Noon: SolarCity’s silver spoon
SolarCity has bilked government programs to grow into being the nation’s largest installer of rooftop solar panels.
Yet, it has no qualms about throwing a tantrum and leaving a state that doesn’t play by its rules — as it has done in Arizona and Nevada. Even uber-green California is being threatened by an exodus and states such as Washington and New Hampshire received warnings that SolarCity won’t come to the state if subsidies don’t favor its operational model.
Last week, Nevada became the latest state to “roll back” its “net-metering electricity scam,” as the Wall Street Journal calls it. As a result, “SolarCity reacted by announcing that it would cease sales and installations in the state.” Back in 2013, with great fanfare, SolarCity announced that it was coming to Nevada “after securing incentives worth up to $1.2 million from the state’s Governor’s Office of Economic Development,” reported the Silicon Valley Business Journal. SolarCity claimed it would create “hundreds of jobs” near Las Vegas. But times have changed.
Nevada is just one of many states considering changes to the solar subsidies. Arizona already made the change, causing SolarCity to shift resources to other states where the profit margins are higher. In April, the Arizona Republic announced that SolarCity was relocating 85 workers out of state. SolarCity CEO Lyndon Rive called the changes: “Too restrictive.” He declared that they “eliminate the potential to save money with solar for nearly all customers.”
What states have found, is that the increasing implementation of solar, results in higher costs for non-solar customers — who as the Wall Street Journal states: “tend to be lower income.”
The net-metering policies are at the center of the debate. In short, net metering compensates solar customers for the excess solar power they generate. The problem is that these individual generators get paid retail for the power, rather than the wholesale rate utilities pay for typical power supplies. As a result, customers with solar panels can completely avoid paying the utility — even though they still use power, transmission lines, and services from the company. States are seeing costs shifted from solar customers to those who can least afford it. As a result, several states have mandated policy changes. Generally, the changes reduce the payment to wholesale and add a grid connection fee or demand fee.
The Journal called net metering “regressive political income redistribution in support of a putatively progressive cause.” Frank O’Sullivan, director of research and analysis at MIT Energy Initiative explains it: “Net metering, in its most plain, vanilla form, is certainly a subsidy to rooftop solar owners. Obviously there has to be a cost transfer to others who don’t have solar on their roofs.”
In Arizona, the changes to the net-metering policies grandfathered in current users, but added grid usage/demand fees. In Nevada, payments to existing customers have been slashed and connection fees have been raised. The current proposal in California would cut payments for excess electricity almost in half and solar customers would pay a monthly fee. In Washington, utilities are pushing for a charge on solar customers.
The solar industry is filing legal action as, admittedly, these “proposals threaten to undermine the economics of their systems.” The Journal explains: “corporate welfare encourages dependency and entitlement that’s difficult to break.”
When even California is proposing policy changes, it is time to realize this business model has to change. And, that includes taking the silver spoon out of the mouth of SolarCity. Although they’ll likely throw a temper tantrum, take their marbles and go home, it will save taxpayers millions and force solar to operate on a level playing field.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy.