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Nevada decision guts the state’s thriving solar industry

Electric utility pushed effort to sour economics of rooftop solar.

 

 Dale Matz and his wife skipped vacations and saved up to put solar panels on the roof of their Las Vegas home two years ago. They planned to retire in a few years and considered it an investment for their future, and the planet’s. They were motivated both by the promise of low electricity bills and a chance to reduce their greenhouse gas footprint and “make a better world for our kids and grandkids.”

Protest outside the Nevada Public Utilities Commission. By Dale Matz

Their good intentions were foiled late last month when the Nevada Public Utility Commission changed the deal that customers with solar panels have with the state’s big utility, NV Energy.  At the request of NV Energy, monthly fees paid by rooftop solar customers will increase from $13 to nearly $40 by 2020. And the utility will slash its reimbursement to customers for each unit of energy they feed to the grid, from about 11 cents to less than 3 cents by 2020, which could add up to hundreds of dollars per year for customers with solar panels.

It was the biggest rollback of rooftop solar incentives in the nation. Most notably, Nevada is the first state not to grandfather in people like Matz who've already invested in rooftop solar. Although an estimated 17,000 people have installed panels, the revised rules, which will be phased in, will apply to to them as well as new rooftop solar customers.

Under the old rules, Matz expected to recoup the $22,000 he spent over about 12 years. Under the new rules, he calculates that he’ll never recoup it.

It’s not that NV Energy is anti-solar. The company owns several utility-scale solar projects and has contracts to buy from others. But electric companies traditionally get revenue from selling electricity, and don’t earn profit on the power produced by their customers. “The utility can own and earn profits on utility-scale projects. Rooftop installations are more of a threat to their business model,” says Dan Bakal of Ceres, a nonprofit that promotes renewable energy.

In fact, the new rules make rooftop solar such a bad deal in Nevada that big solar panel installation companies, including SolarCity, last week announced major layoffs affecting several hundred workers.

SolarCity installation. By Tom Hart. CC/Flickr

One of the companies to pull out of Nevada and lay off hundreds was San Francisco-based Sunrun, the nation’s largest residential solar company. Bryan Miller, Sunrun’s senior vice president of public policy and power markets, is also the president of the Alliance for Solar Choice, a group of rooftop solar companies that has been fighting efforts by utilities to increase costs for solar customers.

“We’ve never seen anything as extreme as what the Nevada Public Utility Commission decided," Miller says. "It’s the first state to eliminate an active solar market.”

A similar effort by the largest utility in Arizona in 2013, which HCN analyzed, was rebuffed and solar customers only saw modest increases to the fixed charges on their bills.

The electric companies argue that solar customers, because their bills are so low, don’t pay their fair share of the costs of running the power grid. What the companies don’t explain is that there are also benefits to having home solar producers scattered around on their grids, such as alleviating the surge of demand for electricity on hot summer days that can require companies to build more power plants. When independent experts analyze the costs and benefits of home solar, they find that non-solar customers at most pay only a little bit extra to make up for costs that solar customers don’t pay. In fact, an independent study done for the Nevada Public Utilities Commission found no substantial cost shift from solar to non-solar customers.

But that could change if solar installations continue to rise at a rapid clip, as they have in recent years as costs dropped and companies started renting the panels to homeowners and businesses, eliminating the need for big upfront investments. Studies, including a 2014 analysis by researchers at Lawrence Berkeley National Laboratory, suggest that utilities and their shareholders will start to feel a financial squeeze once the percentage of households with solar grows significantly.

Electric companies are taking preemptive action to prevent solar from becoming so popular that it would hurt their bottom lines and share prices, says Francisco Flores-Espino, an analyst for the National Renewable Energy Laboratory, whose recent report summaries dozens of efforts by utilities to increase costs and deter customers from installing rooftop solar.

Miller traces the rash of utility efforts against rooftop solar to the “Disruptive Challenges” report published by the Edison Electric Institute, the main trade group, three years ago. The report warns that rooftop solar, batteries and other technologies could “directly threaten the centralized utility model.”

At the time, Miller directed renewable energy policy for a Exelon  Corp., a massive utility. He saw from the inside how “Disruptive Challenges” inspired a coordinated campaign by utilities to take on rooftop solar. He decided to quit, join the solar industry and fight back.

Before the Nevada decision, the only state to approve a major rollback was Wisconsin, where solar is much less popular. But solar companies challenged that ruling and won.

If the Nevada Public Utilities Commission fails to reverse its decision, as the state’s solar companies have requested, they plan to sue. The commission held a public meeting Wednesday, and Matz was one of many rooftop solar owners and renters voicing his outrage.

“The most heartbreaking thing is that no one is going to ever buy solar again,” says Matz, 59. “I’ve got kids and grandkids growing up on this planet. Global warming is a real thing.”

 Matz plans to do more than protest. He’s eyeing the home batteries that Elon Musk of Tesla Motors says he’ll soon start mass producing, as HCN reported. “I’m going to put them in my garage and cut my cord to the grid,” Matz says. 

Elizabeth Shogren is HCN's DC Correspondent.

Thumbnail image by CoCreatr. CC/Flickr