Ground zero in the solar wars: Nevada

A major fight over solar power in the state of Nevada seems to have found a resolution—until the end of the year, anyway.

Solar panels at the Ivanpah Solar Electric Generating System in the Mojave Desert near Primm, Nevada.
Jacob Kepler | Bloomberg | Getty Images
Solar panels at the Ivanpah Solar Electric Generating System in the Mojave Desert near Primm, Nevada.

The Nevada Legislature has been intensively lobbied for months by both solar advocates and their allies on the one hand, and the state utility on the other, over how home solar users are credited for electricity they generate and give back to the power grid.

Current law mandates a limit of 3 percent on residential solar production, as a percentage of the utility's historical peak load, as being eligible for so-called "net metering" credits. In other words, consumers who add solar panels to their homes are eligible for credits from the utility as long as the state's total solar-generated energy falls under that 3 percent cap. But if the state's solar energy begins to exceed the 3 percent limit—as it's likely to do soon—then new solar panel users won't get a credit.

On Monday, utility NV Energy and The Alliance for Solar Choice (TASC) announced a compromise that will slightly increase the size of the cap through the end of 2015 by defining "3 percent" as 235 megawatts. It also will push the decision on the future size of the cap to the state's public utilities commission rather than its legislature.

The solar industry and its allies support a higher cap, saying a failure to boost it will put 6,000 Nevada solar-industry jobs at risk. The state's electric utility, on the other side, wants to keep the cap as is. (Tweet This)

Both sides have lobbied strenuously for the Legislature to rule in their favor, in turn sparking both sides to trade accusations about the other's lobbying tactics.

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"This argument has been so muddled and filled with hysteria, if it wasn't so important to a community, it would almost be comical," former Nevada State Sen. Randolph Townsend said.

The solar industry told CNBC last week that it expected the state's growing solar output to exceed the cap by late summer. NV Energy puts its own estimate later, saying the cap could be reached sometime during the first quarter of 2016. The utility was acquired by Berkshire Hathaway in 2013.

The stakes are high in Nevada, said Bryan Miller, co-chairman at The Alliance for Solar Choice (TASC).

He sees solar's chief opponent in Nevada not as NV Energy, but Warren Buffett's holding company, Berkshire Hathaway, which he says has spent "an enormous amount" on ads and lobbying against rooftop solar.

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"When you get the fifth-largest company in the world with 6,000 families in the cross hairs, that's bullying," he said. According to a census conducted by The Solar Foundation, Nevada leads the country in the number of solar jobs per capita. The industry employed about 5,900 Nevadans in 2014, up 3,500 from the previous year.

Berkshire Hathaway did not respond to CNBC requests for comment. But in the past, Berkshire has touted its commitment to developing "solar, wind, hydro and geothermal projects that deliver safe, reliable and cost-effective energy.

In an email, NV Energy pointed out that it provides its customers with 247 megawatts of solar power currently, and will serve another 110 megawatts when the Crescent Dunes Solar Energy Project comes online in Tonopah, Nevada, later this year. Separately, NV recently broke ground on its first company-owned solar project, the 15-megawatt Nellis Solar Array II.

Generally, the utility industry claims that limits on net metering ensure fairness among all customers using the power grid, whether they have solar systems or not.

"It's a system created to make sure that customers without solar will not be paying for customers who have solar," NV Energy told the Reno-Gazette Journal earlier this month. Since the 1990s, the Nevada cap has been raised a couple times, from 1 percent to its current 3 percent.

Casinos join forces with solar power

Around the world in a solar powered plane
Around the world in a solar powered plane   

The push to raise Nevada's cap has created unusual business alliances in the state, with large energy consumers such as the casinos joining the solar side, for instance. Earlier this month, Las Vegas Sands, Wynn Resorts, Sunrun, SolarCity and Switch joined forces with TASC to boost the cap.

Robert Utihoven, a lobbyist for TASC who represents solar-using utility customers in Nevada, said he does not see any threat to utility jobs from a higher cap, which is something some U.S. utilities have suggested in the past. "No one at NV Energy is going to lose their job if the cap is bumped up," he said. "Utilities are playing defense to large and small ratepayers who want some relief from these high-cost projects."

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In general, utilities generate a lot of revenue from government contracts to construct power plants, said former Sen. Randolph Townsend. The Republican businessman has been involved in most of the energy legislation in that state over the last 30 years.

"We are trying to keep the utilities healthy in terms of not overbuilding, which is their natural tendency to do," he said. "In order to survive, they tend to overbuild."

Townsend argues that the cap on solar is arbitrary and unnecessary in today's energy environment. Solar makes sense in a place like Nevada, he said, and a lot of people are starting to look to it as a viable solution.

"The question is how fast we should move as a society in transition from fossil fuels to renewables, because there will be a transition eventually." -Lawrence Cunningham, author, "Berkshire Beyond Buffett"

To be sure, NV Energy and Berkshire aren't the only ones being accused of aggressive lobbying. At a public hearing on the issue last week, lawmakers called out the solar industry itself for "aggressive" emails that lashed out at individual representatives.

The CEO of SolarCity, Lyndon Rive, was present at the hearing and publicly apologized for some of his staff for sending the emails. But SolarCity's director of public affairs, Will Craven, said that Rive's apology shouldn't be the highlight of the meeting. "He did apologize, but also said that the consequences of this are massive," Craven said.

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For Lawrence Cunningham, a professor of law at George Washington University, the drama in Nevada illustrates the rapidly changing nature of the U.S. energy scene.

"The question is how fast we should move as a society in transition from fossil fuels to renewables, because there will be a transition eventually," he said.

Cunningham authored a book about Berkshire Hathaway called, "Berkshire Beyond Buffett." "Berkshire are capitalists who are interested in returns," said Cunningham. "But at the same time, [Buffett] has scruples and the company has a conscience."

The bill to raise the cap on net metering has already passed the Nevada Senate and is being debated in the House. If no decision is reached by the end of the week, the issue will wait until the next legislative session, which begins in 2017, as Nevada's legislature meets every other year. In the meantime, the cap will hold steady at 3 percent.