POWER PURCHASE AGREEMENT FOR ELECTRICITY USE BY COUNTY

GOVERNMENT OPERATIONS

AGREEMENT BETWEEN ARLINGTON COUNTY AND DOMINION ENERGY VIRGINIA

COUNTY BOARD JANUARY 28, 2020 MEETING

THE SOLAR FARM PROJECT

• Located in Pittsylvania County

• Ownership: Dominion Energy Virginia acquired project rights in 2019

• Supports Dominion commitment of 3000 MW of new solar and wind by 2022

• Projected capacity: 120 MWpeak

• Land size: 1500 acres

• County share: up to 38 MWpeak

• Will generate about 79,000,000 kWh/year

• Arlington’s portion of this solar farm to offset over 80% of the County’s annual electricity use

• Operational Date: Q3 2022

• Term: 17 years

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HOW THIS OFF-SITE POWER PURCHASE AGREEMENT WORKS

• Dominion will build the solar farm and sell the electricity it generates onto the power grid.

• Dominion will receive the wholesale market price for the electricity, which varies hourly.

• Arlington and Dominion agreed to a fixed price for a portion of the electricity generated by the solar farm.

• The difference between the actual wholesale revenue received and the revenue provided by the fixed rate determines the cost (or savings) to the County for the transaction. This amount is expected to be small.

• Arlington receives the Renewable Energy Certificates (RECs) for the electricity generated by the County’s portion of the project.

• The small costs (or credits) from this transaction will appear on County government’s monthly electricity bills, with an annual reconciliation (‘true-up’) for the following year.

ADVANTAGES

FINANCIAL/PROGRAMMATIC

• Fixed rate, no escalation

• No capital outlay by County

• Expense neutral, potential to be revenue-positive

• Reinforces County leadership role

• Opportunity to further expand Dominion partnership

SUSTAINABLE/RESILIENT

• High-quality Renewable Energy Credits (RECs)

• Construction will NOT require deforestation

• Local economic impacts in-state

• Exceeds County’s CEP Goal of 50% renewable energy for Government Operations by 2022

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RISK AND RISK MITIGATION

MARKET FACTORS

RISK: Wholesale market rates fall below County’s fixed rate for an extended period

➢ If so, the rates the County pays for electricity will likely fall as well, and offset losses

➢ However, outside expert analyses forecast rising costs for natural gas and wholesale electricity in Virginia in the future

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Source: U.S. Dept. of Energy, Annual Energy Outlook, https://www.eia.gov/outlooks/aeo/

The price of natural gas has a direct effect on the price of wholesale electricity. Over half of the electricity made in Virginia comes from burning natural gas.

• Reduces government GHG emissions by 31%

• Exceeds 2019 CEP Goal 3.1 to achieve 50% renewable energy for government operations electricity by 2022

• Supports Priority Measure ranked by E2C2’s Energy Committee:

o Optimize the use of renewable energy technologies in all sectors from a variety of on- and off-site sources …

• Promotes AIRE top-ranked (#4 of 72) implementation framework strategy:

o Use Virtual PPAs to increase renewable energy capacity and diversify transactional options

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THIS AGREEMENT ADVANCES COMMUNITY ENERGY PLAN GOALS AND POLICIES

Questions