As solar installations multiply, U.S. utility companies fight back

Below the MandalayBayHotel in Las Vegas, they glimmer in the relentless Nevada sunlikescales on a monstrous grey dragon. More than 26,000 solar panels cover113,000square metres of rooftop. It'sthe biggest solar array of its kind in America.

"Just look at its physical size," says MGM's chief sustainability officer Cindy Ortega from high atop the Delano hotel which overlooks the arrays. "We have a lot of sunshine here and we want to take advantage of that renewable energy."

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The solar panels were installed by MGM to power 25 per cent of the peak energy used by three of its hotels.

"At the hottest part of the day, it produces enough power to power 1,350 customers of the Nevada utility," Ortega says.

MGM now plans to obtain some of its energy from its solar installations and other renewable resources, and buy the rest on the wholesale market.

Fantastic, if you're a fan of clean energy. Disaster, if you're privately owned Nevada power utility NV Energy. Sevenper cent of its revenue will disappear when the hotel chain pulls the plug, but the utility wouldn't allow that to happen without a fight.

MGM to compensate utility

After a protracted legal battle with NV Energy, MGMhas now agreed to cough up $87 millionto make up the shortfall.

"What that money goes towards is making sure all the other ratepayers here in southern Nevada aren't harmed or don't have higher power bills because MGM left the grid," says Ortega.

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This is what happens when disruptive technology becomes popular: The monopolies fight back.And increasingly, those who are actually being disrupted are the people who have chosen to go solar, like Judi Penna.

"Right here are my solar panels" she says, pointing at the panels covering half of her extensive roof in North Las Vegas.

Last yearshe heard about what she calls "a beautiful plan."It's known as "net metering;"if you installsolar panels you can earn credit by sending excess energybackto the power company.

"I jumped on it!" she says. "But that" she says, pointing at her roof, "isonly half the panels I need."

Net metering scrapped as panels half installed

She had panels installed on the right half of her roof. Then the Nevada power utility suddenly scrapped the deal.With so many people switching to solar, the utility said it was losing revenue and would have to pass the costs off to its non-solar customers. Instead it chose to slashthe amount of credit solar customers like Pennagot for selling electricity back to the system, effectively cancelling the net metering program. And elected officialsdid nothing to stop it, she says.

"It's politics at work to help a few keep their money," Pennasays.

With that, the consumersolar industry in the country's sunniest state was basically shut down.

As of June ofthisyear, there areapproximately 30,000 rooftop solar customers in Nevada, producing more than265 megawatts of electricity, about threeper cent of NV Energy's peak demand.

The impact of the utility's decision to end net metering can be seen at SolarCity, which last year was selling solar panels in Nevada faster than the company could installthem.

"So we're here in SolarCity's call centre," says Chandler Sherman, the company's spokeswoman, as she walks down an aisle between dozens and dozens of cubicles. About 200 salespeople are on headsets, some sitting, some standing, some walking, almost all of them trying to convince someone to go solar.

Sales of panels in Nevada dive

"They are selling solar around the country but they can't sell solar to their own neighbours here in Nevada because of the policy decision that made solar unaffordable for Nevadans," Sherman says.

"There were about 1,400 people applying to go solar every month in 2015," she says. "After the new rates went out, it'sabout 15 per month, in the entire state of Nevada. One-fivepeople. Out of a state of threemillion."

At a nearby SolarCitywarehouse, there's only one worker and one empty truck. Inside aredozens and dozens of solar panelswith names taped to them;panels that were destined for Nevada customers who no longer want them.

And it's not just happening in Nevada.Two other states -- Hawaii and Louisiana have pulled their net metering programs, and, according to Hugh Bromley of BloombergEnergy Finance, more than two dozen other statesare re-examining them.

"What you'reseeing across the country is that demand energy demand is no longer growing," Bromley says.

Utilities' market share shrinking

The utilities' total market share is shrinking, he says,"and that isa threat to their business model."

When the utilitycompanies complain that solar customers aren't paying their fair share, Bromley believes they have a case.

"It gets to a tipping point whereultimately customers who install systems later are quite a burden to the system," Bromley says. "There's investment in the network which someone needs to pay for. They're no longer procuring energy from the utility,it's ultimately borne by the rest of the ratepayers."

Predictably, the solar companies see things a little differently.

"Of course the utility is powerful," Sherman says. "The utilities had a monopoly on energy here since... since there's been energy here. And they have a lot of friends in the legislature.What we're seeing is the utility, rather than adapting to the changes that are happening in the energy sector, they're choosing to blame rooftop solar and trying to place discriminatory charges and fees on rooftop solar customers."

This past week at a recent solar powertrade show in Las Vegas, several CEOsworried openly about what the trend would mean for the industry across the U.S.

Solar needs a strategy

Guy Sella, CEO of SolarEdge, is calling for federal guidelines to help both the conventional power utilities and the solar industry find a way to co-exist.

"We saw the change in Nevada, and we understand that what we do today puts lots of pressure and risk on the utilities after investments of hundreds of billions over 130 years," Sellasaid.

David Kaiserman, president of Lennar Ventures,believes the solarindustry is to the power utilities asUberis to cabs, andAirbnbis to hospitality.The solar industry isn't doing enough to convince the public, and politicians it's worth the pain,Kaisermansays.

Disruptive technology means change

"It's a disruptive technology that causes pain as all disruptive technologies do."To survive, solarshould startmarketingitself as aggressively as Apple orGoogle, he says.

"The symptomis what you see here in Nevada," Kaiserman said. "We're going to eliminate an industry where we induced people into putting solar on the roof and then we said, 'Ooh by the way the contracts that we told you these 20-yearleases that we said were great, that we gave you a rebate for and made you real comfortable about oh, those stopped.' Those types of things are nonsensical. But they're bornfrom the fact that there isn't a counter-balancing consumer viewpoint that says 'look this is what we want, this is what we demand as a society.'"

In Nevada, at least one part of Kaiserman's wish has been granted. Thenet metering programwaswildly popularand there waspolitical pressure to restore it. Nevada's governor came out in favour of adeal that wouldbring back theold rates NV Energy had been paying solar customers, though onlyfor the panels that havealready been installed. On Friday, regulators approved the deal.

Penna greetedthe announcementwith a shrug.

"I'm just going to wait and see and figure out what I'm going to do," she says.

After all, the new deal isgreat for half of herroof.But not the other.