Nevada Debates Third-Party Ownership of Renewable Energy Systems - My Florida Solar East LLC

Nevada Debates Third-Party Ownership of Renewable Energy Systems

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Earlier this month, the Public Utilities Commission of Nevada (PUCN) delayed a ruling on the legality of third-party ownership of renewable energy systems in the state, saying that it needs more time to deliberate how such a ruling will impact Nevada’s ability to meet its renewable energy targets.

The decision has temporarily relieved some nervous business owners who were worried that the PUCN would rule the renting and leasing of renewable energy equipment illegal. Now the renewable energy industry has a chance to raise more awareness about the issue before it comes back before the Commission in the next couple of months.

Debate over the legality of third-party ownership has been brewing since last September when PUCN Staff contended that companies renting or leasing renewable energy equipment to customers in Nevada are acting illegally because they are directly competing with utilities as sellers of power.

Under a typical rental/lease agreement, a company finances, installs and maintains a renewable energy system and charges the host customer a fixed rate for electricity generated by the system. This type of agreement is becoming increasingly popular for customers who can’t afford the upfront cost of, for example, a solar photovoltaic (PV) system.

Mark Johnson, CEO of Golden Sierra Power (GSP), leases PV systems to schools and government agencies in Florida and Nevada. He said that GSP could be virtually shut out of Nevada’s market if the Commission rules his business model illegal, which, combined with the demise of other businesses, would limit the number of megawatts the state could develop to meet its renewable portfolio standard (RPS).

“Nevada is not even close to meeting its RPS. They need to figure out a way to start meeting some of these goals they’ve set by installing more systems. So when the Commission looks at the situation, I don’t think they want to discourage development,” said Johnson.

PUCN Spokesman Sean Sever agreed with Johnson’s assessment. He said that it became obvious during the agenda meeting that the commissioners, advisors and staff attorneys need to begin an investigative process to study the issue in more detail. In order to meet the goal of procuring 20% of its energy from renewables by 2015, Nevada must “step it up in the future,” he said.

“Now everybody will go back and take a real hard look at it. There will be a lot of scrutiny before we vote on it in the next couple of months,” said Sever. “In Nevada, we rely heavily on natural gas at this point. So I think it’s important for us to diversify our energy portfolio and get some of the renewables up to speed.”

It looks as if the Commission is trying to make a determination internally and not send the problem on to the legislature, which could complicate and elongate the process. Erika Morgan, Senior Vice President of Communications with Citizenre, was heartened by the Commission’s willingness to take the issue head-on in a timely manner.

“It was a constructive, open process. At first, we weren’t sure if the Commission was going to simply take the Staff’s word,” said Morgan. “During the meeting, we really got the feeling that the Commission understands how this will affect the market in the state. Also, they want to retain jurisdiction, which is great.”

Currently, Citizenre, GSP and SunEdison are the only companies involved in the dialogue with the Commission. GSP’s Johnson hopes that more companies will participate in the comment period, “as the issue impacts all renewables, not just solar,” he said.

There will now be a written comment period for all stakeholders, followed by a hearing. After the hearing PUCN officials will hold another agenda meeting and make a final decision that will either make or break a large portion of Nevada’s renewable energy market.

“There are a few more steps to the process and there’s no deadline to issue a decision. But we want to rule on this in the next month or two. We know how important it is to provide a level of certainty to businesses in the state,” said PUCN’s Sever.

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