Nevada regulators have been going back and forth on the state’s solar incentives. 2015 ended with the Public Utilities Commission of Nevada (PUCN) approving a new net metering policy for 2016. The order states that all solar customers (old and new) will be paid for their excess solar power generation at wholesale instead of retail rates and will have higher monthly fixed charges for using the grid. If other states follow suit, then the economics of solar installations could be hindered.

Net metering is a program available in most states in the country. The program usually allows for solar customers to sell back excess generation to the grid at retail rates, which tend to be much higher than wholesale rates because they include transmission, delivery and grid maintenance costs. Under this program a solar customer could potentially have monthly bills with no charge from the utility even though it used power from the grid. This is because the customer generated enough excess power and there was a net of zero between the amount owed to the utility and the amount owed to the customer.

Nevada’s decision has made solar installations less profitable. As a result major solar companies in the state have announced that they will shutter operations. SolarCity and Sunrun, the major players in the state, of course do not appreciate the lowering to wholesale rates and upping of fixed charges. To make matters worse, however, there is “no grandfathering” clause, which means that all solar customers, new and old, will be under the new rules. This greatly undercuts the “savings” that customers with solar installations were promised for their long-term investments.

Why so much hype about Nevada’s solar policies?

The PUCN’s recent decision will impact all solar customers in Nevada, not just the new ones, by lowering the economic incentives for solar projects. This move could be a harbinger for what’s in store in other states. More than half of the states in the country are currently studying or changing net metering policies, California, Hawaii and Massachusetts included. The proposals so far have been relevant to new customers only, meaning that if the solar project was installed before the change in policy, then the old policy remains in effect. Nevada is the first state to apply a “no grandfathering” clause, which has shaken the solar industry and its potential economics.