Dark stormy sky above a solar power plant

The Future of Solar Energy in the U.S. – The Case of Nevada

Arsalan Tariq January 20, 2016

0 4 minutes read

Solar Energy obtained a steady increase in growth rate in the recent past both globally and in the U.S. The industry obtained extraordinary growth rate in the past 5 years. The capacity, which was nearly 1 GW in the year 2010, has reached nearly 8 GW by 2015, which is a tremendous growth in the solar industry. The projections suggest that the total installed solar capacity will exceed 12 GW in 2016 [1]. The solar industry, however has recently encountered some problems regarding the prices and tariff associated with it in the U.S., specifically in the state of Nevada.

To understand the problem clearly and the tariff associated with energy globally, some of the most popular ones are explained herein. The details associated with each of the type is provided below:

Fixed Energy Tariffs: Such type of tariff is fixed by the supplier for per unit usage of energy. Such tariffs are usually valid for a certain date set by the supplier.

Dual Fuel Tariffs: Such type of tariff is usually the case where different types of energy resources, such as gas, electricity etc. are being obtained from a single supplier. These tariffs usually cost less than the standard type.

Green Energy Tariffs: In such cases, the supplier usually promises to meet your energy demand through sustainable and renewable energy resources.

Feed-in Tariffs: This tariff is incorporated when you have your own electricity generation at home and you are generating more energy than your demand. The excess energy is sold to an energy supplier at some rate. Usually, it may also happen that you sell the energy to your supplier in terms of energy units [2].

Feed-in Tariff is basically sort of an incentive to speed up investment in the renewable and sustainable energy sector. Governments also provide subsidy to encourage and support the use of renewable energy resources. The tariff is mostly different for different types of renewable resource used such as solar, wind, biomass etc. [3].

Different types of renewable energy resources have some limitations and problems associated. For instance, wind energy is intermittent; biomass depends upon the availability of livestock or biomass fuel, hydro energy requires a lot of water and some geographic limitations and solar energy is dependent upon two major factors; one is the number of sunshine hours and the other is the average solar insolation for a particular location.

Nevada, one of the sunniest states in the United States of America and one of the sunniest places on planet earth, is prolific in solar energy. More than 90% of the state receives an average total solar insolation of more than 5.5 – 6.0 kWh/m2/day, with around 50% of the state receiving an average solar insolation of around 6.0 – 6.5 kWh/m2/day. Some of the sunniest regions of the state receive an average solar insolation of approximately 6.5 – 7.0 kWh/m2/day [4]. The numbers show that this type of insolation is really good if solar energy is to be harnessed to generate electricity or space heating.

Nevada is already among the leaders in terms of utilization of solar energy for energy generation purposes. It produces more energy per person compared to the other states of the U.S. The state had a program named, “Solar Generations Rebate Program”, which encouraged multitudes of the residents of the state to increase their solar generation capacity. Many people including home residents, schools, small businesses and public buildings invested in solar energy generation to help counter global environmental problems as well as benefit by reaping profits from the solar industry [5].

As mentioned earlier, the rooftop solar industry in Nevada has received a major setback recently. The state’s Public Utility Commission (PUC) has recently allowed the sole power generation company, NV energy, to increase tariff and rates while decreasing the Feed-in Tariff for users that utilize solar panels. This decision has utterly destroyed the state’s business model. The new plan from the utility company will increase the monthly fee to $40 from $12 over the next five years. Furthermore, the utility company will only pay one third of the current rate for Feed-in Tariff for the users that are generating electricity through solar panels and selling it to the grid. Previously, the users used to receive full retail value for the excess electricity generated.

To add fuel to the fire, the problem is worsened for the poor users of solar energy, they will be charged full for the electricity they consume from the utility grid every day during the night hours when there is no sun and they will be paid very less for what they are supplying to the utility grid during the daytime. The commission has utterly eliminated and destroyed any savings that the solar energy users were obtaining by harnessing this sustainable energy resource. In fact, the unfortunate users will have to pay more to use solar energy.

Advocates of solar energy state that the energy commission has coordinated with the utility company lobbyists which has resulted in the implementation of this new rule.

The residents of the state have resisted strongly to this change by filing a lawsuit and complaints against NC energy. The plaintiffs allege the newly designed structure, which will increase the base rate over the span of five years and will reduce the feed-in tariff at which the company was purchasing the excess electricity generated by the solar panel users. The plaintiffs added that this new rule will cause them to lose money rather than making profit from their solar installations, as they had invested around $40,000 in this technology. They further added that they were lured into investing in solar panels and now NV energy is acting illegally to reduce the incentives, credits and rebates from this technology [6], [7].

This step, by the state’s PUC can be regarded as a step backward on the road to sustainable development and progress. This new rule will not only dishearten the current solar energy users and create problems for them but will also inhibit new users from investing in this virtually unlimited and sustainable energy resource. Such a rule has been implemented in Nevada only at present but it cannot be said with surety that other states will also not follow suit in the implementation of such rules. The government needs to find some alternate solution to this problem since it will really discourage people from investing in renewable energy technologies and specifically solar energy.