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Vision for Virginia 2025: Energy Policy

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Virginia’s energy policy is at a crossroads: either Virginia continues down a path of expensive mandates and unreliable generation, leading to higher costs and likely shortages, or we pivot toward affordable and reliable energy.

As the largest net importer of energy of any state, facing energy growth not witnessed since the 1950s –Virginia is quickly running out of sufficient baseload power to support its demand (mainly due to data centers and its AI-related infrastructure). This puts Virginia’s economic future in the hands of the elected officials and the regulatory policies of other states in the PJM from which we import power to close Virginia’s shortfalls. 

The Virginia Clean Economy Act (VCEA) phases out coal and gas and leans hard on intermittent wind and solar. The Thomas Jefferson Institute has warned repeatedly that this will lead to more shortages and skyrocketing costs. In fact, we recently reported that the “non‑compliance costs” under the VCEA are about to climb to $609 million in just one year.

Additionally, the new federal rollback of anti‑hydrocarbon and pro renewable energy policies (e.g., repeal of IRA/IIJA clean-energy subsidies), will have limited impact unless Virginia reshapes its own energy laws. True relief of the crisis we face depends on the prudent alignment between Richmond and Washington and the ability to take advantage of the full scope of Virginia’s energy options. 

Virginia’s election isn’t just about governors or legislators—it’s about whether the Commonwealth will embrace an energy policy that trusts markets, protects consumers, and delivers reliable power. Voters must choose leadership that champions practical diversification—not ideological extremes.

To this end, here is the Thomas Jefferson Institute’s vision for energy policy for the next Governor and General Assembly.

Energy Policy Goal of the Thomas Jefferson Institute:

To enact energy policies that prioritize the affordability and reliability of electricity for all Virginians and businesses, promote transparent cost structures, and foster a competitive energy market free from costly and unreliable mandates and subsidies.

Specific Legislative Actions to Meet TJI’s Energy Policy Goals:

1.    On the Virginia Clean Economy Act (VCEA) and Similar Mandates:

Problem: The Virginia Clean Economy Act (VCEA) and similar state-level renewable energy mandates are imposing unsustainable costs on ratepayers, threatening grid reliability, and hindering economic growth by forcing premature retirement of essential baseload generation.

Solution:

·     Repeal the Virginia Clean Economy Act (VCEA). Alternatively, if full repeal is not immediately feasible, propose significant amendments to:

·     Eliminate or significantly extend mandatory renewable energy targets and timelines. Current technologies are either too expensive, intermittent, or too inefficient to meet the arbitrary targets set by the General Assembly.

·     Remove penalties for non-compliance with renewable energy targets.

·     Allow for continued operation and investment in diverse, reliable energy sources, including natural gas and existing baseload generation for as long as they are economically viable and essential for grid stability. This is particularly important as Virginia’s energy demand is rapidly increasing.

Key Message: “We must dismantle the VCEA’s costly mandates that are burdening families and businesses and jeopardizing our energy future.”

2. On Grid Reliability and Energy Security:

Problem: Current energy policies are creating a dangerous disconnect between electricity supply and demand, leading to warnings of potential energy shortfalls from regional grid operators (e.g., PJM) and reliability authorities (e.g., NERC). The rapid proliferation of intermittent renewables is compromising grid stability, especially with growing demand from sectors like data centers.

Solution:

·     Propose legislation that mandates energy policy decisions prioritize grid reliability and energy security above all other considerations. This includes:

·     Requiring comprehensive, independent reliability assessments before any baseload generation is retired.

·     Incentivizing the development and maintenance of dispatchable power sources capable of ensuring 24/7 electricity availability.

Key Message: “Reliability is paramount. We cannot sacrifice the stability of our power grid for ideologically driven mandates that leave us vulnerable to blackouts and economic disruption.”

3. On the Role of Natural Gas and Diverse Energy Sources:

Problem: Ideological opposition and restrictive policies are hindering the development and utilization of natural gas, a critical, affordable, and reliable energy source for electricity generation and other essential uses.

Solution:

·     Introduce legislation to facilitate the permitting and construction of new natural gas-fired power plants and associated infrastructure (pipelines) to ensure adequate baseload capacity.

·     Remove any legislative or regulatory barriers that discourage investment in or mandate the premature retirement of natural gas and other reliable, conventional energy sources.

·     Prohibit local government bans on natural gas connections for homes and businesses.

Key Message: “Natural gas is not just an interim solution; it’s a vital component of a reliable and affordable energy grid. We must enable its continued use to secure our energy future.”

4. On Cost Transparency and Consumer Protection:

Problem: Consumers are often unaware of the true costs of state-mandated energy policies because these costs are hidden or obscured on their utility bills. Programs like PIPP add further burdens without clear accountability.

Solution:

·     Enact legislation to mandate clear and detailed line-item transparency on all utility bills. This legislation would require:

·     Separate identification of all charges related to state-mandated renewable energy programs, carbon taxes (e.g., RGGI proceeds if applicable), and specific project riders.

·     Clear disclosure of the total amount and percentage of a customer’s bill attributable to such mandates.

·     Require legislative review and explicit approval for any utility rate adjustments tied to state mandates.

Key Message: “Consumers deserve to know exactly what they are paying for. Transparency in billing is not just good policy; it’s a fundamental right.”

5. On Demand Side Controls:

Problem: With supply shortages, utility companies often resort to rationing energy uses by various consumer classes. The General Assembly is seeking to expand upon this through smart thermostats that will allow even greater control over energy usage by residential consumers.

Solution:

·     Prices should be the only limit to consumer demand, and control of thermostats should not be ceded to another authority. Oppose legislation to mandate rationing and meter control. Additionally, pass legislation that would require:

·     Utility companies to disclose when they have had to ration energy so ratepayers are aware of the shortage.

Key Message: “This technology is only beneficial and cost-effective to the extent the company utilizes them. It is also a blunt and dangerous instrument to prevent (and delay) the more important decisions over ensuring enough power is generated.”

6. On Market-Based Competition and Ending Subsidies:

Problem: Current energy policies create an uneven playing field by providing preferential treatment, tax subsidies, and mandates for specific renewable energy technologies, distorting market competition and leading to higher costs.

Solution:

·     Propose legislation to eliminate or phase out specific subsidies, tax credits, and preferential treatment for renewable energy projects.

·     Promote an “all-of-the-above” energy strategy where all generation sources compete on their merits (cost, reliability, environmental impact) without artificial mandates or financial advantages.

Key Message: “Let the market decide. When energy sources compete on their merits, consumers win with lower costs and greater choice. Special carve-outs and subsidies only inflate prices and stifle innovation.”

7. On Restoring Regulatory Authority to the State Corporation Commission (SCC)/Independent Regulators:

Problem: Legislative interference has eroded the independent authority of state regulatory bodies (e.g., Virginia’s SCC) to determine fair utility rates, approve investments, and oversee integrated resource planning based on sound economic principles and public interest.

Solution:

·     Introduce legislation to restore full regulatory authority to independent state commissions over utility rate-setting, profit margins, and resource planning.

·     Remove legislative mandates that dictate specific utility investments (e.g., specific renewable projects or battery storage targets).

·     Ensure that commission decisions are based on comprehensive cost-benefit analyses, consumer affordability, and grid reliability.

Key Message: “Our energy decisions should be made by independent experts, not political mandates. We must empower our regulatory bodies to prioritize affordability and reliability for all citizens.”

8. On Preserving Local Control over Land Use:

Problem: Proposals to create state-level boards or panels to override local zoning decisions for large-scale energy projects undermine the fundamental principle of local self-governance and accountability.

Solution:

·     Introduce legislation that explicitly protects and reinforces local government zoning authority over the siting and permitting of all energy generation facilities, including large-scale solar and battery storage projects.

·     Oppose any bills that would establish state-level bodies with the power to bypass or override local land-use decisions.

Key Message: “Land-use decisions are best made by local communities, not by distant state panels. We must protect local control and ensure that energy projects respect the rights and concerns of the communities they impact.”

The Core Energy Approach of Each Major Party Candidate for Virginia Governor

Abigail Spanberger and Winsome Earle-Sears have articulated sharply different visions for how to secure affordable, reliable power for Virginians. A close examination reveals not only contrasting policy prescriptions but divergent philosophies about the path toward energy security. To her credit, Spanberger released a detailed energy plan, which allowed us greater insight into her policy prescriptions and thinking. Earle-Sears has not released a detailed energy plan but has spoken frequently about her “all-of-the-above” approach and her alignment with the policies of Governor Youngkin.

·     Abigail Spanberger’s Approach: Leans heavily on demand-side management, continues clean energy mandates, and calls for consumer-focused energy efficiency measures. She also pushes for significant battery storage and “virtual power plants.” Her plan maintains Virginia’s transition toward carbon-free energy under the Virginia Clean Economy Act (VCEA). Spanberger’s plan also specifically mentions support for nuclear (small modular reactors), hydrogen, fusion and geothermal.

·     Winsome Earle-Sears’s Approach: Embraces an “all-of-the-above” supply-side philosophy, emphasizing new generation capacity from fossil fuels, nuclear, and renewable sources. She stresses energy independence, avoiding overreliance on demand curtailment, and ensuring affordable rates through expanded production.

Comparing each candidate’s known position to the Thomas Jefferson Institute’s vision for a sound energy policy highlights the need for both candidates to reconsider or supplement their current positions. The following chart attempts to summarize their views based on public comments and campaign policy outlines.

Comparison of Candidate Energy Policy Positions

Here’s the reality:

In January of this year, during a brutal cold snap, PJM (the electric grid operator serving Virginia) hit an all-time winter record for electricity demand. To keep the lights on, 88% of that power came from reliable, “dispatchable” sources—natural gas, nuclear, and coal. At that moment, wind contributed just 2.6%, and solar 0% because the peak hit at 4:00 AM.

Similarly, during June’s heat wave, the PJM hit a peak load of about 161 GW, the highest demand on its system since 2011. To keep the lights on during that week, 84% of that power came from natural gas, nuclear, and coal, while wind and solar only contributed 9%.

Worse, during the summer heat wave, the PJM instituted “demand control measures” to not run out of fuel – meaning PJM forced the energy companies to unilaterally limit energy output to certain businesses on the grid. This means the power companies were, in essence, controlling the thermostats around the region.

And yet, without a vision for a common sense energy policy as we outlined above, Mark Christie, Chairman of the Federal Energy Regulatory Commission, warned: “we’re going to keep shutting down dispatchable resources and keep adding renewable resources and hope the weather’s 72 degrees all year. Well, that’s not going to happen. We’re going to have a reliability problem and we’re going to have blackouts.”

Virginia deserves a reliable and affordable energy market. Both candidates need to make this a priority.

The Thomas Jefferson Institute is a non-partisan, free-market think tank that does not endorse candidates. The above is meant to be informative of each candidate’s energy policy positions, contrasted to those of the Thomas Jefferson Institute. For more information on TJI’s energy views, please contast Steve Haner at Steve@thomasjeffersoninst.org or Derrick Max at DMax@thomasjeffersoninst.org.

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