
SolarCity Will Eliminate Over 550 Job Due to State’s Anti-Rooftop Solar Decision - Shivetya
https://solarthermalmagazine.com/2016/01/06/solarcity-will-eliminate-over-550-job-due-to-states-anti-rooftop-solar-decision/
======
ndonnellan
This article seems to have a more thorough explanation:

[http://www.marketwatch.com/story/is-this-sunny-state-
trying-...](http://www.marketwatch.com/story/is-this-sunny-state-trying-to-
kill-solar-power-2016-01-07)

snip -----------------------

A little-understood billing mechanism called net metering is at the heart of
the Nevada controversy.

Net metering means that residential and commercial solar customers are billed
for their “net” energy consumption. They are allowed to send back to the grid
the electricity their solar arrays generate when the supply outstrips demand
-- such as during daytime hours, in the case of a home -- and take power from
the grid when demand may exceed the system’s output -- such as at nighttime
when all the lights are on, or during a cloudy spell.

It’s a system usually based on power-bill credits. How that quid-pro-quo
works, varies from state to state and from utility to utility. In Nevada, the
utility regulators have decided to pay lower, wholesale prices for that
surplus power, not the higher, retail prices they had been paying.

California utility regulators evaluated a similar proposal, but decided
against major changes. In Hawaii, regulators approved lower net metering
rates, but not higher fees for the most part. Arizona and Wisconsin have
imposed higher monthly surcharges for solar customers.

More worrying in Nevada’s case, however, is that regulators made no provision
to grandfather in existing customers, said Shayle Kann, a senior vice
president at GTM Research, a green-energy consulting firm.

\-------------- end snip

~~~
CWuestefeld
Wow, that's a long reach to get to the OP's "de facto ban on rooftop solar".

If we take the OP at face value, then, it seems to be declaring that solar
energy is completely impractical, and can't survive without life support.

I realize that other forms of energy generation are all subsidized in various
ways, so it's clearly not as serious as my above interpretation, but still, it
doesn't speak well of solar.

~~~
vinceguidry
It's not that simple. Solar is only really practical if it fits into the grid
system, otherwise there's no real point. The energy it gives you goes up and
down, and not in sync with your own household needs.

So you need something to do with excess capacity. All by itself, units of
power aren't all that expensive. But a solar installation is very expensive.
You need to amortize the cost of the installation, the people putting it in,
the company developing the technology, over around 30 years before it's really
worth it.

Even then, normal consumers won't bother unless it's actually making their net
energy expenditures lower. So you also need a finance company to come in and
finance everything so the consumer isn't coming out of pocket for the
installation.

All of this is viable, only so long as the power companies are paying retail
rates for excess electricity. There's enough money so everyone gets paid. What
this is all about is the power companies are suddenly deciding they want to
pay wholesale for excess power. Why should they pay wholesale? They're not
buying in wholesale quantities from each consumer.

This sucks enough profit potential from the industry that it makes more sense
for them to go elsewhere to put together a workable business model than to
stick around and deal with decimated revenues.

The power companies are using their political muscle to stamp out competition.
If they were to play fair, then they'd be forced to compete with solar. They
don't want to compete, so they're using lobbyists to warp the political
process.

~~~
JoshTriplett
> What this is all about is the power companies are suddenly deciding they
> want to pay wholesale for excess power. Why should they pay wholesale?

The power companies (normally) have enough power to supply everyone; they buy
that power at wholesale prices and sell it to the customer at retail prices.
So why, if they can always buy power at wholesale prices, should they
deliberately pay retail prices instead? Doing so increases their costs, which
then potentially raises rates for others.

So, asking power companies to buy power back at retail rates amounts to having
power customers pay to subsidize the solar power generated by other power
customers.

Looking at it as a subsidy, though, suggests a useful way to bring it about.
Many power companies have a program where you can pay extra per kWh for
"green" power, paying for the use of wind, solar, geothermal, hydroelectric,
and other renewable zero-pollution power sources. Why not use a program like
that to allow customers to subsidize solar power if they want to, and use the
resulting funds to pay customers higher-than-wholesale rates for solar power?

~~~
encoderer
It's a bit more complicated than that, too. I don't know about NV, but in
California the power company never actually buys net power from you. At best
you can owe $0, you never get a check from the power company, even if you pump
all of your juice to the grid. So it's only paying "retail prices" insofar as
it's offsetting the retail prices you're paying for your overnight/cloudy day
power. And incidentally, overnight/cloudy days are off-peak times for power
cos.

~~~
amluto
Incorrect.

[http://www.cpuc.ca.gov/PUC/energy/DistGen/netsurplus.htm](http://www.cpuc.ca.gov/PUC/energy/DistGen/netsurplus.htm)

~~~
encoderer
Only somewhat -- but i can't edit the comment anymore. You carry a credit
balance at retail prices but your refund is decimated and paid at wholesale
prices.

~~~
mchahn
> your refund is decimated and paid at wholesale prices.

No. It is paid at the same retail rate that consumers pay. However, because
the amount paid is low, the retail rate used is tier 0, which is basically a
lifeline rate. But it still isn't wholesale.

~~~
encoderer
I don't see a 3 cent rate tier. Do you have a link?
[http://www.pge.com/en/myhome/saveenergymoney/plans/tiers/ind...](http://www.pge.com/en/myhome/saveenergymoney/plans/tiers/index.page)

The pay-out on the true-up statement is very clear about the 3.xx cent rate.

~~~
mchahn
You are correct. I was going by what a solar city engineer told me. I should
have known better than to take them at their word.

Our first year we didn't go negative so we had a payment to make at the end of
the year. Now that I know the return rate is so low I'll try to stay positive,
switching some appliances to electric if I have to.

~~~
encoderer
I think it's fair to say that the situation is pretty opaque and confusing.
For 2 years I thought we lost our credit balance. I didn't notice the small
credit that applied because in effect it only offset about half of our gas
bill each January (which, with PG&E is on the same bill for us)

------
Animats
If solar can't make it in Nevada without subsidies, the industry has a big
problem. Nevada's population is mostly around Las Vegas, which is at 36°
latitude and has 294 sunny days a year. It doesn't get much better than that.

Utilities are still buying back power, just at wholesale rates. You can still
use the power yourself and buy less at retail rates. Or you can get some of
Tesla's batteries and store it for nighttime use. If your solar panel output
matches your air conditioning load, this shouldn't affect you.

~~~
jsight
It is not really about subsidies in this case. It is about a change to Net
metering and the addition of a new fixed monthly fee just for solar users.

Fixed fees can significantly affect the cost of solar and some reports have
this fee as high as $40/month[1]. The fact that they have also made this
retroactive to existing solar customers adds a lot of uncertainty to the
market as well. That can't help from a sales perspective.

[1] [http://cleantechnica.com/2015/12/28/nevada-solar-fee-
retroac...](http://cleantechnica.com/2015/12/28/nevada-solar-fee-retroactive-
makes-solarcity-exit-state-2000-nevada-employees-all/)

~~~
skrause
> _It is about a change to Net metering and the addition of a new fixed
> monthly fee just for solar users._

I've predicted rising fixed fees for solar customers before [1] and I think
it's just the beginning. When a significant amount of households have a solar
installation they're not really providing a service to the grid anymore.
Everyone sends a lot of power into the grid when nobody else needs it during
the day, and then wants power from the grid at night.

So what you're basically doing is using the grid as a giant battery. The grid
doesn't really need your energy most of the time, but has high fixed costs to
maintain the infrastructure. I think it's just fair that you pay them for this
service. If you don't want it, you need to get off the grid and install your
own batteries.

[1]
[https://news.ycombinator.com/item?id=10473509](https://news.ycombinator.com/item?id=10473509)

~~~
mikeash
The grid doesn't need your energy most of the time, but when it _does_ need
your energy it tends to be right around when you're giving it, because peak
solar production lines up pretty well (admittedly not perfectly) with peak
electricity consumption.

If having a bunch of household solar saves the power company from spinning up
expensive peaking plants, you're saving them a ton of money and performing a
great service.

Of course, if enough households have solar then you'll exceed what the system
needs even at peak times. But we're so far away from that point that there's
no reason to discuss it in the context of current policy.

The big question to me in this case is, when the power company buys back solar
power at wholesale rates, are they paying average wholesale rates, or are they
actually paying the marginal wholesale rates at the time in question? How well
do their retail rates reflect their peak marginal costs?

In many places, residential rates can end up below cost at peak times, even
with time of use metering. In a situation like that, switching from net
metering to paying true wholesale rates could be a net gain for homeowners
with solar. But I have a feeling the setup here is not quite so fair.

------
ISL
A less-sensational article:
[http://www.technologyreview.com/news/545146/battles-over-
net...](http://www.technologyreview.com/news/545146/battles-over-net-metering-
cloud-the-future-of-rooftop-solar/)

The change isn't a ban on rooftop solar. It's a change in the metering for
selling power back to the grid.

~~~
mcv
I guess the solution is to store it locally and buy less from the grid, then.

------
downandout
NVEnergy, Nevada's primary power producer, is behind this and a couple of
other recent controversial decisions. The company is ultimately controlled by
Warren Buffett and has proven to have far too much political influence. Own
some casinos and want to leave NVEnergy because of absurdly high power rates?
Sure, just pay an "exit fee" of $126.6 million for the privilege of having the
right to buy power from other companies [1]. Own a data center? Good, you'll
only pay $27 million to leave [2]. Now we have this decision, which destroyed
the economics of solar for both future and existing solar users in the state -
unsurprisingly, for the benefit of NVEnergy.

It's pretty rare that political corruption is this transparent. Normally at
least some attempt is made to cloak it. In Nevada, this is apparently not
necessary.

[1] [http://www.reviewjournal.com/business/casinos-
gaming/3-strip...](http://www.reviewjournal.com/business/casinos-
gaming/3-strip-gaming-companies-get-ok-leave-nevada-power)

[2] [http://www.reviewjournal.com/business/energy/casino-
companie...](http://www.reviewjournal.com/business/energy/casino-companies-
would-pay-131m-leave-nevada-power)

------
20years
This is not specific to only Nevada. Utility companies have started pulling
back power-bill credits in other states too, just not as aggressive as Nevada.
Arizona was effected last year which caused job loss and solar downsizing and
this is happening in CA too.

Lots of state rebates are starting to go away and utility companies are
pulling back on credits.

We worked with over 50 solar companies in 2013 to 2014. It was a gold rush
during that time. 2015 was a completely different story and I think 2016 will
continue in that downward spiral.

Solar companies really need to figure out a way to survive without state &
federal rebates and utility company credits.

~~~
ghaff
Where I live (Massachusetts), the solar companies have started getting really
aggressive with sales. Going door-to-door and camping out at the local home
improvement store. Smells a lot like trying to get installs while the getting
is still good.

~~~
toomuchtodo
There is a production tax credit that provides 30% off the system cost that
eventually expires.

EDIT: It behooves you to install a solar system on your dwelling sooner than
later.

------
JoblessWonder
> "Governor Brian Sandoval’s Public Utilities Commission (PUC) to terminate
> Nevada’s rooftop solar industry just days before Christmas, SolarCity®
> announced that it has been forced to eliminate more than 550 jobs in the
> state."

I get that it is a trade magazine, but wow... that is some sensationalism. It
makes it sound like he is literally shutting down the industry, not just the
rates that drove the market's rapid growth.

------
notlisted
Somewhat off-topic. I'm all for solar, but there are some nasty practices out
there with the "free" installs (lease). To maximize energy-harvesting
potential, many "free" solar installers don't seem to care at all about
ruining the look of nice houses, for example stuff like this [1], reducing the
value of the home and increasing the time to sell. There are many horror
stories about unexpected liens on homes [2] preventing a sale and/or
refinancing. I'll jump on solar as soon as they make affordable panels that
resemble shingles (they exist, I know [3], but expensive)

[1]
[http://www.greensunnj.com/resource/1430381659000/Bad_Princet...](http://www.greensunnj.com/resource/1430381659000/Bad_Princeton_1)

[2] [http://watchdog.org/212170/surprise-solar-
liens/](http://watchdog.org/212170/surprise-solar-liens/)

[3] [http://cleantechnica.com/2015/02/08/solar-shingles-
renewable...](http://cleantechnica.com/2015/02/08/solar-shingles-renewable-
energy-solution-curb-appeal/)

~~~
SmallBets
Exactly. This stumbling block is as much about the solar lease/ppa model as
net metering, because math about cost of botg grid and solar are assumed 100%
unchanged for 20 years.

Rooftop owners that buy their systems outright are still im good shape, with a
different payback period. Leases have been pushed bc theyre more lucrative for
installers and homeowners have avoided the upfront cost of buying. Leases were
a gateway financial model to expand rooftop solar but I think we'll see a
shift to system ownership, which will reduce the impact of net metering. And
it will be further reduced as storage tech ramps up.

~~~
notlisted
Once home batteries like Tesla's Powerwall become mainstream we may see
another up-tick in self-financed systems, especially since those may have an
effect on the price of electricity for people without them [1]. This is a
lovely article on the latest developments and side-effects [2]

[1]
[http://www.bloomberg.com/news/articles/2015-09-24/batteries-...](http://www.bloomberg.com/news/articles/2015-09-24/batteries-
pose-sales-challenge-for-power-companies-moody-s-says)

[2] [http://rameznaam.com/2015/04/14/energy-storage-about-to-
get-...](http://rameznaam.com/2015/04/14/energy-storage-about-to-get-big-and-
cheap/)

------
kriro
So basically excess power generated is bought back at a standard price (bulk)
instead of the current retail price? As long as you're consuming all the
energy you harvested nothing changes. They basically just removed a subsidy of
sorts which seems to be in line with the general party policy decisions.

~~~
ZeroGravitas
With something as innately interconnected as a power grid, its not that
simple.

In the states where they investigated how much value was provided by the
rooftop solar, the value was higher again than net metering (e.g. it might
save money on uprating grid connection). This means Nevada was effectively
taxing rooftop solar and wasn't getting the optimum amount installed. With
this change they've raised that tax and destroyed even more value.

Another specific angle is the retro-activity, this means no consumer in the US
can commit to rooftop solar without worrying that all their calculations will
be rendered moot, after the install. This puts a big cloud over things.

------
inthewoods
Seems like they need a middle ground - not selling at wholesale prices or full
retail. Putting the price at wholesale doesn't take into account the costs for
the homeowner (or a 3rd party company like SolarCity) to invest in solar
panels. Selling at retail doesn't take into account cost of grid maintenance
for the power companies.

It also doesn't make a lot of sense to me that they charge higher fees to
connect to the grid.

Definitely seems like a big win, short term, for the power companies. It seems
like a big lose for renewables. Everyone seems to focused on whether it's
perfectly fair or not - whereas I would say the goal of getting to
environmentally friendly energy must weigh into the discuss - but hey, that's
me.

Side note: I would be curious how much grid maintenance costs the power
companies relative to their other costs.

~~~
ethbro
I don't see where the argument against retail (possibly minus a small amount)
comes from.

Effectively, they're deleting load from close to the end user from the
utility's books. If that load hadn't been deleted, the utility would have
charged retail pricing in order to generate it.

The small negative adjustment from retail would come from the fact that the
utility is still servicing the solar user as a retail user. So still needs to
charge a set amount for admin costs & _transmission_ (NOT generation)
infrastructure.

Paying them wholesale is pretty ridiculous, and is a blatant abuse of the fact
that they're a monopoly enshrined in law. If the state decides that you can't
sell your electricity to anyone else because they anoint a utility, then that
utility should absolutely be banned from exploiting that position to
compensate solar generation less than it could.

If utilities can't balance their long-term amortizations of recent/new plants,
then the state government can step in an reimburse them over the top for the
disruption.

~~~
Armisael16
The utility also has to be prepared to provide you with the power that you
aren't using (if there's a solar eclipse or something). The marginal cost of
power generation is very low, so you save them almost nothing by not using the
power.

~~~
ethbro
The marginal cost of average power is very low. At least for solar in the
south (air conditioning), the marginal cost of peak daytime power is much less
so.

Remember that capacity is sized for peak utilization: the gap between average
load and peak is load is extremely expensive, as it's by definition low-
utilization compared to base load generation.

------
transfire
Here is the official report
[http://pucweb1.state.nv.us/PDF/AXImages/PRESS_RELEASES/300.p...](http://pucweb1.state.nv.us/PDF/AXImages/PRESS_RELEASES/300.pdf)
It really leaves people hanging b/c they won't know the actual dollar amounts
until 7 days before it becomes law.

------
mrfusion
What was the anti solar decision? The article doesn't seem to say.

~~~
eli
It has to do with net metering rates, that is how much indidivuals and small
business get paid for putting electricity back into the grid for others to
use. See [http://www.utilitydive.com/news/nevada-regulators-approve-
ne...](http://www.utilitydive.com/news/nevada-regulators-approve-new-net-
metering-policy-creating-separate-rate-c/411284/)

(disclaimer: I'm co-founder of the linked news site)

~~~
OliverJones
Interesting. This Utility Dive article points out that the rate change is to
be phased in over four years. It's not a cliff. That should mitigate large-
scale sudden incentive changes.

Where I live the electric energy company has separate rates for energy and for
distribution. I think it's like that everywhere.

In the most naive pricing model net metering ignores that distinction and
simply run the meter backwards when local production exceeds local
consumption.

In the second most naive pricing model, the local customer would credit for
energy cost, but not distribution, when local production exceeds consumption.

Neither of those are completely fair: the first doesn't gain the utility a
return on their distribution infrastructure investment, and the second pays
the utility too much. Why too much? Around here we pay a level distribution
fee that covers both the long-haul lines from Georgian Bay and the shorter
haul from the local coal plant. Locally generated electricity doesn't use the
long-haul distribution system.

What's needed is a pricing model that ...

    
    
      a) maintains incentives to build out new generation (rooftop, etc.)
      b) makes incentives to create a new "smart grid" distribution system.
    

I fear that loud political posturing (Jobs!!! Monopolists!!!) isn't helping
get this right.

But naive models, in a world that can have companies like Enron disrupting
those models, are also not good enough.

For example, naive net metering -- backward running meters -- is not as
favorable to Tesla's battery business as a dual-rate system. The return on a
battery investment needs to come from that margin.

~~~
pkaye
I think we need a pricing model that scales with the % solar installations
with net metering and supporting the infrastructure costs connecting to the
grid. Imagine if everyone was using solar but still connected to the grid.
Someone still has to pay the infrastructure costs.

------
feld
Electricity is much more fragile than people realize. When you flip on a light
switch the power to light up your room is being generated _instantly_. That's
the problem. Utilities do not have large batteries. Electricity is generated
on demand and the utilities have to estimate exactly how much power they need
to generate __ALL THE TIME __.

When a utility adds wind and solar to their portfolio they also have to hire
experts to analyze the weather. These experts need to estimate how much power
the wind and solar are going to provide _every day_. There are times when
entire wind farms are shut off because they will be generating too much power!
There are other times when they are shut off because of concern that the
weather could damage them. This is not easy.

Imagine adding tens of thousands of tiny solar arrays to your grid and then
having no knowledge of how well they are going to operate. You can't possibly
begin to estimate what the cloud cover is going to be like for all of these
installations over your territory. You don't know how well they are
maintained. You don't have any clue if they're kept clean. You might not have
the infrastructure to accept electricity back into the grid (substation
upgrades are not cheap).

The grid would gladly accept your power if they knew it was safe to do so. The
fact is that it isn't. If too little power is generated, brownouts or
blackouts occur. If too much is generated equipment is damaged and shit starts
on fire.

What we need is a _SMART_ grid. It does not exist yet. It will take many
years. Large battery installations may be a good stop-gap. But to vilify the
utilities is ignorance when you don't really understand how the grid works.

edit: I actually know of a giant private wind farm that was built on the idea
that they could sell access to it back to a utility. Unfortunately it has been
sitting dormant for a couple years because the cost to get the backhaul to the
windfarm was too much, and the private investor had no idea the windfarm
couldn't just be hooked up.

------
cephaslr
I was looking for the opposition view point, to see if there is something I
missed. Here is one of the better articles:

[http://www.technologyreview.com/news/545146/battles-over-
net...](http://www.technologyreview.com/news/545146/battles-over-net-metering-
cloud-the-future-of-rooftop-solar/)

I still have the impression that the incumbent monopolists (power companies)
are protecting their interests at the expense of the public, not unlike taxi
drivers blocking uber operations within a city.

I hope we get to a non monopolist system asap.

[http://www.technologyreview.com/news/544471/renewable-
energy...](http://www.technologyreview.com/news/544471/renewable-energy-
trading-launched-in-germany/)

------
protomyth
The ruling is not a "de facto ban on rooftop solar", it says that the power
company should pay the SAME amount no matter who provides the energy to the
grid (wholesale rather than retail). If that change kills a company of
industry then there are some major problems with the business model.

Hopefully this will encourage energy storage systems. Using the grid that
already has enough energy as virtual storage is a pretty shady way to enhance
your business. If you cannot store energy yourself than accept that you are
going to pay for someone else to do it for you.

~~~
krschultz
There are no problems with the business model, it just doesn't pencil out in
that state anymore. Keep in mind the business model for solar is basically
trading higher up front capital costs for lower long term recurring costs, and
the capital costs are largely invested into products that have a rapidly
declining cost. That sounds like a great plan to me, and while it requires
subsidizes today, in a few years it won't. Arguably the entire drop in oil
prices over the last few years was due to the realization by major players
that we will see the end of fossil fuel demand before we see the end of fossil
fuels. One of the key contributors to that is unsubsidized price of solar
panels was getting very close to the price of oil (~24 months ago).

I would also argue, if you do not take care of the externalities of your
energy production yourself, than accept that you are going to have to
subsidize people that are reducing the demand for it. Why is it on the solar
owners to pay for all of their energy storage but not on the coal power plants
to capture and store their CO2 emissions?

~~~
protomyth
"Why is it on the solar owners to pay for all of their energy storage but not
on the coal power plants to capture and store their CO2 emissions?"

Because those are two separate issues. One has nothing to do with the other.

The story here is that a solar customer wants the government to force the
power company to store his/her energy for them and the grid is not designed
for that. The power company pays a wholesale rate to all its suppliers.

I see this as a push to get better storage technology developed which will
benefit far more people. The solar company is being disingenuous and I bet
there books are not quite as positive before this event as they let on.

I like home solar and will probably install it when I decide to buy a home,
but I will install a storage system and a cut off so I can use my panels
without the backfeed to the grid incase of power outage.

------
transfire
Never trust subsidies. Look at history and you will see again and again that
government has often used them as a form of industrial sabotage.

------
beatpanda
Want to help solve this problem? My company, Genability, builds software to
help solar companies and other new energy companies figure out how to make the
economics of clean power "pencil out". And we're hiring!
[http://genability.com/careers/work_with_us.html](http://genability.com/careers/work_with_us.html)

------
tcbawo
If you were an electricity provider (which homeowners are on a small scale),
you would be receiving wholesale rates. I wonder how much of the energy pushed
into the system is actually utilized. Overcapacity during peak hours is
probably a big problem for the utilities.

------
jack9
> This is not how government is supposed to work.

I think it is. That's not how businesses are supposed to operate (at the whim
of the state's budget dole-outs)

------
DiabloD3
So, seeing as how the Governor of Nevada just cost thousands of citizens of
his state their job, in an industry that is progressive and required for the
survival of that state (and the nation as a whole), why has the state
legislature not immediately begun impeachment?

Politicians need to be taught that they serve at the pleasure of the people,
and when they stop doing what they are told, they will no longer be employed.
Nevada has been one of the most pro-solar states in the US, and what he is
doing is political suicide.

~~~
tinco
The article said 550, where did you get the thousands figure? Is it from other
solar companies? How many employees does NV Energy have and how many millions
did they offer the state in discounts or whatever. It's unfortunate that they
are working against solar, but I would be very surprised if this affair has a
negative financial effect for Nevada in the short term.

edit: woops that's what I get for skimming too fast, thanks :)

~~~
geomark
From the article, "Other Nevada solar companies with higher cost structures
than SolarCity are expected to collectively lay off thousands of additional
Nevadans in the coming months." That's probably where he is getting the
thousands figure.

------
logfromblammo
The thought I had after reading the headline was "550: Permission Denied".

I can't be the only one.

