Billionaires Elon Musk and Warren Buffett are locked in combat over lucrative solar power subsidies in Nevada.
For now, Buffett has the upper hand. He scored a major win in December, when Nevada’s Public Utilities Commission (PUC) imposed rules that effectively ended net-metering, a policy which forces electrical utilities to buy the energy produced by rooftop solar panels at or near retail rates.
Musk SolarCity stock was devalued by roughly $165 million in a single day as a result of the policy shift. But Musk’s solar company scored a huge victory Thursday, when California maintained favorable net-metering polices.
Many states have enacted net-metering policies for homeowners with solar panels. Solar companies have pushed these policies as a way to encourage solar power and fight global warming, but utilities argue net-metering shifts the costs of maintaining the electrical grid on to households that don’t have solar panels. Nevada regulators sided with utilities and allowed Buffett’s company to increase monthly service charges for solar customers from $12.75 to $17.90 next year. NV Energy will also pay solar customers 75% less for energy they sell back to the grid, according to a sample bill posted on the website of a utility.
The PUC’s decision to curtail net-metering payments to SolarCity’s customers is infuriating the company, causing it to make good on its threat to end 550 jobs in the state.
Musk has benefited from billions of dollars in taxpayers subsidies. In 2014, Musk received $1.4 billion from Nevada taxpayers to build a “gigafactory” for his electric car company, Tesla Motors. SolarCity also got a large payout to move to Nevada. Musk helped found SolarCity and still serves as its chairman.
The billionaires are paying special attention to the conflict in Nevada, where Buffett took control of the electrical utility NV Energy in 2013 for $5.6 billion. The utility was instrumental in lobbying PUC to revise the state’s rules to end net-metering. Since the demand of and price for electrical power fluctuates widely on any given day, net-metering is effectively a wealth transfer from utilities to rooftop solar companies.
Despite Nevada’s ditching of solar subsidies, SolarCity will still be able to draw on federal tax credits to support its business model.
Solar companies can get a 30% federal tax credit for installing residential arrays. Solar-leasing companies, like SolarCity, install rooftop systems at no upfront cost to consumers in exchange for a 20-year lease. SolarCity is able to get tax credits and lease payments from its customers.
Congress recently extended this tax subsidy for solar panels, which was a boon to leasing companies. Tax credits and other subsidies are crucial to keeping solar leasing companies afloat.
A 2015 study by the Massachusetts Institute of Technology concluded rooftop solar subsidies are inefficient and costly, and that rooftop solar companies simply cannot compete without government support.
Solar power receives 326 times more subsidies than conventional energy sources relative to the amount of energy produced, according to Department of Energy data. Green energy sources got $13 billion in subsidies during 2013, compared to $3.4 billion in subsidies for conventional sources and $1.7 billion for nuclear, according to data from the Energy Information Administration.
Solar power only accounted for only 0.4% of electricity generated in the U.S. for 2014, according to the Energy Information Administration.
This article originally appeared in The Daily Caller