How Solar Energy Is Turning Into a Losing Proposition in Nevada
Nevada is one of the sunniest states in America, but recent regulatory changes have cast a long shadow over its solar industry.
In late December, the state’s energy regulators drastically changed incentives for solar users, upending their plans to reap the long-term financial benefits of investing in pricey solar panels.
Under the new plan, monthly fees for solar customers connected to the energy grid would increase from $12 to $40 over the course of five years. During that same time, those customers would also go from being paid full retail value for the excess energy they create to getting paid back at wholesale rates, essentially a two-thirds decrease.
Nevada solar customer Dale Matz, who invested $20,000 to purchase a rooftop solar array, said the move felt “like having the rug pulled out from under [him].”
Matz told TakePart that he’d invested in solar with the hope that he’d pay off the investment within 14 years and all but eliminate his electricity bill in the process.
He’s not alone. David Lee Taylor, a retired Vietnam veteran who lives on a fixed income, leased his solar panels in 2009 with a simple plan. “During the winter I would build up enough credits to zero out my power bill for June, July, and August. Now, with the compensation rates, I’ll never be able to do that.”
At the heart of the debate is a renewable energy incentive scheme called net metering. Proponents say net metering solves the challenge of storing all the extra energy produced on sunny days and makes plans like Taylor’s possible.
Rather than investing in expensive batteries, solar users can earn one-for-one credits by sending their extra energy back into the grid. They can then redeem those credits to purchase energy on cloudy days.
Net metering turns purchasing solar panels from an environmentally conscious investment into a legitimately good deal. By decreasing the value of the credits net metering users get for creating excess energy, Matz and Taylor said Nevada has turned solar into a raw deal.
The rate changes also prompted a class-action lawsuit filed on Jan. 12 by Nevada resident John Bamforth and Stanley Schone, who claimed Nevada Energy lured them into investing in solar energy with false claims about long-term savings. Matz and Taylor said they were not involved in the lawsuit but were interested in joining.
In many ways, Nevada has served as a flash point in the debate over affordable solar energy—and echoes fights in California and other states where sunshine is the sort of commodity residents want to bank on as an eco-friendly alternative to coal.
On Monday, a coalition of advocacy groups including The Alliance for Solar Choice and the Libertarian Party of Nevada launched a petition calling on Gov. Brian Sandoval to remove all three members of the state’s energy rate regulating committee as punishment for their ruling.
“They’ve presided over the most extreme anti-solar proposal we’ve seen anywhere in the country,” said Lauren Randall, policy manager for SunRun, one of the nation’s largest residential solar panel retailers and a supporter of the petition. “Nevada law says that the commissioners are supposed to encourage private investing in renewable energy, and these new laws have done anything but that.”
The rate changes have also had a devastating impact on Nevada’s solar energy industry. SolarCity, the nation’s largest solar retailer, announced earlier this month that it will no longer be doing business in the state, laying off 550 employees in the process. Two other major retailers, Vivint and SunRun, have pulled up stakes.
California is considering gradual reforms, which would impose higher monthly fees and modestly reduce the rate at which solar users are compensated for creating excess energy.
In Arizona, two Republican candidates for the state’s energy rate regulating body were accused of receiving secret campaign contributions from public utilities in exchange for promises to increase costs for solar users.
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Despite the public backlash, public utilities have framed the battle over solar energy rates as a matter of fairness.
When asked about the rate-change decision, Peter Kostes, a spokesperson for Nevada’s rate regulating committee, pointed TakePart to a statement released in late December outlining the significant overhead costs associated with maintaining the infrastructure of net-metering systems. The statement argues that net-metering customers are so highly subsidized by going solar that they are transferring the cost of maintaining the utility grid to traditional customers.
"Under existing rates, costs are being unreasonably shifted away from small commercial and residential net metering customers to other ratepayers, resulting in non-net metering customers paying higher rates to compensate for the reduced collection of revenue from net metering customers," the statement reads.
Concerns over unfairness have fueled California’s net-metering debate as well. In San Diego, the Fix My Energy Bill Coalition, an advocacy group organized to fight “unfair subsidies” awarded to solar users, took out a full-page ad in a local newspaper in which it claimed average customers were forced to pay up to $340 per year to cover costs associated with net metering.
Randall dismissed claims that solar customers create a disproportionate burden on energy grids, pointing to an independent study commissioned by Nevada’s state legislature in 2013 that showed that solar energy users create a net savings for utility users.
In turn, Nevada’s rate regulating committee has dismissed the study as being based on outdated solar pricing models.
As the debate over solar pricing rages on, users like Matz got some good news on Monday afternoon. NV Energy, a utility that brings power to 2.4 million homes, released a statement calling for residents who have purchased solar panels to be grandfathered into their existing deals.
Matz said he’s happy for the financial relief but is more worried about the future of the residential solar industry.
“My bottom line is I’m worried about this planet,” Matz said. “For the existing customers, I’m sure they’re all happy, but for the sake of the planet, it’s still not a good deal.”