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Virginia Leads the Way on Energy Affordability in 2026

April 2, 2026

Region

MidAtlantic

Related Issues

Energy

NCEL Point of Contact

Ava Gallo
Climate and Energy Program Manager

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Overview

Motivated by rising electricity bills — up 30% since 2021 — the Virginia General Assembly passed a wide range of legislation to promote energy affordability during its 2026 legislative session. The legislative session ended on March 14, and Governor Abigail Spanberger, who has made energy affordability a core priority, has until April 13 to sign or veto legislation. Below is a breakdown of the most notable legislative trends, as well as their implications for energy affordability in Virginia and other states seeking to take action. 

Jump to a Section: Data Centers | Distributed Solar and Batteries | Energy Efficiency | Utility Reform and Grid Modernization | Siting, Permitting, and Interconnection Reform | Energy Storage | Financing

1. Data Centers 

As data centers drive up energy demand, the cost of grid infrastructure and generation built to meet this demand is frequently passed on to average ratepayers. The Virginia legislature sought to address this as part of SB253. The bill would authorize the State Corporation Commission to assign electricity costs driven by large energy users, like data centers, to those users themselves, rather than residential and small business ratepayers. Virginia lawmakers also sought to address the impacts of data centers by passing bills related to demand flexibility and heat reuse.

2026 Policy Advancements

  • Demand Flexibility: Virginia passed measures to reduce the amount of new energy and infrastructure needed. HB284/SB371 would require utilities to develop a voluntary demand flexibility program for large energy users, encouraging data centers to reduce their peak load.
  • Heat Reuse: Virginia is the first state to pass legislation related to data center heat reuse. HB323 directs the Virginia Department of Energy to report policy recommendations to the legislature for reusing data center waste heat for nearby facilities. Studies show that heat reuse can lower energy consumption by 30% while offsetting consumer energy needs.

2. Distributed Solar and Batteries 

Virginia also expanded access to more localized energy solutions like rooftop solar, home batteries, and other distributed energy resources (DERs). These resources reduce reliance on centralized power systems, which lowers electricity costs and improves reliability. With nearly 80% of the cost of U.S. solar coming from “soft costs,” Virginia took steps to reduce red tape that makes rooftop solar and home batteries more expensive and inaccessible. This included legislation to promote the use of plug-in solar, automated permitting, virtual power plants, and more.

2026 Policy Advancements

  • Plug-in Solar: Virginia became the first state this session to pass legislation that reduces regulatory barriers to plug-in solar, which allows renters and others without feasible roofs to benefit from solar (HB395/SB250). More than half of states are also considering legislation on plug-in solar this session.
  • Automated Permitting: Like New Jersey, Virginia also passed legislation to authorize the creation of a statewide automated permitting platform for residential solar, which would standardize and expedite permitting across municipalities (HB590/SB382). 
  • Solar Interconnection Grant Program: Legislators also sought to address mounting distribution interconnection delays by creating the Solar Interconnection Grant Program to provide financial support to public entities, such as schools and municipalities, to help cover the costs of interconnecting solar to the grid (HB683/SB659). 
  • Community Solar: The General Assembly also expanded shared solar programs in the state beyond the oversubscribed pilot programs that currently exist. SB254/HB807 would increase the program’s capacity and create a low-income carve-out, while SB255/HB809 would simplify crediting processes by moving to consolidated billing (i.e., net crediting). 
  • Virtual Power Plants: Virginia also expanded its Virtual Power Plant pilot program to rural electric cooperatives (SB487/HB562). Virtual power plants aggregate distributed energy resources to meet peak demand more efficiently, lowering costs by reducing the need for new generation. This bill was signed by the Governor on March 31.
  • DER Task Force: Finally, SB223/HB285 would create a Distributed Energy Resources Task Force to make recommendations to advance solar, microgrids, virtual power plants, energy storage, and streamlined interconnection and permitting. 

3. Energy Efficiency 

Energy efficiency continues to be one of the most cost-effective ways to lower energy bills and reduce energy demand, while also improving housing and public health, especially for low-income households. During the 2026 legislative session, Virginia passed numerous bills to expand access to energy efficiency solutions via upgrades, pilot programs, and a task force.

2026 Policy Advancements

  • Efficiency Upgrades: Virginia passed HB2/SB72, which would require the state’s major utilities to provide energy efficiency upgrades to low-income households by 2031, targeting households that are already eligible for weatherization, have inefficient appliances, or heat their homes with oil, propane, or other delivered fuels. 
  • Pilot Programs: Virginia took action to extend its energy efficiency pilot programs that serve low-income, elderly, and disabled residents to 2038, while increasing funding through SB253. Virginia also passed SB327/HB1062 to establish a multi-year, utility-funded pilot program to promote energy conservation, solar, and storage for vulnerable Virginians.
  • Task Force: Lastly, the legislature passed HB3 to create a task force to identify barriers to energy efficiency and weatherization services for low-income Virginians, creating a plan to ensure all eligible households receive necessary upgrades by 2034.

4. Utility Reform and Grid Modernization

Modernizing the electric grid, improving planning, and reforming utility incentives can be key components to reducing energy costs, while also increasing reliability and decarbonization. In 2026, the Virginia General Assembly chose to optimize existing infrastructure to lower costs by reducing the need for building new infrastructure, which is a major driver of electricity costs.

2026 Policy Advancements

  • Grid Utilization: Virginia is the first state to pass legislation (HB434/SB621) that directs utilities to report to regulators where current infrastructure is going underused. Regulators will then establish a timeline for utilities to optimize usage of existing infrastructure, prioritizing alternatives such as Grid Enhancing Technologies and storage. 
  • Fossil Fuel Plants: The legislature took action (HB1360) to require utilities to provide justification for operating coal or gas plants past their retirement dates, which would allow the State Corporation Commission to deny cost recovery for decisions deemed unreasonable. The operation of older plants is significantly more costly for consumers. 
  • PJM Transparency: Virginia joined fellow Mid-Atlantic states in passing legislation to require their utilities to annually report on how they vote within PJM — the regional grid operator in the Mid-Atlantic (HB84). By making these votes public, this legislation would help increase accountability for utilities and other companies that make votes that directly impact ratepayers.  
  • Integrated Resource Planning: The legislature took additional steps to improve planning by updating the Integrated Resource Planning (IRP) process. IRPs are long-term plans that utilities develop to forecast electricity demand and plan infrastructure development, which directly impact how much households have to pay for new infrastructure. 
    • Surplus Interconnection: In SB249, Virginia would require utilities to consider surplus interconnection services and additional grid-enhancing technologies before planning new infrastructure in their IRP process.
    • Transparency: HB429 would require IRPs to be more comprehensive, transparent, and stakeholder-inclusive, with the goal of improving reliability, decarbonization, and public input. 
    • Load Forecasting: HB892 would mandate a state investigation into utility load forecasting, which has become increasingly inaccurate due to uncertain data center growth and can lead to overbuilt infrastructure as well as higher consumer costs.
  • Utility Disconnection: Another measure, HB828/SB516, would require utilities to report on utility disconnections on a monthly basis. Utility disconnections can create major impacts on a household’s health and economic wellbeing. Additional information can help programs be effective for the most energy-burdened households.
  • Studies for Future Action: The legislature directed a review of the state’s utility infrastructure, with a focus on identifying cost-saving improvements (SB267). They also passed legislation to create a working group that would explore the adoption of performance-based regulations — aligning utility incentives with affordability and efficiency outcomes (HB903).

 

5. Siting, Permitting, and Interconnection Reform

Costs and timelines for large renewable projects often increase because of delays and uncertainties in overly complex and burdensome siting, permitting, and interconnection processes. Virginia took several steps to streamline these processes and reduce costs by focusing on siting frameworks and additional capacity.

2026 Policy Advancements

  • Siting Framework: SB347/HB711 would create a statewide framework for the siting of utility-scale permitting that municipalities must use. The legislation still preserves local control over permitting decisions, while also barring blanket municipal bans on renewable siting.
  • Additional Capacity: Through SB508/HB1065, the legislature directed utilities to assess additional capacity connections at existing interconnection points on the grid and to create a pilot program enabling solar and battery storage to connect at those points. This would reduce interconnection costs, which have contributed to rising energy bills. 

6. Energy Storage 

Energy storage improves energy affordability by enabling the grid to maximize the use of cheaper energy during periods of peak demand, reducing the need for costly “peaker plants.” The Virginia General Assembly took steps to advance the deployment of energy storage this session by focusing on establishing targets, streamlining permitting, and integrating storage into utility planning. 

2026 Policy Advancements

  • Setting Targets: HB895/SB448 would establish and expand ambitious targets for short- and long-duration energy storage. 
  • Permitting: Through SB443/HB891, the legislature sought to streamline the co-location of battery storage facilities with solar by removing duplicative permitting. 
  • Integration: Finally, HB893 would mandate the comprehensive assessment and integration of energy storage in utilities’ Integrated Resource Plans, helping ensure storage is prioritized ahead of more costly infrastructure.

7. Financing

With budgets thinning, states are looking to innovative financing mechanisms to support clean energy adoption. During the 2026 session, the Virginia General Assembly chose to focus on two promising models — green banks and cap-and-invest programs — to attract private capital and complement existing programs. 

2026 Policy Advancements

Learn More

Energy affordability is a core concern for households across the country this year. During the 2026 legislative session, the Virginia General Assembly provided multiple models for what addressing affordability concerns can look like from an ambitious and varied perspective. 

Learn more about how to address energy affordability in your state by exploring NCEL’s Issue Pages on Distributed Solar and Batteries, Utilities and the Grid, Climate Finance, Transmission, and Data Centers. 

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