What are VA GRECs?

Virginia's Clean Economy Act requires the state's two largest utilities to source a growing share of electricity from renewables. Dominion Energy Virginia (Phase II) must reach 29% by 2026, scaling to 100% by 2045. Appalachian Power (Phase I) follows a parallel schedule. Both utilities satisfy their obligation by procuring and retiring RECs through PJM GATS each compliance year.

SB 252 carved a dedicated lane for geothermal within that RPS framework. Starting with compliance year 2027, each utility must retire a specific percentage of geothermal RECs - not generic renewables - or pay a penalty. That mandate creates the demand that gives Virginia GRECs market value.

SB 252: What Changed

• 1. Geothermal Carve-Out. Beginning with compliance year 2027, every Phase I and Phase II utility must retire a percentage of geothermal RECs as a share of all RPS RECs. The schedule: 0.50% in 2027; 0.75% in 2028; 1.00% in 2029 and thereafter.
• 2. Quarterly RFP Obligation. Each utility must issue a quarterly RFP for geothermal RECs. Exchange responds to these RFPs on behalf of its registered customers.
• 3. Explicit Water Heating Eligibility. Domestic hot water produced by the geothermal system counts toward GREC production. (Va. Code § 56-585.5 C 5)

What Qualifies for Virginia GRECs

• Exchange thermal energy from groundwater or a shallow ground source via an electric geothermal heat pump, using either a closed-loop pipe system or an open-loop system that returns water to the same aquifer or surface water source.
• Meet or exceed current federal Energy Star product specification standards.
• Replace or displace a less efficient space or water heating system (any fuel type).
• Replace or displace a space cooling system that does not meet federal Energy Star standards.
• Not feed electricity back to the grid at the heat-pump level.
• Be located in Virginia. Registered through PJM GATS with an executed GEO affidavit (Class I, II, or III depending on rated capacity).

How GRECs Are Measured

GRECs are not created from metered electricity consumption. They are created from the renewable thermal energy the earth delivers to your building; that is, the portion of total heating and cooling output attributable to the ground loop, not to the compressor electricity.

One GREC = 1 MWh of ground-sourced thermal energy delivered to the building. The conversion factor is 3.412 mmBTU = 1 MWh.

The GATS Business Rules implement a three-tier system based on system tonnage, effective January 1, 2026 through December 31, 2030:

Class 1 Formula: Step-by-Step

This is Flett Exchange's calculation model, built to GATS Business Rules Rev. 5. Each input is auditable and sourced from verified third-party data.

Heating_EFLH = HDD × 24 / (Indoor_Setpoint − Design_Heat_Temp)
  e.g. 4,013 × 24 / (68°F − 14°F) = 1,783 hrs/yr
Cooling_EFLH = CDD × 24 / (Design_Cool_Temp − Indoor_Setpoint)
  e.g. 1,291 × 24 / (93°F − 75°F) = 1,722 hrs/yr

Ann_Heating = Design_Heat_Load_BTUh × Heating_EFLH / 1,000,000
Ann_Cooling = Design_Cool_Load_BTUh × Cooling_EFLH / 1,000,000

Ren_Heat = Ann_Heating × (COP − 1) / COP
COP_Cooling = EER / 3.412
Ren_Cool = Ann_Cooling × (COP_Cooling − 1) / COP_Cooling
Total_Renewable = Ren_Heat + Ren_Cool

GRECs/yr = Total_Renewable_mmBTU / 3.412
  (3.412 mmBTU = 1 MWh = 1 GREC)

Worked Examples: Three Virginia Sites

The following are illustrative calculations using Flett Exchange's proprietary VA GEO Class I model, built to GATS Business Rules Rev. 5. Weather data is from NOAA 1981–2010 Climate Normals (base 65°F, with project-specific design base temperatures applied per ASHRAE). Building loads are proportional to conditioned square footage. All inputs are auditable against third-party sources.

GATS Registration Requirements

All Virginia geothermal generators register through PJM GATS via manual GEO affidavit. Once registered, you may claim up to five years of historical GRECs prior to the year of registration. Created RECs are usable for RPS compliance in the year of creation or within the subsequent five calendar years. GATS Certificate format: VA-XXXXX-GEO.

Required Documents

Registration Steps

Sources: Virginia Acts of Assembly, 2026 Session, Chapter 734 (SB 252); PJM-EIS GATS Business Rules Rev. 5; Va. Code §§ 56-576, 56-585.5; ISO/AHRI Standard 13256-1; WaterFurnace 7 Series SC2700AN; WaterFurnace 5 Series BR2500AN; ClimateMaster RP909/RP1000; NOAA NCEI U.S. Climate Normals 1981–2010; ASHRAE Handbook - Fundamentals; Flett Exchange VA GEO Class I GREC Calculator (proprietary, GATS Business Rules Rev. 5).