Las Vegas goes solar: good news for some, bad for others

Las Vegas this week became the home of the largest solar installation in the nation, and not everyone is celebrating.

First Look

Las Vegas this week became the home of the largest solar installation in the nation, with sun-harnessing panels stretching across 28 acres of rooftop space covering the sprawling Mandalay Bay Events Center.

The electricity produced by the 26,000 panels, which began to be installed in 2014, would cover the average annual energy usage of 1,340 US homes, according to MGM Resorts International, which operates the convention center. For the energy-intensive Mandalay Bay Resort and Casino complex, the solar system, at full production, will cover a quarter of its energy needs.

MGM is among several of Nevada’s largest casino companies to have committed to powering some of their operations with solar, a plentiful resource in sun-soaked Nevada. Wynn Resorts and Las Vegas Sands also have announced plans to buy and produce more renewable energy for their hotels.

“We are looking at leaving the power system, and one of the reasons for that is we can procure more renewable energy on the open market,” Cindy Ortega, chief sustainability officer at MGM Resorts, told The Guardian in March.

Though this is a win for clean energy in power-hungry Las Vegas, it's a loss for the state's utility. The potential of losing three of its biggest energy-consuming customers has led the local utility NV Energy to fight their attempts to go energy independent. Together, the resorts make up 7 percent of NV Energy’s sales. If the utility loses these customers, says NV, it will be forced to raise rates for its other customers in order to maintain the grid.

“This is what I call a death spiral for utilities,” Bill Ellard, an energy economist for the American Solar Energy Society, told The Guardian. “They make it hard to go solar because once you defect from them, that affects revenue. Then they increase rates on everybody else, forcing them to defect.”

The Nevada case highlights a challenge for utilities across the country, which are grappling with a decline in sales as more customers switch to renewable energy or just become more energy efficient, thereby using less electricity.

At the close of 2015, Nevada’s Public Utilities Commission (PUC), which regulates utility rates and services, approved NV Energy’s controversial request to dramatically lower the rate of compensation that solar users get for selling the excess energy their installations produce to the utility.

In arguing for the reduction, NV Energy, which is owned by Berkshire Hathaway, the company of famed American investor Warren Buffett, said the move was necessary to cover its costs, including those related to maintaining the energy infrastructure and delivering energy to solar customers when the sun isn’t shining.

For this reason, the PUC also is requiring the utility’s large customers to pay an exit fee for severing business ties with NV Energy. MGM will pay about $87 million to leave NV Energy’s service in October, reports the Las Vegas Sun.