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U.S. Crushes Solar Installation Record In ‘Monumental’ 2015

U.S. solar installations boomed in 2015 to a record-stomping 7.3 gigawatts as legislators bandied about the fate of the Investment Tax Credit on solar, the Solar Energy Industries Association said Monday. For the first time ever, solar energy beat out natural gas capacity additions. Solar energy generated 29.5% of all new electric-generating capacity in the U.S. California, North Carolina and Nevada led the charge, and the three states now top 25 GW in cumulative installations. There’s still plenty of headroom for growth, said Shayle Kann, Greentech Media Research senior vice president. The top 10 states account for 87% of installed capacity, but 24 of 35 states Greentech tracks saw market growth in 2015, he said in a statement. SEIA CEO Rhone Resch, in the association’s press release, called 2015 “a monumental year for the U.S. solar industry.” The year was also marked by Obama’s Clean Power Plan, a pledge to cut carbon emissions by power plants, and a 196-country agreement to cut carbon emissions during the COP21 (Conference of Parties) climate change summit in Paris. “Over the next few years, we’re going to see solar continue to reach unprecedented heights as our nation makes a shift toward a carbon-free source of energy that also serves as an economic and job-creating engine,” Resch said in the release. In 2015, residential installations jumped 66%, outgrowing the commercial and utility markets, which were flat and up 6%, respectively. Still, utility installations — First Solar ( FSLR ) and SunPower ‘s ( SPWR ) wheelhouse — continued to account for more than half of all installed capacity. Overall, installed capacity has grown 1,150% since 2010, when U.S. solar capacity touched just 2 GW. Last year, the residential segment alone eclipsed 2 GW in installations — a first. Residential installations now comprise 29% of the entire U.S. solar market, its largest share since 2009, the SEIA said. Commercial installations trailed but managed to break 1 GW for the fourth year running. Solar Stocks Got Late-2015 Boost From Congress The results shine light on the recently shadowed industry. IBD’s 23-company Energy-Solar industry group is down 31% for the year after sharply rising at the end of 2015 on Congress’ decision to extend the Investment Tax Credit (ITC) on solar for five years. The ITC has been slated to expire Dec. 31, 2016, and Wall Street expected solar demand to hit a floor in 2017. Shares of installers First Solar, SunPower, SolarCity ( SCTY ) and Sunrun ( RUN ) lit up on the extension. Tesla ( TSLA ) CEO Elon Musk chairs SolarCity. But the rally was short-lived. Less than two weeks later, stocks plunged after Nevada regulators opted to cut net-metering payments to solar customers, or what utilities pay solar customers for excess energy fed back into the grid. Warren Buffett’s Berkshire Hathaway ( BRKA )-owned utility NV Energy pushed for the cut, which will take place in five steps over 12 years. Utilities dislike net-metering mandates, which forces them to buy energy at a high cost. This month, Nevada regulators voted against grandfathering in existing solar customers under the old rate scheme. Sunrun executives have said they will sue. In 2015, California regulators  went in the opposite direction. The California Public Utilities Commission voted to retain net metering but add interconnection costs, new minimum bill requirements and time-of-use rates, according to Greentech. Other states are likely to take up the issue. Net metering is mandated in 44 states. Last year, 13 states each added at least 100 megawatts in installations, helping lead to 17% growth in the U.S. solar market. Utah jumped from No. 23 state in solar to No. 7, and Georgia moved from 16th to eighth place. Nevada was No. 3 on the installer list for the second year running. In 2013, Nevada was No. 12. California and North Carolina have led in recent years. But analysts say Nevada solar demand is likely to hit a floor in 2016 on the new net-metering rate scheme. SolarCity and Sunrun exited their Nevada operations in December because of that then-pending move. Vivint Solar ( VSLR ), soon to be acquired by SunEdison ( SUNE ), made a similar threat at the time.

Nevada PUC Refuses Solar Grandfathering Bid; Sunrun Plans To Sue

Nevada regulators voted unanimously late Friday to slash net-metering payments without grandfathering existing solar-energy customers, despite opposition from 55,000 Bring Back Solar Alliance supporters. Within an hour of the 3-0 vote by the Nevada Public Utility Commission, Sunrun ( RUN ) executives were already planning to file suit, Lauren Randall, the company’s public policy manager, told IBD. “Even NV Energy recommended grandfathering current solar customers for a period of 20 years, but once again, Governor (Brian) Sandoval’s commission gave the monopoly utility more than it asked for,” she wrote in an email. “This decision is clearly unjust and unacceptable for Nevadans. “We will sue to overturn the anti-solar rules, and we will win.” The decision follows a week of testimony, including commentary from Tesla Motors ( TSLA ) CEO Elon Musk, chairman of No. 1 solar installer  SolarCity ( SCTY ). Both Sunrun and SolarCity criticized the net-metering cut — payments that solar customers get for selling excess energy to utilities — and exited Nevada in December when the PUC first approved the new rates. Solar advocates’ hope momentarily gleamed last month when Warren Buffett’s Berkshire Hathaway ( BRKA )-owned utility, NV Energy, proposed a 20-year grandfathering caveat to the new solar rules. But Friday’s vote puts the final nail in Nevada’s solar coffin , according to Bryan Miller, Sunrun vice president of public policy and power markets. He’s also president of the Alliance for Solar Choice president. “(PUC Commissioner) Dave Noble was wrong when he predicted his initial order would not kill the industry,” Miller said in an email Thursday. “He has now flip-flopped and argues that the commission can legally kill the industry.” Nevada incentivized more than 17,000 residents to install solar, BBSA spokesman Bob Greenlee said in a statement Thursday. Since 1997, net-metering policies have required utilities to purchase excess power fed into the grid from solar customers at a retail rate. Under the new rules, the reimbursement rate will step down five times over 12 years to reach what the Nevada PUC calls a “cost-based structure.” Although TASC estimates that solar customers will still save about a third on their electric bills, the rate shift doesn’t allow them to recoup the costs of their systems, Greenlee said. Early Friday, he said the BBSA planned to cart “six wheelbarrows full” of signed commitment cards from supporters. “Fully 89% of Nevadans believe that the Public Utilities Commission made the wrong decision when it ended net-metering, refused to grandfather existing solar customers at their current rates and destroyed one of the fastest-growing solar sectors in the country,” Greenlee told IBD via email following the vote. Greenlee tallied 55,000 commitment cards — the same number of petition signatures needed to put the matter on a referendum ballot in November. The PUC, however, argued within its draft order Wednesday that grandfathering existing customers under the old rates would perpetuate the $16 million that utility customers now pay annually to subsidize solar customers. Proposals to delay the necessary correction in rates to a cost-based structure only serve to kick “the can down the road,” the PUC said. Over 40 years, the subsidy borne by non-solar customers would grow to $640 million. “These proposals do nothing to address the problem of antiquated rates that were instituted nearly 20 years ago to jump-start an industry,” the commission wrote. “The old net-metering rates are not reflective of accurate price signals or actual costs to serve.”

Nevada PUC ‘Contortionist’ Act Will Kill Rooftop Solar: Sunrun

Nevada regulators will vote Friday on a restructured net-metering scheme that increases rates over 12 years and doesn’t grandfather existing solar-energy customers — a decision sure to rile installers SolarCity ( SCTY ) and Sunrun ( RUN ). The draft order , released late Wednesday, stems from a week of hearings at the Public Utilities Commission, and pits billionaire CEOs Warren Buffett and Elon Musk in a battle over the sun. Buffett’s Berkshire Hathaway ( BRKA ) owns NV Energy, the utility pushing for a rate change, and Tesla Motors ( TSLA ) CEO Musk chairs SolarCity. SolarCity and Sunrun exited Nevada in December when the PUC first voted to cut payments to solar customers for excess energy fed back into the grid. Net-metering angers utilities because it forces them to buy energy from rooftop customers at the expensive retail rate. California regulators recently upheld net metering. Under the Nevada commission’s new proposal, the new rates won’t apply to existing solar customers for a period of 12 years. Over that time, the rates will step up five times until reaching a cost-based structure on Jan. 1, 2028. The PUC estimates that the 12-year time frame represents $81 million in costs shifted to non-solar customers. Solar Advocates Cry Foul In May, the Nevada Legislature voted to allow the PUC to create new solar-energy rates in exchange for lifting the 3% cap on customers eligible for net metering. On Dec. 23, the commission voted unanimously to cut net-metering payments. Solar-energy advocates immediately began calling for a reversal. “By eliminating net-metering, the order has discouraged private investment, which has led to layoffs and ensured that there will not be future applications to install (rooftop solar),” the Solar Energy Industries Association argued in a PUC filing. Not grandfathering existing solar-energy customers under the old net-metering rules was particularly egregious, the SEIA wrote. “The elimination of net-metering for existing customers makes their investment meaningless and creates a ‘financial catch 22’ of deciding between spending more every month or spending significantly to remove a (rooftop solar) system,” they wrote. “For potential customers, the decision is easier because there is no longer a financial incentive to invest in net-metering.” Bureau of Consumer Protection representatives argued for a 20-year grandfather clause that would allow existing solar customers to recoup the costs of their hefty investments. NV Energy, in turn, filed a proposal for a 20-year grandfathering period last month. Solar advocates also bashed the NV Energy rate study used to justify the net-metering cut, with the Southern Nevada Home Builders Association claiming it contained “logical and factual flaws.” The BCP argued that the study discounted medium- and large-scale users, which skewed the results. “No reasonable person would accept as reasonable the inference that Nevada Power Company’s ability to provide as much power to (rooftop solar) customers as they could need creates an obligation to pay for power not received,” the SNHBA wrote. Further, the SEIA argued the new rate structure ignores 9 of 11 rooftop solar values, and unfairly lets the utility buy solar energy at a wholesale price to sell it back at a retail price. “This decision denies their right to be fairly compensated,” The Alliance for Solar Choice (TASC) separately argued. ‘Kicking The Can Down The Road’ Net-metering was codified in 1997, the PUC wrote. Since then, rooftop installers have made big bucks by advertising set-in-stone solar rates and “unrealistic payback periods,” the commission argued. And as a result, non-solar customers are now paying $16 million annually to carry solar customers — a subsidy that “will cumulatively grow unreasonably larger over time,” said the PUC. Proposals to delay the necessary correction in rates to a cost-based structure only serve to kick “the can down the road,” it said. Over 40 years, the subsidy borne by non-solar customers would grow to $640 million. “These proposals do nothing to address the problem of antiquated rates that were instituted nearly 20 years ago to jump-start an industry,” the commission wrote. “The old net-metering rates are not reflective of accurate price signals or actual costs to serve.” And while the PUC understands the desire to “lock in rates and structures . . . electric utility rate-making cannot work in this manner.” Over time, new ratepayers would be forced to take up increasing incremental costs as new customers join the grid. By gradually shifting costs, solar customers can avoid “rate shock.” The structure also allows solar customers time to customize their usage to benefit from time-of-use policies. Currently, NPC and Sierra Pacific Power Company solar customers still rely on the grid 42% and 49% of the time. Under the new proposal, solar customers will save about a third on their electric bills, according to TASC estimates. That’s in line with the cost of service, the PUC wrote. The PUC also took issue with SolarCity, Sunrun and TASC’s “all-out campaign to influence public perception” by claiming the commission was in NV Energy’s pocket. Customers are now unlikely to accept the new rates. “However, this commission will not allow such actions by TASC, SolarCity, Sunrun and other rooftop vendors to dictate a certain outcome in this proceeding,” the PUC wrote. ‘Contortionist Twisting Of The Law’ Sunrun executives blamed Commissioner Dave Noble and Gov. Brian Sandoval for the ultimate death of Nevada’s solar industry, in an emailed statement to IBD. “Every party to the case, including NV Energy, recommended grandfathering these customers for a period of 20 years,” they wrote. “Once again, Noble proposes to give NV Energy more than it asked for.” As presiding officer, Noble has received a fair amount of online flak since the commission’s decision in December. Bryan Miller, TASC president and senior vice president of public policy and power markets at Sunrun, accused Noble of contorting the law to “kill” the industry. “Noble’s contortionist twisting of the law belongs in a Vegas Cirque du Soleil show, not the halls of government,” he wrote in the email to IBD. “Brian Sandoval’s legacy will be letting his hand-picked commissioners eliminate a booming industry while he complicitly stays silent.” SolarCity didn’t respond to an email seeking comment.