Why The Death Of Nevada's Solar Industry Terrifies Arizona Businesses

Published: Thursday, February 25, 2016 - 8:49am
Updated: Thursday, February 25, 2016 - 3:48pm
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(Photo by Will Stone - KJZZ)
A SunHarvest crew puts up solar panels on a residence in Scottsdale.
(Photo by Will Stone - KJZZ)
Nationally, the residential solar company is booming but if Nevada sets a precedent, that could affect more homes like this one in Scottsdale from installing panels.

When Nevada upturned the process of how its solar customers are charged, it cast a shadow far beyond state lines.

Just ask Brandon Cheshire. On a clear morning, a crew from his company SunHarvest was putting up panels at a home in Scottsdale.

“What happened in Las Vegas is really kind of scary because if we don't have foresight as an industry," then the same could happen here, he said. 

Nationally, the residential solar market is booming with a 66 percent increase from 2014 to 2015. And Nevada was one of the standard bearers.

Bring back solar! Bring back solar! Bring back jobs! Bring back jobs!

So shouted hundreds at a rally earlier this month to protest dramatic changes to how rooftop solar customers are charged by the utility there. In December, state regulators abruptly raised fees and voted to phase out what’s known as net-metering, which gives customers credit at retail prices for the power they produce.

What’s more, those changes apply not only to new customers but existing ones. 

“I am not hurting anyone," said homeowner Donna Walldren to the public utilities commission earlier this year as she went over her bill. She said she went solar to save money after her husband died. 

Public outrage eventually led Nevada to scale back its decision but many companies have closed shop or left the state along with hundreds of jobs. This shock wave is even touching businesses owners in Arizona, like Brandon Cheshire.

“I’ve personally received phone calls from three different solar industry executives trying to liquidate panels and liquidate inverters because they’re shut down altogether," said Cheshire. "The Vegas solar market is entirely dead."

Like many solar supporters in Arizona, Cheshire is nervous because the Valley has also seen rapid growth in residential solar and, like Nevada, utilities are pushing back.

“I’m not foolish to think that we are not taking on the most profitable, powerful industry that’s really ever survived. We’ve got a huge infrastructure that we’re trying to replace,” said Cheshire.

The dilemma for solar adopters though is that they can’t replace the infrastructure yet-- they still need it. Solar is by its very nature intermittent and customers draw from the grid when the sun isn’t shining.

Marc Romito is with Arizona Public Service—the state’s largest utility. He said, “We are at the tip of the spear in the United States."

Romito said the growth of rooftop solar in Arizona is “explosive” and out of sync with how people consume energy here. "They get the credit for the solar they overproduced that went on to a system that is super saturated with excess generation."

"Overproduced" because during midday solar is churning out the most power. But that is not when the utilities and their customers need it most. Energy use peaks in the evening when people come home.

"When the solar is not producing, they have been allowed to bank the credit for their excess generation, however useful or useless it was," said Romito.

According to Romito, this amounts to a subsidy, which shifts the costs onto all the other ratepayers. But that is not how solar companies see it or their customers, who purchased and leased expensive systems believing net-metering would save them money.

Harvey Bryan is a professor at Arizona State University and said the “solar wars,” here and across the country, have put utilities in a tough spot.

“There are so many things that what we call legacy industries tend to fight rather than try to incorporate into a new business model," said Bryan. "And that will come back and hurt them.”

Bryan points to the telecom companies that fought cellular technology. But he still believes a compromise can be possible. That will be put to the test when Arizona Public Service and other utilities go in front of state regulators like Doug Little later this year, possibly to raise solar rates.  

“One of the key core values in regulatory policy making is this concept of gradualism," said Little. 

Little is chair of the Arizona Corporation Commission and said he doesn’t want to send Arizona’s solar industry into a tailspin like what happened in Nevada.

“When you start doing things that make broad abrupt changes to the economic environment here, it’s not good for any of us," said Little. 

This isn’t hypothetical for Arizona, either.

Last year, the state’s other major utility, the Salt River Project, or SRP, changed its rate structure and that increased what solar customers were paying. As a result, installations plummeted.

If a Nevada-like decision comes to the other utilities, Brandon Cheshire said customers and the public lose the benefits. The math might not make much sense anymore.

“Then what incentive is there to invest in solar, unless it’s to quell your bleeding heart, right?” he asked.

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