Virginia repurposes old mines for renewable development

In meeting renewable energy goals, Virginia has found a new purpose for its old mine lands.

State officials believe they can turn an epidemic of mine closures to their advantage by developing a growing number of abandoned properties into renewable energy hubs, leveraging millions of new funds to bring private developers to the table on the effort.

Since the nation’s first mine opened in the state in 1701, Virginian coal helped feed an industrializing world’s growing appetite for energy while the industry provided a key pillar of the state’s economy — one that’s rapidly eroded in an evolving energy marketplace.

State figures put total coal production down by two-thirds over the previous two decades in a trend that developed as cheap natural gas unlocked by fracking and affordable renewable energy has undercut coal on price. Along with federal climate regulations, those trends have led to the closure of commercial mining operations across Virginia.

Many of the sprawling and now empty properties were left in conditions that make them “conducive” to the large-scale deployment of renewable energy to public power grids, said Will Payne, managing partner at Coalfield Strategies, an economic development firm working with the state on reclamation efforts. 

Virginia has “geography, geology, and topography” to be a “strategic location for renewable development,” Payne said, with some of the same attributes that made it a giant in national coal production appealing to a growing renewable industry.

Coal mines are often located near developed infrastructure, transmission lines, and power plants that service large energy markets, making them ideal facilitates for tapping into the wider grid when projects are completed, he said.

With more than 100,000 acres of abandoned mine property, the state can also provide an inexpensive source of land to renewable developers in search of large tracts of space needed to conduct operations.

Planning for mine repurposing efforts has been ongoing for nearly four years, Payne said, during which time the state evaluated proposals and played “matchmaker” between utility companies, mine owners, and developers, in brokering deals to repurpose mines to host solar, wind, hydrogen, and other green energy sources.

“We’re trying to take a portfolio approach and locate these projects near economies of scale around transmission lines and other developed infrastructure,” he said.

Passed in 2020, the Virginia Clean Economy Act set the state’s two largest investor-owned utility companies, Dominion Energy and Appalachian Power Company, on the path towards 100% percent clean electrical generation by 2050. 

To meet that goal, Gov. Glenn Youngkin, elected in 2021, began to erect a local renewable infrastructure that includes natively managed solar, wind, hydrogen, and even nuclear energy capabilities.  

Having leveraged millions in the effort, however, as Virginia continues toward milestones set by the bill, local providers are contending with an increase in power usage that threatens to plateau or roll back progress on those goals, a state task force found, suggesting in a report issued in May that lawmakers consider further funding for mine reclamation as a means of expanding green energy resources.

Youngkin moved in step, tapping federal, state, and private resources to develop the industry while rolling a permanent portion of mine reclamation funding into an annual revenue bond issuance made on behalf of the Virginia Pooled Financing Program, which provides financing to local governments for essential infrastructure projects.

The most recent sale in support was a $27 million issuance of one-year revenue notes in May by the Virginia Resource Authority.

The deal was split into $18.7 million of infrastructure revenue bonds rated Aaa by Moody’s Investors Service and AAA by S&P Global Ratings, and $8.4 million of state moral obligation revenue bonds rated Aa1 by Moody’s and AA by S&P.

In its report, Moody’s also maintained an Aaa rating with a stable outlook on the VRA’s $1.7 billion of outstanding infrastructure revenue bonds, citing strong debt service provisions, pledged loan repayments, healthy credit quality, and favorable demographic, economic, and financial trends.

In conjunction with Dominion Energy, Youngkin in 2022 also launched a research and development lab hosted in a former mine near the town of Pound in Wise County that would provide “land as laboratories and scientific assistance to promote energy innovation.”

The plan created a “first-of-its-kind energy technology testbed” to research wide-scale renewable deployment that the governor hopes will put Virginia ahead in what is shaping up to be a renewable energy gold rush of sorts as between states in the region competing to attract investments from green energy companies.

Providing a place to deploy and demonstrate new renewables is necessary as power providers test the technologies for future integration in the nation’s public energy grid, said Payne, and the new business could held the potential to create new jobs and investments to replace those lost as demand for coal waned.

Like many large-scale municipal infrastructure projects, progress on mine reclamation proposals is being delayed by materials cost increases and supply chain issues, with the first solar production facilities expected to be pumping power into a regional grid by 2027, said Payne.

“Virginia will always be an energy community and we did a lot of work to find a business model that makes sense,” he said. “We have we have people calling almost every day with a project they want to locate on a reclaimed property, but we’re providing that vehicle for them to do that.”