Nevada Utilities Win Small, But Will Ultimately Lose Big

Despite Nevada’s Anti-Solar Legislation, The Solar Industry is Moving Ahead in that State

As reported by

Nevada, the seventh largest state in USA recently altered its net metering laws. These new regulations are loaded against solar home owners, which will find it economically nonviable to switch to solar energy. This decision goes against the broad policy and regulatory trends in USA, which has been broadly supportive of solar energy. Unlike other countries, USA’s growth in solar capacity has been extremely lopsided with a few states such as Arizona, Hawaii and California accounting for a lion’s share of solar energy capacity. Solar industry still remains in infancy in USA with only 1% penetration, when compared to ~7% for Germany. The ITC extension will play a major role in further promoting solar in USA, with SEIA estimating a huge increase in solar installations compared to a scenario where ITC would not have been extended.

Utilities in USA have been lobbying hard to stop the advancement of solar energy. USA does not have a standard federal law and state regulators frame their own regulations. Though Nevada has decided to go anti-solar, major states in USA have decided to remain pro-solar. California recently revised its net metering law, which remains favourable for net metering solar customers. While Nevada’s decision has certainly raised concerns, it also emphasizes that solar is now becoming a mainstream power source and utilities are now threatened by the rising popularity of solar energy.

The Nevada PUC Solar DecisionMoving towards the darker side

When the whole world is coming together to fight climate change with solar as the key weapon, Nevada has decided to go against the tide by punishing solar installers. The state regulator recently implemented new net metering rates and fees for rooftop solar users. These changes in net metering law has increased the charges on solar home owners by ~40% and reduced the tariffs paid under net metering. The decision came days after Congress voted to extend the Investment Tax Credit on solar. Nevada was once used as an example for its aggressive rooftop solar installations, given its high solar radiation and the state’s friendly net metering laws. There are almost 15000 interconnected net metering customers at Nevada Power Co. in Southern Nevada, and more than 2000 customers with Sierra Pacific in Northern Nevada.

This led NV Energy (the state’s dominant electric utility) to push for a new rate design to the PUC. The new rates will increase the monthly charge for NV Energy customers with rooftop solar from $12.75 to $17.90 per month in the first year of the phased increase and will eventually reach $38.51 at the end of five years. Credits for excess generation from rooftop solar systems also will decline over the next four years. The changes were supposed to take effect on January 1 and will apply retroactively to all net-metered solar customers. Major solar installers such as Solar City (NASDAQ:SCTY), Sunrun (NASDAQ:RUN) and others have already cut hundreds of solar jobs.

Despite the Nevada setback, USA Solar Growth is set to grow strongly

According to IEA solar will generate ~16% of global electricity by 2050 from less than 1% now. Solar is expected to generate 200,000 solar jobs in USA by 2016 end, making it one of the largest employers in the country. The solar industry which used to be a niche one is slowly becoming a mainstream one. Since 2006 when ITC was implemented, the solar installation cost has dropped by more than 73%. ITC has helped annual solar installation to grow by more than 1,600% since it was implemented in 2006. According to SEIA solar power will hit 95GW mark by 2022, enough to power 19 million homes. In USA, solar accounted for 30% of all new electric generating capacity brought online during the first three quarters of 2015. IHS has predicted that solar energy installations will grow to 15 GW in 2016, which is a growth over 60% over 2015.

Source: Nevada PUC Solar Decision – Utilities Win Minor Battle, But Their Loss In The War Is Inevitable | Seeking AlphaordPress.