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Solar Companies to Leave Nevada Following State Net Metering Cut

published: 2016-01-19 18:44

Various solar power installers, such as SolarCity, Sunrun, and Vivint Solar, have decided to leave Nevada after the state announced to cut net metering.

Nevada, one of the fastest-growing markets for residential solar, is the first state to significantly adjust its net metering policy wherein solar owners are compensated for the power they send onto the utility power grid, usually at retail rates. Yet, utilities claimed that these fees represent an unfair transfer of costs to the utilities and thus launched campaign to eliminate the payments. The Nevada Public Utilities Commission concurred, calling on utilities to lower the compensation for solar providers from retail to wholesale rates.

The solar industry was outraged by the decision. Calling the net metering cut “unethical, unprecedented, and possibly unlawful.” Lyndon Rive, SolarCity CEO, predicted that it will “destroy the rooftop solar industry in one of the states with the most sunshine.”

Nevada’s decision could reshape the economics of solar power for homeowners. The retail rate of electricity in Nevada is 12.39 cents per kWh, while the wholesale price for electricity in the region that includes Nevada averaged around two cents per kWh in December. According to a report from Lawrence Berkeley National Lab, the cost of a residential solar system has dropped to around 25 to 30 cents per kWh. But that figure will drop to 15 cents per kWh or less with federal and state subsidies and tax benefits. If the retail rate for electricity from the grid (absent net metering fees) is less than that, solar is a poor investment; if it’s more, solar is a good investment.

The difficult news came shortly after the solar investment tax credit (ITC) was set to be extended to 2022 with the current 30% level remaining until 2019 in a move that is likely to benefit the residential solar sector particularly.

Source: technologyreview

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