Solar In The Southwest: Cautionary Tales Abound In Two Desert States

In the last weeks of 2016, the solar coaster continues its twists and turns in the Southwest, once again producing both good news and bad, with one state learning from experience and taking steps to re-start its solar market, and another succumbing to utilities’ false claims.

Arizona regulators effectively ended net metering, a system that allows solar system owners to send their excess power back to the grid for future bill credit. The decision imperils what has been one of the country’s strongest solar markets and threatens the nearly 7,000 solar jobs in the state. Meanwhile, Nevada showed signs it was reconsidering its ill-advised decision to kill net-metering and rooftop solar.

Grand Canyon State policymakers did learn some lessons from the debacle in Nevada. The Value of Solar decision issued this week allows existing customers to remain on net metering. And the immediate cost to new customers isn’t as stark as Nevada’s earlier decision.

Compensation under the new methodology would initially be set at around 11 cents per kilowatt-hour for most customers, close to the current retail rate net metering credit. But that rate will decrease in future rate cases, and new solar customers aren’t protected over the longer term. In effect. Arizona ignores the fact that, among its many other attributes, solar reduces demand on the grid and reduces the need for substantial transmission and distribution investment.

In contrast, as our colleague at Vote Solar, Adam Browning, notes in his excellent piece this week, Nevada has begun to rise from the ashes.  In September the PUCN agreed to a settlement reversing the worst aspects of their earlier decision, grandfathering existing solar owners onto net metering rates that restored the value of their investments.

Now Nevada appears poised to take the next step toward restoring a solar market for new customers. A proposed decision in Sierra Pacific’s rate case would bring back net metering for solar customers in SPPC’s northern Nevada service territory. The order notes that the PUCN’s earlier NEM decision “all but crushed the rooftop solar industry in Northern Nevada, reducing the booming industry from 983 applications … in 2015 to 41 applications in 2016…” and quotes Abraham Lincoln that “bad promises are better broken than kept.”  The decision is scheduled for a vote by the Commission tomorrow.

The PUCN’s proposed decision isn’t perfect.  It would allow for up to 6 MWs of installed capacity for existing and new customers, and keeps solar customers in potentially discriminatory separate rate classes.

But Nevada’s proposed decision strongly endorses the conclusion found by numerous prior solar cost-benefit studies that NEM simply doesn’t produce a material cost shift to other customers, particularly when penetration levels are low, stating that, “there will be no discernable cost increase on the average monthly bill to non-NEM customers.”

Once again as the year comes to a close, we have reason for both hope and concern.  But one thing we know for certain: With about 90 percent of all Americans saying that they favor more solar, we are moving steadily towards a cleaner energy future, and solar – at both rooftop scale and large utility scale projects – is leading the way.