The David Goliath Saga for Renewable Energy
Updated: May 22, 2019
Have you seen Ben Hur? It is undoubtedly one of the great classic movies that Hollywood has ever produced.
There is a dialogue in the movie that I am reminded of these days.
Sextus, the Governer of Judea asks Messala the new Tribune of Judea.
Sextus: How do you fight an idea?
Messala: I will tell you how to fight an idea? With another idea!
So how do you fight an idea? You fight an idea with another idea!
This is exactly what Utility Companies in Nevada tried to do to renewable energy lovers in the State.
I would be happy to narrate this saga to you.
Nevada is a desert state in the US, which is probably why there has been much activity with regards to renewable energy, as they have a great capacity to provide Solar Power.
Now US has a regulation called Renewable Portfolio Regulation (RPS) that stipulates a certain percentage of energy be generated from renewable energy sources such as – the wind, solar, biomass and geothermal. This regulation places the obligation upon the electricity supply companies to produce a specified fraction of their electricity from renewable sources. For Nevada, the stipulation in 2015 was that 20% of their power be from renewable resources and 5% from solar power.
In 2007, Nevada had the largest photovoltaic power plant in the world (at that period) and they were able to provide the Nellis Air Force Base with electricity for only 2.2 cents/kWh, which was pretty inexpensive considering the fact that Neva Power Company was charging them 9 Cents/ kWh. This led to many more solar power plants and companies being established in Nevada.
If you see the rate of solar power generated in the state of Nevada then you would see the steady rise in the power generated.
With the rise of solar power in Nevada, many companies started selling solar panels in the domestic market where people could install solar panels on their rooftop and reduce their utility bills by using a renewable energy source and at the same time sell the extra energy to the grid. Rooftop solar in domestic homes so much so that Nevada was once described as the ‘Saudi Arabia of Solar Energy’.
With the solar business booming, the local economy in Nevada got a huge boost with Solar City hiring as many as over 2000 employees to service their 20,000 customers who had installed rooftop solar panels.
What could be more idyllic than this? A rooftop solar that would drastically reduce your utility bills and what more the extra energy that you get to collect can be fed back into the grid allowing you to make money. On top of all that, you have the satisfaction of drastically reducing your carbon footprint.
Unfortunately, there was a snake in this paradise and they happened to be the utility companies.
In a region like India where we burn huge amounts of coal just to produce electricity and where many remote villages are still off grid, electricity companies would welcome it if the people found an ingenious way to light up their homes with the help of solar energy. Wouldn’t they?
But the Utility companies in Nevada were not happy and there were many reasons for this –
First and foremost, the obvious reason for their unhappiness is the fact that by harnessing Solar Power, the domestic customers are going to use less and less electricity that is generated by their companies. In the US, most Utility Companies that supply electricity are owned by private corporates and energy companies (which incidentally explains this capitalistic approach).
And as with any capitalistic company, private utilities do not look favourably upon newfound energy resources that would eat their own profits. To the shareholders of these companies, the fact that a clean energy source that would cause little or no pollution is of little consequence. Most of them couldn’t get their head around the fact that people would harness their own energy and utilise and furthermore, they didn’t anticipate the fact the customer would end up making money by selling their extra-unused energy back to the grid.
The sad truth that emerged out of this tug-of-war is that it is easy to fight against the solar power energy source rather than innovate one’s old archaic business goals. While some Utility Companies have tried to build their business around the renewable energy fervour that is becoming popular in the US, many have chosen to fight against it.
For example, Green Mountain Energy in the state of Vermont was one of the first utility companies that offered alternative energy solutions to the people. Today, they offer many sustainable solutions and products to their customers and offers ‘pollution free electricity’ to the residents of Texas, New York and many other states.
While there are a few anomalies like this company, there are many others that chose to fight and bring down the solar companies rather than innovate and build their business on clean energy!
What’s even more surprising in this whole saga was the fact that it is happening in a developed nation like the United States and not in a suburb of Uttar Pradesh, Madhya Pradesh or Bihar where the literacy rates are abysmally low.
The first hit on the Nevada Solar customers was a draft order that the State Public Utilities Commission filed in 2015 that proposed to reduce the credits that the solar customers would get when they sell excess power back to the grid.
One of the biggest lures for solar customers in Nevada had been of course ‘no more utility bills’ and they get to make money that would one day square off the investment that they made on the solar panels by just giving back their excess free energy to the grid.
But the Utilities Commission sought to cut back on this credit as a measure to curb the spread of Solar Power. Their argument was that non-solar customers were forced the subsidise those who used green power. Let me explain this argument in simple terms –
If there are 100 people in a town and about 70 of them were using Solar Power and were selling free energy to the grid, then the utility companies were charging the rest of the 30 people more money. Why? Simple! They wish to compensate for the payment that they would have otherwise received from the rest of the 70 people.
Sadly for the Solar industry in Nevada, this draft came into force and effectively ended the popular solar subsidy scheme.
It was a huge blow for the solar customers and to those who truly believed in using free energy.
That’s not all that they did. They went an extra mile to literally punish those who had opted for solar energy in the state.
NV Energy is one of the biggest utility companies proposed that the State raise the residential fixed charges in South Nevada to a $15.25 per month, which is a whopping 50%. How does it affect the consumers?
This means even those who are not connected to the traditional grid and are only using clean energy to power their houses, will still have to shell out $15.25 per month which in my opinion, a rotten deal by all standards.
NV Energy and other Utilities Companies persistence and money power won and the draft got passed which caused many Solar Companies to shut shop.
One of the most powerful arguments used by the Utility Companies is that if Solar energy Powers our grid and they end up paying their customers for the excess energy, then how would they generate enough revenue to pay for the grid and its maintenance?
Yet another argument made in this regard was that if everybody started producing solar energy on their own rooftop then a lot of revenue would be needed to produce power plants that would need to produce energy after the sun goes down!
This is precisely how the Utility Companies fought an idea with another idea!
While each of these questions did have some merit it only means that there is a need to rethink the role that Utility Companies play in a sustainable environment that we are trying to create. But instead of coming up with an alternative solution that would not infringe on the usage of free energy. But that didn’t happen here instead they sought to destroy a viable industry and a chance to utilise free energy.
This status quo continued for an entire year but ultimately common sense prevailed…
This month a referendum that took place during the US electoral process that saw lakhs of Davids sling shooting Goliaths and voting to break the stranglehold of NV Energy on the electricity production in the state.
More than 70% of Nevadans voted to open Electric Energy Market, which challenges the arcane law that allowed Utility companies to establish monopolies within their own geographic service areas.
With this referendum in place, the monopoly of the Utility Companies will end hopefully in a year, paving the way for more solar companies, sustainability development and free energy.
At the end of this saga, I am however left wondering what kind of challenges India might face when we bring in Solar Energy here. What do you think?