Secretary Granholm on Nevada’s role in the energy transition, lithium mining, rooftop solar

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Last Thursday, Energy Secretary Jennifer Granholm sat down for a roundtable with Gov. Steve Sisolak, Rep. Steven Horsford and other Nevada leaders. 

The roundtable was part of Granholm’s multi-state tour stumping for the Biden administration’s infrastructure plan and its efforts to speed up the energy transition. 

And if there was a theme for the day, it was the economy and jobs. 

Not long before the roundtable, Sisolak signed a massive energy infrastructure bill, SB448, at IBEW Local 357. The bill, dropped in the final weeks of the legislative session, focuses on NV Energy’s build-out of its Greenlink transmission line and the deployment of electric vehicles. 

Granholm touted the bill, sponsored by Sen. Chris Brooks (D-Las Vegas), who participated in the roundtable with other renewable advocates. NV Energy CEO Doug Cannon was also there. 

Other states Granholm has visited recently (Texas and West Virginia) have played central roles in producing fossil fuels: oil, gas and coal. But Nevada is in a different position. In Nevada, the fossil fuel industry is small compared to other states, where it has historically been a dominant and powerful political player. 

In Granholm’s remarks, she recognized what Nevada’s economic development planners have said for years: When it comes to energy, the opportunity for Nevada is not in fossil fuels, but as an exporter of renewable energy across the West and a key player in the battery supply chain.

From Granholm’s perspective, Nevada has everything “soup to nuts.” She pointed to the ample land for solar projects, the Tesla Gigafactory, geothermal capacity and deposits for critical minerals. 

“When I say ‘soup to nuts,’ Granholm said during an interview with The Nevada Independent on Friday, “that's really referring to the full supply chain of clean energy products that we should be building and manufacturing in this country, as well as installing and exporting.”

But doing that won’t necessarily be easy. New development in Nevada, from large-scale solar projects to mining, has, at times, faced opposition from Indigenous communities, conservation groups and local residents concerned with how projects could harm ecosystems and change the landscape.

In a brief interview Friday, as Granholm prepared to tour the Townsite solar project in Boulder City, she discussed some of the opportunities and challenges facing Nevada amid the push to place more renewables on public land and secure a domestic supply chain for the materials needed to produce electric cars.

On the need for domestic solar-panel production: Granholm stressed the importance of manufacturing solar panels in the United States, saying that “other countries have cornered the market on some of this, and we need to get it back.” She specifically singled out China, noting that President Biden had just delivered remarks concerning China’s use of forced labor.

“Nevada could be manufacturing solar panels, as well as installing them,” she said.

Land for utility-scale solar projects: Early into the interview, Granholm said that Nevada’s “comparative advantage is this massive amount of land that could be used to generate solar.” 

Nevada is one of the least densely populated states, and about 85 percent of the state’s land is managed by federal agencies, from the Department of the Defense (military bases) to the U.S. Forest Service (national forests). Most of the utility-scale solar would likely be sited on land managed by the Department of Interior, specifically the U.S. Bureau of Land Management. 

The bureau oversees about 65 percent of Nevada’s land — and they are often charged with permitting energy projects (solar, geothermal, wind, etc.). But the bureau must balance multiple (and often conflicting) activities: conservation, recreation, grazing, mining, etc.

Even with plans to prioritize energy development in low-impact areas, energy developers are still eyeing projects in sensitive areas. In Southern Nevada, projects have run into opposition over their impacts on imperiled species, such as the Mojave desert tortoise, recreation activities and sacred sites for Indigenous communities.

As a result, many environmental groups have called for better federal and state planning to direct projects into areas with fewer impacts. We asked Granholm about this and how she is working with the Department of Interior.

“I’m really enthusiastic because Secretary [Deb] Haaland and the president are really prioritizing renewable energy on public lands, and that’s onshore and offshore,” Granholm said. 

“Our team is actively working with her team to figure out how to do that,” she added. “What are the most optimal places we should be prioritizing? How do you streamline the permitting without jeopardizing the reviews that need to happen to ensure that you are protecting the resources?”

Granholm said lithium mining should have the support of Indigenous and local communities: The Energy Secretary’s visit came just days after the Biden administration released a report looking into the supply chain for electric vehicle batteries and other products needed to address climate change.

The report underscores the need for securing critical minerals both domestically and from allies. But as new mines are proposed in Nevada and across the American West, Indigenous leaders and conservation groups have raised serious concerns about how certain projects to extract key minerals, including copper and lithium, would irreparably harm the environment. 

When thinking about where to permit mines, Granholm stressed the need for community buy-in.

“The view of the administration is that mining that is done here — in the U.S. — must be done responsibly, sustainably, and with the buy-in of local and indigenous groups,” she said. 

Granholm said Indigenous communities who have been on the land for generations “have to be at the table” during mine planning. She said that companies could engage in partnerships, such as community development agreements, to direct benefits to Indigenous and local communities.

Granholm on the role of rooftop solar: NV Energy’s CEO was at the roundtable with Granholm on Thursday, and the Berkshire Hathaway-owned utility is playing a driving role in transitioning the state’s power sector away from fossil fuels. 

But what about renewable energy infrastructure that is not owned directly by the utility?

We asked Granholm about “distributed energy resources,” a very technical (and dry) phrase for electric infrastructure that is installed on-site (think rooftop solar), rather than by the utility. 

She said utility-scale and distributed generation are both “incredibly important pieces of the pie.”

Granholm noted that although the roundtable focused on NV Energy’s Greenlink transmission line (a utility-scale project), “there’s also a role for distributed transmission too — microgrids to help with resiliency — and certainly in more remote areas that are powered by solar.” 


Here’s what else I’m watching this week:

THE COLORADO RIVER

‘An earthquake in people’s sense of urgency:’ That’s a quote from The Arizona Republic’s piece about Lake Mead declining to its lowest level since the 1930s. “The lake's rapid decline has been outpacing projections from just a few months ago,” reporter Ian James wrote. 

The real-world effects of Lake Mead’s low elevation: Review-Journal reporter Blake Apgar writes that the Lake Mead boat launch area closed on Friday last week. 

Saving the Salton Sea: The Desert Sun’s Mark Olalde published an excellent, in-depth story on the proposals to fix the issues in the Salton Sea by importing water from the Sea of Cortez. 

DROUGHT HITS THE WEST

Wildlife managers drop water for bighorn sheep: Review-Journal science reporting fellow Stephanie Castillo writes about the Nevada Department of Wildlife’s efforts to replenish water sources for bighorn sheep amid severe drought conditions. “We have had to haul water on an emergency basis, but not anywhere near approaching this magnitude, this scale of severity,” said one wildlife biologist for the agency. 

Life on the edge in the Amargosa River Basin: The Amargosa River is a unique landscape that has carved out a biodiversity hotspot. But the climate change and groundwater overuse are adding new stresses to the area, as National Geographic’s Stefan Lovgren reports. 

These visuals, compiled by the New York Times, show just how bad the drought is. 

LITHIUM SUPPLY CHAIN 

Battery recycling firm is expanding: The Reno Gazette Journal’s Jason Hidalgo writes about Redwood Materials, a Nevada-based battery recycling firm that was started by a former Tesla executive. 

A Panasonic mining partnership: Neolith Energy, a venture from oil services company Schlumberger, is partnering with Panasonic on a lithium extraction project near Tonopah. 

Thacker Pass mine work delayed, via Reuters’ Ernest Scheyder. And over the weekend, more than a hundred demonstrators, including many Indigenous leaders and advocates, gathered in Reno to protest the mine (photos from the Reno Gazette Journal).

WATER AND LAND

Biden to reverse Trump’s Clean Water Act rollback: President Joe Biden’s EPA is planning to restore certain federal protections for streams and wetlands after the Trump administration weakened protections associated with the Clean Water Act, the New York Times’ Lisa Friedman reports.

Lawmakers want wild horse investigation, halt on adoptions, the Review-Journal’s Gary Martin reports.

Why does snow turn pink? The answer has to do with microalgae. But there is also an important feedback loop involving climate change — with implications for snowmelt. KUNR’s Noah Glick has more. 

Coming up: The Clark County Lands Bill is getting a hearing in Congress. 

Massive clean energy bill expanding transmission, electric car charging stations gets first hearing; resorts opposed

Heralded as a transformative step to move Nevada toward greatly reduced carbon emissions through massive expansions in transmission and electric vehicle infrastructure, state lawmakers heard the first details of the legislative session’s biggest energy policy bill with just two weeks to go before the end of session.

Sponsored by Sen. Chris Brooks (D-Las Vegas), SB448 would expand the state’s transmission infrastructure in line with NV Energy’s multibillion-dollar Greenlink Nevada initiative, along with requiring a $100 million investment in electric vehicle charging stations, expanding rooftop solar to multi-tenant and commercial buildings and proposing a host of other measures aimed at lowering carbon emissions and building up renewable energy infrastructure.

During the bill’s first multi-hour hearing on Monday in the Senate Growth and Infrastructure Committee, lawmakers and clean energy advocates were not shy about pouring praise on the legislation — ranging from NV Energy CEO Doug Cannon saying the bill “positions Nevada as energy leader in the western United States for decades to come” to Governor’s Office of Economic Development Director Michael Brown saying “448 will be one of those bill numbers that lives beyond legislative sessions.”

Support was not unanimous — several progressive and environmental groups warned that a large infrastructure project could harm fragile ecosystems, and the politically powerful Nevada Resort Association (which represents many casino resorts that have left regular utility service but remain as transmission-only customers) testified in opposition, wanting the state’s Public Utilities Commission to have more authority over the transmission build-out.

Brooks, who sponsored legislation raising the state’s Renewable Portfolio Standard in 2019 and 2017, said those bills and past efforts were helpful first steps but that this legislation represented an attempt to “take a more holistic approach at carbon reduction planning for the electricity sector.”

“Imagine a world where in Nevada, we are making most of our own electricity with renewable resources, we're putting them in our vehicles, and we're driving our vehicles,” he said. “That closes the loop and keeps billions of dollars in our economy, and also makes it far more affordable for the individual who's driving the electric vehicle.”

SB448 has two main prongs — transmission and electric vehicle charging infrastructure.

The transmission portions would help finish NV Energy’s proposed “Greenlink” transmission plan, which received initial, partial approval from the state Public Utilities Commission in March. The project would build two major transmission lines aimed at forming a “transmission triangle,” expanding and linking the current 235-mile, 500 megawatt “One Nevada Transmission Line” that links Northern and Southern Nevada. 

Brooks said expanded transmission capacity would not only build up grid resiliency beyond the current One Nevada line — pointing at the 2021 Texas electricity crisis as a warning — but would also allow Nevada to more cheaply import renewable energy produced in other states and help diversify the current fuel mix.

“If we just connect the dots with a few transmission lines, we could realize that economic opportunity of being the hub of the western grid, and we could realize the benefits that come with all of that energy that we can export and all that energy that we move through our state,” Brooks said. “The benefits are billions of dollars of economic activity in our state and billions of dollars of private investment in our state and renewable energy projects.”

The other major portion of the bill would require NV Energy to propose and submit a $100 million spending plan for electric vehicle charging station infrastructure over the next two years, with a strong focus on historically underserved areas, outdoor recreation, transit agencies and fleet upgrades for state, local and federal governments.

Much of the three-hour hearing focused on the transmission aspects — a wide variety of groups testified in support including IBEW; businesses including Google, Ikea, Patagonia and Uber; Battle Born Progress and clean energy development groups including the Natural Resources Defense Council, Southwest Energy Efficiency Project, Nevada Conservation League and others.

Brown, who heads the state’s economic development arm, said corporations in and considering moving to Nevada were increasingly focused on renewable energy and meeting environmental goals, giving the state a potential leg up on business development if it further committed to renewable resources.

“For the first time, we sat with a manufacturer from the Midwest a few weeks ago, and they looked at us and the first question they had for us is they wanted to talk about renewable energy,” he said. “They wanted to know how we were producing it, how it was transmitted, what the prices were. That's a game changer. We've not had that before.”

Cannon, who helped present the bill, said completion of the Greenlink project would help create a “path forward for us to economically achieve the state's net zero carbon goals,” while opening up new areas for solar and renewable energy development currently cut off from transmission lines.

“We can produce energy in a lot of places in Nevada, but that doesn't do us any good if we can't get that energy from where it's produced to where it needs to be utilized,” Cannon said. “Transmission becomes the backbone that is necessary to fully utilize that energy.”

But that proposed infrastructure expansion attracted opposition from spokesmen for environmental groups including Basin and Range Watch and the Center for Biological Diversity who said they had strong concerns that the legislation allowed NV Energy to rush forward without enough time for environmental review or potential impacts.

“Instead of instructing state agencies to complete a clear-eyed, comprehensive review of where renewable energy might be appropriate in this state, SB448 would throw open the doors to our most wild and pristine landscapes and rely on the tender mercies of the market and fossil fuel companies like NV Energy to decide the fate of Nevada’s wildlands,” Center for Biological Diversity State Director Patrick Donnelly said.

Sen. Dallas Harris (D-Las Vegas), a former administrative attorney at the PUC, asked what would happen if the promised economic benefits don’t materialize — and how much risk was being shouldered by ratepayers.

Cannon responded that the Greenlink plan was “not a risk-free proposition,” but said the utility was prepared to move forward with the $2.5 billion infrastructure project immediately, noting that customers would not have to start paying for the project for several years and that any proposal by the utility would go through a contested hearing process before the PUC and ultimately have to be approved by the commission.

“There is no guarantee in this legislation that we will recover the dollars of this investment,” he said. “There's not. We have to proceed reasonably, and then we'll trust in the process on the back end that we have the opportunity to recover our investment and earn a reasonable return. It's kind of the regulatory compact that exists between the utility as a private entity and the state.”

But the proposed process in the bill attracted opposition from the Nevada Resort Association —  lobbyist Laura Granier said the group was in “technical opposition” because of the complexity of a bill introduced with only two weeks left in the legislative session. She said the association had proposed “clarifying changes” to the bill that would not affect the timeline but would ensure that the PUC “retains authority and regulatory discretion to protect customers from increased rates and making projects more expensive than they need to be.”

“The Commission needs the tools to keep an eye on that,” she said. “We're not saying that they shouldn't earn their return on investment, they should, but through the (Integrated Resource Planning) process they do get to recover costs.”

Both Brooks and Cannon said the bill would not have a sizable impact on utility customers — Brooks pointed to a slide showing the adoption of renewable energy increasing while average electric prices in the state had gone down. Cannon added that opening up transmission markets would help the state access lower-cost power from other areas, and that ratepayers wouldn’t see the cost of the expanded infrastructure until five or six years down the road.

NV Energy, in a filing submitted to the PUC as part of the initial Greenlink filing last month, estimated that customers in nearly all rate classes would see higher base power prices to help pay off the expansion of power lines. Cannon and others said in a previous forum on the bill that those estimates do not include potential benefits from increased transmission access.

Beyond transmission and electric vehicle charging, the bill also creates a Regional Transmission Coordination Task Force, a group of public and private industry officials tasked with helping the governor and Legislature determine the steps needed to join a western states regional transmission organization — an entity that coordinates, controls and monitors a multi-state electric grid. The legislation requires Nevada to join a regional transmission organization (RTO) by 2030, with options for the PUC to delay or waive the requirement.

The bill would also double an energy efficiency initiative for low-income customers from five to 10 percent of the utility’s overall energy efficiency plan, expand a state Renewable Energy Tax Abatement program to cover energy storage projects, reopen a discounted energy rate program that expired at the end of 2017 and require NV Energy to begin including a low carbon dioxide emission reduction plan in its triennial integrated resource plan.

Natural gas legislation looks to implement state climate strategy, faces opposition from utility

Good morning, and welcome to the Indy Environment newsletter.

As always, we want to hear from readers. Let us know what you’re seeing on the ground and how policies are affecting you. Email me with any tips or suggestions at daniel@thenvindy.com

To get this newsletter in your inbox, subscribe here.

Last year, Gov. Steve Sisolak’s administration released a climate strategy that emphasized the need for a long-term transition away from using natural gas and the need to start planning now.

Much of the state’s efforts around climate change have focused on transitioning from fossil fuels to renewables in how electricity is produced (most of the state’s power still comes from natural gas). But the climate strategy was significant because it singled out another area where natural gas is predominant: It’s still the default option for cooking and heating in homes and businesses. 

In order to meet the state’s statutory goal of reducing greenhouse gas emissions to net-zero by 2050, the climate strategy said policymakers need to plan out an equitable transition away from indoor natural gas by scrutinizing new utility infrastructure, giving customers a choice to switch to electric appliances and giving utility regulators more oversight over the planning process. 

Assemblywoman Lesley Cohen (D-Henderson) is sponsoring a bill, AB380, that aims to do that. At its core, the legislation would require gas utilities to go through a comprehensive planning process meant to consider the effects of decarbonization on their operations and ratepayers.

The legislation also directs state utility regulators to compile one or more reports on the role of gas utilities in reducing greenhouse gas emissions, how to ensure a safe and reliable grid with fewer customers paying for the system and strategies to ensure that the transition is equitable.

On Tuesday afternoon, the legislation got its first public airing in a hearing that stretched on for more than two hours. Supporters of the bill, including the Nevada Conservation League and the Natural Resources Defense Council, argue that planning for a long-term transition from natural gas is a necessary and common sense approach. Without planning today, they argued, ratepayers could be saddled with paying off unnecessary gas infrastructure for years to come.

Consumer Advocate Ernest Figueroa, who represents ratepayers in proceedings before utility regulators, said in testimony that he supported the legislation and agreed with that assessment. 

If it’s the state’s policy to transition from natural gas by 2050, Figueroa said “it is imperative for economic reasons that natural gas resource planning be implemented so that natural gas utility customers are not left with billions of dollars in stranded assets when that time comes.”

None of this is happening in a vacuum. Policymakers from cities and states across the country have increasingly looked at indoor gas use with more scrutiny as they address climate change. And the efforts have come up against opposition from utilities and an industry that says it wants to be part of the solution, as it makes the case for continued — and in some cases expanded — natural gas use, arguing that switching to electric will be more costly. 

On Tuesday, Southwest Gas, the state’s largest gas utility, testified in opposition. 

CEO John Hester noted that the utility, with expansions in Mesquite and Spring Creek, supports economic development and argued that the company is already highly regulated. Hester said the utility is “fully supportive of taking efforts in energy efficiency and reducing greenhouse gas emissions, but we are also very concerned about the needs of our customers here in Nevada.”

NV Energy, which supplies natural gas to buildings in Northern Nevada, also came out against the bill. CEO Doug Cannon said the utility, which stands to gain from electrification, supports the concept of a gas planning process, but he said it should not be tied to specific policy outcomes.

For months, Southwest Gas has deployed a full-court press lobbying strategy, building a coalition with concerns about strategies mentioned in the state climate plan and AB380. 

In February, the utility helped organize a coalition letter to the governor’s office with the header “Clean. Affordable. Natural Gas.” Last week, a new group, the Coalition for Cleaner Affordable Energy, began posting videos from business groups campaigning against the legislation. Many of the business groups featured in the videos testified against the bill at Tuesday’s hearing.

Southwest Gas is advocating for its own legislation, SB296, which would allow gas utilities to apply with state regulators to replace existing infrastructure and recover costs through a monthly rate. Senate Majority Leader Nicole Cannizzaro (D-Las Vegas) introduced the proposal in March.

David Bobzien, who directs the Governor’s Office of Energy, and Kristen Averyt, the state’s climate policy coordinator, testified in neutral on the legislation. But both officials noted that the climate plan calls for a transition away from natural gas that will require a planning process.

“The intent of AB380 is consistent with the state climate strategy in that it addresses the need to reduce greenhouse gas emissions from natural gas in order to meet our state’s 2050 net-zero emissions target,” Averyt said.

At the hearing, lawmakers from both parties expressed major questions about the impact of AB380, raising concerns about costs and higher rates for low-income households. For about an hour, lawmakers on the Assembly Committee for Growth and Infrastructure questioned the bill sponsors with concerns that AB380 could disrupt reliability and have a disproportionate impact on low-income households, seniors on fixed incomes and underserved communities. 

The legislation’s sponsors noted the costs of inaction and said that the proposed bill language asks state utility regulators to investigate “strategies to limit the impact of a transition from the use of gas in buildings on low income households and historically underserved communities, including, without limitation, such persons who rent or lease their residence.” 

We’ll be writing more about natural gas and lobbying efforts over the next few weeks.

Here’s what else I’m watching this week:


THE LEGISLATURE

Water authority looks for a turf removal law: Toward the end of a long committee hearing on two controversial state-backed water bills Monday, the Southern Nevada Water Authority made some big news. The authority testified in neutral on AB356, one of the bills being pushed by the Nevada Division of Water Resources, and then went on to propose an alternative:

  • The proposed bill, AB356, seeks to establish a conservation credit program that state water officials argue would create an incentive to use less water. But the bill faces broad opposition from agricultural interests and conservationists who are concerned that such a program is out of step with how water is managed on-the-ground and could potentially lead to speculative behavior. Enter the Southern Nevada Water Authority.
  • After lawmakers heard opposition to AB356, a water authority lobbyist, Andy Belanger, asked the committee to consider an amendment to the bill or separate legislation for its own conservation initiative. The water authority, for weeks, has indicated that it was seeking a legislative vehicle to remove unused turf by the end of 2026. 
  • Across the Las Vegas Valley, there are about 5,000 acres of non-functional turf — grass that is decorative and used for landscaping in medians, along sidewalks or in entryways to communities. “It is purely for show,” Belanger said. “And it is a luxury our community can no longer afford.” Non-functional turf is a leading driver of water use across the Las Vegas Valley, and while the water authority has long offered incentives to remove grass at residences, it has run into some opposition with HOA boards and other hold-outs. 
  • Backing from groups: The water authority’s push yesterday came with buy-in from key groups. The Vegas Chamber, the Southern Nevada Homebuilders Association, the city of Henderson and the city of North Las Vegas all backed the water authority’s proposal at the hearing. And shortly after the hearing ended, the Center for Biological Diversity put out a statement in favor of the water authority’s proposal. 

Farmers, conservationists criticize water banking bill: The AP’s Sam Metz has an update on another bill (AB354), which the Assembly Committee on Natural Resources heard Monday. Rural water users, agricultural interests and conservationists expressed concerns that a bill to create “water banks” had not been fully vetted and could lead to unintended consequences. 

Closing the classic car loophole: My colleague Jannelle Calderon offers an update on efforts to fix a loophole in the state’s Emissions Inspection System that allows drivers to register a car as “classic,” evading smog emission standards, even when it is not in fact a “classic” car. 

A good roundup from KNPR’s Heidi Kyser on what to watch in the Legislature. 

Couldn’t drag me away: My colleague Riley Snyder found that of all the proposed legislation in Carson City, a resolution on wild horses has generated the most opinions (by quite a bit).


WATER AND LAND

Colorado River cutbacks: Excellent reporting by The Arizona Republic’s Ian James on how hydrology in the Colorado River, driven by climate change, is setting the stage for mandatory cuts. The story explains what the cutbacks will mean, and it is a must-read for understanding the road ahead on the Colorado River. From the article: “Lake Mead, the biggest reservoir on the river, has declined dramatically over the past two decades and now stands at just 40% of its full capacity. This summer, it’s projected to fall to the lowest levels since it was filled in the 1930s following the construction of Hoover Dam. The reservoir near Las Vegas is approaching a threshold that is expected to trigger a first-ever shortage declaration by the federal government for next year, leading to substantial cuts in water deliveries to Arizona, Nevada and Mexico.”

Great piece from Aspen Public Radio on the role that soil moisture plays in water supply. 

'Mediocre' water year wraps up for Tahoe, Truckee basins (via the RGJ’s Amy Alonzo)

Nevada facilities to get Interior funding: “One of several investment projects in Nevada will be $5 million to modernize infrastructure at the Lake Mead National Recreation Area and improve access to drinking water for visitors, concessioners and employees,” Jeniffer Solis writes for the Nevada Current. Because of declining reservoir levels on Lake Mead, the project will relocate the Callville Bay water intake barge and also improve service roads to the new site.

Greater sage-grouse declines: A comprehensive USGS report shows significant declines in Greater sage-grouse populations over the past six decades and a nearly 40 percent population decrease since 2002. Last week, a federal judge struck down a project to allow more grazing in an area identified as high-quality sage-grouse habitat, the AP’s Scott Sonner reported. 

More details emerge from NV Energy’s rare electricity conservation request from August

Around mid-day on August 19, NV Energy customers began to get texts, robocalls and emails asking them to please conserve electricity use between the hours of 2 to 9 p.m. over the next two days.

The requests — in part marred by a “vendor error” that sent out robocalls in the dead of night — came amid a record-breaking Western U.S. heat wave and thick smoke from California wildfires blanketing parts of the state. But the utility said the effort worked — estimating a significant decrease in power demand over the two-day period that helped avoid power shutoffs or blackouts for customers in Nevada.

More than two months later, NV Energy is releasing more information about the decision-making process that led to the request for power conservation, as well as data that may help state utility regulators determine whether the conservation request was a one-time unusual request or a sign that the utility needs to do more to ensure resource adequacy as climate change and other factors drive more strain on the system.

The new information comes via a filing made in a state Public Utilities Commission docket, launched in late August shortly after the conservation requests were made to investigate “resource adequacy and planning.”

NV Energy made the filing last week, the first of several requested by regulators seeking more details on the circumstances leading up to the request for voluntary power cutbacks. The PUC is not responsible for overseeing day-to-day decisions made by the utility company to balance load or meet customer demand, but approves long-term energy supply plans and other planning decisions. 

The utility’s filing is a behind-the-scenes look at the circumstances NV Energy faced in mid-August to stave off a potentially catastrophic power outage in Nevada, ultimately leading up to that request for customers to conserve power.

While NV Energy is the state’s primary electric utility, that doesn’t mean all electricity used in the state comes from power plants owned by or contracting with the utility company.

The company is required under state law to file what’s called an “Energy Supply Plan” every three years that details utility plans for procuring enough electricity, as well as fuel and risk management strategies to meet a projected electricity demand, based on factors such as temperature and historical trends.

While the company regularly files amendments to that plan, it’s able to make short-term modifications as needed through what’s called “short-term procurement activities,” which includes practices such as day-ahead or real time electric-market trading to “bring the gap between long-term energy supply planning and actual energy supply needs.”

In its filing with the PUC, NV Energy said it uses those transactions to “ensure a continuous balance of energy supply and demand because of variations in system conditions” as well as to achieve “economic benefits” for customers.

Use of those types of electric market trading to meet demand aren’t unusual — the utility reported to the PUC that since the summer of 2017, there were more than 100 instances in which it opted to purchase more than 1,000 megawatts of power on the open market in order to meet demand, including 40 times during the summer of 2020.

On Aug. 17 (the Monday before the request for conservation), the utility reported engaging in its normal day-ahead trading activities for energy supply resources. But with hotter-than-normal weather (about 11 degrees warmer in Las Vegas as compared to seasonal averages) through the record-breaking heat wave across the U.S., the utility company found the market to be “severely restrictive with heavy buyers and very few sellers.”

“It was unprecedented for NV Energy to receive so few supply offers for power market purchases,” the company wrote in the filing. “Routine suppliers were unable or unwilling to transact with NV Energy.”

The utility reported that much of demand was being driven by an overall concern about “market uncertainty” from the California Independent System Operator (CAISO), the balancing authority that manages California’s energy market and that at the time warned that supply limits could lead to potential curtailments — blackouts.

Despite engaging in a “broader search of additional counterparties,” NV Energy reported exhausting all available supply options for day-ahead availability, meaning it would need to either obtain power in real-time markets or risk the potential of an Energy Emergency Alert (EEA), utility parlance for power blackouts.

EEAs come in three levels, with the third level being the most severe and meaning that load interruptions are “imminent or in progress.” 

Nevada entered the first EEA level on Aug. 18 — the first day of requested power curtailment — shortly after noon, reaching the third level around 3:30 p.m. That level was reset to the first EEA level after 9 p.m., and finally reverted to normal operations about an hour later. The utility entered the first EEA level the next day, Aug. 19, but was back to normal by the end of the day.

Again, no NV Energy customers lost power during the period of high demand — but the utility was taking rapid action behind the scenes to ensure that was the case.

According to a timeline published in the filing, the utility took several unusual or rare steps to obtain electricity throughout that two-day period, including asking large customers to voluntarily cut back on power, asking large independently owned power generators within the state to help address the demand and issuing a “no touch” order on generation equipment to avoid any inadvertent interruptions.

NV Energy also reached out to its sizable base of distribution-only customers (largely businesses that opted to leave utility service through the 704B legal process, but still rely on it for transmission service) to ensure that their electric loads were in balance and not relying on the power company for electric demand. Those customers — many of whom filed to leave NV Energy through the 704B process to purchase power from other sources — still take transmission service from the utility, and are required to contract with them as an essential provider of last resort.

The company wrote in the filing that two of the company’s distribution-only customers were “unexpectedly relying” on NV Energy for electric service as their supplier failed to deliver their energy. Those customers were not identified in the filing.

The utility also disclosed that one of the units at the natural-gas firing Higgins Generating Station near the California border had experienced equipment failure in late July, meaning it was offline for the power shortages in August. The out-of-commission plant has a production capacity of 225 megawatts, which could have helped address the high-demand period.

Additional filings in the docket are due throughout the rest of the year, with a workshop hearing set for Dec. 16.

NV Energy plan to issue $120 million bill credit, lower rates approved by utility regulators

NV Energy’s plan to issue a $120 million rate reduction and substantial one-time bill credit to customers has been approved by state energy regulators, under a stipulation agreement that will see the credit applied during the October billing cycle.

Members of the Public Utilities Commission voted 2-0 to approve the stipulation agreement on Wednesday, the final stamp of approval before the utility company can begin processing the bill credit for customers (Commissioner Tammy Cordova abstained, as she worked on the docket in her previous role as a regulatory attorney for the commission).

The bill credit will equate to roughly $107 per single-family residential customer, $60 per multi-family unit customer and $53 for typical small business customers. The bill credits will be standardized for smaller classes of customers but will be individually set for the utility’s largest customers on an individual basis.

In a statement issued last week after a draft of the stipulation was published, NV Energy CEO and President Doug Cannon said it would provide “immediate and long term electric cost reductions” to utility customers.

“Customers will see an immediate $120 million one-time credit and will see long term savings associated with lower energy rates going forward,” he said in the statement. “This historic agreement lowers energy costs for our southern Nevada customers and will help drive Nevada’s economic recovery.”

The stipulation agreement includes not only PUC staff and NV Energy, but a large number of other parties that intervened in the utility’s company’s general rate case, including the state’s Bureau of Consumer Protection, 10 large casino companies, Walmart, Kroger and solar panel installer Sunrun.

The $120 million bill credit comes from the following sources:

  • $57.9 million in an over-earnings sharing account created by the commission during NV Energy’s 2017 rate case. The commission approved remitting those funds back to customers last month and said the current order “effectively modifies” the past decision
  • $26 million in excess accumulated deferred income tax, essentially a holding account for corporate taxes that was modified by the 2017 federal tax bill
  • An expected $20 million in revenue from the existing earning sharings mechanism for the year 2020
  • $9 million in carrying charges on the earnings sharing liability that accrued between 2019 and 2020
  • $5 million in “other expense adjustments”

In its order approving the stipulation, members of the commission wrote that the “ordered one-time bill credit successfully balances the interests of ratepayers and shareholders by returning the balance of the earnings sharing regulatory liability and other amounts due to ratepayers, as identified in the Stipulation, in a time of need, without unduly harming [NV Energy].”

The utility company announced plans last year to request the $120 million rate reduction, filing the application to do so as part of its normal General Rate Case filing in June. Cannon said the reduction is possible due to a variety of factors, including a restructuring of debt, the decreased corporate income tax and lowered operating expenditures.

Nevada’s electric model operates under a system that authorizes one company (NV Energy) to have an effective monopoly on electric service for the vast majority of the state. In return, the company is required to have rates and other core business practices approved by state-appointed regulators — the Public Utilities Commission of Nevada — with the power to hold hearings and make decisions on the company’s prices for electric rates.

Under the order, the company is required to disclose within seven days its plans on eligibility information, timing on the bill credit and how it plans to communicate the information to the public. Within seven days of issuing the bill credit, NV Energy is also required to report to the Commission how many credits were issued to each customer class and the total dollar value of the bill credits.

The stipulation also sets the utility company’s return on equity (a measure of financial performance created by dividing net income by shareholder equity) at 9.4 percent, and a rate of return (the profit margin NV Energy is allowed to make on the sale and service of electricity to incentivize capital development and pay shareholders) at 7.14 percent. Those are slightly below what the utility initially requested in its General Rate Case application filed in June. 

The commission also will hold a supplemental hearing on the general rate case next week to determine whether to extend the cost-sharing mechanism over the next three years.

How ahead-of-schedule energy storage adoption could help Nevada avoid blackouts, electric supply issues

Nevada and other states’ increasing reliance on and plans to adopt more and more renewable energy have a slight problem: The sun eventually has to go down.

The intermittent nature of solar energy and other renewable resources isn’t exactly a big secret; but it nonetheless has come under renewed scrutiny in other states, namely California, amid the “unprecedented” strain on the Western U.S. electric grid earlier this month caused calls for voluntary power cutbacks in Nevada and several other Western states.

NV Energy CEO Doug Cannon said in an interview two weeks ago that the call to reduce power consumption was not tied to a greater reliance on renewable energy; it was instead a capacity problem, with not enough generation to meet expected demand.

But there’s a positive sign; combined under-construction and pending storage projects will see NV Energy surpass a 1,000 megawatt energy storage goal seven years ahead of schedule.

Still, as the state continues to move toward a greater reliance on renewable energy — including a gradual ramp up to a 50 percent Renewable Portfolio Standard by 2030 — renewable energy advocates say the state needs to take proactive steps now to avoid future resource adequacy issues -- i.e. blackouts or brownouts. 

“It's a race, and if we don't act now on starting all of these transmission projects that have been proposed, and we don't continue to keep our foot on the gas when it comes to storage and renewable energy, we will fall behind,” Democratic Sen. Chris Brooks, an advocate for expanded renewable energy, said in an interview. “And we won't be able to seize those opportunities and it will cost not only our state in lost opportunity, it will cost our state in more expensive power.”

Storage targets

The solution most often identified for dealing with the unique nature of solar energy is battery storage, a way to capture excess produced energy and use it later during periods of peak demand.

In Nevada, that process started in 2017, when lawmakers passed legislation requiring the state’s Public Utilities Commission to determine if expanded electric storage and battery systems were in the public interest, and if so, to set (nonbinding) storage targets for NV Energy to reach.

The PUC finished those regulations in 2019, setting a gradually increasing scale of storage targets topping out at 1,000 megawatts by the end of 2030.

Though the storage target is nonbinding, NV Energy is nonetheless on track to exceed that storage goal by the end of 2023.

Representatives from the utility company told members of the interim Legislative Committee on Energy a week ago that between previously approved and currently pending battery storage projects, the utility would bring on more than 1,028 megawatts of battery capacity by 2024.

That expanded capacity could help the utility deal with periods of unexpected high demand such as the rare request for volunarity power cutbacks made last week by NV Energy because of supply constraints on the grid.

“The addition of the thousand megawatts of battery capacity could be used over the peak,” NV Energy Portfolio Analytics manager Roger Halbakken said during the Monday meeting. “I believe it would have had a positive impact to reduce what we saw as a scarcity issue in both Nevada and the Western states.”

With the goal already likely to be surpassed (three of the battery storage projects are still pending PUC approval), Brooks said that it likely wasn’t necessary for lawmakers to create new policies calling for more storage adoption. The demand is already there.

“Regardless of if we had those goals in place or not, and if we have any future goals or mandates or not, solar with storage has now become the most cost effective way to deliver energy in those peak hours,” he said. “And so I think we're going to see, with or without policy guidance, we're going to see quite a bit more solar with storage adopted over the years to come.”

Solar problems and new solutions

Any discussion about the growth of solar energy usually returns to conversations about how to solve the “duck curve” — a commonly used graph charting the difference between electricity demand and available solar energy throughout the day.

Electric demand is relatively predictable — there’s a small uptick in the morning when people get ready for work, and a spike in the evening when people return home, turn on lights, televisions and other electric appliances. But solar power is intermittent — producing the most electricity during the middle of the day, while trailing off in the evening as the sun goes down.

That curve resembles a duck — and represents the challenge facing utilities and grid operators in adding more intermittent renewable resources to the power supply. Not only is it an issue of meeting higher demand in the evenings, but excess production during the day also comes with challenges; California has paid other states to take excess renewable power during the day to avoid overloading the state’s electric grid.

The most common solution brought up to address the “duck curve” is battery storage. In theory, it addresses both problems -- capturing excess “oversupply” during the day, and then releasing it during peak demand hours in the evening.

Storing electricity for later use is not a new concept. The most popular form of energy storage in the United States comes from pumped-storage hydropower, a technology developed in the 1920s that uses gravity and water power to “store” power.

But thanks in part to the declining cost of lithium ion batteries, the cost of battery systems has dropped dramatically over the past decade — a 76 percent decrease between 2012 and 2019

That price reduction has helped NV Energy in requesting battery storage operations be included in the utility’s most recent power purchase agreements with utility-scale solar projects.

Six of the last nine power purchase agreements between NV Energy and solar contractors included battery projects, with another three solar and battery projects included in the utility’s recent request for a $2 billion statewide transmission upgrade

Only two other states have battery storage capacity above 1,000 megawatts (as of March 2019), but several states have set more ambitious goals or mandates to significantly raise their storage capacity throughout the next decade.

So far, all of those battery projects have been linked to expanded utility-scale solar projects. But Mark Tourangeau, an employee of a company called Able Grid Solutions, told lawmakers that the future of expanded energy storage may be in moving the batteries away from the power plants and closer to homes and businesses.

Tourangeau’s company develops stand-alone batteries with locational flexibility — i.e., not directly connected to another power plant. The benefits of standalone storage, he said, would allow intermittent solar and wind energy resources to be collected and used during periods of high demand — a potential alternative to carbon-heavy peaking power plants that only run during periods of high electric demand.

“So in the evenings, you have a lot of peakers that will start up, there's significant emissions from the startup and the ongoing operations of those, and the best systems can replace those peaking units to replace that,” he said.

Tourangeau also suggested that lawmakers expand a renewable energy tax credit program to cover storage facilities, saying storage facilities are a highly capital intensive investment that can cost up to $100 million. Standalone battery storage facilities are generally pricier than those co-located with solar generation facilities, which allow sharing of overhead, interconnection, installation and other capital costs.

Home and business storage incentives not used

But storage incentive programs designed for residential and commercial customers have fared much worse. NV Energy offers sizable incentives — up to $3,000 for residential and $50,000 for commercial customers — for installation of integrated energy storage systems in homes of businesses, but the program has seen relatively little use.

Since the program launched in 2018, the utility has paid out a little more than $630,000 in incentives across nearly 260 applications, all for residential or small business customers. That’s just a fraction of the $10 million for energy storage investments the Public Utilities Commission initially required NV Energy to set aside for the program in 2018 (the commission actually fined NV Energy $100,000 last year for failing to set aside the incentive dollars).

NV Energy’s Halbakken said there were several reasons for the lack of interest; small scale battery storage is fairly expensive and has a higher maintenance cost and reduced lifespan as compared to rooftop solar units. Plus, the state’s net metering program for rooftop solar makes it more economical for people to send power back to the grid than to store it for themselves.

Brooks, who sponsored the 2017 net metering bill, said it was similar to issues with rooftop versus utility scale solar; utility-scale solar is just more effective, but policy makers have decided to incentivize rooftop solar given intense public demand. He called the issue a “work in progress,” but said a solution wouldn’t require amending current law on net metering.

“I don't see it as an either/or,” he said. “I think that it's an economic decision that the regulator needs to make when they're determining the rate impact on all Nevadans, as far as these decisions are made.”

Utility regulators approve investigation into electric capacity after NV Energy calls to reduce power consumption

Sign for State of Nevada Public Utilities Commission on front of building.

The Public Utilities Commission of Nevada has approved launching a formal investigation into electric supply adequacy issues in the state, a week after NV Energy issued a rare request for customers to voluntarily reduce power consumption amid unprecedented electric grid strain during the record-breaking heatwave.

The three members of the commission — which oversees and regulates utility businesses in the state — voted unanimously during their Wednesday meeting to launch the investigation, an initial step that will allow regulators to take a more active role in overseeing supply adequacy, after electric demand over the past week have far outstripped projections.

Commission Chair Hayley Williamson acknowledged that the step was necessary to “ensure the commission is doing everything in its power to ensure Nevada's resource adequacy and supply of energy is sufficient.”

“I believe this investigation will help the commission have an open, transparent look at the capacity constraints experienced last week, and make sure that the Commission is doing everything it can to ensure that we continue to provide in the state reliable electric service,” she said during the meeting.

Opening the investigation comes a week after NV Energy issued an unusual request asking customers to cut back on power use between 2 p.m. and 9 p.m. last Tuesday and Wednesday in order to offset energy supply issues caused by the record-breaking heat wave across the U.S.

In an interview last week, NV Energy CEO Doug Cannon called the requests for cutbacks an “unprecedented” event, given the heat wave affecting all Western states as well as electric supply issues in neighboring California.

Williamson acknowledged that the record-breaking heat wave may have played a role in the energy supply issues and in capacity planning; noting that more than 80 million U.S. residents were under excessive heat warnings last week and at least 140 weather stations across the country matched or exceeded record high temperatures.

“We're experiencing firsthand the effects of climate change in Nevada and across the West,” she said. “As the (National) Weather Service has succinctly put it: yeah, it's summer, and summer is hot, but this is different.”

In a statement, NV Energy spokeswoman Jennifer Schurict said the utility was able to avoid any customers losing power last week despite energy supply issues that affected the entire regional grid, and would support the commission’s efforts to “fully understand this energy supply event.”

“NV Energy looks forward to working with the Commission to review our energy supply plan and adjust it as needed in order to ensure ongoing, reliable electric service continues to our customers in light of changing energy conditions in the United States,” she said in an email on Wednesday.

Typically, the PUC is not involved with overseeing day-to-day energy supply issues in Nevada; that grid operator is NV Energy, the electric monopoly company that serves more than 95 percent of state residents.

The commission instead regulates electric supply through approval of what’s called an Energy Supply Plan, a planning document filed by the utility company that outlines expected energy demand over a period of time, and steps NV Energy plans to take to procure enough power to meet demand.

According to NV Energy’s most recently approved Energy Supply Plan (approved in November 2019), the utility expected electricity demand to peak in July 2020 and go down slightly in August. The utility projected system peak demand in August to be about 7,080 megawatts with an additional requirement of 903 megawatts for planning reserves, with 641 megawatts of that in an “open position,” meaning the utility planned to obtain that power from the market.

But actual demand in August exceeded those projections significantly. According to the utility’s own load tracking website, total system load last week exceeded 8,600 megawatts of demand in the days prior to the ask for voluntary cutbacks.

The PUC can retroactively levy a fine or take action against the utility in other proceedings if it determines that the company took actions that were not “reasonable and prudent.” 

The filing of an investigation gives the PUC a more direct and immediate way to look into energy supply issues and take action if deemed necessary. The commission usually gathers information through requesting comments or holding workshops, but can take additional steps — such as issuing subpoenas — if deemed necessary.

Williamson also noted that two other Western states have issued calls or started investigations into energy supply issues that arose last week. California Gov. Gavin Newsom called for an investigation into resource adequacy last week, and an Arizona utility regulator called for an emergency meeting regarding ways to avoid rolling blackouts if electric supply issues persist.

Regulators plan investigation into ‘resource adequacy’ after NV Energy’s call to lessen electric use

Sign for State of Nevada Public Utilities Commission on front of building.

The Nevada Public Utilities Commission is planning to launch a formal investigation into electric supply adequacy issues days after NV Energy this week asked customers to voluntarily reduce power consumption to help offset potential energy supply issues caused by a record-breaking heatwave across the Western United States.

The Commission has scheduled a discussion on opening the investigation docket for its Wednesday meeting, which is described as an “investigation regarding resource adequacy and planning to ensure that electric utilities’ supply of energy is sufficient to satisfy demands and maintain reliable, continuous service.”

No supporting material for the investigation has yet been filed. A spokesman for the Commission said additional details would be discussed during the PUC’s Wednesday meeting.

The investigation comes as NV Energy made a rare request to customers on Tuesday and Wednesday to voluntarily cut back power consumption between 2 p.m. and 9 p.m. in order to help the utility deal with “energy supply issues caused by record-breaking heat throughout the Western United States.”

NV Energy CEO Doug Cannon said in an interview earlier this week that the request for cutbacks were due to the “unprecedented” demand on the Western energy grid, largely caused by rising demand in California.

Cannon said the voluntary call for cutbacks was a success, and shaved about 250 to 300 megawatts of expected demand off of peak electric usage on Tuesday. The utility was ultimately able to avoid brown or blackouts caused by lack of supply, and lifted the voluntary call for reductions in electric use.

The PUC, which has oversight of all utility companies in the state, oversees and approves what’s called the Energy Supply Plan — a planning document filed by NV Energy that outlines a long-term strategy for the utility to procure enough energy for its customers, based on historical and projected demand for electricity month-to-month. The last Energy Supply Plan filed by the utility was approved in November 2019.

But the PUC is not responsible for overseeing day-to-day decisions made by the utility company to balance load and ensure it has enough power to meet customer demands. It does have the power to revisit decisions and potentially fine the utility, though, if the agency finds it did not make prudent or necessary decisions related to power supply, or to open investigations that allow for a more rapid response and oversight into the utility’s decision-making.

‘Unprecedented’ stress on power grid drove NV Energy to request voluntary electric cutbacks

On Tuesday, NV Energy broke out a tool it hasn’t had to use since the Clinton administration.

The state’s largest electric utility issued a wide-ranging call to customers asking for voluntary electricity cutbacks between 2 p.m. and 9 p.m. on Tuesday and Wednesday in order to “offset energy supply issues caused by record-breaking heat throughout the Western United States.”

While reducing electric usage has been a regular push for the utility, a specific call for reducing power consumption because of potential energy supply issues hasn’t happened since the rolling blackouts in the California energy crisis in 2000 and 2001, NV Energy CEO Doug Cannon said in an interview.

And just like two decades ago, Nevada’s proximity to California is exacerbating issues with Nevada’s energy supply. But California’s issues — which include several days of rolling blackouts for millions of residents — aren’t the only factor that led to the call for reducing electric use. 

Other reasons include continual record-high temperatures, poor weather conditions from smoke and fires blowing into northern Nevada, a later peak in expected energy use than projected by the utility and the COVID-19 pandemic keeping more people home and using more electricity in their homes.

“This really is an unprecedented event on the Western energy grid, and we are seeing unprecedented demand on the Western energy grid right now,” Cannon said in an interview. “You talk about 100-year flood events, these kinds of unprecedented events that occur, I would put the demand that we’ve seen over the last five days in that category.”

Although NV Energy is the primary electric utility and grid operator in Nevada, the flow of electricity does not stop at any single state’s boundaries. Power generation between Nevada and neighboring states is bought and sold freely to help make up gaps in power supply — a boon during normal times and a problem during times of scarcity.

Electric use data show that the call for conservation has so far worked out. Cannon said that combined electric reduction from residential and business customers shaved about 250 to 300 megawatts of expected demand off of “peak” electric usage on Tuesday, the equivalent of a small-to-medium power plant’s output.

Cannon said it was probable that Wednesday would be the last day the utility asked customers to voluntarily reduce electric usage, as temperatures across the western part of the country are expected to drop through the rest of the week. 

But the widespread public call to reduce electric usage has been met with concern and confusion about Nevada’s energy supply plan, with fears that the state could end up following the same path of rolling blackouts and electric uncertainty currently befalling California.

Cannon said that NV Energy was taking steps to ensure adequate future energy supply, from a $2 billion planned statewide transmission upgrade to the wide suite of expanded solar generation and battery operations contracting with the utility to expand capacity. 

“I don’t think it’s something that customers need to spend a lot of time being concerned about,” he said. “We have a very robust plan to provide energy resources for Nevada.”

How the reductions worked

The utility’s recommendations for residential customers were straightforward: keep thermostats above 78 degrees or higher, turn off lights, pool pumps and other appliances not in use, as well as not running dishwashers or washing machines during peak hours.

Beyond residential cutbacks, Cannon said that many of the utility’s largest customers, including casino resorts and mining operations, also reduced operations to help pitch in. Casinos were able to pre-cool spaces during non-peak hours or temporarily turn off pumps or other equipment, while industrial, manufacturing or mining customers of the utility shut down certain energy-intensive equipment during the afternoon. 

He also said the utility worked with rural electric cooperatives to reduce their afternoon water pumping electric load, all part of the statewide effort to reduce electric usage. 

Preliminary data indicates that the company’s call to reduce power consumption worked.

Data from Tuesday and Wednesday show that actual load amounts came in below forecasts starting around 5 p.m. on both days — the top period for electric use.

That’s important, Cannon said, as electric prices during peak hours have skyrocketed in recent days. The price of a megawatt hour on the market has grown from around $30 to $40 to more than $1,300 during peak early evening operating hours.

Beyond the power use reduction, Cannon also said that the utility was able to reduce load significantly through use of demand-side management programs — a broad term that refers to energy efficiency, smart thermostats and other policies reducing electric demand.

The heat wave and other contributing factors also threw off the utility’s forecasts for expected energy supply needed this month. NV Energy is required to regularly file an Energy Supply Plan with the state’s Public Utilities Commission, a planning document that outlines expected energy demand (a load forecast) and how the utility plans to procure it.

While the PUC oversees and approves that long-term Energy Supply Plan, the utility operates its day-to-day fluctuations between forecast and actual power demand. 

Typically, the utility expects peak demand to come in July, but the combination of high temperatures and issues in California pushed that peak into August, where expected electricity needed is below actual demand — necessitating the call for voluntary power reductions.

Renewables

The increasing reliance and move toward renewable energy resources has drawn the concern of some, most notably in California, that states should be more cautious about fully relying on renewable power sources without adequate backup sources during times of peak demand.

Nevada, which implemented a 50 percent Renewable Portfolio Standard by 2030 last year, still relies heavily on natural gas-fired power plants to meet electric demand. More than half of the state’s electric output comes from natural gas-fired plants, though use of renewable sources including solar and battery storage now makes up about a fifth of the utility’s fuel mix.

Cannon said it was not accurate to insinuate that an increased reliance on solar power was causing issues with Nevada’s supply of electricity. Rather, he said, it’s a system-and multi-state wide problem of just not having enough capacity between both carbon-based fuel sources and renewable sources.

Cannon also reiterated that NV Energy has made several filings that in total exceed more than 1,000 megawatts of energy storage from solar power plants, well exceeding a Legislature-set goal of the same amount of storage by 2030.

“I don't think it's a fair or accurate argument to say that renewables is what caused the current situation. That's not the case,” he said. “There's a way to use renewables and combine it with storage and combine it with transmission to have a very reliable and efficient electric grid.”

Outages

If needed, a decision to implement outages — planned blackouts or brownouts — would not come from NV Energy itself.

Instead, that decision is left up to an entity called a reliability coordinator, which is charged with overseeing and taking action to prevent emergency electricity shortages. That coordinator is charged with following guidelines and standards put in place by the North American Electric Reliability Corporation (NERC), which oversees the reliability of the nation’s bulk power system.

As of late 2019, the reliability coordinator for Nevada is the California Independent System Operator (CAISO), which otherwise acts as the electricity “traffic cop” and operates the electric grid of Nevada’s western neighbor.

CAISO took over duties as reliability coordinator in late 2019, after the previous organization closed up shop and left Western states scrambling to find a replacement. Although Nevada’s grid is not operated by CAISO, the state along with parts of Idaho, Utah, Oregon, Washington, New Mexico, Wyoming, Montana and even parts of Mexico are nonetheless governed by the CAISO-run reliability coordinator.

Cannon said that even if the utility’s electric supply necessitated some type of temporary electricity shutoff, the utility and reliability coordinator could target certain blocks of customers to temporarily stop electric service in hour-long blocks, with as much notice as possible given in advance. But he emphasized that as of Wednesday, the utility did not expect any temporary electric shut-offs or forced blackouts to occur in the company’s service territory.

“When you get into the type of scenario that we've been in over the last week it's always a risk, but it's one that in NV Energy we've been able to very successfully manage thus far,” he said. If an outage does happen, NV Energy and any other utility business in the state are required to file reports with regulators at the PUC.

NV Energy is required to report any outage lasting more than 10 hours that affects 50 or more customers, or any outage exceeding 3,000 customer hours (equivalent to 3,000 customers without power for one hour, or 300 customers without power for 10 hours).

The Indy Explains: Why NV Energy is pushing for a $2 billion statewide transmission upgrade

In the midst of an unexpected recession and staggering job losses across the country, NV Energy has proposed a massive new transmission infrastructure project that it says will create jobs, boost the economy and help promote renewable energy development.

If that line sounds familiar, that’s because it’s happened before. In 2009, the state’s primary electric utility made many of those same arguments about economic recovery and renewable energy in its pitch to build a 235-mile, 500 megawatt “One Nevada Transmission Line” linking Southern and Northern Nevada for the first time.

Now, more than a decade later, the utility has proposed another major transmission line upgrade. Dubbed “Greenlink Nevada,” the estimated $2 billion transmission project would upgrade existing lines between Ely and western Nevada (centered in Yerington) and a new line between Las Vegas and Yerington, forming a transmission line triangle inside the state.

But what has changed since the “game changer” original statewide transmission line was completed in 2014, and why is the utility pushing for a major transmission expansion now?

NV Energy CEO Doug Cannon says the proposal — which still must be approved by state energy regulators at the Public Utilities Commission (PUC) — is meant to proactively address several issues that the utility expects to deal with over the next decade; transmission capacity in a rapidly growing Northern Nevada; and complying with higher renewable energy mandates including a 50 percent Renewable Portfolio Standard by 2030 that was passed by the Legislature.

“We're not asking for any tax breaks,” Cannon said in an interview last week. “We're not asking for any special treatment. We're ready to make this investment in the state and drive economic development in the state.”

The proposed transmission plan, which was announced last Monday, is composed of two main phases. The first is a 235-mile long, 525 kilovolt transmission line linking substations in Ely to Yerington, with plans to build out additional lines linking to the Reno and Tahoe Regional Industrial Center areas. 

The second phase of the plan is a 351-mile, 525 kilovolt line stretching from Las Vegas to Yerington, running somewhat parallel to the state’s western border. The plan also calls for some substation upgrades and construction — notably a full buildout of a substation at Fort Churchill, where the utility operates a natural gas-fired power plant.

NV Energy is also asking for PUC approval for three new solar and battery storage projects in Southern Nevada, including one owned by the utility, that would add 478 megawatts of solar generation and 338 megawatts of battery storage. 

All in all, the utility — which filed the planned transmission upgrade as part of a lengthy amendment to its 2018 Integrated Resource Plan — is bullish on how the infrastructure upgrades could benefit the state.

The company commissioned a report from well-known analytics firm Applied Analysis, which estimated that the project would generate $781 million in economic activity while employing or supporting more than 4,000 jobs over the 11-year construction period.

Once completed, the project will have a smaller economic footprint; Applied Analysis estimates that it will average $2.1 million in “annual economic activity,” and support around 9 jobs with $822,000 in wages for management and maintenance of the new lines.

But Cannon said the transmission upgrades will not exist in a vacuum; outside of the construction and materials that will go into building power lines through hundreds of miles of Nevada desert, the upgraded capacity will open the door for new development of solar plants in previously inaccessible areas, and in theory allow Nevada to stop being the “hole in the donut” among other Western states. 

Still, NV Energy will need to prove to the PUC that the proposed infrastructure upgrades and other related projects are worth the $2 billion price tag that ratepayers and customers of the utility will ultimately need to pay.

“This infrastructure doesn't get put in overnight,” Cannon said. “These are long-term processes, long-term projects to put in, with having to permit federal land, and all the parties involved. And so we need to start that long term conversation now.”

Building a triangle

Although NV Energy has provided electric service to most of the populated areas of the state since the Northern Nevada-based Sierra Pacific Power and Las Vegas’ Nevada Power merged in 1998, Nevada’s two largest urban areas continued to operate as unconnected islands in the state’s power grid until 2014. 

That changed after construction of the 235-mile One Nevada Transmission Line between Las Vegas and an Ely substation completed construction. The line was originally proposed as a way to link a proposed coal-fired plant near Ely that was ultimately never built.

Cannon said that the 2014 transmission line has been successful, but that the company has now fully maximized capacity on that line, which limits the utility’s ability to “dispatch our system in the most cost-effective way.” Creation of the transmission triangle would also serve as an important redundancy, in case of a natural disaster or other interruption on the existing transmission line.

“Having this triangle around the state allows us to build those renewable resources in the most efficient location, and then move those efficient resources to wherever the load is,” he said. “Whether that's in Las Vegas or Reno or Elko, wherever the load might be, we can move the energy on this triangle to the most efficient location. So we're not trying to force a solar project into Northern Nevada, when it doesn't really make sense.”

Outside of new development in the state, NV Energy said in its application with the PUC that expanded transmission capacity in the state would also help move the state away from being the transmission “hole in the donut” between neighboring Western states.

Renewables

An enhanced transmission system would allow the state to potentially “become an energy highway for transfers to and from Southern California and Arizona,” the company said in the application, adding that planned construction of third-party and other transmission systems would make the state the “path of least resistance between the hydro-rich Pacific Northwest and the high-capacity winds within the central plains of the United States.”

Beyond the potential financial benefit of having more electricity from other states flow through Nevada, the company also wrote in its application that it didn’t believe it could achieve a cost-effective pathway to net zero carbon emissions — a nonbinding goal set in state law after the 2019 Legislature — without substantial import of wind and other renewable energy from other states.

While more attention has been paid to a successful push in the 2019 Legislature requiring NV Energy to reach a 50 percent Renewable Portfolio Standard by 2030 (which the company supported), the utility is also looking at the possibility of reaching zero carbon emissions by 2050.

But getting to that point won’t be easy. As part of its application, the utility commissioned a report from an energy consulting firm that found “solar and PV energy storage alone cannot accomplish the aggressive renewable goals established for the state.”

The report by Energy+Environmental Economics found that in order to hit those decarbonization goals, NV Energy would need to exponentially increase its share of solar power and storage capacity. Because solar is an intermittent resource — the sun only shines for part of the day and doesn’t match up with peak hours of energy use in the evening — the cost of switching to such a solar-heavy fuel fix would likely drive the average price of a megawatt-hour (the standard measurement for power plant generation) up nearly four times the current cost.

The report recommended that resource diversity — such as wind or hydroelectric power — would benefit the company and lower the cost of reaching the zero-carbon goal. But reaching those resources in a desert state such as Nevada would require enhanced transmission capacity, the company said.

“The only way to gain access to diverse renewable resources is through an interconnected western grid,” NV Energy wrote in its application. “Nevada’s geographic location provides the opportunity to be a key player in the development of that grid and a key renewable energy provider in the west. At this point, the missing piece is the lack of transmission infrastructure in Nevada.”

Cannon said while the company could possibly meet its renewable energy requirements and goals set in state law without a massive transmission system upgrade, it would be “very challenging” to ensure system reliability and efficiency “because you're trying to balance that renewable energy with just batteries.”

Regional connections

Cannon did not outright dismiss the idea that the upgraded transmission lines could lead the state into joining a multi-state wholesale energy market, also called a Regional Transmission Organization (RTO).

For everyday electric customers or ratepayers, talk of an RTO wouldn’t affect day-to-day operations or how one uses electricity. But on a macro level, the effect of Nevada joining a wholesale energy market could affect not only the price of electricity over the coming decade, but also the availability of renewable energy in the state.

So what is a wholesale energy market, or RTO? 

Traditionally, the energy industry has been vertically integrated with generation, transmission and final sales to customers done all under the same roof by a single utility company. But as energy markets have become increasingly decentralized, many states have set up RTOs (also called Independent System Operators, or ISOs) that function as central clearing houses for managing the electric grid in certain geographic areas. 

There are nine ISO/RTO organizations operating in North America; the closest to Nevada is the California ISO (CAISO).

Cannon said in an interview that while the utility has made no decisions about joining or creating an ISO, the company believes that it will better achieve carbon reduction and renewable energy goals if “we take a regional view.” He added that Nevada’s participation in the Western Energy Imbalance Market (run by CAISO) in 2015 — a bulk power market that allows short-term buying and selling of electricity among 8 states — had been beneficial for the company by allowing it to purchase excess solar produced in California at cheaper prices.

“If there is a structure that we think makes sense for Nevada's interests, we certainly would look at exploring that path,” he said.

But in order to participate fully in a future Western states RTO, NV Energy argued in its application that Nevada would likely need an upgraded transmission system including redundancies on the existing state-stretching line between Ely and Las Vegas in order to participate.

“Greenlink West eliminates this single contingency impact and creates the essential connections for both the northern and southern systems to become key players in a western interconnected grid,” the utility said in its application.

Northern Nevada needs

When filing to leave NV Energy’s service last year, the Atlantis Casino Resort Spa quickly ran into a problem; the utility said it would run out of transmission capacity in Northern Nevada if the casino company opted to buy electricity from another source.

Although the timing of the utility’s announcement was questioned at the time, continued growth in the Reno area as well as the Tahoe-Reno Industrial Park in Storey County has put additional strain on the electric grid in Northern Nevada.

In its application, the utility wrote it expected Northern Nevada to use all of its committed transmission capacity by 2023 and begin to exceed current reservations by 2024 — meaning it either needs new power generation, or increased out-of-area transmission to meet business and other ratepayer needs.

“It is not in the interest of the state to have the lack of utility infrastructure cause delay in economic development and job creation,” the application stated.

The planned transmission upgrade would increase Northern Nevada import capacity by approximately 1,025 megawatts — well above the 700 megawatts in expected load growth over the next decade.

Cannon said that the utility could in the short term continue to service Northern Nevada without issue, but the number of new businesses and overall growth in the Reno area meant that even the utility’s “internal capacity starts to get tight.”

“We do get to the situation there that if we don't approve transmission construction in Northern Nevada, the system will get constrained to the point where we could not support ongoing growth on the system,” he said. “We do not believe that's in anybody's interest. That's certainly not where we want to be.”

Cost to the customer

NV Energy’s promotion of the new transmission line is heavy on details on projected financial impacts, jobs numbers, expected taxable sales and other benefits it expects the state to see if the PUC approves the project.

But the $2 billion price tag attached to the project does not come from a magic pot of money; the utility will eventually recoup the cost of its investment from the rates that it charges to its customers.

Cannon said that the company has not yet attempted an assessment of what effect the new transmission lines may have on rates or monthly power bills of its customers. For one, the company is essentially “fronting” the cost of construction and build-out of the transmission lines, and would seek to recover the rates through what’s called a General Rate Case (filed by the company every three years with the PUC that sets rates for all customer classes) sometime in the mid-2020s.

But he said there were other factors that might drive that price point down; the second phase of the transmission line between Las Vegas and Yerington will open access to otherwise remote areas of the state well-suited for utility scale solar production. If the current price of solar remains low, Cannon said that will help lower the utility’s fuel costs and thus balance out the eventual price tags owed by ratepayers.

“Ultimately, the cost for customers will be influenced by how much we can offset energy costs, because now all of a sudden, we have this new infrastructure available to us that wasn't historically there,” he said.

The entire $2 billion price tag also won’t all come at once; utilities including NV Energy often amortize and spread out the costs of any large project or infrastructure over a period of many years, so ratepayers can avoid a sudden upswing in their power bills.

Cannon also said that the rate recovery will be different than how the utility managed the 2014 One Nevada transmission line, which was developed and partially leased with a private company. Cannon said the utility planned to own the new transmission infrastructure outright, which would give the company more flexibility to spread the ownership cost over a longer period of time.

But in what could be a hint at the future cost, the company wrote in its application that moving toward enhanced renewable energy capacity would require a shift for traditional, lowest-cost favored style of ratemaking.

“The Companies fully support these state of Nevada goals and requirements, but they and industry stakeholders also need to shift from the past practices of ‘just in time’ resource and transmission planning and narrow focusing on immediate needs and benefits,” NV Energy wrote in its application. 

New Projects

In addition to the transmission line, NV Energy also announced plans for three new “solar plus storage projects,” with a combined generation capacity of 478 megawatts of solar generation and 338 megawatts of battery storage — an amount the utility company said could power more than 107,000 homes.

The projects, which would all be based in Southern Nevada, include a direct, NV Energy-owned 150 megawatt solar project with an attached 100 megawatt battery storage capability. The Dry Lake Solar Project, which would be located about 20 miles northeast of Las Vegas on leased Bureau of Land Management land designated as a “Solar Energy Zone.”

It’s a departure from the utility company’s more recent strategy of entering into long-term power purchase agreements; where the company agrees to an exclusive, decades-long agreement with a private company that runs and operates a separate electric generation facility guaranteed a certain sale price for their production of power.

Cannon said that the Dry Lake project, which is located on federally leased Bureau of Land Management land designated as a “Solar Energy Zone,” signals a shift in utility strategy around procurement of generation facilities.

He said that while the power purchase agreement model has provided the utility with extremely competitive electric prices, the structure of the deals meant that the utility would only contract with the developed solar field for a set period of time (normally 20 to 25 years) before the developer could start selling the solar-generated electricity on an open market. 

Solar fields usually have a three to four decade long lifespan, so the independent developers on the other side of the “PPA” can essentially sell at a pure profit after NV Energy customers essentially helped pay to build their facilities.

“There's no reason to profit on our customers that way,” he said. “If our customers pay for a facility, let's let them benefit from that facility for the entire life of plants.” 

The other proposed solar projects include:

  • A 128 megawatt solar array, including a 58 megawatt battery storage system, called Boulder Solar III. It’ll be built south of Boulder City and is developed by 174 PowerGlobal and KOMIPO America, Inc.
  • The Chuckwalla Solar Project, a 200 megawatt solar generating facility with a 180 megawatt battery storage system. It’s proposed to be developed by EDF Renewables North America and will be placed about 25 miles northeast of Las Vegas on Moapa River Indian Reservation land.

In its application, the utility company said that at least two of the projects would be essentially earmarked for Google, which signed an energy supply agreement with the utility to offset 100 percent of the search engine’s electric output with clean energy.

It’s also planning the first quasi-community solar project at Mojave High School in Las Vegas, a 0.35 megawatt solar facility expected to cost $1.56 million an come online by the end of 2021.

It also wrote that the company wanted to get started early on large-scale solar projects given the looming expiration of the federal investment tax credit for solar projects and as a hedge against any potential disruptions in the development and construction of already-approved solar plants amid supply chain and other disruptions caused by the COVID-19 pandemic.

“The risk, however, is likely more challenging for projects with commercial operation dates in 2020 and 2021, since they are now in various stages of receiving or procuring major equipment such as solar panels, inverters and transformers,” the application states.

The proposed projects would also add a cumulative 338 megawatts of battery storage capacity to the utility’s fleet, which combined with other previously approved battery storage projects exceeds a 1,000 megawatt of storage by 2030 target set by the PUC.