Nevada Solar – Everything You Need to Know

nevada-solar

Information about Solar Panels in Nevada

Nevada solar has had a rocky road over the last few years, due to serious net metering changes and ensuing controversies, resulting in the solar industry going dormant and big solar installers leaving the state.

That’s not the whole story though – there’s a glimmer of sunshine through the clouds. With the state beginning the process of reintroducing net metering in June 2017, the solar industry is poised to explode once again.

If you want to jump on the bandwagon, but don’t know where to start, read on for info on the current status of net metering in Nevada as well as other info on relevant policies, incentives, and savings estimates.

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#1 Are Solar Panels in Nevada Worth It?

C
Overall Grade
12 years Avg. Payback Time (For Cash Purchase)
7.8 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$16,909 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

#2 Options for Buying Solar Panels in Nevada

Nevada homeowners have 3 financing options available to install solar.

Cash Upfront

A cash purchase is the simplest way to go solar. You foot the whole bill upfront, your installer puts up the system, done. You monitor the system afterward and you’re in charge if something stops working (which is pretty rare, solar installations have no moving parts so not much breaks). You also enjoy pretty big savings, though again, you have to pay the entire price before the installation.

For an average-sized 5kW system in Nevada, that upfront cost totals around $12,226 after applying the 30% federal tax credit. Yes, we know, that’s a doozy! But this high cost introduces the main selling point of a cash purchase: without any interest or leasing fees, you stand to save quite a bit of money. Let’s take a look at what kind of savings we are talking about.

First off, most experts agree the typical solar installation these days should last 25 years or more. Over that 25 years, a 5kW installation in Nevada will produce about 193,116 kilowatt-hours of electricity. Nice!

Knowing how much your solar installation costs and how much electricity it will produce over its lifetime, now we need to know how much it would cost to purchase the same amount of electricity from the utility over 25 years.

With the average Nevada utility charging about $0.12 per kWh and rates rising 1.7% each year, we find that you’ll save $16,909 over 25 years, after recouping your initial investment in year 12. This is equal to an ROI of about 7.8% – pretty good for a low-risk investment!

Bottom Line: If you don’t have the cash to purchase outright, take a look at loans, which offer many of the same benefits without that hefty price tag.

Leases

During the 2015/2016 net metering fiasco in Nevada (see net metering section below), most of the national installers that offer solar leases – like SolarCity and Sunrun – pulled out of the state since, under the new law, financial savings for homeowners were scant.

As the state began the process of reintroducing net metering in June 2017, national installers started taking steps to reenter the state, thereby making leases available to Nevada homeowners once again.

Like loans, leases offer you a chance to go solar for no money down and start saving right off the bat, from year 1. You don’t own the system, so the federal tax credit goes to your installer, but you’re also not responsible when something breaks or malfunctions.

The whole setup sounds pretty sweet, but the downside is that you’ll always see lower savings when compared to cash purchases and likely to loans as well. In fact, since 2015 or so, solar leases have been on the decline, as more and more homeowners turn to solar loans to finance their installation.

Bottom Line: If you’re thinking about a lease, seriously consider entering into a loan, which gives you many of the same benefits but typically yields higher savings.

More: Solar Leases

Loans

In solar-happy states like Nevada, it seems like every organization is offering loans for solar installations, including banks, credit unions, installers, and even solar loan companies. If you take out a loan to pay for your installation, your savings will drop due to interest payments, but you’ll be the owner of the system and are therefore eligible for all available financial incentives as well, including the federal tax credit. And the best part? You also don’t have to bring all that cash to the table!

If you took out a 15-year loan with 5% interest for the same $12k installation above, you’d be adding an additional $7,396 in interest, for a grand total cost of $19,622. Accounting for this higher cost, your savings with a solar loan drop to around $9,513 after 25 years, with a 3.2% ROI and a long payback period of 18 years.

Bottom Line: If you can find a solar loan with lower interest rates or shorter time frames, you’ll see higher savings, so be sure to do your homework and ask around to get the best deal. Oftentimes, installers will even have preferred lenders, so talk to a few to see what they can offer.

More: Solar Loans

#3 Nevada Solar Policy Information

While Nevada courted extreme controversy with its net metering changes in 2015 and 2016, the state actually has some great solar policies in place. In fact, as of summer 2017, it looks like net metering will be making a comeback in the state!

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Renewable Portfolio Standard

If there’s one thing that conjures up a healthy dose of renewable energy in a state, it’s a Renewable Portfolio Standard. More than any other legislation, RPSs encourage the growth of the local solar industry.

RPSs are simply laws passed by states requiring that a certain percentage of all electricity sold in the state must come from renewable sources by a given date.

The vast majority of all the electricity in the US comes from burning coal and natural gas (about 64% in total) and RPS mandates are meant to switch out those fossil fuels for cleaner renewable energy like wind and solar.

Since states really began adopting RPSs around the 2000s, the amount of solar and wind energy in the US has skyrocketed. Wind currently accounts for 6% of all electricity produced in the country. That might not seem like a huge accomplishment, but consider that back in 2005, wind accounted for just 0.004% of all generation!

This huge jump over just 12 years wouldn’t have happened without RPS mandates. And while solar doesn’t account for nearly the same amount of electricity as wind, at just 1.3% in 2016, it has also exploded in the last 10 years.

This is the power of an RPS. Without them, the renewable energy industry in the US might be dead in the water. Since utilities are the ones who generate and sell electricity, it’s typically up to them to adopt solar or encourage their customers to go solar (which can be used to meet their RPS goals in some states). If utilities don’t meet these goals, they’re typically fined by the state.

Nevada requires that 25% of all electricity sold in the state must be renewably sourced by 2025. This is very similar to neighboring states’ RPSs, with Utah requiring 20% by 2025, Arizona requiring 15% by 2025, and California requiring 50% by 2030 (a huge endeavor).

Nevada also requires that 1.5% of all sales come specifically from solar by 2025, in what’s known as a solar carve-out. This is in line with the handful of other states that also have solar carve-outs. For example, Colorado requires that 3% must come from distributed sources like rooftop solar, Oregon requires that 20 megawatts come from solar, and North Carolina requires 0.2% from solar.

More: Renewable Portfolio Standard (RPS)

Electricity Prices

Nevada’s average electricity price of $0.123 per kWh is just below the national average of $0.127 per kWh – also in line with neighbors New Mexico and Colorado, though about 20% higher than Utah’s $0.107 per kWh. In addition, when we analyze EIA data over the past 15 years, Nevada’s electricity prices have risen an average of 1.7% each year, much slower than the US average’s 2.6%, but higher than some states.

In a nutshell, Nevada sees fairly standard electricity prices. While they’ll likely increase more slowly than in other states, they are going to creep up steadily over the next 25 years.

If you don’t have solar installed, you’re simply left to the whims of your utility. When they raise rates, you’ve just got to grin and pay it if you want to keep the lights on. If you’ve installed solar and are producing your own electricity, you get to avoid those constantly increasing utility prices. Smart decision!

This is how solar savings work. By installing solar, you successfully avoid paying your utility serious bucks for electricity. As you save more and more each year, you are paying off your initial solar investment through these savings until you’ve broken even – typically around 10 to 15 years. Once you’ve made your investment back, it’s all free electricity for the rest of your installation’s life.

Net Metering (Updated for 2017)

Net metering in Nevada has had a rocky road over the last few years. In fact, rocky might be an understatement. More like a cracked, broken, boulder-strewn road after an earthquake-flood combo.

Before 2015, everything was fairly hunky-dory. Solar homeowners were eligible for net metering, with the utility providing one-to-one credits for any excess electricity a homeowner’s solar system produced but didn’t use and went to the grid. It’s the quintessential net metering system and it works great.

(By one-to-one credit, we mean that if you paid $0.12 per kWh for electricity, the utility would credit you that same amount for every kWh that you put into the grid. Great!)

Unfortunately, the state had put a cap on how much electricity net metering could account for. In the fall of 2015, the state met that quota and state regulators required the utilities to draft up new net metering rules.

Here’s where it got ugly.

The new net metering regulations, adopted at the beginning of 2016, weren’t beneficial to homeowners at all. Instead of one-to-one credits for excess electricity, it was credited at the utility’s avoided cost. Suddenly, if your utility charged $0.12 per kWh to buy electricity, instead of getting a credit for $0.12 for each kWh you sent to the grid, you were probably getting around $0.03 per kWh.

Worst of all – these new, very low rates applied retroactively to all solar customers in the state, no matter when they installed their system!

You can probably figure out what the problem is here. If you purchased and installed your system thinking you were getting full credit for all your excess electricity, these new regulations just pulled the rug out from under you, completely removing a huge cornerstone of your financial savings!

Needless to say, there was a huge outcry, with many claiming NV Energy was behind the new regulations. Pretty much all the major solar installers like SolarCity and Sunrun left the state as well.

Thankfully, in September 2016, the Nevada Public Utilities Commission (the government organization in charge of regulating NV Energy, among others) decided to restore net metering incentives to customers who installed their systems before the beginning of 2016 – a huge relief to all those previous solar customers in the state. New solar homeowners, though, were still out of luck.

Finally after so much outcry, in June 2017 the state legislature passed a bill to reinstate net metering for all solar homeowners in the state. While net metering won’t go back to full retail rate credits like before, homeowners will be credited at a high percentage of the full rate.

At the beginning, credits will be worth 95% of the retail rate (so if you pay $0.12 per kWh, you’d be credited at $0.11 per kWh for all your excess electricity). As more homeowners install solar, that rate drops 7% for every 80 MW of rooftop solar installed, down to a base of 75%, at which point it doesn’t get any lower.

While it’s a far cry from the old system, even 75% of the retail rate can make solar a sound financial investment and major installers are already working to reenter the state – potentially jumpstarting again the once explosive solar industry in Nevada. For once, it’s hopefully a happy ending!

On the flip side, if you’re a customer of Valley Electric, the electric cooperative outside the jurisdiction of the Nevada PUC, you’re actually in luck! You’re eligible for full retail rate net metering. The coop’s board of directors approved net metering in 2008 for systems up to 30kW in size.

At Valley Electric, net metering customers are given bill credits for any excess electricity sent to the grid and, at the end of the year, Valley Electric can either carry forward those credits into the next year or pay the customer for the remaining credits at their avoided cost.

More: Net Metering

Interconnection Rules

Since 2003, the state of Nevada has dictated what utilities must require (or not require) for solar homeowners to be connected to their grid, a process known as interconnection. Without the state stepping in, utilities are free to charge fees and require additional equipment as well as additional insurance, all of which drives up the cost of going solar.

According to state law, Nevada homeowners with installations under 10kW aren’t required to install additional safety disconnects on their installation (a common requirement for larger installations). You also aren’t required to purchase additional liability insurance for the system, either.

This is good news, but in all honesty, you really don’t need to worry about it. Your installer should take care of the entire interconnection process for you, even filling out your paperwork on your behalf (though you’ll still have to sign it of course).

Homeowners Associations

Homeowners occasionally worry that their HOA might put up a fight in regards to their solar installation. In fact, there have been fights between homeowners and HOAs across the country for this very reason, with HOAs either not appreciating the aesthetics of rooftop solar or harboring the misbelief that solar negatively affect home values (more on that later).

Thankfully, in Nevada, you don’t need to worry about this at all. State law forbids any HOA, covenant, or deed from blocking solar installations on the property. HOAs can dictate where the system can be placed (on the backside of the roof, facing away from the street, for example), as long as the system’s production doesn’t drop by 10% or more (according to SB 114). So don’t worry, get that solar installed!

#4 Financial Incentives, Rebates, and Tax Credits

Nevada homeowners are eligible for a couple of great incentives when they go solar: the federal tax credit and NV Energy’s rebate program or REC program.

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Federal Tax Credit

The federal tax credit is an amazing incentive available to homeowners who purchase their system either in cash or through a loan. The credit decreases the amount of taxes you owe by 30% of your total installation cost. This means that an $18k installation can drop your taxes by $5,400.

The credit is non-refundable, but can be broken out and claimed over several years. The full credit will expire at the end of 2019, when it drops to 26% until the end of 2020, then 22% until the end of 2021. The credit will completely expire after 2021.

More: Solar Federal Tax Credit

Nevada Tax Credits

Nevada offers no state tax credits for solar homeowners.

Utility Based Incentives

NV Energy offers rebates for solar homeowners through their RenewableGenerations Program. For systems under 25kW, NV Energy will provide an upfront rebate worth $0.1475 per watt as of July 2017 (the incentive decreases as more solar is installed).

For an average-sized 5kW installation, at the current rate, you’d receive a $737 rebate. Along with your interconnection application, your installer should help you apply for this rebate as well.

By receiving this incentive, you’re actually giving NV Energy all the Renewable Energy Credits your installation produces. NV Energy then uses these RECs to meet the state’s RPS mandates.

If you don’t want to hand over your RECs, you can actually sell them to NV Energy and possibly make even more money than through the rebate program.

NV Energy is required to offer payment for any RECs its customers produce. As of 2015, homeowners receive 1 REC (which Nevada actually calls a PEC, portfolio energy credit) for each kWh of electricity their system produces. This means that you’ll be making money slowly over the life of your system – not all upfront like NV Energy’s rebate program.

You can’t enroll in both programs, so you’ll need to pick one. You might be able to save more with the REC program, but it’s hard to walk away from almost $800 in cash! The price of RECs are determined by market value, meaning they fluctuate, so be sure to ask your installer which program will save you the most over the long run.

Property Tax Exemption

Unlike many other states, Nevada homeowners aren’t eligible for any property tax exemptions for their solar installations.

Sales Tax Exemption

Nevada also does not offer sales tax exemption on solar equipment.

General Increase in Home Value

Purchasing and installing solar on your roof can add upwards of $4 per watt to the value of your home, depending on the age of the installation. This means that a normal-sized 5kW installation can add $20k in value to your home. These findings come from a 2015 study from the Lawrence Berkeley National Lab of 22,000 homes in 8 states from 1999 to 2013, including 4,000 homes with solar.

These values are only for installations owned by the homeowner (either through a cash or loan purchase). According to a separate study from LBNL of Southern California homes, installations financed through leases bring no additional value to the home, though they don’t detract from the home, either.

While an increase in home value probably isn’t your main reason for installing solar, it’s certainly a perk!

More: Buyers Will Pay More for Solar Homes

If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.

#5 Reno and Las Vegas Solarreno-skyline

Are solar panels worth it in Reno or Las Vegas? We’ve talked a lot about NV Energy in the sections above and if you live in either of these cities, you’ve probably dealt with them before, as the utility provides electricity to both cities.

If you’re going solar in one of these two cities, there are not too many additional details you need to be aware of. You’re eligible for the federal tax credit, just like homeowners in any city, as well as NV Energy’s rebate or REC program. If there are any special installation requirements for your local city or county, your installer will be aware of them and take the appropriate steps.

What To Do Next?nevada-valley-of-fire

Nevada was, and hopefully will be again, a hotbed for solar, with many installation companies working in these cities. After you decide to move forward, be sure to get estimates from at least 3 different companies. This is one of the best things you can do, as you can save 10% just by shopping around! And don’t forget the local installers, who often have lower rates than the big national companies!

Image Credits under CC License via Pixabay - 1, 2,  & Flickr -34, 5

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