Virginia SCC and DEQ Adopt MOA on Interconnection Facilities for Small Renewable Energy Projects

Summary — The Memorandum of Agreement implementing Chapter 710 of the 2025 Virginia Acts of Assembly provides guidance on the permitting of dedicated interconnection facilities under Virginia's Small Renewable Energy Project Permit by Rule program. By clarifying agency roles and the scope of Permit by Rule review, the agreement is expected to bring greater regulatory certainty to renewable energy projects.

On July 10, 2026, the Virginia State Corporation Commission (the “SCC”) entered an Administrative Order adopting a Memorandum of Agreement (“MOA” or “Agreement”) with the Virginia Department of Environmental Quality (“DEQ”) implementing Chapter 710 of the 2025 Virginia Acts of Assembly. The MOA provides long-awaited guidance regarding how “interconnection facilities” associated with Virginia’s Small Renewable Energy Project Permit by Rule (“PBR”) program will be treated during the DEQ permitting process.

The Agreement resolves several practical questions that have arisen since the General Assembly in 2025 expanded the statutory definition of “Small Renewable Energy Project”[1] to expressly include dedicated interconnection facilities.

Background: Chapter 710 Expands the Scope of the PBR

Prior to 2025, Virginia’s PBR permitting framework focused primarily on the generating facility itself. Developers frequently encountered uncertainty regarding whether transmission-related infrastructure, including generation tie lines, collector lines, substations, and switching stations, could be reviewed as part of a DEQ PBR, or whether they would require a certificate of public convenience and necessity (CPCN) from the SCC.

Chapter 710 addressed that uncertainty by:

• Amending Va. Code § 10.1-1197.5 to include a new statutory definition of “Interconnection Facilities”;
• Amending Va. Code § 10.1-1197.5 to incorporate dedicated interconnection facilities into the general definition of “Small Renewable Energy Project,” which includes solar, wind, hydroelectric, biomass, energy storage, and hybrid facilities;
• Requiring DEQ and the SCC to enter into a memorandum of understanding implementing the legislation; and
• Making the amendments effective July 1, 2026.

The statute defines “Interconnection Facilities” as: “generation tie lines, collector lines, substations, switching stations, and any other component required to connect an electrical generation facility with the electrical grid.”[2]

The SCC Adopts the Memorandum of Agreement

In its Administrative Order in Case No. PUR-2026-00090, the SCC formally adopted the MOA negotiated with DEQ. The SCC noted that the Agreement was developed specifically to implement Chapter 710.

The Order gives effect to a coordinated regulatory framework between the agencies responsible for environmental permitting and electric utility regulation.

Key Provisions of the Agreement

The MOA provides new technical definitions.

The SCC and DEQ established working definitions for several components commonly encountered in transmission interconnection design, including:

• Collector Stations;
• Project Owner;
• Substations;
• Switching Stations;
• Transmission Owners; and
• Points of Interconnection (POIs).

These definitions should promote more consistent application of the laws governing PBRs and reduce ambiguity regarding which facilities are considered project infrastructure versus utility-owned transmission assets.

Dedicated interconnection facilities are expressly covered by the DEQ PBR.

Perhaps the most significant clarification is the agencies’ agreement that DEQ-issued PBRs encompass interconnection facilities that:

• are dedicated to the Small Renewable Energy Project; and
• do not support the interconnection of any other facility.

This confirms that qualifying interconnection infrastructure may be reviewed as part of the project’s PBR permit rather than through a separate permitting pathway.

Interconnection facilities may extend beyond the primary project site.

The MOA recognizes that interconnection facilities often extend outside the physical boundaries of the generating facility. Nevertheless, the Agreement provides that the project owner must control those facilities through ownership or easement.

The agencies also recognize that certain approvals remain outside the scope of the PBR process, including Virginia Department of Transportation (VDOT) permits and applicable local approvals.

The SCC will provide technical assistance during DEQ’s permit review.

The MOA establishes a formal consultation process under which:

• DEQ may request SCC review within 30 days after a PBR application is filed;
• Requests may be used to confirm whether an interconnection facility is truly dedicated to the project; and
• The SCC agrees to respond within 30 days to allow DEQ to satisfy its 90-day PBR review deadline.

This interagency consultation process should improve consistency while preserving DEQ's statutory permitting timeline.

DEQ will provide interconnection documentation to the SCC.

Consistent with Virginia Code § 10.1-1197.6, DEQ agrees to forward final interconnection agreements or the most recent interconnection studies to the SCC as soon as practicable after receipt.

Practical Implications for Developers

The MOA provides meaningful regulatory certainty for developers, utilities, and investors by clarifying how dedicated interconnection infrastructure will be treated during Virginia’s PBR permitting process.

Although the MOA provides greater clarity regarding dedicated interconnection facilities, developers should continue to account for approvals that remain outside the PBR process, including transportation permits, local land use approvals (including substantial accord approval), and other regulatory requirements applicable to transmission infrastructure.

Looking Ahead

Chapter 710 represents an incremental but important refinement of Virginia’s PBR permitting framework. By expressly incorporating dedicated interconnection facilities into the statutory definition of a “Small Renewable Energy Project” and establishing a coordinated implementation process between DEQ and the SCC, the General Assembly sought to eliminate permitting uncertainty that has accompanied increasingly complex renewable energy projects.

The newly adopted MOA provides the operational guidance necessary to implement those statutory amendments and should facilitate more predictable permitting for future solar and energy storage projects in Virginia.