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What’s derailing growth of solar energy in some US states?

What’s derailing growth of solar energy in some US states?


Indiana gets 2440 hours of sunshine per year. That’s higher than New York, Alaska or Ohio. Nevada, located close to the West Coast, gets 3646 hours of sunshine in 365 days. People in both these states are keen on switching to solar energy or meet at least some percentage of energy needs. However, hurdles are being thrown at them time and again.

Although coal is the biggest source of electricity in Indiana, renewable energy sector employs far more people. The solar energy sector in Indiana employs nearly 3866 people, three times the natural gas sector (1378). But even then, Republican Governor Eric Holcomb signed a bill that cuts incentives for rooftop solar, giving a huge blow to solar installers and their customers.

Areas of concern

Currently, if rooftop solar owners generate more electricity than they use, the power utility buys excess power at the retail rate—around 11¢ per kilowatt-hour(kWh). This is known as net metering. However, according to the new law, the utility would buy the excess power at a little more than the wholesale rate—around 4¢ per kWh.

The new Bill is partly an improvement on a previous version where rooftop solar owners had to sell all the power they produce at the wholesale rate and buy it back at the retail rate. But the new version places restrictions in other ways. It not only ends net metering for new customers after 2022 but also for existing customers who replace or expand their solar system after 2017.

Moreover, the new Bill empowers utilities to charge rooftop solar owners an additional fee for “energy delivery costs”.

According to Amit Ronen, director of the George Washington University Solar Institute, “This Bill is obviously an attempt to derail the rapid growth of rooftop and community solar in Indiana.”

Despite facing widespread opposition from people, Indiana legislators have been trying to slow the growth of solar for years. An attempt at radically scaling back net metering was made in 2015 Bill, but advocates manage to defeat the legislation.

Who’s benefiting the most?

For power utilities, rooftop solar is a threat as it enables customers to buy less power from the grid. They consider net metering unfair to ratepayers who don’t have solar panels. They argue that rooftop solar owners are enjoying sweeping benefits as they can sell their surplus power to the grid without paying for transmission lines or other infrastructure needed to deliver that power to homes and businesses in the community.

This view is being countered by the rooftop solar community. According to them, it’s a net gain for the grid with owners bearing the infrastructure cost of power generation through solar panels and installation and delivering their surplus power to customers nearby. This, according to them, minimises the volume of electricity lost in transmission.

Nevada has a similar story to tellAhead of the Christmas in 2016, Nevada’s public utility commission (PUC) gave the state’s only power company, NV Energy, permission to charge higher rates and fees to solar panel users—a decision that led to the collapse of the rooftop solar industry’s business model.

Realising that a fair net metering is the way to encourage solar energy growth, the lawmakers in Nevada made progress with a slew of bills only in the first week of April this year. These bills, according to them, will revert back to more favourable rates for rooftop solar and increase the amount of energy credits for selling solar power. The Bills are now being reviewed by a full committee for consideration.

The Nevada Assembly Bill AB 270, if passed, will restore retail rates for up to 1,250 Sierra Pacific Power customers in Northern Nevada, thus reviving the state’s solar industry which took a hit two years back.

The Las Vegas strip in Nevada has also become target of public utilities for its efforts to harvest solar energy. Three of Nevada’s largest casino companies—Las Vegas Sands, MGM Resorts and Wynn—have announced plans to buy and produce more renewable energy. They have already started installing rooftop solar array. However, regulators will not allow casinos to be self-sufficient and stop depending on the state’s utility provider, NV Energy.

Collectively, 15 properties of the casinos account for seven per cent of NV Energy’s electricity sales, and if that income is lost, remaining customers of the power utility would have to bear the deficit, hence, causing significant rate hikes. According to media reports, the public utility commission (PUC) of Nevada is asking resorts to pay tens of millions of dollars to leave NV Energy’s services.


Anand Gupta Editor - EQ Int'l Media Network


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