VirginiaSB4482026 Regular SessionSenateWALLET

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

Sponsored By: Lamont Bagby (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 HB 895.

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Bill Overview

Analyzed Economic Effects

17 provisions identified: 6 benefits, 2 costs, 9 mixed.

Customers pay renewable and storage costs

Customers in Phase I and Phase II utility areas pay covered renewable and storage costs, even with another electricity supplier. Specified exemptions apply, and utilities may seek storage cost recovery through regular rates or a separate rate adjustment. For utilities serving several states, Virginia's allocated renewable compliance costs cannot also be charged outside Virginia. The Commission must ensure fair transmission and distribution cost allocations for covered new generation. Cost-allocation proceedings were due by September 1, 2020; outside-supplier charges began no later than January 1, 2021, with yearly updates and true-ups.

Utility renewable shortfalls can affect bills

Utilities must pay for yearly renewable shortfalls or when required renewable certificate costs exceed $45 per megawatt-hour. The base payment is $45 per megawatt-hour of shortfall. It is $75 for shortfalls involving qualifying Virginia solar, wind, or anaerobic-digester projects of 1 megawatt or less. Both payment rates rise 1% each year after 2021. Utilities may recover these payments as compliance costs, which can affect customer bills.

Long-duration storage expands with viability checks

Long-duration storage targets take effect only after the Commission finds the technology viable and targets reasonably achievable. Phase I utilities must seek approval for 520 megawatts and Phase II utilities for 4,000 by December 31, 2045, with half petitioned by December 31, 2035. Half must last 10–24 hours at full capacity and half over 24 hours; at least 20% of Phase II capacity must be in Virginia's coalfield region. Exceeding either target requires Commission approval. After the demonstration report, the Commission must review targets and issue a final order by March 1, 2031, then adopt reasonable interim targets for 2031–2045; it can also adjust short-duration targets.

Phase I utilities add renewable power

Phase I utilities must seek approval for at least 600 megawatts of Virginia solar or onshore wind. Petitions must cover 200 megawatts by December 31, 2023, another 200 by December 31, 2027, and another 200 by December 31, 2030. For each portion, 35% must come from facilities owned by others; the utility must build or acquire the rest. Going beyond 600 megawatts requires Commission approval. Added generation expands power resources, while approved project costs can affect customer rates.

Phase II utilities expand renewable power

Phase II utilities must seek approval for 16,100 megawatts of Virginia solar or onshore wind by December 31, 2035. Targets are 3,000 megawatts by 2024, another 3,000 by 2027, another 4,000 by 2030, and another 6,100 by 2035. The total includes 1,100 megawatts of solar projects no larger than 3 megawatts each and at least 200 on previously developed sites. A 35% share must come from solar facilities owned by persons other than a utility, including utility and deregulated affiliates. 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, and project costs can affect rates.

Utilities face larger short-duration storage targets

Phase I utilities must seek approval for 780 megawatts of storage lasting under 10 hours by December 31, 2040, replacing 400 megawatts by 2035. Phase II utilities must seek approval for 4,000 megawatts by December 31, 2030, and 16,000 by December 31, 2045. At least 10% of each required capacity must be proposed for cost recovery as distribution-grid improvement projects; exceeding targets requires Commission approval. Newly acquired capacity rights or capacity increases at Virginia pumped-storage facilities count toward these targets. Individual projects generally cannot exceed 500 megawatts, but Phase II utilities may procure one up to 800; electric cooperatives organized under Chapter 9.1 are excluded from the section.

Utility bids get independent cost checks

Phase I and Phase II utilities must seek solar, wind, and storage bids yearly, posting requests at least 45 days before bidding closes. Selection must weigh at least seven factors, including costs, project readiness, developer experience, grid effects, and regional benefits. Storage bids must compare buying capacity with buying facilities, including costs, risks, ownership, and customer effects. The Commission approves an independent auditor from three utility nominees; public reports accompany annual petitions, and the Commission can direct changes. Utility solar approval requires competitive bidding, while covered projects must competitively buy Virginia- or U.S.-made equipment and components when reasonably available and competitively priced.

Utility plans include customer-side storage

Phase I and Phase II utilities must file yearly solar, onshore wind, and storage plans from 2020 through 2045. Plans must aim for at least 10% of proposed storage projects to be behind customers' meters. The Commission reviews costs and prudence and must issue a final order within six months of filing. At least 35% of storage facilities placed in service after July 1, 2020, must be bought from non-utilities or sell non-utility-owned capacity to utilities. Rules are due January 1, 2027, and must include customer-side incentives, alternatives to new wires, and peak-demand programs, with updates at least every five years.

Localities get energy storage safety guidance

Virginia's Department of Energy must develop suggested local storage ordinances and best-practice guidance by December 1, 2026. It must consult the Departments of Environmental Quality and Fire Programs. The ordinances must include safety standards consistent with the latest NFPA 855 edition and receive updates every three years. The Department must convene an advisory work group and keep education resources online. Localities can choose whether to use the model ordinances.

Storage bids must meet safety standards

Utilities must show that covered storage projects meet the latest published NFPA 855 safety standard for stationary storage systems. In qualifying 2026 acquisition solicitations, utilities cannot reject submission of a proposal that meets that standard. They must revise and reissue requirements issued before July 1, 2026, when needed to comply; this does not guarantee bid selection. For applicable 2026 petitions, the Commission reviews bid rules and can order changes for unreasonable safety, reliability, or cost requirements. The law also requires a storage safety and prudence technical conference by September 1, 2026.

Renewable buyers avoid some utility charges

Accelerated renewable buyers can contract for eligible renewable certificates or bundled power, capacity, and certificates to offset electricity use. Eligible resources must be in the PJM grid region and have first entered commercial operation after January 1, 2015. Buyers avoid specified renewable compliance charges, but not offshore-wind facility costs. Utility contracts cannot charge resource costs to customers who did not voluntarily agree to pay them. Contracts with the utility's own customers avoid special-rate approval only when no added contract costs reach another customer.

Some outside-supplier customers avoid renewable charges

Some customers avoid specified renewable charges while buying electricity from a competitive supplier rather than their utility. Phase II customers must have had peak demand above 100 megawatts in 2019 and chosen competitive supply before April 1, 2019. Phase I customers must have chosen competitive supply before February 1, 2019. Their load is also excluded from utility renewable requirements while they are not buying electricity from that utility.

Storage buyers receive limited cost exemptions

Accelerated renewable buyers can contract for storage capacity and receive specified storage-charge exemptions proportional to capacity demand. Those contracts cannot charge customers who did not voluntarily agree to pay. A separate proportional procurement-cost exemption covers Phase II customers subscribed to the specified voluntary tariff on March 1, 2020. They must also have a renewable facilities agreement and buy at least 2,000 renewable attributes yearly. Contracted new solar, wind, or storage offsets utility procurement requirements; associated certificates cannot count toward utility compliance, and certified buyers' load is excluded from utility renewable obligations.

Shortfall payments fund jobs and energy

Virginia's Department of Energy places all renewable shortfall payments in an interest-bearing account. It directs 50% to job training and 30% to renewable-energy programs in historically economically disadvantaged communities. Another 16% funds energy-saving measures at public facilities, and 4% pays for administration. Available funding depends on payments collected; the law sets no total appropriation or direct household credit.

Commission checks storage and power proposals

The Commission can permit storage facilities only after finding no material harm to utility reliability or conflict with the public interest. Qualifying regulated-utility petitions filed after July 1, 2007, also need a public-need finding; some existing government approvals satisfy covered requirements. Utilities can seek approval for extra zero-carbon resources beyond statutory requirements, but approval is not automatic. Reviews weigh customer needs, fuel costs, Virginia economic development, and whether demand reduction or storage offers a cheaper solution. The Commission must also consider storage growth, renewable integration, and resilience of critical electrical infrastructure in applicable reviews.

Renewable rules favor regional power sources

Starting with 2025 compliance years, eligible renewable certificates must come from Virginia or the PJM grid region. Eligible sources include qualifying solar, wind, hydropower, and geothermal resources, plus specified Virginia waste-to-energy and landfill-gas resources. Virginia biomass facilities operating by January 1, 2023, must meet feedstock, sustainability, and output limits. Virginia falling-water facilities qualify if commercial operations began before July 1, 2024. These rules change which resources count toward utility renewable requirements, not a fixed household payment.

Virginia tests long-duration storage technologies

The Commission must create a long-duration storage demonstration program for a Phase II utility. The program provides for petitions covering at least three technologies with at least 4,000 megawatt-hours of combined discharge capacity. Existing long-duration storage can count, and the Commission may excuse targets when enough resources are not reasonably available. The utility must make a good-faith effort to obtain U.S. Department of Energy funding. Progress and outcomes must be reported to the Commission by October 1, 2030.

Sponsors & Cosponsors

Sponsor

  • Lamont Bagby

    Democratic • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 257 • No: 120

Senate vote • 3/12/2026

House substitute agreed to by Senate

Yes: 21 • No: 19

House vote • 3/11/2026

Passed House with substitute

Yes: 66 • No: 33

House vote • 3/11/2026

Delegate Wilt Floor amendment passed by

Yes: 64 • No: 35

House vote • 3/5/2026

Reported from Labor and Commerce with substitute

Yes: 15 • No: 6

House vote • 3/3/2026

Subcommittee recommends reporting with substitute

Yes: 8 • No: 1

Senate vote • 2/16/2026

Read third time and passed Senate

Yes: 22 • No: 17

Senate vote • 2/13/2026

Committee substitute rejected (Voice Vote)

Yes: 0 • No: 0

Senate vote • 2/13/2026

Committee substitute agreed to (Voice Vote)

Yes: 0 • No: 0

Senate vote • 2/12/2026

Constitutional reading dispensed Block Vote (on 1st reading)

Yes: 40 • No: 0

Senate vote • 2/12/2026

Passed by for the day Block Vote (Voice Vote)

Yes: 0 • No: 0

Senate vote • 2/11/2026

Reported from Finance and Appropriations with substitute

Yes: 12 • No: 3

Senate vote • 2/9/2026

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

Yes: 9 • No: 6

Actions Timeline

  1. Acts of Assembly Chapter text (CHAP0695)

    4/13/2026Governor
  2. Approved by Governor-Chapter 695 (Effective - see bill)

    4/13/2026Governor
  3. Fiscal Impact Statement from Department of Planning and Budget (SB448)

    4/2/2026Senate
  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

    3/31/2026Senate
  6. Signed by Speaker

    3/31/2026House
  7. Bill text as passed Senate and House (SB448ER)

    3/30/2026Senate
  8. Enrolled

    3/30/2026Senate
  9. Signed by President

    3/30/2026Senate
  10. House substitute agreed to by Senate (21-Y 19-N 0-A)

    3/12/2026Senate
  11. Fiscal Impact Statement from Department of Planning and Budget (SB448)

    3/11/2026Senate
  12. Passed House with substitute (66-Y 33-N 0-A)

    3/11/2026House
  13. Engrossed by House - committee substitute

    3/11/2026House
  14. Delegate Wilt Floor amendment passed by (64-Y 35-N 0-A)

    3/11/2026House
  15. committee substitute agreed to

    3/11/2026House
  16. Read third time

    3/11/2026House
  17. Passed by for the day

    3/10/2026House
  18. Floor

    3/10/2026House
  19. Read second time

    3/9/2026House
  20. Committee substitute printed 26109068D-H1

    3/5/2026House
  21. Reported from Labor and Commerce with substitute (15-Y 6-N)

    3/5/2026House
  22. House subcommittee offered

    3/3/2026House
  23. Subcommittee recommends reporting with substitute (8-Y 1-N)

    3/3/2026House
  24. Assigned HCL sub: Subcommittee #3

    2/27/2026House
  25. Referred to Committee on Labor and Commerce

    2/19/2026House

Bill Text

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