As solar installations multiply, U.S. utility companies fight back
'It’s politics at work to help a few keep their money,' says solar owner cut out of Nevada net metering plan
Below the Mandalay Bay Hotel in Las Vegas, they glimmer in the relentless Nevada sun like scales on a monstrous grey dragon. More than 26,000 solar panels cover 113,000 square metres of rooftop. It's the biggest solar array of its kind in America.
"Just look at its physical size," says MGM's chief sustainability officer Cindy Ortega from high atop the Delano hotel which overlooks the arrays. "We have a lot of sunshine here and we want to take advantage of that renewable energy."
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The solar panels were installed by MGM to power 25 per cent of the peak energy used by three of its hotels.
"At the hottest part of the day, it produces enough power to power 1,350 customers of the Nevada utility," Ortega says.
MGM now plans to obtain some of its energy from its solar installations and other renewable resources, and buy the rest on the wholesale market.
Fantastic, if you're a fan of clean energy. Disaster, if you're privately owned Nevada power utility NV Energy. Seven per cent of its revenue will disappear when the hotel chain pulls the plug, but the utility wouldn't allow that to happen without a fight.
MGM to compensate utility
After a protracted legal battle with NV Energy, MGM has now agreed to cough up $87 million to make up the shortfall.
"What that money goes towards is making sure all the other ratepayers here in southern Nevada aren't harmed or don't have higher power bills because MGM left the grid," says Ortega.
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"Right here are my solar panels‚" she says, pointing at the panels covering half of her extensive roof in North Las Vegas.
Last year she heard about what she calls "a beautiful plan." It's known as "net metering;" if you install solar panels you can earn credit by sending excess energy back to the power company.
"I jumped on it!" she says. "But that‚" she says, pointing at her roof, "is only half the panels I need."
Net metering scrapped as panels half installed
"It's politics at work to help a few keep their money," Penna says.
With that, the consumer solar industry in the country's sunniest state was basically shut down.
As of June of this year, there are approximately 30,000 rooftop solar customers in Nevada, producing more than 265 megawatts of electricity, about three per cent of NV Energy's peak demand.
The impact of the utility's decision to end net metering can be seen at SolarCity, which last year was selling solar panels in Nevada faster than the company could install them.
"So we're here in SolarCity's call centre," says Chandler Sherman, the company's spokeswoman, as she walks down an aisle between dozens and dozens of cubicles. About 200 salespeople are on headsets, some sitting, some standing, some walking, almost all of them trying to convince someone to go solar.
Sales of panels in Nevada dive
"There were about 1,400 people applying to go solar every month in 2015," she says. "After the new rates went out, it's about 15 per month, in the entire state of Nevada. One-five people. Out of a state of three million."
And it's not just happening in Nevada. Two other states -- Hawaii and Louisiana — have pulled their net metering programs, and, according to Hugh Bromley of Bloomberg Energy Finance, more than two dozen other states are re-examining them.
"What you're seeing across the country is that demand — energy demand — is no longer growing," Bromley says.
Utilities' market share shrinking
The utilities' total market share is shrinking, he says, "and that is a threat to their business model."
When the utility companies complain that solar customers aren't paying their fair share, Bromley believes they have a case.
"It gets to a tipping point where ultimately customers who install systems later are quite a burden to the system," Bromley says. "There's investment in the network which someone needs to pay for. They're no longer procuring energy from the utility, it's ultimately borne by the rest of the ratepayers."
"Of course the utility is powerful," Sherman says. "The utilities had a monopoly on energy here since... since there's been energy here. And they have a lot of friends in the legislature. What we're seeing is the utility, rather than adapting to the changes that are happening in the energy sector, they're choosing to blame rooftop solar and trying to place discriminatory charges and fees on rooftop solar customers."
This past week at a recent solar power trade show in Las Vegas, several CEOs worried openly about what the trend would mean for the industry across the U.S.
Solar needs a strategy
Guy Sella, CEO of SolarEdge, is calling for federal guidelines to help both the conventional power utilities and the solar industry find a way to co-exist.
David Kaiserman, president of Lennar Ventures, believes the solar industry is to the power utilities as Uber is to cabs, and Airbnb is to hospitality. The solar industry isn't doing enough to convince the public, and politicians it's worth the pain, Kaiserman says.
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"It's a disruptive technology that causes pain as all disruptive technologies do." To survive, solar should start marketing itself as aggressively as Apple or Google, he says.
"The symptom is what you see here in Nevada," Kaiserman said. "We're going to eliminate an industry where we induced people into putting solar on the roof and then we said, 'Ooh by the way the contracts that we told you — these 20-year leases that we said were great, that we gave you a rebate for and made you real comfortable about — oh, those stopped.' Those types of things are nonsensical. But they're born from the fact that there isn't a counter-balancing consumer viewpoint that says 'look this is what we want, this is what we demand as a society.'"
In Nevada, at least one part of Kaiserman's wish has been granted. The net metering program was wildly popular and there was political pressure to restore it. Nevada's governor came out in favour of a deal that would bring back the old rates NV Energy had been paying solar customers, though only for the panels that have already been installed. On Friday, regulators approved the deal.
"I'm just going to wait and see and figure out what I'm going to do," she says.
After all, the new deal is great for half of her roof. But not the other.
- This article originally said the solar panels power MGM's chain of 15 hotels. In fact, they provide 25 per cent of peak energy for three of the chain's hotels.Sep 19, 2016 4:42 PM ET