Consumer demands for access to solar in Nevada brought about the nearly unanimous passage of a new law that goes beyond bringing back net metering. Nevada is now the first state in the nation to legally guarantee “the right to self-generate energy.” NV Energy, the state’s largest utility launched an unexpected war on solar in 2015 that seemed like an apocalypse for the Nevada solar industry. The passage of Nevada State Assembly bill AB 405 marks the return of a top market for residential solar and sets an example for states in the heat of the net metering debate. Compromises have been made, but in essence the bill reinstates net metering at almost full retail rates in Nevada, and it’s being hailed as a victory for the rooftop solar industry.
At the center of the battle for solar in Nevada is net metering. Net metering ensures that homeowners who install solar and produce more energy than they use are compensated for the excess energy they feed back into the grid. The price which homeowners are compensated for this energy is incredibly important in determining how the economics of home solar pan out, and most net metering debates boil down to two points opposing points of viw of view: 1) that homeowners pay the retail rate for electricity from a utility, and should be compensated for any electricity they produce at that rate and 2) that utilities pay the wholesale rate for electricity, and shouldn’t have to pay homeowners the retail rate for energy they feed back to the grid. As can be expected, price drops in net metering rates can cause significant problems for homeowners who have installed solar, and Nevada provided a case study of how destructive net metering drops can be when homeowners with existing panels aren’t grandfathered into their previous rate.
The surprise decision by the Nevada Public Utilities Commission in December 2015 to upend the state’s net metering policy threw the solar industry in the state in disarray. Going against the conclusions of their own report, the Commission took the stance that net metering did not benefit the public and immediately slashed compensation. With the recent reversal, net metering has been reinstated at a rate of 95% of retail utility prices for new installers, with a reduction to a floor of 75% as the number of installations increases statewide. This is the key compromise of AB 405 that is intended to please both utilities and proponents of solar. Prior to 2016, net metering in Nevada was at a 100% retail compensation rate. Ensuring that compensation rates were comparable to retail rather than lower wholesale rates was a huge victory for the solar industry.
With the ups and downs of the past 18 months put to rest, many homeowners are looking to harness the sun as soon as possible, and this month, companies such as Tesla and Vivant Solar have announced that they are returning to Nevada immediately. This should continue to cement Nevada as one of the top states for solar in the nation - as of 2016, there was already enough solar installed in the state to power 372,000 homes. The state ranks fourth in the nation for overall installed solar capacity at 2,268.7 MW. Currently, 8% of Nevada’s electricity is generated by solar, but that figure could soon be much higher – especially if we assume that the development of solar in Nevada will follow industry-wide trends. Consider the following: Prices for solar panels and installations have dropped by 64% in the last five years, and the fact that recent polling showing that 89% of the American public want to see more solar energy. When the Nevada Public Utilities Commission restricted incentives in 2015, several prominent solar installers in Nevada pulled out of the state at a cost of 2,600 jobs.
Although 2015 was a horrible year for the solar industry in Nevada, at the federal level, it wasn’t all lights out for the solar industry! At the end of the year it did bring about a lengthy extension of the federal solar Investment Tax Credit (ITC). The ITC is in full effect for 30% of installation costs through 2019, when it will be phased out over two years. Whether the looming expiration of this generous incentive will cause a second boom in home solar installations in Nevada after the rapid growth we anticipate due to the reinstated net metering laws remains to be seen, but it would be expected as homeowners tend to rush to take advantage of expiring incentives.
In addition to bringing net metering at close to retail rates back to Nevada, AB 405 helps disarm a common critique of solar energy - that there has been no economically feasible way to store power produced during the day for use when the sun isn’t shining. That is simply an outdated argument in 2017. Battery technologies have matured and costs have come down with the Tesla Powerwall 2 selling for under $6,000, and other solar battery manufacturers following close behind. Recognizing the rising importance of batteries for homeowners who install solar, AB 405 provides new protections for solar-plus-storage customers. The bill makes it tough for any extra fees or utility interference to be applied to those who have battery storage for their excess energy at home. Home solar-plus-storage equals the ability to go ‘off the grid’ if desired. Imagine a sleek solar roof connected to a solar battery in your garage, accompanied by a non-existent monthly electric bill —and importantly, the ability to move past fears of future changes in net metering compensation.
As states continue to experiment with the best policies to promote the development of distributed solar, net metering regulations will surely come up again and again, and Nevada’s experience likely will inform many future policy decisions. We see AB 405 as a huge win for the people of Nevada and the solar energy industry in general – well done, Nevada!
Additional reporting for this article provided by Justin Fischer.
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