vote)

    3/9/2026Senate
  17. Constitutional reading dispensed Block Vote (on 2nd reading) (40-Y 0-N 0-A)

    3/9/2026Senate
  18. Rules suspended

    3/9/2026Senate
  19. Reported from Finance and Appropriations (10-Y 4-N)

    3/6/2026Senate
  20. Committee substitute printed 26108942D-S1

    3/3/2026Senate
  21. Senate committee offered

    3/2/2026Senate
  22. Reported from Commerce and Labor with substitute and rereferred to Finance and Appropriations (8-Y 5-N)

    3/2/2026Senate
  23. Referred to Committee on Commerce and Labor

    2/18/2026Senate
  24. Constitutional reading dispensed (on 1st reading)

    2/18/2026Senate
  25. Read third time and passed House (65-Y 32-N 0-A)

    2/17/2026House

Bill Text

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