Nevada Gambled Away Its Solar Energy Growth

Last Updated:
Tue, 2016-01-12 11:51
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As we revealed in our Top 10 States for Solar Energy post, the success of solar energy in a given territory is largely traced back to state and local policy. Several of the top states listed were not those with the most sunshine but rather those that had laid the policy groundwork to encourage solar energy adoption.

Research has shown that building codes, net metering, smart permitting rules, and utility rate structures have significant effect on if and how solar energy will be developed in a region. As more stakeholders see the value in solar energy, they can create a fertile atmosphere for the development of future solar installations, thereby creating more jobs and lowering the nation’s dependence on foreign oil.

Solar Panels

Since this is a developing industry, we must expect some highs and lows until we reach a universal plateau. The Solar Energy Industries Association (SEIA) publishes quarterly research reports that show the tremendous growth of solar energy across the country. Be that as it may, one state, in particular, has been making the news lately because of its controversial decision on net metering.

Solar Energy Landscape in Nevada

In December 2015, the Nevada Public Utility Commission (PUC) voted unanimously in favor of a new solar tariff structure. The decision increases the fixed service charge for net-metered solar customers and gradually lowers compensation for net excess solar generation from the retail rate to the wholesale rate for electricity over the next four years. The changes took effect on January 1 and will apply retroactively to all net-metered solar customers. (!!)

The broad application of this policy sets a precedent for future net-metering and rate-design rebates. To date, no other state considering net-metering reforms has proposed to implement changes on pre-existing customers that would take effect right away. Changes are typically grandfathered in over a decade or more.

SolarCity logoSolar companies have said that these changes will lower net metering compensation to the point where rooftop solar no longer makes sense. Nevada had been one of the fastest growing solar markets in the country prior to this decision.

According to SolarCity CEO Lyndon Rive, “The Nevada government encouraged these people to go solar, and now the government is putting them at great financial risk.”

SolarCity had opened a 13,000-square-foot training center in Las Vegas in November 2015, but since the PUC decision, the company has completely halted operations in Nevada. Two other solar companies have followed suit.

Solar advocates had made a strong push to keep the existing net-metering policy in place, recognizing the impact on jobs. Companies and grassroots organizations submitted more than 31,000 petitions to the PUC asking commissioners not to increase fees or lower compensation for net-metered solar customers.

What’s sad, too, is that the Nevada PUC decision comes days after Congress approved a five-year extension of the Investment Tax Credit for solar.

Solar Energy Landscape in Iowa

On the bright side, solar advocates in Iowa expect to see two popular tax credits for solar projects to top the legislative clean energy agenda during the current session, which started yesterday. Last year, the Iowa General Assembly increased funds to subsidize the cost of solar panel installation. That bipartisan support, along with the fact that the additional funds had been snapped up quickly, is prompting interest in further increasing the funds available.

Legislation in 2015 expanded the state’s renewable energy production tax credit by creating a 10 megawatt set-aside for solar investments only. The bill also made the credits available to investor-owned utilities and municipal utilities. Until then, the tax credit funds had been available only to rural cooperatives.

The production tax credit pays 1.5 cents per kilowatt hour to any utility that is either generating or purchasing solar power. Homeowners and businesses that install solar panels can qualify for a state income tax rebate equal to as much as 50% of the federal solar tax credit, or roughly 15% of the project’s cost. Two years ago, the state put $4.5 million into the fund. Last year, the legislature agreed to increase the fund to $5 million.

Solar Panels Image

As they say – you win some, you lose some. In most locations in the country, solar energy is still flourishing. It will be interesting to see how the Nevada Public Utilities Commission deals with the backlash of its decision. It must be a tough pill to swallow to see three major companies – employers – leave the state. Not to mention, there seems to be a great bit of hostility among consumers who are now confronted with their new rates.

 

 

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