Dominion rolls out solar purchase program

Sigora Solar employees install solar panels on a commercial roof. Founder Andy Bindea says Dominion Power’s new solar purchase program could be a boon for customers. Photo: Sigora Solar. Sigora Solar employees install solar panels on a commercial roof. Founder Andy Bindea says Dominion Power’s new solar purchase program could be a boon for customers. Photo: Sigora Solar.

Dominion Virginia is wading into the renewable energy credit market, and it’s offering its customers a way to cash in.

Andy Bindea, co-founder of Waynesboro-based residential and commercial solar installation company Sigora Solar, said Dominion’s new solar power purchase program, launched June 20, is a big step for sustainable energy in the Commonwealth. The power giant will be buying power from customers at a premium, he explained, “so the system gets paid off faster, and the return on investment percentage is higher. It makes the solar energy system a whole lot more attractive.” And that’s good for customers, the planet, and companies like his.

Until now, something called “net metering” was the only option for Dominion customers looking to save by going solar, said Bindea, who created Sigora in 2011 with leftover funds from his Piedmont Virginia Community College engineering scholarship. Under the old setup, said Bindea, “if the consumption is less than the production, the excess goes back into the grid and the meter literally spins backwards and generates a credit, kilowatt hour for kilowatt hour.”

With the new approach, people with solar arrays will buy power as usual from Dominion for the standard rate of 10.5 cents per kilowatt hour. But they’ll also sell all the energy they produce back to the company for 15 cents per kilowatt hour, meaning if their production matches their consumption, they can make a tidy little profit —and ultimately make their solar installation more affordable. The company has agreed to lock into the rate with participating customers for five years.

Sigora estimates the average-sized Virginia household consuming an average of 6,038kwh per person over the life of the program could generate about $3,600.

So why is Dominion selling low and buying high? The idea, said Bindea, is to encourage the creation of a network of mini rooftop power plants, which all generate not just electricity, but renewable energy credits, or RECs.

“A REC is basically the bragging rights that get attached to a bucket of energy,” said Bindea. A whole mini-economy has sprung up around the sale and trade of credits, which power companies can purchase to offset dirtier energy production, so those bragging rights are valuable enough that Dominion is willing to buy customer-produced buckets of solar at a premium so it can claim the RECs that come along with them.

If that seems like a convoluted and confusing way to ramp up green power use, Bindea says he hears you. He also pointed out that Dominion is taking a small first step. It’s only committed to doing three megawatts worth of purchasing, and admission into the program is on a first-come, first-served basis.

“It’s far from perfect, and we wish we’d see a whole lot more involvement from the state, but this is a step in the right direction,” he said. “If we look at it from an environmental standpoint, every single kilowatt hour that gets produced from a renewable energy source versus coal that gets mined from a mountain is a step forward. We keep pushing them in the right direction, and we’re going to get somewhere eventually.”

“It makes the solar energy system a whole lot more attractive,” said Sigora Solar founder Andy Bindea.

  • Paul Risberg

    I must take issue with the statement that this program makes solar electric energy systems more attractive. If you are a nonprofit, it is possible that this program will be better than net metering, but not necessarily, especially over the life of the contract.

    With net metering, you always sell your production at prevailing retail rates. You either use your electricity yourself, thereby avoiding retail purchases, or sell it to the utility at current full price for credit. These are not taxable events.

    With the Solar Purchase program, you lock in a fixed sell rate of $.15 Kwh for five years, but as rates go up (which they have at an average rate of 4.5% in each of the last 20 years), yours doesn’t. The current rate of 10.5 cents per KWH will be greater than $.13 in five years. You are locking in a sell price, but not your buy price. Which is important, because with the Solar purchase program:

    Every watt you produce, gets sold to the utility, in contrast to net metering, which only sells power when you produce more than you need. You will be issued a 1099 for the payment. So if you produce 1000KWH one month, you will receive a check for $150.00 (which will not escalate in value over time, because the rate is fixed) that you will be taxed on (if you pay tax) both state and federal. But you will spend $105 to buy that 1000 KWH back from the utility, and that number will escalate as rates go up. The difference is $45, but you must pay tax on $150 income, and.If you are in the 20% bracket, you spent $30 on taxes. So now the difference is $15, you are still up.

    You also give up your SREC’s that your system produces. The utility needs these, and the value of that SREC today is $18, and is market driven. They have been much more valuable in the past.. So even in year one, if you pay taxes, you are worse off with the program, and as rates rise, you’re far worse off. Additionally, If SREC values rise, which we believe they will as the market develops, your gift to the utility gets bigger. Most people should carefully consider signing the contract. Churches, non-profits, etc., could benefit.

  • Michael Simpson

    From reading this article, it sounds like a scam to me. Sounds like all your solar gets sold to Dominion, so instead of saving money by NOT buying from Dominion, you have to buy all your power but get a little rebate on the solar you produced.

    In other words, without this, say my solar cells produce 1kwh. That is used in my house. So I effectively don’t have to buy that 1kwh from Dominion. 1kwh costs 10.5 cents to buy. My savings: 10.5 cents. Simple.

    With this program, my solar still produces 1kwh. But I have to sell it to Dominion for 15 cents. But then I have to buy 1kwh from Dominion for 10.5 cents because I didn’t get to use it. My savings: 15 – 10.5 = 4.5 cents. Less than the previous arrangement. Dominion gets credit for producing solar on my investment but forces me to still buy all my power from them.

  • Andy Bindea

    These are great questions. Before I give Sigora’s perspective on these points, I just want to reiterate that the work of a solar energy provider is bigger than any individual company. We are creating a sustainable future for Central Virginia through renewable energy. In that sense, we are all partners.

    So, to address these issues:

    First and foremost, the Dominion contract doesn’t lock
    customers in. Customers can leave the Power Purchase Program at any time and
    sign up for net metering with no penalty at all.

    How Are the Programs Different?

    It’s true that in the case of net metering there is no sale of electricity between the customer and the utility. Here’s how it works: Dominion customers receive a kWh for kWh credit on their next bill for the solar production in excess of what they consumed that month. If there is a kWh surplus at the end of the net-metering year and the customer choses to “cash it out” the utility will pay wholesale rate for it, which is slightly less than 5 cents a kWh.

    In contrast, the Solar Purchase Program pays customers 15 cents/kWh for surplus energy each month. Considering tax implications and SREC’s, every kWh of excess will net the customer 6.2 cents/kWh more than net metering.

    Rate Increases.

    Paul brought up a national figure for electricity rate increases. Electricity rates are quite a bit lower in Virginia, and are increasing at a lower rate. According to the Virginia Department of Mines, Minerals, and Energy, the 20-year average electricity rate increase in our state is 2% per year. That means that we can realistically expect that our utility rates will be around 11.4 cents/kWh by the 5th year of the Power Purchase program. The rate today is about 10.5 cents/kWh.


    Paul also brought up SRECs. As he points out, the value of SRECs is indeed market-driven. However, the only market where new Virginia solar energy systems can sell SRECs is Pennsylvania. The price for these assets there is unfortunately low and declining.

    The price for a 2013 SREC in Pennsylvania is currently $10. The value of SREC’s has been declining since November of 2010 when they were worth $255 each. 2012 SRECs have decreased in value by 60% in the last year alone, from $20 per 2012 SREC to $8. There is no indication that this trend will change.


    Paul brought up taxation. It is worth noting that the majority of our customers are in a lower than 20% tax bracket for income from capital investments. However, even using the 20% tax bracket and applying that to the real price of SRECs, which is fully taxable income, a residential customer will net about $7 more from the Solar Purchase Program than he or she would from net-metering.

    Net Revenue

    Let’s continue with Paul’s 1000kWh figure to calculate revenue from Solar Purchase Program.

    Year One for a residential customer:

    Cash from Dominion ($150) – Cost of electricity ($105) – Taxes ($30) – SREC ($8) = Revenue per 1000kWh ($7).

    Net metering simply means free electricity, so this is a $7 gain per 1000kWh. If we compared the returns from surplus, the Purchase Program further outpaces net metering.

    Notes: Cash from Dominion is called a FIT payment and SRECs are worth $10 before taxes.

    Year Five for a residential customer:

    Cash from Dominion ($150) – Cost of electricity ($114) – Taxes ($30) – SREC ($5.28) = Revenue per 1000kWh ($0.72).

    Notes: Factoring for a 10% yearly decrease in PA SCRECs – significantly lower than the actual SREC price decrease rates we have seen over the last couple of years – the 2018
    price of an SREC after taxes will be $5.28. In combination with a realistic utility increase rate, the Solar Purchase Program will still result in higher returns than net metering.

    As I have mentioned, this program is far from perfect, but
    residential customers will see an increase in revenue over net metering.

    Commercial and Industrial.

    Another very important aspect of this discussion are the commercial and industrial markets. This program is not dedicated to the residential customers, exclusively. In fact, 40% of the program has been set aside for businesses, whose utility rates are significantly lower than those charged to homeowners: 7.93 cents/kWh for commercial and 6.52 cents per kWh for industrial users. Applying the same math to these customers yields even higher revenue:

    Solar Purchase Program, Commercial

    Cash from Dominion ($150) – Cost of electricity ($79.3) – Taxes ($30) – SREC ($8) = Revenue per 1000kWh ($32.7).

    Solar Purchase Program, Industrial

    Cash from Dominion ($150) – Cost of electricity ($65.2) – Taxes ($30) – SREC ($8) = Revenue per 1000kWh ($46.8).

    Phew! Thanks for your patience with this long explanation. These are complicated initiatives, but I hope that this spiel gives a bit more clarity on what our community can expect from Dominion’s program.


    Regarding the SREC pricing please visit this website. Select latest, and choose Pennsylvania from the list above the graph.

    Cost per kWh of electricity for commercial and industrial customers comes from the Energy Information Administration April 2013 Virginia average rates.

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