Nevada should embrace disruption in energy markets
Things are changing rapidly in America’s energy markets. The shale revolution of the past decade already has brought about enormous changes both in the price of energy and in the mix of power sources used to provide it. Now, an explosion in the availability of affordable rooftop solar is having similarly broad effects, with breakthroughs in on-site energy storage holding out the potential for even more fundamental shifts just over the horizon.
Given just how fast the ground beneath them is shifting, legislators and regulators should be forgiven if they don’t quite yet know up from down and left from right. No one can say with certainty how everything will shake out in the end, but an ideal system – one in which a reasonable price is placed on the cost of pollution, but where the market is otherwise left to itself to find the best energy mix for consumers, devoid of any distortionary subsidies, regulations or tax rules – just might be a reality in our time.
But in the meantime, it is crucial that, to the extent possible, the government stay out of the way and not subject any particular energy option to regulatory extinction before consumers have an opportunity to have their say. Lamentably, that’s the current state of residential solar power in Nevada.
With the legislative session coming to a close in mere weeks, policymakers face the distinct prospect that the solar market will be frozen as it hits a regulatory cap that dictates no more than 3 percent of the state’s net energy mix can come from residential solar. Once that cap is hit, rules that allow solar consumers to sell their excess power back to the grid will be suspended, rendering any new installations uneconomical. The maddening irony is that it is the very success of solar that could lead to the interruption – by some estimates, as soon as the first quarter of 2016.
A recent poll, by the admittedly self-interested Alliance for Solar Choice, suggests that both Democratic and Republican voters are less likely to support candidates who do not support solar power. That finding should come as no surprise, as Nevada earlier this year became the state with the most solar jobs per capita in the country.
Despite the evident political peril associated with opposing solar power, a contingent of the Republicans who control the state Legislature in Carson City have been skeptical about raising the cap on residential solar installations. They believe the current arrangement unfairly favors solar generation over other energy sources.
To the extent that the costs and burdens of energy generation should not be unfairly shifted, it’s a reasonable objection. But the facts do not support that conclusion in this particular case. According to the Nevada Public Utilities Commission’s study on net energy metering, solar customers do not shift energy costs onto non-solar ratepayers. In fact, in terms of financial costs and benefits, solar energy is a virtual wash, because there is not yet enough of it on Nevada’s grid.
If the cap is not raised, Nevada will stunt the development of long-absent competition in the energy sector. Competition is the mechanism best able to create wealth and develop civil society. For the sake of consumers, and the exciting energy future that awaits us all, the Legislature must act sooner rather than later.
