In a clash of the titans, Warren Buffett just defeated Elon Musk.
The fight was over solar net-metering in Nevada, a state that has the fifth largest installed solar capacity in the country. Nevada is home to Tesla’s ‘Gigafactory,’ which will produce batteries for electric vehicles. In addition to CEO of Tesla, Elon Musk is also the chairman of SolarCity, and net-metering – the policy that allows homeowners with solar panels to be paid for the power they produce – is central to solar economics.
But while Musk has quite a bit of sway in the Silver State, he came up short against Warren Buffett. NV Energy, a major Nevada utility and subsidiary of Buffett’s Berkshire Hathaway, strongly opposed the net-metering provision.
Earlier this year the Nevada state legislature ordered the Public Utility Commission (PUC) to formulate a new net-metering payment by the end of 2015 after the state maxed out the allotted 235 megawatt net-metering program. Vivint Solar, another solar developer, pulled out of Nevada last summer after the net-metering program became fully subscribed, which forced solar installations to grind to a halt. The impasse meant that a lot was riding on the PUC’s decision. Related: Lifting The Oil Export Ban Could Be A Short-Sighted Action
Just days before a New Year deadline, the Nevada Public Utility Commission (PUC) voted 3-0 to slash the payments that homeowners receive for solar energy and also increase charges on them. The solar industry cried foul, saying that the PUC decision was made without evidence or debate, and that it “flies in the face of Nevada law, which requires the state to 'encourage private investment in renewable energy resources, stimulate the economic growth of this State; and enhance the continued diversification of the energy resources used in this State' through net metering,” as Bryan Miller, Senior Vice President of Public Policy at solar developer Sunrun, said in a statement. “We believe the Commission, appointed by Governor Sandoval, has done the exact opposite today.”
The move also does not grandfather in homeowners who have already installed solar, even though many of those people likely made solar investments based on the net-metering payments. The retroactive penalty could be a death blow for solar in Nevada, and one that the solar industry says might also be illegal. The Alliance for Solar Choice, an industry trade group, filed a lawsuit against the PUC. Sunrun also filed a lawsuit against Nevada Governor Brian Sandoval (R) in order to obtain records of text messages between him and NV Energy lobbyists. Related: China's $1 Trillion Nuclear Plan
The main proponent of the move is Warren Buffett’s NV Energy, which pays residential homes for the solar energy they produce. NV Energy says that lowering payments avoids shifting the costs to other ratepayers. NV Energy proposed to lower net-metering payments and to increase fixed charges on solar homes, a decision that the PUC went with. The PUC decision will cut those payments by 75 percent.
SolarCity threatened to leave the state if the PUC moved forward on slashing the net-metering payments. "It will destroy the rooftop solar industry in one of the states with the most sunshine...There is so much wrong with the decision, the only option for the PUC is to reject it," SolarCity’s CEO Lyndon Rive told Bloomberg ahead of the vote. "The one beneficiary of this decision would be NV Energy, whose monopoly will have been protected." Related: OPEC: $95 Oil, But Not Until 2040
After the PUC voted to roll back net-metering payments, SolarCity followed through on its threat. On December 23, SolarCity announced that it would stop selling and installing solar panels in Nevada. "The PUC has protected NV Energy's monopoly, and everyone else will lose," SolarCity’s Rive said. "We have no alternative but to cease Nevada sales and installations, but we will fight this flawed decision on behalf of our Nevada customers and employees."
NV Energy said it was reviewing the PUC’s decision to determine how it would affect its customers.
December has been a busy month of SolarCity, which saw its share price skyrocket following the federal budget deal that extended tax credits for solar. But now it has been chased out of Nevada.
ADVERTISEMENT
By Nick Cunningham of Oilprice.com
More Top Reads From Oilprice.com:
- 5 Possible Surprises In Energy For 2016
- $10 Trillion Investment Needed To Avoid Massive Oil Price Spike Says OPEC
- OPEC Expects U.S. Oil Production To Rise In 2016… Really?
Pushing people into a corner, they will now use Tesla based storage (aka Powerwall), exiting the grid completely. Then noone will want his power.
Either way, however BRK sees fit to conduct its business, it is a minor issue that perception of business incorporation is so dependent on marginal legislation. If the idea was any good, the product would sell itself.