INTRO: For the first time Nevadans are getting financial incentives to bring the state's abundance of sunshine inside. The offer of cash for installing solar panels is overwhelmingly popular, but as KNPR's Ky Plaskon reports, what the power company gets in return for the rebate is also valuable.
PLASKON: When someone installs a renewable energy system like solar panels, the Public Utilities Commission issues a Renewable Energy Credit or REC as it is known in financial markets. Mark Harris is with the PUC.
PLASKON: It's a piece of paper, you haven't seen the piece of paper. It's a piece of paper that is embossed and stamped and it is one REC equals one kilowatt hour.
PLASKON: Just like the energy, the piece of paper has value too. Nevada Power has been acquiring these RECs from homeowners, business and school districts across the state by offering rebates for installing solar energy systems. Dale Sanderson is Plant Facilities Manager of the Washoe County School District. He installed two small solar systems when approached by Nevada Power this year.
SANDERSON: I guess that is the question. Is there a market for these credits? You know I thought about it a little bit when they said we will put these demonstration solar systems in the schools but we want the credit for it and I said that's fine so I signed them over to them. But if there is some value to it I guess we better start finding out about it.
PLASKON: Brokers like Lenny Hochschild Director of Evolutionmarkets Renewables in San Francisco sells RECs.
HOCHSCHILD: It's then my job to find a buyer that is more interested in buying the renewable energy credits.
PLASKON: Some utilities are stockpiling them.
HOCHSCHILD: Thinking that they will have the opportunity to sell to other utilities or other municipalities at a higher price.
PLASKON: There is already one North East trading system for RECs and the western Governor's Association has a proposal for a similar system in Salt Lake City that will handle RECs from 11 western states including Canada and Mexico. Hoschschild says it will be implemented in 2005.
HOCHSCHILD: I think that what we will see is more investment in larger renewable energy plants possibly in Nevada the idea that they can sell the power to sierra pacific and if they don't need the RECs they can sell it outside the state to someone else. It just means there might be more investment in renewables in this state helping to meet requirements in other states instead of just us.
PLASKON: On the voluntary market he buys and sells a megawatt REC for 40 to 50 dollars per year. But Nevada and Sierra Pacific Power are in what's called a compliance market. Here, utilities are required to acquire credits by law. So they are paying tens of thousands of dollars in rebates for solar installations at businesses and households, getting indefinite rights to a few RECs every year. Gary Wood of Sierra Pacific won't reveal the price.
WOOD: You are going to find some advocacy groups that are going to say the RECs are worth more than gold.
PLASKON: Normally a REC can be re-sold year to year. But the ones Nevada and Sierra Pacific Power acquire are worth even more. When someone accepts the rebate they give up the RECs forever, in other words, they don't expire. Even if someone tried to invest in solar electric without the rebate and pay for it by saving on energy bills and selling the REC Tom Starrs Vice President of the Bonneville Environmental Foundation says it would take 30 years for the average homeowner to pay it off.
STARRS: In that sense the 5 dollar subsidy from Nevada Power is going to certainly provide a better short and long term benefit to the Nevada power customer than selling their green tags.
PLASKON: That may be true for the little guys, but the Clark County School District is building 2 million square feet of new roof every year. Putting solar power on it makes the school district a major renewable power producer with thousands of RECs.
GERNER: We are talking about 4 megawatts that we could be generating on site.
PLASKON: Clark County Facilities Manager Paul Gerner dreams of keeping the right to the power and credits, then negotiating to sell the RECs to power companies.
GERNER: I could go and sell them to whoever was the highest bidder and then sell them for a couple of years and then sell them a couple of years down the line to another bidder. We think the world-wide market might be headed up as far as that's concerned.
PLASKON: Last week the states largest solar power producer, Your Vitamins of Henderson used its RECs to negotiate a sale to Nevada Power. But Gerner of the school district says that's not an option now. The only way the district could get 4 new solar generation projects approved this year was through accepting Nevada Powers rebate, loosing the right to any excess power it produces and the credits. However, unlike households and businesses that take rebates and indefinitely loose the RECs, schools and public facilities get them back in a decade.
Ky Plaskon, News 88-9, KNPR
TAG: Both parts of this story and related links are located on our web site at KNPR.org.
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