The Virginia Clean Economy Act (VCEA) is landmark clean energy legislation signed into law by Governor Ralph Northam on April 11, 2020. The Act sets Virginia on a clear path to 100% clean electricity by 2050 — making it the first Southern state to adopt such an ambitious clean energy target. For Virginia homeowners, the VCEA isn’t just environmental policy. It directly creates new solar incentives, expands net metering rights, and removes barriers that previously made going solar more complicated and costly.
One of the Act’s most important provisions is the establishment of a mandatory Renewable Portfolio Standard (RPS), which requires Virginia’s largest utilities to steadily increase the share of electricity they generate from renewable sources — ultimately reaching 100% by 2050. The VCEA went into effect on July 1, 2020.
What Does the VCEA Do?
The VCEA is a comprehensive piece of legislation that touches nearly every aspect of Virginia’s energy economy. Key provisions include:
- Virginia’s two largest investor-owned utilities — Dominion Energy and Appalachian Power — are required to retire their carbon-emitting power generation facilities on a legislatively mandated timeline based on facility type and size.
- The net metering cap for residential customers increased from 20 kW to 25 kW. Dominion Energy customers can now size their solar system to meet up to 150% of their annual electricity demand.
- Specific megawatt targets are established for offshore wind, solar, and energy storage development across the state.
- New energy efficiency standards for utilities are established, including dedicated programs to support low-income households.
- The RPS includes a solar carve-out for Dominion Energy, requiring that at least 1% of its renewable energy generation come from distributed solar systems smaller than 1 MW in size — creating direct demand for residential and small commercial solar.
- Dominion Energy cannot charge standby fees for solar customers with systems under 15 kW (up from the previous 10 kW limit). Standby fees are eliminated entirely for Appalachian Power customers regardless of system size.
What the VCEA Means for Virginia Homeowners
For homeowners considering solar, the VCEA created a significantly more favorable environment. Here’s how it directly benefits you:
- SRECs are now available in Virginia. The VCEA’s solar carve-out created Virginia’s SREC (Solar Renewable Energy Certificate) market. For every 1,000 kWh your solar system generates, you earn one SREC that can be sold for cash — typically generating $500–$650 per year for a standard 10kW system, on top of your energy bill savings.
- Larger systems are now allowed. The increase in the net metering cap from 20 kW to 25 kW means more homeowners — particularly those with higher electricity usage or electric vehicles — can install a system large enough to meet their full energy needs.
- Standby fees are gone or reduced. Previously, Dominion Energy charged standby fees to solar customers with systems over 10 kW. The VCEA raised that threshold to 15 kW, eliminating fees for most residential systems. Appalachian Power customers see no standby fees at all, regardless of system size.
- System oversizing is now permitted. Dominion Energy customers can now install a solar system sized to produce up to 150% of their annual electricity consumption — allowing homeowners to plan ahead for future energy needs like EV charging or home electrification.
Encouraging Small-Scale, Rooftop Solar Energy
One of the VCEA’s clearest impacts has been the acceleration of distributed solar — rooftop and small-scale solar systems that turn homes, businesses, schools, and other properties into clean energy generators.
A compelling example of this is the spread of rooftop solar across Virginia’s public schools. Two Virginia-based solar companies worked together to install solar panels on the roofs of Powhatan County Schools — a project that delivered environmental, economic, and educational benefits simultaneously.
As Superintendent Dr. Eric Jones put it: “Our solar energy project has saved us money and given our teachers and students priceless hands-on learning experiences. It also shows our community’s strong support for clean, renewable energy.”
The same principle applies to homeowners across Virginia. By going solar, you’re not just reducing your own electricity bill — you’re contributing to the statewide clean energy transition the VCEA is designed to achieve.
Implementing a Carbon Pollution Cap Through RGGI
To achieve a fully decarbonized electricity grid by 2045, the VCEA required Virginia to implement a binding cap on carbon pollution. Following the Act’s enactment, Virginia joined the Regional Greenhouse Gas Initiative (RGGI) — a cap-and-trade program that sets carbon dioxide allowance limits for polluters across participating states.
Virginia became the first Southern state to participate in RGGI, joining 10 other states across the Mid-Atlantic and Northeast. In its inaugural year in the program, Virginia generated $228 million from RGGI auctions. Half of those proceeds fund energy efficiency programs for low-income residents; the other half supports flood prevention and resilience efforts — addressing both climate mitigation and adaptation simultaneously.
Setting Energy Efficiency Resource Standards
The VCEA established new Energy Efficiency Resource Standards (EERS) — mandatory targets for utilities to reduce their customers’ overall energy consumption over time. These standards are particularly important for Virginia, where families face the 10th highest average residential electricity bills in the country, running 14% above the national average.
By requiring utilities to invest in energy efficiency programs, the VCEA aims to reduce utility bills for all Virginians — with special emphasis on low-income households that spend a disproportionate share of their income on energy costs. Half of the state’s RGGI proceeds are directed specifically to energy efficiency improvements for low-income homes, compounding these benefits.
Beyond consumer savings, energy efficiency investments generate strong economic returns: research shows they create twice as many jobs per dollar compared to fossil fuel investments, with 96% of those jobs belonging to small businesses within Virginia.
Building a 100% Clean Energy Grid
The VCEA’s ultimate goal is a 100% carbon-free electricity grid in Virginia by 2050. Reaching that target requires action on multiple fronts simultaneously:
- Reducing carbon pollution and energy demand through the carbon cap and energy efficiency standards.
- Expanding distributed solar — rooftop and small-scale solar systems on homes, businesses, schools, and other existing structures — with the help of the SREC market and expanded net metering.
- Building large-scale renewable projects — utility-scale solar farms and offshore wind to meet the bulk of Virginia’s electricity needs.
- Developing energy storage to ensure clean energy is available around the clock, even when the sun isn’t shining and wind isn’t blowing.
The VCEA has already catalyzed a major offshore wind industry in Virginia. With one of the most ambitious offshore wind targets in the nation, Virginia is emerging as a national hub for a sector valued at over $100 billion. On the solar side, large-scale projects are designed with smart land use principles in mind — including pollinator-friendly designs that support biodiversity, manage stormwater, and minimize environmental disruption.
How the VCEA Compares to Other State Clean Energy Laws
Virginia’s VCEA is notable not just for its ambition, but for its position in the landscape of US clean energy policy. As the first Southern state to pass a 100% clean energy standard, Virginia signaled a major shift in a region historically dominated by fossil fuels. Here’s how it compares to similar legislation in other states:
- California — Passed a 100% clean electricity standard in 2018, with a target date of 2045. California’s market is larger, but Virginia’s law is notable for its solar carve-out provisions that directly benefit residential solar owners.
- New York — The Climate Leadership and Community Protection Act (CLCPA) targets 70% renewable electricity by 2030 and 100% zero-emission electricity by 2040. New York and Virginia are both active RGGI participants.
- North Carolina — By contrast, NC does not have a 100% clean energy standard or a solar carve-out in its RPS, which is why Virginia has an SREC market and NC does not. NC homeowners benefit from different incentives — primarily the Duke Energy PowerPair program and the federal ITC.
Frequently Asked Questions About the VCEA
Does the VCEA apply to all Virginia utilities?
The VCEA’s mandatory provisions apply primarily to Virginia’s two largest investor-owned utilities: Dominion Energy and Appalachian Power (a subsidiary of American Electric Power). Electric cooperatives and smaller municipal utilities are subject to some provisions but have more flexibility in implementation.
What is Virginia’s renewable energy target under the VCEA?
The VCEA establishes a mandatory RPS requiring Dominion Energy to reach 100% renewable electricity by 2045 and Appalachian Power by 2050. Interim targets are set along the way to ensure steady progress toward these goals.
How does the VCEA create SRECs for Virginia homeowners?
The VCEA’s solar carve-out requires Dominion Energy to source a specific percentage of its renewable electricity from distributed solar systems. To meet this requirement, Dominion must purchase Solar Renewable Energy Certificates (SRECs) from homeowners and businesses with solar panels. This creates a real market demand that gives your SRECs monetary value — typically generating $500–$650 per year for a 10kW system in Virginia.
Is Virginia still in RGGI?
Virginia’s participation in RGGI has been subject to political debate. The program was established under the VCEA, but future participation depends on the political and regulatory environment at the time of publication. For the most current status, check the Virginia Department of Environmental Quality (DEQ) website or contact 8MSolar for guidance on how current policy affects your solar investment.
Learn More From 8MSolar
The Virginia Clean Economy Act created one of the most solar-friendly environments in the South — and 8MSolar is here to help you take full advantage of it. From SREC registration to system design and installation, we’ll make sure your solar investment is optimized for every incentive the VCEA makes available to you.
8MSolar is equipment agnostic — meaning we design the right system for your home and energy goals, not the system that’s easiest for us to sell. Contact us today for a free consultation and find out exactly how the VCEA can benefit you as a Virginia homeowner.