Virginia Geothermal REC Market Report

Senate Bill 252 created the second mandatory geothermal REC market in the country. Beginning with the 2027 compliance year, Dominion Energy Virginia and Appalachian Power must retire geothermal RECs or pay $100 per MWh. On our base case, that obligation is worth roughly $8.6 million in year one and close to $70 million cumulatively through 2030.

Section 01

How the Virginia GREC market works

SB 252 amended Va. Code § 56-585.5 to carve out geothermal inside Virginia's existing Renewable Portfolio Standard.¹ Each utility must procure and retire geothermal RECs “as a percentage of the total number of RECs used for RPS program compliance.” The underlying RPS percentage climbs every year, so the geothermal obligation grows on top of a growing base.

• Geography is not uniform. Dominion, a Phase II Utility, can source GRECs from systems anywhere in the Commonwealth. Appalachian Power, a Phase I Utility, has to source from systems inside its own service territory. If you operate in southwest Virginia, you are selling into a separate sub-market that is smaller and considerably tighter.
• Utilities have to come to market four times a year. Each one is required to “issue a quarterly request for proposals regarding the procurement of RECs produced by geothermal heating and cooling systems.”
• The $100 exemption sets the ceiling, not the floor. A utility “shall be exempt from making an annual deficiency payment for the quantity of required RECs produced by geothermal heating and cooling systems that are not made available in each request for proposals at a price that is equal to or below the price of such deficiency payment.” When GRECs are not offered at or below $100 per MWh, the utility retires generic RPS RECs against the $45 base ACP instead.²

Section 02

Deficiency payment rates by REC type

On escalation: § 56-585.5 D 5 provides that “the amount of any deficiency payment shall increase by one percent annually after 2021.” The geothermal rate is the highest dedicated ACP in the Virginia RPS.

Section 03

Utility compliance base

Section 04

Projected demand, 2027 to 2030

The carve-out steps up from 0.50% of total RPS RECs retired in 2027 to 0.75% in 2028 and 1.00% in 2029 and every year after. Applied to the filed base above on flat load, it builds like this.

Base-case volume build

Across our load-growth scenarios the four-year cumulative obligation lands between roughly 776,000 GRECs on flat load and 965,000 GRECs with Dominion load growing 5% a year on data center demand. Northern Virginia construction is moving fast enough that we expect the upper half of that range.

Section 05

Market value

At base-case volumes and $80 per GREC, the market is worth about $8.6 million in 2027 and roughly $24.3 million by 2030. Cumulative transaction value for 2027 through 2030:

Estimates and disclosure. Forecasts in Sections 04 and 05 are Flett Exchange estimates from our own analysis and due diligence. We make no claim as to their accuracy, and nothing here is an offer to buy or sell any environmental commodity.

1. 1. Va. Code § 56-585.5, law.lis.virginia.gov/vacode/title56/chapter23/section56-585.5
2. 2. Commission on Electric Utility Regulation, 2026 Virginia energy legislation summary, dls.virginia.gov/commissions/eur/files
3. 3. Virginia SCC, Renewable Energy Certificates, scc.virginia.gov/.../renewable-resources/recs