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Here comes the sun

Solar Energy
Brent Holmes
Brent Holmes

The falling price of solar makes an economic case for upping Nevada’s renewable energy production. Will residents reap the benefits?

While NV Energy and rooftop solar advocates have been busy debating whether to raise the statewide cap on distributed generation and/or charge Nevada’s rooftop solar customers fees for being on the grid, something else significant has happened in the world of solar energy: Its cost dropped below that of natural gas. In July, NV Energy asked the Public Utilities Commission to approve two proposed deals for solar power plants. The two 100-megawatt proposals included costs of $46 per megawatt hour fixed for 20 years and $38.70 per megawatt hour with incremental increases over 20 years. The current cost of natural gas is around $70 per megawatt hour.

Why does this matter? Let’s start with the practical reason. Solar reaching price parity with natural gas means it’s a more stable long-term investment. Whereas natural gas prices fluctuate in response to market forces, the price of sunshine is always the same: $0. That doesn’t mean it costs nothing to capture and distribute, of course. It also doesn’t mean that solar is cheaper than natural gas, per se — at least right now in Nevada. That’s because NV Energy, which provides electricity to 95 percent of the state’s residents, has enough power generation capacity available to meet current customer demand. If the company built excess capacity today, it would likely increase rates to cover the cost of its existing investments. Think of it this way: It’s cheaper to just keep driving a gas-guzzler than to add a Prius to the garage and drive it instead, so long as you’re still making payments on the gas-guzzler.

What the falling price of solar does mean is that it’s the smarter choice for any new capacity the state needs going forward — or any additional capacity it deems necessary to hedge its bets against the volatile price of natural gas.

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Naturally, environmentalists are ecstatic about this development. Despite Senator Harry Reid proclaiming Nevada the “Saudi Arabia of solar” several years ago, the state doesn’t lead the nation in this regard. According to data from last year, Nevada was fifth in the U.S. in installed solar energy capacity, with enough to power 120,000 houses. Not bad, to be sure. And the clean-energy bill passed in the 2013 state Legislature (referred to in the industry by its number, SB123) required NV Energy to retire its coal-fired generating stations by 2019 and replace 350 megawatts of that capacity with renewable energy — a progressive move toward replacing carbon-emitting power plants with cleaner-burning facilities, and the reason behind the two proposals for solar plants that NV Energy submitted to the PUC in July.

Unfortunately for those who take more than market prices into account when estimating the value of a type of energy, SB123’s mandates were loosened somewhat by a bill in the 2015 Legislature, AB498. This law gave NV Energy flexibility in complying with the coal shut-down law by delaying construction of the remaining clean energy facilities, beyond what’s already out to bid, until after there is a demonstrated need for further capacity. Intended or not, it’s an argument in favor of the status quo.

If we can avoid fracking our land — potentially destabilizing the geology and trashing the water supply — then why wouldn’t we?

And, again, it’s not a horrible status quo. NV Energy has more than 1,240 megawatts of renewable energy under contract or under development and claims that the state ranks first in the nation per capita in installed geothermal and solar energy. Still, as of last year, only 3 percent of Nevada’s electricity generation came from solar while 64 percent was from natural gas, according to trade association Advanced Energy Economy. Since the state has ample resources to meet its renewable portfolio standard of 25 percent by 2025 (and Southern Nevada is already at 20 percent this year), we’ll probably end up exporting much of the solar power we add to California. Meanwhile, as far as our own consumption goes, Nevadans use eight times more fossil fuels than renewables, according to U.S. Energy Information Administration data.

This matters to anyone who’d like to see America end its so-called addiction to oil (and all the geopolitical problems that come with it). Sure, natural gas produces half the CO2 of coal, but that’s like saying Captain Crunch has half the sugar of Fruity Pebbles. Neither one is good for you. And now, it seems, the organic bran flakes are cheaper, too.

When the PUC asked Energy & Environmental Economics to evaluate the statewide impact of net metering (compensating rooftop solar customers for the excess energy they produce that goes back into the grid), the research firm took more than per-megawatt-hour energy prices into consideration. In its 2014 report, it also assigned value to societal benefits, such as avoiding the public health cost of treating respiratory diseases related to pollution.

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I would go further, asserting there’s enormous value in the abstract idea of environmental stewardship. If we can avoid fracking our land — potentially destabilizing the geology and trashing the water supply — then why wouldn’t we? Particularly if the price of solar is on par with or lower than that of natural gas?

And, as their presence at public hearings has demonstrated, many Nevadans would argue in favor of choice. Whether because of an aversion to oil dependence, or a preference for sustainability — or because they simply can’t stand relying for electricity on an investor-owned utility when there’s all that high-quality sunshine falling from the sky 300 days a year for free — recent protests suggest there are plenty of people who’d like to go, or stay, solar.

Particularly if the state, utility and utilities commission are going to block distributed generation (and I hope they don’t), then they should see to it that more clean energy is generated centrally, not just for export, but for local consumption as well. Go ahead with those remaining 100 megawatts of solar, even if the law doesn’t require it. It’s a chance for Nevada to win at something that makes the world a better place, and it’s what we want.

Desert Companion welcomed Heidi Kyser as staff writer in January 2014. In 2018, she was promoted to senior writer and producer, working for both DC and State of Nevada. She produced KNPR’s first podcast, the Edward R. Murrow Regional Award-winning Native Nevada, in 2020. The following year, she returned her focus full-time to Desert Companion, becoming Deputy Editor, which meant she was next in line to take over when longtime editor Andrew Kiraly left in July 2022.