This week, NV Energy, owned by Warren Buffett’s Berkshire Hathaway, signed a Power Purchase Agreement (PPA) to buy electricity from the 100 MW Playa Solar 2 power plant in Nevada at a jaw-droppingly low price of $0.0387 per kWh. Meanwhile, NV Energy’s lobbyists are doing all they can to make it more expensive for Nevada residents to produce their own solar power.
It would seem that Mr. Buffett loves to sell solar to his customers, but he does not like the idea of his customers making their own power. From a strictly business perspective, this is not surprising– after all, why buy rooftop solar from your homeowners or businesses at retail rate, when you can make and sell your own for a tiny fraction of the price?
The problem is, as in most of the United States, utilities in Nevada are government regulated, and operate in government-sanctioned monopoly service territories. This means that residents and businesses in NV Energy’s territory do not have a choice of who they buy their electricity from, and they have no other options as to who they can sell their solar power to. This means that it is up to the Nevada Legislature and the Nevada Utilities Commission to decide what is fair to both parties.
During the 2015 Nevada legislative session, NV Energy paid no less than 11 lobbyists to do their bidding… more than any other single organization (one NV Energy Lobbyist, Pete Ernaut, was even an adviser to Nevada Governor Brian Sandoval on two election campaigns.) They fought attempts to raise the state’s cap on net metering by 235 MWs, but in the end, reached a compromise with solar advocates that allows more solar to be net metered, but adds a monthly service charge to the bill of solar producers. This effectively lowers the price that NV Energy has to pay for rooftop solar and extends the payback period for solar owners, supressing solar industry growth in the state, at least in the rooftop sector.
Mr. Buffett has always enjoyed the massive tax breaks that investing in renewable energy brings, and Berkshires strategy for using utility regulations and state incentives to corner the market on renewables is nothing new. In Iowa, lobbyists for Berkshire-owned MidAmerican Energy used the same strategy throughout the early 2000’s to develop large, utility-scale wind farms while simultaneously suppressing farmer-owned wind projects in their service region.
In many states, solar businesses have been succeeding, despite the roadblocks thrown up by utility companies and their highly-paid lobbyists. “Across the country the utility industry is pressuring regulators and elected officials to limit solar energy’s growth, and the same thing is happening in Nevada,” Gabe Elsner, executive director of the Energy & Policy Institute, a Washington, D.C.-based clean energy think tank told Bloomberg Business. “NV Energy is trying to protect their monopoly by squashing competitors.”
Last June, Warren Buffett spoke at a utility business conference in Las Vegas and said he is prepared to double Berkshire Hathaway’s commitment to renewable energy. That would bring his solar and wind investments to $30 billion. It would also appear that most of that will go to large solar plants like Playa 2, and as little as possible to homeowners. And he is willing to hire a lot of lobbyists to keep it that way.
About the Author: Rich Dana serves as Director of Microenterprise Development for the Sustainable Living Department at Maharishi University of Management. He works with students to develop ideas and implement new projects. He is a serial entrepreneur, a freelance writer and partner in Plan B Consulting. He has served as an energy specialist at the National Center for Appropriate Technology and President of the Iowa Renewable Energy Association. At 53, he still likes to climb on roofs and install solar equipment.
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