Audacious goals and clean energy. John Morrill, Division Manager for Innovation & Sustainability at Fairfax County, Virginia, joined the podcast to talk about sustainability and energy efficiency. He discussed the strategies needed to implement local government sustainability plans and the goals associated with them. John also talked about the energy grid, the need for electrification to meet energy goals, and power purchase agreements.
Host: Toney Thompson
Toney Thompson 00:09
Coming to you from Durham, North Carolina. This is Gov love, a podcast about local government. I’m Tony Thompson, your Gov Love co host for today’s episode. On today’s episode, we’ll be talking with John Morrill. John Morrill is a Division Manager for Innovation & Sustainability in the Office of Environmental and Energy Coordination of Fairfax County, Virginia. He joined Fairfax at the end of last year, after 20 years as Energy Manager for neighboring Arlington County. Early on his career, John work in research and management positions at the American Council for an energy efficient economy in Washington, DC. John, thanks for joining us today.
John Morrill 00:47
Well, thank you Toney. I’m very happy to be here.
Toney Thompson 00:50
Yeah. So let’s start, like we start with most episodes here, like, we’ll do a brief lightning round of questions so our listeners can get to know you, and then we’ll jump into the podcast. So first question for you, John. As a kid, what did you want to be when you grew up?
John Morrill 01:06
Well, that’s kind of funny. I, my father was in the Coast Guard. He was enlisted and and he was kind of a lifer in the Coast Guard. I wanted to be an admiral in the Coast Guard. That was sort of my first childhood dream. And then through middle school, it became I want to be a baseball statistician. Yeah. And, and then I had a bit of a environmental awakening in high school. And so that that’s kind of the evolution that I had,
Toney Thompson 01:41
I think you could have done all three of those things.
John Morrill 01:45
Well, you know, the statistician is still a, it’s still a possibility in retirement.
Toney Thompson 01:52
Oh, that’s great. Yeah, the next Billy Beane, I like it. Alright, next question for you. What are you currently reading?
John Morrill 02:02
Unfortunately, mostly magazines. You know, I I used to love creative nonfiction, and, and, and nonfiction in general, and would dabble in novels. But these days, it’s it’s trying to keep up with little deeper dives and things like the economist, Business Week, but also Mother Jones in these times, you know, they think the mailman might when he or she delivering might wonder, you know, wow, this guy’s not that they pay attention to that stuff. But but it’s, it’s also funny how positively mainstream economist is these days. It used to be kind of a strong free market Bible. And now I feel like it’s Wow. Either they’ve changed or we have.
Toney Thompson 03:01
Yeah, that’s a that’s an interesting comment what you said about, you know, the mail person not judging you, I always had this fear when I go to the grocery store. You know, the, the clerk is, you know, judging my food choices, and I always think, is the mail person judging, you know, the kind of mail I get. I mean, they’re probably peddling too much not even care. But I was thinking about that.
John Morrill 03:20
Right. And same thing with Amazon deliveries. It’s like, if I start feeling guilty, it’s like, oh, my god, these delivery guys are gonna think, yeah, I’ve got a bad habit. But then I realized when I see I’m scanning it in that they don’t see names. They’re just scanning that barcode.
Toney Thompson 03:37
Yeah. Yeah. processing. In and out, in and out. Yeah. Alright. So last lightning round question for you. This is when we asked almost everybody, what is your most controversial, non political opinion?
John Morrill 03:52
Well, most things end up being political pretty quick, but and I’m going to I’m going to admit to this, but it might just be as a result of my current situation and that I think homeownership is grossly overrated. I you know, I’ve done I’ve had, I’ve had the single family house, and now I’m in an apartment. And I’ll tell you, I don’t miss the yard work. I don’t miss shoveling snow. I don’t miss the repairs, home repairs every every other month it’s, but no, I mean, homeownership is is nice. It represents a lot but I’m at a point now where I realize that the American Dream can be many different things for different people.
Toney Thompson 04:50
Yeah, absolutely. I think this is such a an interesting emerging topic. You know, I’m I think I am, I’m a millennial, but I think you know, my generation and the generation after me, are slowly, you know, coming around to this idea that homeownership isn’t everything. And partly because, you know, trying to own a home is becoming more and more difficult. But, you know, I’m at a place in my life where I’m thinking about, well, maybe I should, you know, buy a home, but what are those things you’re talking about? Like, man, owning a home is expensive, like there are all these other things outside of the mortgage, you got to, like, at some point, I got to like, replace that roof for $10,000.
John Morrill 05:27
Right. Right. Right. And, of course, it does help also, it serves as an investment. But fundamentally, we need a place to live. So I guess I now see, homeownership is just one option in terms of a place to live.
Toney Thompson 05:47
Absolutely. All right, let’s get into the questions I have for you. And one of the reasons I, I want to invite you on as because, you know, I think more and more local governments are starting to get into like the energy business or the energy game, quote, unquote, and you’ve been doing this for a really long time. So I just really want to talk to you a bit about, you know, your own experience, and you know, where you think local governments are going in terms of, you know, investing in energy products and trying to become more sustainable. So, the first question I really have for you, john, is can you just tell our listeners a little bit more about your career journey and how you ended up in local government?
John Morrill 06:26
Sure. Well, it I think it really started in college, I pursued a interdisciplinary major at Clark University in Massachusetts, where they had this Science Technology and Society program that integrated energy technology and policy with economics, public behavior, and, and policy. So this is back in the late 70s, early 80s. And this kind of an interdisciplinary subject matter was not common in universities at the time. So while I was good at science and math, I also knew I wanted to be involved in policy. So after graduating, I, my big break really came when a previous Clark University graduate, five years prior to me, called the university and said, Hey, I’m with this small, not for profit, energy policy and research group, do you have any recent graduates who are interested in energy and and would like to pursue this this area. And so I fit the bill and applied and that was with the American Council for an energy efficient economy, also known as AC Triple E. So I was employee number two, with the organization. And now now it’s a thriving group of I think they’ve got over five dozen staff. And they’re still based in downtown DC. But that was that got me that that showed me that doing this interdisciplinary course or field of study could actually produce a job. And while I was working there, I pursued a master’s in planning through the University of Virginia. And that’s when I became more aware of and knowledgeable of local government and how fundamental it is to to people’s lives. And and so I, I didn’t think I was going to go into local government at the time. But of course, DC being DC, I thought, Well, I better pick up another degree. So after 10 years at AC Triple E, I’d done quite a bit of the research and policy analysis. And there was a little bit of a sense of this is kind of an ivory tower thing. And I wanted to get my hands dirty with implementation. And it was just, I was just lucky that back in the days when the newspaper was a was a common way to advertise jobs, Arlington County was advertising for an Energy Manager. And I looked at the description and thought, wow, this is this is implementation. This is this is actually doing the kinds of things that we’ve just been writing about from a distance. So I applied and was fortunate to get the position. I sometimes joke all my hands were filthy after that. But this Arlington was really the first jurisdiction in Virginia to create a position of Energy Manager, this is back in 2000. And so they were, they were a little ahead of the curve. And, and in fact, it was some citizen activists in the community who, in dialogue with the elected officials and management, urged the county to create that energy manager position. So that’s how I got into local government. And I’ve, I’ve really enjoyed the whole ride. I think it’s absolutely fascinating. It’s very, very important. And I think people don’t have enough appreciation for really what gets done at the local level. And in fact, until I joined county staff, I had no idea the extent of the services and everything from the Human Services safety net to the wide variety of Park, recreation, and educational programs that they that the government itself offered. And, and Arlington certainly wasn’t unique in that respect.
Toney Thompson 11:15
Oh, yeah, we do a lot, get a lot done here.
John Morrill 11:17
Right. So so that was there 20 years with Arlington. And it was, it turned me into a dedicated public official.
Toney Thompson 11:32
Excellent. Love it. I mean, I mean, that’s an amazing journey. I mean, going, you know, working in policy in the policy sector for, you know, kind of like a think tank for, you know, that long time, we then want to actually get into implementation. And I think the wildest thing I heard you say was, you know, posting a job advertisement in a newspaper. I was like, “what?”
John Morrill 11:55
Well, and I, I sometimes tell people, I, I think one thing that helped me get the job, aside from having worked with AC Triple E and shown that I had the subject matter background, but during the interview for the position, a question I asked the interview panel was, so what is Arlington’s energy bill? And they, they, the panelists looked at each other and said, Well, we don’t know. That’s what we want this position to find out. So that that was and that’s also a lesson in yeah, asking questions. And yeah, and the discovery.
Toney Thompson 12:49
I mean, it’s, I mean, it’s fascinating, because it’s not, even in my brief local government career, I’ve already seen, you know, things that maybe are traditionally in the private sector, that local government is trying to get into, you know, they’re trying to find that person who can tell them, like, yeah, we’re hiring you for this position, but we need you to tell us, you know, what to do. And so it’s, you know, great that you were kind of at this forefront in 2000, when you were hired, you know, for Energy Manager. And so the next question I have for you is, you’re coming into this position, trying, you know, essentially building it from the ground up when local governments are, you know, becoming more aware of their responsibility to, like, do this kind of work, you know, what were some of the things that you accomplished as Energy Manager in Arlington County, and how did you know, you know, Arlington County’s awareness about, you know, their responsibility or the things that they could impact evolve, in almost, you know, the 15 plus years you were there in the position?
John Morrill 13:52
Well, we had a number of successes. And I stress up front that key to any success is that we had champions on the, among the elected officials. If If something’s a priority for the elected officials, and of course, that’s often supported or driven by by constituent interests, but the willingness of elected leadership to open the door or or point the way really frees up the civil staff to then, to then do things. So the first great example of that was Arlington County launched a climate action program in 2007. And that was a that was an initiative of the incoming board chair and a number of us on staff got to work with him during 2006 to define it and shape it and then when he, was stepped up and when he began his term on January 1st, 2007, this program was an, was launched and announced, and the timing was perfect. It was in the wake of Al Gore’s Inconvenient Truth. And essentially it was the county board was was looking to seize the moment. And the public response was very strong, we had done a lot of work in advance to lay the groundwork for what we were doing. And it was initially it was fairly modest by today’s standards, it was a 10% reduction in greenhouse gas emissions by 2012. With a number of sub goals about engaging outreach with the community and so forth, but it was it was that initiative it was it was it, it set out a specific goal. And it was usually on January 2, after the county board Chairman is elevated, you know, the news might report it on, say the second section of the metro Metro newspaper might report it on the second page of the metro section. On January 2, 2007, it was above the fold on the front and front page of The Washington Post. Because this was a first for local government in the region to really take a stand on climate. And so that set a number of things in motion, we were able to grow a program, add additional staff, it led to a community energy plan, also known as a Climate Action Plan. Before they were really a thing for local governments. So we met we met the goal for the 2007 for the county. Yeah, and that that was met through energy efficiency and renewable electricity. We were using biodiesel in our heavy equipment. And then with the community energy plan that followed, we then further revised the community energy plan in 2019. And that raised the bar to carbon neutrality for both county operations and the community as a whole, by by 2050. And, and the revision in 2019 of the community energy plan, also called for 100%, renewable electricity by by different dates for county operations and for the community as a whole. And so by by setting some early goals, and then achieving them, it, it set us up to continue leaning forward to do more. And that, to me is always a key thing, whether in the private sector or in public service, you need to get some early wins to build your credibility while laying the groundwork for even bigger gains.
Toney Thompson 18:25
Yeah, absolutely. Absolutely. I definitely want to talk to you more about, you know, that evolution of as more local governments have adopted this what what their plans kind of look like and what it takes to accomplish them. You know, I also want to talk to you, because when I first reached out to you about potentially doing a podcast, you know, you know, the events in Texas were kind of happening, where they had that, you know, the the winter storm, and everything was shut down, and people are now aware of, you know, we have a national energy grid, and, you know, what does this mean? And, you know, why did this thing happen where, you know, people are without power for for weeks on end? Can you can you tell us a little bit about you know, exactly what the energy grid is, and how we are as local governments are, or just as people connected to it, and depend on it, especially when we’re talking about things like electricity markets.
John Morrill 19:24
Well, thanks, Toney. That’s a, that’s a great and an interesting question. There is no escaping the electricity grid as it’s everywhere. And it’s used by all but just a very small number of people who are living off the grid, generally disconnected from electricity and also often from say, public water supply. electricity grid is has been called the world’s largest machine. And it it in North America consists of 1000s of miles of power distribution lines, like we see all along our roadways. And these are fed from transmission lines that run from electric power plants, usually out in the more rural areas. An all along the way, connecting these power lines, their meters to monitor the power flow, and substations and Transformers that convert high voltage power down to the low voltage power used in homes and businesses. People might be surprised to hear that 120 volts, like what you have in your home, that’ll still give you a jolt. And so, you know, when we think of high voltage or low voltage, we think of the little nine volt battery or something but no 120 volts will give you a jolt. But the grid is made up of these 1000s of miles of very high voltage, 1000s of volts of power that is essentially constantly on, it’s constantly loaded with electricity. And how it works is utilities and some independent power producers, they make electricity at power plants, and they feed it onto the grid. And the grid is managed or maintained by independent system operators on a regional basis. The challenge which they’ve become very, very good at, for these independent system operators, is to always keep electric power available to match whatever customers are demanding might be. When customers turn on a light switch or computer or anything, that’s boom creating demand for electricity. And the grid is always energized to to meet that power demand. Except in these disastrous occasions, which which I can talk about. And so the independent system operators, they do this constant monitoring, and they can control the flow of power. And they can actually tell power generators to increase or decrease power production. Now, of course over years of history, have helped the system operators predict with very great accuracy, how much power is needed based on weather patterns and recent trends. So you’re talking about it, it’s a it’s a let me let me use this analogy. The grid is like a bathtub full of water. Okay, and the it’s constantly draining. And that’s people using using electricity is the drain. And then the water faucet, keeping the tub filled that’s say the power plants. The tricky thing is that the drain can increase or decrease in size. And so they’re they’re they’re kind of throttling how much power is coming onto the grid to keep it all in balance. But again, because it’s because it’s a very well built out with with constant monitoring. They’re able to keep this in balance. In North America, there are about three dozen states and a few Canadian provinces linked together by something called the eastern interconnection. And then there’s also about a dozen states and a couple of Canadian provinces linked by the western interconnection. So there is possible for for electricity to flow across vast distances, vast distances. But most of Texas stands alone, isolated. And that was a fundamental part of their undoing. When the when the uncommonly cold polar vortex hit Texas that deep freeze affected gas pipelines and and froze up some of the components that that keep the pipelines working, which cut off gas going to the power plants. And then that meant that the those gas power plants were unable to perform. Similarly, there were some cases where they have a lot of wind turbines in Texas but they hadn’t been treated, they hadn’t been prepared for very cold temperature. Wind, wind turbines operate up in Minnesota and in Canada quite commonly, but they’re they’re equipped to-
Toney Thompson 25:13
John Morrill 25:14
Exactly. But in Texas, they they hadn’t weatherized or winterized, the turbines and so some of those turbines froze as well. Meanwhile, people were desperately trying to use electricity and using electric heaters and, and the grid was overwhelmed. It was like there was a huge drain at the bottom of the bathtub. And they couldn’t open the faucet with enough water to fill it up. And so when we put electricity when supply can’t meet demand, blackouts are the result. And, and Texas because it was not interconnected with either the eastern interconnection or the western interconnection, it really stood alone. So they couldn’t import electricity from from other regions of the state. Now, and I say that because there are a few parts of Texas that are not part of the inner of the Texas system. The city of El Paso, on the western edge of Texas is part of the Western interconnection. And so they had they had the same cold temperatures but they were fine. Yeah, right.
Toney Thompson 26:41
Okay, that’s, that’s interesting. So I guess, you know, since you know, I live in Durham, North Carolina. So I’m a part of the Eastern interconnection. So if we got hit with, you know, a major winter storm similar to what Texas did. And there’s this huge spike in demand for electricity. You know, the people who are monitoring the levels, I mean, they could, you know, theoretically tell a power plant in New York, hey, I need you to up your output for these people in Durham, because we need more electricity in the entire grid.
John Morrill 27:15
Right. Right, you’re right, they and even if it’s that far away, they might not be able to tell a particular power plant, but they can essentially send up market signal to the, to the grid to the north and and import import power. Another thing that our regional grids do commonly is they provide market signals, let’s say on a very, very hot day in the summertime, when typically, electricity use is high for air conditioning. The utilities and the grid operators will often have incentive programs, just encouraging customers to voluntarily come cut back a little bit, just to just to keep everything happier. And so there is a it’s a strong market. It’s still a market based system. And, and yeah, so it works. It works well.
Toney Thompson 28:23
Yeah. I mean, that’s, I mean, I think this is I wanted you to kind of explain, you know, the energy grid, because I think it really, as we get to the later part of our conversation, highlights the problem or not the problem, but the the challenge and major challenge is local governments are trying to become more sustainable, because, you know, it’s all connected. So I’m getting we’re getting energy from coal plants from nuclear power plants, from wind energy, like, all of these different forms of generating energy are feeding into this massive grid, the Eastern, Western, and I guess, Texas interconnection that it’s all connected. You can’t just say, Well, I’m only getting my energy from this renewable source, so.
John Morrill 29:10
That’s right. And so it is a big, it is a big mix of power. And of course, resilience is another part of sustainability. And so I hope that the local governments affected by that in in Texas, I hope that they had standby generators for their mission critical facilities, fire stations, communication, infrastructure, and other public safety facilities. Here in Virginia, we commonly are on tropical storm watches and we have high wind incidents. And so we probably like you there in Durham, we we exercise our backup generators just to be prepared for when incidents happen. But there’s no question that that the grid is is very, very essential to everything really.
Toney Thompson 30:20
Right. Okay, so I want to kind of talk, move the conversation forward talk about, you know, now that local governments are, you know, essentially doing what you initially did when you became Energy Manager back in, you know, you know, a couple of decades ago. So you talked about, you know, your first Climate Action Plan program, you know, was a 10% reduction by 2012, which you released in 2007. And you talked about the ways you all got there. But now, it seems like, you know, I’m seeing every single local government adopting some kind of energy program or strategy that with the general language of local government X is going to be carbon neutral, or rely on 100% renewable energy by typically 2050, which seems like a much larger challenge to a much larger goal to meet, which requires different strategies, you know, compared to, you know, back in the early 2000s. So, can you talk about ways in which local, local governments need to do to ensure that these plans are effective and successful, what strategies they need to be implementing?
John Morrill 31:37
Sure, I can tell you what we have planned, but the wise guy in me says, I don’t know if they’re gonna ensure that these are, are successful, because this is it’s these are audacious goals, right. And very often, we don’t know. If we’re trying to be carbon neutral, we don’t know how that last 20 percents gonna, 20% reduction is going to come from. We we’ve consulted with research firms, and and we can point the way but but there’s, there’s still going to be something new that pops up. In the short term, the things that we know we need to do – improve energy efficiency, purchase renewable energy, and electrify as much as possible, especially transportation. And the Climate Reality project, an organization founded by former Vice President Al Gore, they identified renewable electricity, and electric transportation as the two biggest imperatives for a low carbon future. And and when I look at the greenhouse gas emission inventories for Arlington County, and Fairfax County, those those are the two, the two fundamental needs is based on these inventories, is have to have massive non carbon electricity and get away from gasoline and diesel as the vehicle fuels. And of course, now the cli- the science of climate change suggests we need to do it even much faster than 2050. And that’s a that that also shows the herculean lift that it’s going to be needed. I’d like to touch briefly on on this idea of electrification and because electric vehicles I think people are becoming more familiar with in different parts of the market. They’re, California certainly, and and up in the northeast, they have very strong programs and they’re penetrating the market. But in addition to electric transportation, alternatives to say heating with fossil fuels in homes and buildings, natural gas is natural gas is better than coal, from a carbon standpoint. But natural gas is still itself a very potent greenhouse gas, methane, methane is is is even stronger than carbon dioxide in terms of its global warming potential. And so there’s now a shift in in the research community and Some localities are now pursuing a preference for electric heating over gas water heating and gas space heating. And to give you an example of how wild an idea that is, when I was an undergraduate, it was pointed out that electric heat was an absurd application of that technology. Because 40 years ago, the idea to burn a fossil fuel at a power plant at 30% efficiency, move that high quality electricity across a state only to be converted back into heat. And the heat is just a very low quality form of energy, right? Electricity is kind of magic. Electricity, you can do, you can light things, you can power motors, you can power computers with electricity, heat is just this kind of dumb form of energy. So however, the development of much more efficient power plants, and they, including safe, very high efficiency, modern gas plants, as well as non carbon, wind and solar farms, plus nuclear, just the whole power grid has become much more efficient, and much lower carbon to where now it’s looking like even electric heating is becoming superior to say gas heating, especially when we consider the leakage of methane from gas distribution systems. So and I mention that, I mention that not to not to dismiss or pile trash on on the natural gas industry, but just really showing how quickly the whole energy scene has has changed in the last couple of decades, to where electric vehicles and electric heating is, is now, as long as it’s with clean electricity, is now seen as really the path we have to go down.
Toney Thompson 37:17
Right. And I think it’s, you know, I want to go back to something you were you were I think you’re about to go down a path about talking about electric cars. But you know, I think this it’s very interesting, as we talk about, I think some of the the easiest strategies in terms of local governments doing these implementing these plans is electrifying. Right? So electric buses or you know, electrify whatever vehicles that in a city fleet that we can, but you know, I think you know, the bigger thing you were talking about is, you know, purchasing and developing, you know, clean energy sources, like even if we have those electric buses and electric city fleets, county fleets. If we’re still relying on electric grid, that’s mostly, I guess, quote unquote, dirty, you’re just you’re just pushing the problem out of sight, like further back to the original source of the electric grid, would that be correct?
John Morrill 38:10
To some extent. The good news is that, the good news is that electric vehicles tend to be much more efficient, just in terms of how far they’re moving the wheels for a unit of energy. It turns out that the internal combustion, entered internal combustion engine in conventional vehicles, is surprisingly inefficient. And we were able to get away with it for decades and decades, because gasoline was so inexpensive, but it’s something like 10 to 12% of the energy that’s consumed by gasoline is actually turned into useful work in moving vehicle. Whereas with electric vehicle, yes, you have losses at the power plants. But an electric vehicle is a 99% efficient once you’re actually using the electricity for the motors. And so with, if you’re in an area with predominantly coal fired electricity, say Wyoming, then an electric vehicle is maybe on a par equal to internal combustion. But for much of the United States, where coal has become really only the third largest source, and there’s much more nuclear and natural gas and then more and more renewable sources of electricity, the grid has gotten strikingly cleaner over the past couple of decades. And and so electric vehicles are really fast becoming a slam dunk from an environmental standpoint.
Toney Thompson 40:12
Oh, that’s a that’s good to know. So, you know, you were saying, you know, those three big things that are more efficient, electrifying, you know, purchasing clean energy, if you know, local governments did those three things, that still only gets us 80% of the way there, and we’re trying to figure out, you know, the other 20% that’s something that we still need to find other strategies to deal with, is that correct?
John Morrill 40:39
Yes. And, and, and this is, this has happened in Arlington, when we did our revision to our community energy plan, using very ambitious, aggressive assumptions. We could only reduce our projections where we could only reduce carbon 86% by by 2050. There was still like a 14%. chunk that that I guess in baseball terms, we called it, we would call it a player to be named later. Because there’s there’s, so we put it in a bucket saying, okay, it’s got to be either some kind of offsets, or carbon sequestration, some way of drawing down the carbon burden in the county has it, we just couldn’t get there from from, from a science and numbers standpoint, with with, and that was also using aggressive assumptions. Robust electrification, robust renewable electricity. And some of it, some of it was due to things like the natural gas that would remain in some buildings and some, some vehicle fuels, you know, whether it’s heavy, heavy equipment, construction equipment, yeah, it’s just very difficult to imagine no more burning fossil fuels. And so with a timeline up to 2050, we had to say, okay, we’re good. Our goal is to be carbon neutral. And we see, we see a path that gets us most of the way there, but we’re gonna have to revisit this plan. Yeah, in a few years, and see where the technology and the economics are, of how, how we might fill that gap.
Toney Thompson 42:49
Yeah. And, you know, I think a lot of local governments are going to have that, that that challenge, right? So we can get, you know, even if we’re extremely aggressive to your point, we can get almost all the way there. But how are we going to get over that last, you know, 20 plus percent? And this kind of leads me to, you know, the next question I have for you, and why I really want to talk to you is one of the things that I think was really innovative that you did while you were in Arlington was something called a virtual power purchase agreement, or a VPPA, and, you know, when I came across it, I had never heard anything like it before. So could you, you know, talk to our listeners about what a VPPA actually is, how it came about, and what does it do in terms of, you know, those those climate goals that we have as local governments?
John Morrill 43:42
Sure, I’d be happy to. So let me first start with introducing power purchase agreement. Yeah, because virtual adds on another wrinkle. Okay, but so a power purchase agreement. The price of solar panels has plummeted over the last 10 years. And at a utility scale, very large scale. large solar farms are now cheaper to build and operate than gas power plants. On a smaller scale, say for individual buildings, the Economics of solar are can compete with buying the power from your utility. But many localities don’t have the capital laying around to pay for a solar system on a roof of a library say. So with a power purchase agreement, a third party, for profit company will install and own a solar electric system on a municipal building. And they sell the power it generates, it’s tied into the meter and so then the municipality is by buying the power that the solar system generates and it just it goes into the building through the electric system. The private vendor continues to own and maintain the system. And the vendor can take advantage of some federal tax incentives for solar and other financial mechanisms that lower their cost, cheaper than what it would be for the locality to pay if they tried to do it themselves, like, localities don’t play, don’t pay federal income tax and so the private, the private lender can can take advantage of tax credits and other accounting rules so that they can sell the power to the municipality, usually at or below utility power. And yet, it didn’t cost the locality anything upfront. So that’s a power purchase agreement. And it’s called a power purchase agreement, we usually don’t think of, say connection to the utility as being power purchase agreement. It’s just as my utility. Yeah. But but that we call it a power purchase agreement, because it’s really a separate thing with that third party.
Toney Thompson 46:09
Can I ask you a question? Quick question?
John Morrill 46:11
Toney Thompson 46:11
How, how, how much is that growing in the local government level, these PPAs, these power purchase agreements, because, you know, I heard about the VPPA. But I never heard about this PPA, how often is that being adopted?
John Morrill 46:27
PPAs for onsite solar are becoming much more common. There are a number of jurisdictions in Virginia, who are doing these, especially school systems. School systems tend to have the large flat roofs, that make it very amenable to for solar. So and I think most states around the country allow this kind of transaction. In Virginia, it took, it took legislative legislative action a few years ago, to open the door to these. But this is a tool that I think many localities do have at their disposal. So now, let me back up to where I said it on utility scale.
Toney Thompson 47:22
John Morrill 47:24
So a utility, or an independent power producer can build a large solar or wind farm and sell the power into the wholesale power grid. They do this frequently throughout the country, there are state regulations, but it’s it’s by and large, a well established practice. And so a virtual power purchase agreement is similar to the rooftop power purchase agreement or rooftop PPA, except the electricity does not literally enter the customer’s property. Electricity is, the electricity is real. And the customer is credited with making it happen. And the customer, customer is essentially buying the electricity generated from a faraway renewable energy farm. So we’re gonna have to go back to the maybe the bathtub analogy. So remember that the grid is constantly energized by the power flowing from power plants into that grid. And it just flows along the path of least resistance to the end user. So there’s no way to know or to follow an electron from a solar farm over the transmission line through a corporate building or municipal building.
Toney Thompson 48:56
It’s going to go where it goes.
John Morrill 48:57
It’s going to go where it goes, right. But there’s also no question that when electricity from a solar farm or wind farm is put onto the grid, because that system operator is using that, you know, the faucet throttle that analogy, whenever renewable electricity goes on the grid, then less coal or natural gas needs to be burned. So it happens that federal law says if there’s a renewable energy farm, they get first dibs on the grid. That’s the first thing that goes on to the grid. Yeah. And so this is this is how renewable electricity, especially at the utility scale, goes up on the grid and it’s essentially it’s, it’s, it’s, it’s, sometimes they call it backing down, backing down the output from gas plants for for coal plants, because the grid operator sees based on the weather forecast, it sees all this power that’s going to be coming from the solar farm and the wind farm. And so when there’s a new large solar farm on the grid, it’s that much less that that will then be provided by a coal or natural gas for.
Toney Thompson 50:21
That’s fascinating. So, so to put this in my own word or reframe it, it’s. So let’s say- so essentially, you know, Arlington, they invented this VPPA. And they were basically like, we’re gonna buy, we’re gonna invest in a solar farm in North Carolina say, that electricity generated by that solar farm in North Carolina is probably never going to get to us in Arlington. But you can say on a piece of paper, that we own that electricity, and that electricity is clean electricity. Is that correct essentially?
John Morrill 51:03
Yes, yes. And so a power pur- the virtual power purchase agreement is a contract between the solar farms owner, and either the corporation or the locality who is the customer. And that contract establishes the accounting for the electricity transaction. And, and it in most cases, that solar farm or wind farm would not have been built until that solar farm developer signs customers contracts, because their investors are going to want to know that they have that they have customers for that power, before they actually finance it. So, so sometimes it’s said that nothing happens until someone buys something. And so the and so in Arlington’s case, we were fortunate that we had a partner in Amazon. Arlington is now home to Amazon’s second headquarters. And Amazon happens to be one of the largest customers in the utility scale, renewable energy market. Because Amazon operates data centers for family warehouses, offices, they’ve got transportation activities. And Jeff Bezos made an announcement in September of 2019 that making it was called, it was the Amazon climate pledge, committed to be net carbon neutral by 2040. So they are buying a lot of renewable electricity, because they have a lot of, they consume a huge amounts of electricity for the data farms and other operations. And so it was coincidentally, also in September 2019, that Arlington’s community energy plan was revised with these aggressive 100% renewable electricity goals. And so staff at Amazon contacted Arlington and said, Hey, we’re talking with dominion, about dominion is the investor owned utility that serves serves us here in Virginia. Amazon was talking to Dominion about a significant 120 megawatt in size solar farm, and Amazon offered to share part of that and to make part of that very large solar farm available for Arlington to contract with Dominion for the output. And I had been talking with Dominion staff for several months previously, about exploring these kinds of deals. And, and then, the pieces fairly quickly fell into place from there. We don’t have the same deal as Amazon. Amazon, Amazon does a dozen or more of these huge contracts every year. And this was our first so and then we also have just different procurement systems and so forth. But so Amazon has about two thirds of this very large solar farm, Arlington has, is buying the output from about 1/3 of it. And we’ve entered it to a 17 year contract to buy the output from that. And I would say that it’s important to note that it’s not an investment in the literal sense of have cash upfront for the solar farm. It turns out that the solar farm developer, which happens to be dominion, they’re still putting up the investment to build it, but we’ve, Arlington County and Amazon have agreed to buy the output for a long period of time.
Toney Thompson 55:19
So I think that’s I mean, it’s, to me, that’s an interesting financial arrangement because, and tell me if I’m wrong, but it would essentially mean that now you have two energy bills that you have to pay, right? Like you’re still paying your regular energy bill. But now you’re also paying what it costs that this solar farm is also producing, even though that electricity may never, you know, get to you.
John Morrill 55:48
Thank you for saying that, that that allows me to introduce an important nuance here. While we’re buying that electricity, we’re also having dominion, sell it immediately, on our behalf into the wholesale market.
Toney Thompson 56:10
John Morrill 56:11
And so we’re not literally paying for all of that electricity, we’re paying for, we’re not paying for the value of all that electricity, we are paying for the difference between the price we agreed to, it’s a fixed price that we agreed to with dominion. And then whatever the difference is, between that price, and what the wholesale price is at the exact time that we sell it, let’s say every every hour that they’re selling power from the solar farm into the wholesale grid.
Toney Thompson 56:52
And so when demand is high, and it’s higher than the price we agreed upon, you actually are getting a credit.
John Morrill 57:01
Exactly. And so I had consulted with some research analysts at a consulting firm on the future wholesale price of electricity, solar electricity in our state, and essentially, was and I shared that with management and and all agreed that it was a risk worth taking. It’s possible that it might end up costing the county that over the course of a year, maybe $100,000, more. That’s kind of a worst case. But the county has a $7 million electric bill. And so our worst case is just, just, yeah, just a tiny fraction of a percent. And and it’s also quite possible that this transaction over time will reduce the county’s electric bill, because in say 10 years, as the solar farm continues to produce, and if there’s been whether it’s a tax on a carbon tax that increases price of natural gas, electricity, or continued economic development that creates additional demand for power, it’s quite possible that the county will come out ahead on a net basis through this transaction. But regardless, this is then satisfying, with green power, the electricity needs for almost all of county government operations. One other one other key thing about doing this deal with Dominion was the the economic transaction, the small cost or credit, over the course of a year will be reflected on each of our individual electricity accounts that we get from Dominion anyway. So in other words, this isn’t even us. It’s a it’s a it’s an agreement we have with dominion. But it doesn’t mean that we have 300 new electric bills we have to pay for that. It would just be it’s essentially going to be an additional line on the existing bills.
Toney Thompson 59:44
Right. That’s Wow, that’s that makes it more fascinating and complicated. I mean, it’s, it’s interesting because the way the way you’ve structured the deal, you’re essentially making a bet on the future of clean energy that it’s going to become more in demand. And you know, energy like coal and gas is going to become more expensive. And so that will increase the demand. And because you have this fixed price, you’re going to, as you said, You should come out ahead in the long term for this deal, because dominion is also building the facility. If it works out for them, it’s going to continue to incentivize them to put more clean energy generators into the grid, which means it’s more likely that more and more energy in the eastern interconnect becomes clean energy, which means Arlington is more likely to get electricity that is clean.
John Morrill 1:00:49
Yes, exactly. And in this way, it I, I underscore for most of the times I talked about this, that while this is a financial transaction, it was fundamentally done to achieve the localities policy goals, this was, this was really driven by the desire for 100% renewable electricity, and it has the, our taking this action then continues to build momentum within the state, and it sends a signal to both other localities and to Dominion that, you know, we’re we are putting our money where our mouth is and that we are keen to advance renewable electricity in Virginia. And and moving forward, I think we’re going to continue encouraging other our partner, peer localities, and then also corporations to, to also emulate the example that Amazon has show.
Toney Thompson 1:02:06
Yeah, I think it’s also, I keep saying interesting and fascinating, but it just is to me. It, to me, it’s a different way of looking at energy production for local governments, because to me, it’s also, it’s looking at your energy bill almost as a financial portfolio investment. And going back to the conversation we were having earlier, you know, you’re saying there’s this 15 to 20%, that we just can’t, we don’t currently have the technology or ability to, to eliminate, but with these kinds of agreements, you know, we can, the more of these things that we invested in and buy, we can shrink that 14% in our larger energy portfolio by putting more and more of our investment in clean energy, because we can say that we own it as a certificate of sale or ownership, essentially, if that makes sense. Like, I may not be actually getting the electricity, but you know, in our portfolio perspective is like I can keep putting money into clean energy out there into the grid, and essentially reduce my that 20% that I can’t really shrink.
John Morrill 1:03:23
That’s, that’s the right idea. The challenge is, this kind of transaction, we’re already counting it in the 80% that you can do. We’re, we’re counting on deals like this, this is the kind of thing that we already know we can do.
Toney Thompson 1:03:41
John Morrill 1:03:42
And so that this is part of the 80%. And so the that missing 15, or 20% is, t’s really just, it’s speculation. And well, of course, speculation is is is not a is not a term that we like to choose in local government much. And, and actually, we’re kind of dancing around that this kind of this kind of a long term agreement for on a virtual power purchase agreement, if some, some say, Oh, it’s a hedge. Well, no, a hedge has a very specific financial meaning to it. And strictly speaking, this is not a hedge. I mean, this but this is this is because this is just a it’s it’s diversifying.
Toney Thompson 1:04:44
Yeah. Yeah, it’s diversifying, diversification. I think one of the things that the deal that you entered into Arlington is you know, with the PPA, to me that’s, uh, you know, whatever the rate is, it’s the rate, you know, if it changes year to year, you would pay it. The thing about the deal for me that you did with the VPPA with Amazon and dominion, that makes it so interesting is you have that fixed rate locked in. But I wonder, in your opinion, would it have been as attractive if you couldn’t do the fixed rate, if it was still variable, year to year, depending on demand fluctuations.
John Morrill 1:05:32
It can be, it’s a matter of if the parties agree. You can do this kind of an arrangement where the price does float. And sometimes, a customer could ask to have collars put on the price, say, okay, we’ll let it float, but we don’t want it to go, let’s say, we really hope that the price will be three, but we’re willing to pay up to five. And then to protect the seller, say, and we won’t pay less than say two. So there are there are multiple ways of framing these agreements. And it’s, it’s a matter of identifying what the buyer and the seller can agree to together, and, and then making that work. And so I think, the fixed price option that the county’s pursuing. Now, of course, it’s a fixed price. But then there’s the variable component of, you know, upon what the wholesale price does in the market. It it goes to risk tolerance. And, again, how strong the policy imperative is. Absolutely.
Toney Thompson 1:07:01
All right, John, you’ve been great. I kind of want to wrap up. So you’ve been recently in this new role. You’re no longer with Arlington, you’re now with Fairfax. And you are the Energy Manag- no, sorry. You’re the sustainability, innovation and sustainability manager with Fairfax. Is that correct?
John Morrill 1:07:20
Toney Thompson 1:07:20
Yeah. Can you tell our listeners a little bit about, you know, what you’re hoping to accomplish in this in this new role moving forward with with Fairfax?
John Morrill 1:07:29
Sure. Well, it’s, it’s largely similar to what we were doing in Arlington. And, and that’s really, the goal is to help the county meet, its its own fast evolving goals, which include aggressive targets for energy use reduction, and the use of renewable electricity for county operations. And, and then, now we have a draft community, community Energy and Climate Action Plan, where the draft goal is, is also carbon neutrality for the whole community. And so the work is similar, I bring familiarity with Virginia laws. But one of the things that was appealing about this position and working in this office, which is now a growing office, is that Fairfax County offers large scale. They’re a population of about 1.2 million people. And so one in seven Virginians lives in Fairfax County. And so, as I’m getting toward the end of my career, I’m hoping that the impact from working in a larger community could hopefully be be larger. And so the things that we’re pursuing are, are similar to what I’ve mentioned, thus far, with electrification of the fleet, and aggressive energy efficiency, and also aggressive pursuit of renewable electricity both on site, we have contracts with firms for on site power purchase agreements, and and also developing considerations for possible possible off site agreements.
Toney Thompson 1:09:32
That’s great. Awesome. I can’t wait to see you know, the workout develop as you as you continue that work for Fairfax. So I really appreciate you coming on. Do you have anything else to share with our listeners anything else we should know about electricity and electric grids and sustainability plans?
John Morrill 1:09:54
I, I’m a big fan of setting goals. I think to me, go ahead and stick your neck out and set a goal. I’ve seen time and again, where either I personally or in my personal life or in, in my professional life, we set a goal that seemed ambitious at the time, and we may not have known how we were going to get there. But then, because you’ve got a goal, you start working the problem. And as you’re working the problem, things start emerging. And then you can act on those things. And then, and yes, sometimes things happen that are beyond our control, that make things more complicated. Sometimes those things that happen beyond our control are fortuitous, and help us out a lot. And so I’ve I’ve, I’ve been pleased by setting an ambitious goal, working toward it. And then sometimes how you least expect it, you you end up achieving that goal. And so then you can redo and, and set another goal. Reluctance to set goals I think just Leads, leads to people treading water. And so I’d encourage people to brace yourself and, and and think it through, but brace yourself and set a goal.
Toney Thompson 1:11:26
John Morrill 1:11:27
Toney Thompson 1:11:28
That’s great. Thanks, John. I really appreciate it. One last question for you. If you could be the Gov Love DJ, what song would you pick as our exit music, exit music for this episode?
John Morrill 1:11:42
Well, having been a Coast Guard brat, and I lived in Hawaii when I was 10 years old. And Joni Mitchell had a song, Big Yellow Taxi. And it was later, later redone by the Counting Crows. So Big Yellow Taxi Counting Crows version. I think it speaks to a lot of what we’re talking about here.
Toney Thompson 1:12:09
All right, we’ll see if we can get that done for you. Again, thank you, John. I really appreciate it. That ends our episode for today. Thanks for coming on and talking with me. For our listeners, you can reach us at ELGL.org/GovLove, or on Twitter @GovLovePodcast, and we’re all on your favorite podcast subscription services. Please subscribe to Gov Love through your favorite podcast service and leave us a review so more people know that Gov Love is the podcast for local government topics. And if you have a story for Gov Love, we want to hear it. Send us a message on Twitter @GovLovePodcast. Thanks for listening. This has been Gov Love, a podcast about local government.