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Solar company SolarCity announced on Wednesday that it will slash 550 jobs in Nevada following state regulators’ decision to phase out a controversial subsidy for rooftop solar in the state.
It pledged to move those jobs to states where it can still secure subsidies for its innovative solar leasing business model.
SolarCity criticized the Nevada Public Utilities Commission’s decision “to terminate Nevada's rooftop solar industry just days before Christmas” by sunsetting regulations that required the state’s utilities to buy power from rooftop solar installations at inflated prices.
The company said the move constituted a giveaway to NV Energy, Nevada’s largest utility. However, subsidy critics say it demonstrates the industry’s continued reliance on government handouts and inability to compete with traditional forms of energy.
With incentives ending in Nevada, SolarCity said it “will relocate affected employees to business-friendly states.”
A number of companies have capitalized on “net-metering” programs in Nevada and other states that allow rooftop solar panel owners to sell their excess electricity back to the utilities running their power grid.
Instead of simply selling solar panels to Nevada homeowners, SolarCity leases the panels at no up-front cost, sells power to utilities at retail rather than wholesale rates, and pockets the difference.
The net-metering fight in Nevada has pitted the state’s burgeoning solar industry against its utilities, which say the program forced them to pay inflated prices for power in a de facto subsidy for solar companies and their investors.
SolarCity’s decision to slash Nevada jobs means that it is still overly reliant on such subsidies, according to William Yeatman, a senior fellow and energy policy expert at the Competitive Enterprise Institute.
“It is ridiculous for Solar City to cry foul in the face of regulatory headwinds,” said Yeatman, who called SolarCity’s angry press release “over the top.”
“This company exists only by the grace of favorable politics and regulation,” Yeatman said in an email. “It didn’t complain when ratepayers and taxpayers subsidized the company’s growth in the Nevada market at the expense of competitors in the electricity generation market.”
The solar leasing model used by SolarCity and others has drawn scrutiny from regulators and policymakers who worry that it understates the costs that solar panel owners could face under such arrangements.
The Federal Trade Commission has issued guidance to rooftop solar installers designed to “ensure that the claims they make about the environmental attributes of their products are truthful and non-deceptive.”
Solar subsidy critics say potential deception extends to the companies’ core business strategies.
“The solar leasing market may pose a considerable risk to the increasingly large numbers of American consumers that commit to the leasing product without all of the relevant information,” wrote a group of House Republicans in a 2014 letter to the FTC.
“Of particular concern, is the possibility that these third party leasing companies may be utilizing deceptive marketing strategies that overstate the savings the homeowner will receive,” the lawmakers wrote in their letter.
Some homeowners who have installed leased solar panels say they have significantly depressed the values of their homes due to reticence by potential buyers to assume their remaining obligations under those leases.
Despite those concerns, Nevada’s solar companies lined up significant political support for their position. Senate Minority Leader Harry Reid (D., Nev.) criticized NV Energy and backed extended net metering subsidies during an August green energy conference in Nevada organized by some of Reid’s top former aides.