Virginia weighs geothermal pilots, statewide study

(The Center Square) – Virginia lawmakers are considering allowing utilities and local governments to test geothermal heating and cooling networks, but questions remain over who would pay if utility projects cost more than expected. The issue came up Thursday during a meeting of the Energy Commission of Virginia's Subcommittee 4, where staff presented preliminary proposals for thermal energy networks across the commonwealth. The networks use underground pipes to move heat between buildings and sources such as the ground, wastewater systems or data centers. Staff said Virginia law does not currently provide clear authority for some utilities and public bodies to own and operate the systems. The discussion builds on legislation passed earlier this year. Senate Bill 252 and House Bill 1102 created a carve-out for geothermal heating and cooling systems within Virginia's renewable portfolio standard and require Dominion Energy Virginia and Appalachian Power to begin obtaining a portion of their renewable energy certificates from qualifying geothermal systems in 2027. The requirement starts at 0.5% in 2027, rises to 0.75% in 2028 and reaches 1% beginning in 2029. Commission staff separately proposed allowing municipal gas utilities, localities, investor-owned utilities, private developers and public-private partnerships to develop pilot projects. Staff also proposed a statewide analysis to identify locations suited for pilots. Commission materials say the study could require an outside consultant and a General Assembly appropriation of about $500,000 to $600,000. Sen. Mark Obenshain, R-Rockingham, asked who would bear the costs if a utility's pilot project significantly exceeded projections, including shareholders, participating customers or the utility's full customer base. Staff said the question would be considered as regulators develop rules for the pilots and as part of the statewide analysis. Another staff member said consumer protections would be aimed at keeping ratepayers from bearing costs of projects that do not prove cost-effective. Lawmakers also heard about a geothermal project underway at the University of Virginia's Fontaine Research Park. Paul Zmick, UVA's director of energy and utilities, said the university is already integrating a data center into its heating and cooling system at Fontaine Research Park, where 100 geothermal wells have been drilled and as many as 650 are planned. Zmick said the geothermal field acts as a "big thermal battery," allowing UVA to store excess heat underground and draw it back out when needed. Staff said the recommendations remain preliminary and another subcommittee meeting is expected as the commission continues its work.