The end of rooftop solar in Nevada?
By Nick Cunningham, Oilprice.com
In a clash of the titans, Warren Buffett just defeated Elon Musk.
The fight was over solar net-metering in Nevada, a state that has the fifth largest installed solar capacity in the country. Nevada is home to Tesla’s ‘Gigafactory,’ which will produce batteries for electric vehicles. In addition to CEO of Tesla, Elon Musk is also the chairman of SolarCity, and net-metering – the policy that allows homeowners with solar panels to be paid for the power they produce – is central to solar economics.
But while Musk has quite a bit of sway in the Silver State, he came up short against Warren Buffett. NV Energy, a major Nevada utility and subsidiary of Buffett’s Berkshire Hathaway, strongly opposed the net-metering provision.
Earlier this year the Nevada state legislature ordered the Public Utility Commission (PUC) to formulate a new net-metering payment by the end of 2015 after the state maxed out the allotted 235 megawatt net-metering program. Vivint Solar, another solar developer, pulled out of Nevada last summer after the net-metering program became fully subscribed, which forced solar installations to grind to a halt. The impasse meant that a lot was riding on the PUC’s decision.
Just days before a New Year deadline, the Nevada Public Utility Commission (PUC) voted 3-0 to slash the payments that homeowners receive for solar energy and also increase charges on them.
The solar industry cried foul, saying that the PUC decision was made without evidence or debate, and that it “flies in the face of Nevada law, which requires the state to ‘encourage private investment in renewable energy resources, stimulate the economic growth of this State; and enhance the continued diversification of the energy resources used in this State’ through net metering,” as Bryan Miller, Senior Vice President of Public Policy at solar developer Sunrun, said in a statement. “We believe the Commission, appointed by Governor Sandoval, has done the exact opposite today.”
The move also does not grandfather in homeowners who have already installed solar, even though many of those people likely made solar investments based on the net-metering payments.
The retroactive penalty could be a death blow for solar in Nevada, and one that the solar industry says might also be illegal. The Alliance for Solar Choice, an industry trade group, filed a lawsuit against the PUC. Sunrun also filed a lawsuit against Nevada Governor Brian Sandoval (R) in order to obtain records of text messages between him and NV Energy lobbyists.
The main proponent of the move is Warren Buffett’s NV Energy, which pays residential homes for the solar energy they produce. NV Energy says that lowering payments avoids shifting the costs to other ratepayers. NV Energy proposed to lower net-metering payments and to increase fixed charges on solar homes, a decision that the PUC went with. The PUC decision will cut those payments by 75 percent.
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SolarCity threatened to leave the state if the PUC moved forward on slashing the net-metering payments. “It will destroy the rooftop solar industry in one of the states with the most sunshine…There is so much wrong with the decision, the only option for the PUC is to reject it,” SolarCity’s CEO Lyndon Rive told Bloomberg ahead of the vote. “The one beneficiary of this decision would be NV Energy, whose monopoly will have been protected.”
After the PUC voted to roll back net-metering payments, SolarCity followed through on its threat. On December 23, SolarCity announced that it would stop selling and installing solar panels in Nevada. “The PUC has protected NV Energy’s monopoly, and everyone else will lose,” SolarCity’s Rive said. “We have no alternative but to cease Nevada sales and installations, but we will fight this flawed decision on behalf of our Nevada customers and employees.”
NV Energy said it was reviewing the PUC’s decision to determine how it would affect its customers.
December has been a busy month of SolarCity, which saw its share price skyrocket following the federal budget deal that extended tax credits for solar. But now it has been chased out of Nevada. By Nick Cunningham, Oilprice.com
What might be some of the moves in energy that would push markets and policy debates in unexpected directions? Read… 5 Possible Market-Moving Surprises In Energy For 2016
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The same thing happened in Az. Although the existing solar homes were grandfathered.
Sad to see all that sunshine wasted.
The utility companies have a great deal of political power.
I wish this article provided some specific figures, such as the cost of wholesale energy to the utility and the reimbursement rate both before and after the PUC decision. Additionally, the cost, per house, of maintaining the electrical infrastructure.
I like the idea of solar but the argument from the utilities does make some sense to me and real figures would help clear things up for me.
There are no angels or disinterested parties on either side of the debate.
exactly right.
a free ride on the grid will break the grid. maybe that’s what mr musk wants, batteries for everyone. meanwhile, their marketing and their prices are obnoxious.
now as to nv…..
Can anyone explain to me how net-metering works?
Do homeowners get paid for the extra power they produce and transfer to the grid (fine) or do they just get paid a lump sum based on wattage, even if they have no surplus to sell (not so fine)?
Here in Europe I am starting to see solar fizzle after subsidies were cut or eliminated, chiefly due to budgetary reasons. You may still get tax rebates in some countries, but these only cover the installation itself, not maintenance and repairs, which for some infrastructures can be pretty expensive, with big bills presenting themselves after as little as three years.
And I say this is a big occasion for the solar industry to prove they are able to walk on their own legs and they aren’t just the by-product of subsidies.
I read an article some weeks ago on Market-Ticker that described the compensation process of solar. Very interesting. Basically it said that a solar customer gets compensated with a credit for all power generated, but the excess power is not transferred to the utility. Therefore, solar power becomes a net drain on the utility. I never knew that.
Net metering: during the peak of the day, your solar system produces a lot of electricity, but you’re at work and don’t need it. When you come home from work and turn on the AC, you need juice, but the sun is setting. If you have a big expensive battery, you can store energy. But if you don’t?
That’s why net-metering made rooftop solar financially feasible. The utility is required under state law (which utilities fought tooth and nail) to take the excess juice you produce; and conversely it has to provide additional electricity when you need it. The meter at your house measures the electricity both ways, and you’re billed for the net amount.
That has been in place for years.
Now it’s a question of money. At what price will utilities take your electricity, and what are the fees they can charge you for the hook-up? Utilities feel threatened in an existential way by rooftop solar, and now they’re trying to shift the economics of rooftop solar around. This is currently a huge and hotly contested issue in California as well.
If I’m understanding correctly the calculation only effects “net excess generation”
Regular net metering is still at retail and works. The only change is that excess generation beyond use at the end of a billing cycle is only compensated at wholesale.
In short if I generate 81 KWh and buy 61 KWH my use is covered at retail on both sides, but the 21 KWh of excess is only paid at wholesale.
Solar city has a business model where they have a contractual right to sell the excess for you (with no kickback to you). As a home owner there is little to no difference, but solar city’s business model was based on gaming the system and intentionally getting people to install excess generation so they could get paid retail rates for it. The PUC saw the game, said “this wasn’t the intent”, and broke the game while still protecting legitimite net metering.
Thanks, Scott, for the clarification.
They can dance and celebrate but it is the dance of the doomed. With gradual improvements that occur every year, in no more than 10 years new solar abilities will outstrip the cost of buying from the grid. That will allow homeowners to invest in battery tech that will keep them off the grid forever.
Please see my comment above. Solar will be alive and well in Nevada. There are a lot of installers who put in solar because of regular net metering and a great solar profile here. The only thing that happened was that billionaires who build businesses models to exploit loopholes for a lot of profit will have to adjust their businesses models to be competitive in a legitimite and fair market.
Seeing as to how Spain’s solar sector (and all renewables) imploded almost overnight once the subsidies got cut I am extremely skeptical about it’s future. Here’s some relevant links on the subject, which demonstrates how artificial the whole renewables push has been:
http://phys.org/news/2013-06-spanish-downturn-disaster-green-energy.html
http://www.nytimes.com/gwire/2009/08/18/18greenwire-spains-solar-market-crash-offers-a-cautionary-88308.html?pagewanted=all
http://www.forbes.com/sites/christophercoats/2015/06/29/can-it-get-worse-for-spains-solar-policy-it-just-did/
Remember, these forms of energy production were not pushed for the economical or technological merits, but rather because they are in compliance with radical environmentalist ideas.
‘Radical environmentalist ideas’ like not committing mass suicide in the next fifty years,and actually caring whether our children or grandchildren live or die. Very ‘radical’.
So your solution to the boogeyman is to lock billions of people into permanent poverty and forcing hundreds of millions to become like the desperately poor third worlders currently are? And for what? Because your great crusade to save the world from some impending catastrophe? Let’s look at some eco doom prophecies of the future, I especially like number 6:
https://www.aei.org/publication/18-spectacularly-wrong-apocalyptic-predictions-made-around-the-time-of-the-first-earth-day-in-1970-expect-more-this-year-2/
Environmentalists are as far sighted as Mr. Magoo.
Deflationary collapse means a collapse in demand. Last in is first out, so solar is going to get busted out.
The coal-fired monopolies will win out. We will go backwards in so many ways now.
Don’t be banging on expensive batteries. Your house/castle is worth NOTHING when the power goes out: you are either boiling in your skin or freezing to death, all your food goes bad…. Every structure should have backup energy supply, independent of the grid and solar rooftop with a battery closet is the only reasonable, tested system, damn the cost.
Americans HATE infrastructure. We like new shit, not maintaining the old, the mundane. It will cost us in the future.
Considering that the whole solar thing was artificially engineered by government planners catering to radical environmentalist interest groups in the first place I’m not too surprised. The only reason these things exist is because of astonishingly huge subsidies and government mandates imposing their use via quotas. I love how so many solar boosters keep talking about how cheap and financially viable solar is while simultaneously talking about how the evil utility companies are fighting said subsidies and quotas. I’m sure you can make almost anything financially viable as long as someone else pays for most of it.
Big oil has way more gov subsidies than solar – and wind does better than both. Stanford Prof Mark Jacobon has demonstrated the economics. The only thing coal/oil have is crooked politicians
The only oil subsidy is accelerated write off of expenses related to exploration. Also, if you really want to compare look at subsidy per kilowatt (even if you consider tax write offs a subsidy)
The IMF calculated the subsidies paid globally to the fossil fuel industry at 5.6 trillion per annum, or ten million a minute. I’m not sure if they included the cost of rendering this planet uninhabitable for our species.
They have something renewables will never have, energy density which leads to superior economics. Whatever subsidies oil is alleged to have pales in comparison to renewables especially solar. Solar has a 30% federal subsidy, plus there’s often state subsidies on top of it. While state subsidies are variable, in California it’s also 30%, essentially making 60% of the cost of the final product paid for by someone else, which doesn’t include the subsidies the companies themselves are getting. I’m pretty sure that of the $37 a barrel crude oil is currently going for $22 isn’t being paid for by the taxpayer.
Solar energy will never, in any meaningful sense of the term, run out. You can’t say that of fossil fuels, and solar will not destroy the habitability of the planet for our species., either.
I always get a kick out the ‘subsidy’ crap from those that hate big oil.
Of course those people probably drive cars, take trips on airplanes, and use items made from plastic.
I’m sure that one can name a huge number of areas that get some form of aid from the government.
Here in Oz solar systems still get some kind of help from the government and in some states the power produced also gets a kick as well.
And yes, some people get upset at that , but ignore other funds being directed to other areas.
For example, one of new ways get ‘help’ from the government here is to replace halogen ceiling down lights.
You can actually get them all replaced for FREE by the government who will pay all the cosst for new LED down lights.
Doesn’t matter if you are a house or business. We had all ours replaced where I work and they paid not one cent. They make millions of dollars a year in profit. I think that they are more than able to pay the cost of replacements by themselves.
Gee, I don’t have those type of lights in my house and I would really like to get nifty, new really efficient LED down lights, but guess what?
I don’t have halogens in my house.
And I don’t have the money to replace the 19 down lights in my house either.
So I’m stuck with my current efficient CFL’s which I put in at my own cost.
Here in Australia we have both net metering and gross metering.
I have previously commented on Victoria, but will recap.
In Victoria the actions by the utilities are similar to those in Nevada: destroy new solar installations as they reduce the customer base.
Maybe some person living in Hawaii can comment on the actions of the utility there which may be similar to Nevada or Australia.
Our system in Victoria is gross metering. The measuring period is 30 minutes. The total amount of solar energy generated in each 30 minute period is measured as is the amount of energy used from the grid.
This is repeated every 30 minutes and the total at the end of your 90 day billing cycle is added up for your bill.
If you used more energy that you generated then you pay for the amount used at the current rate (For me: Peak A$0.34 cent per kWh; Off peak is A$0.18).
If you generate more power than you use the you get paid for the excess. How much you get depends on when you installed the system.
New systems get only A$0.052 cents per kWh; Early systems (WHICH HAVE BEEN GRANDFATHERED INTO LAW UNTIL 2026) get A$0.60 PER kWh.
So a simple example during peak rate hours:
a. grandfathered system
First 30 minute period you use 2 kWh and generate .5 kWh.
You pay 51 cents for your electricity (1.5 * .34)
For the next 30 minutes the sun is out and you generate .75 kWh and use only .25kWh. The utility pays you 30 cents for the excess (.5*60)
So for our grandfathered system the result would be a bill of 21 cents. You used 2.25 kWh and produced 1.25 kWh.
b. new system with same energy usage/production
First 30 minute period you use 2 kWh and generate .5 kWh.
You pay 51 cents for your electricity (1.5 * .34) (Same as the grandfathered system as you didn’t generate any excess)
For the next 30 minutes the sun is out and you generate .75 kWh and use only .25kWh. However, you get paid only 2.6 cents.
So for our new system the result would be a bill of 50.974 cents. You used 2.25 kWh and produced 1.25 kWh.
See the difference between the bills? I used a small system as an example. if the systems generated larger amounts of electricity then the results would have been ever worse for new systems.
So the key for systems here is to use as little electricity as possible during peak generation times for old grandfathered systems and to use up as much of the generation produced during peak generation for new systems.
Funny, but true. Each owner would be taking exactly the opposite actions.
Which brings us to the next step: battery storage. NSW is going to be the first state to get rid of the high grandfathered tariffs which IIRC is sometime in 2016.
Those with big systems will now be hit with low payments for excess production and be the first to adopt batteries for storage once it becomes economical to do so.
NSW was/is net metering which meant that they got paid for all their production at the high rate and not the net amount.
By the way December 2015 was the best month ever for the amount sunshine since I put up my panels. It also had the highest monthly amount of sunshine since January 2009 and the third highest monthly amount since 2000.
Unfortunately, we had 3 days of 40C plus temps and a couple of days that were over 39C which reduced the amount the panels produced.