Nevada Question 6: Nevada Renewable Energy Standards Initiative
Renewable Portfolio Standards require that regulated electric utilities collect a minimum percentage of electricity from designated renewable sources, such as wind turbines or solar panels. Nevada’s Question 6 would double the state’s Renewable Portfolio Standard (RPS), from the current 25 percent to 50 percent by 2030.
Nevada voters approved this question in 2018 in the first of two required votes to place it into the state constitution.
The true fiscal impact is unknown as of this writing. Critics suggest costs could be in the hundreds of millions when considering potential higher costs in energy generation, distribution, and higher consumer rates. Much of the additional cost would likely be borne directly by electric consumers, but state and local governments could face higher costs as well.
Proponents Arguments For:
Proponents argue that increasing Nevada’s Renewable Portfolio Standards is the best way to make the necessary move to more clean and renewable energy. Supporters say that moving to 50 percent renewable energy will add thousands of jobs and billions in investments to the state’s economy in the renewable energy sector. Question 6 would make Nevada a self-sufficient leader in renewable clean energy, taking advantage of its natural supply of solar and geothermal resources, and would dramatically reduce carbon and sulfur pollution in our air. Supports say now is the time to make this change because renewable energy is already more reliable than fossil fuels and it keeps getting more affordable. Nevada currently gets 80 percent of its electricity from out-of-state natural gas and this over-reliance on fossil fuels leaves Nevadans vulnerable to price spikes and supply disruptions that Question 6 would end, its proponents argue.
Opponents Arguments Against:
Opponents to Question 6 argue that a higher RPS will impose higher electric rates and lead to less-reliable power for households and businesses. Nevada already has one of the most diverse renewable energy portfolios in the nation, including 19 geothermal projects, 14 solar projects and roughly one dozen wind, biomass, hydro and waste heat renewable energy projects, with additional renewable energy products in the planning process. Forcing further shift to renewables before the market is ready will hurt consumers, opponents say. Furthermore prices of renewables are still high and the would cost jobs in manufacturing, agriculture, and tourism. Question 6 would impose the same type of RPS in Nevada that is partially blamed for California losing a large percentage of its industrial base since 2000, opponents say. California’s residential utility rates are 57 percent higher than Nevada’s and industrial rates are more than double, according to statistics from the U.S. Energy Information Administration. Putting Question 6 into Nevada’s state constitution means that if it turns out to be impractical to implement or too costly to the state’s economy, the only way to fix it would be with another constitutional amendment.
While Renewable Portfolio Standards may expedite the adoption of renewable energy, it does appear that this transition comes at a higher cost to customers. A recent comprehensive review of RPS by the University of Chicago shows a significant increase in costs alongside more mild gains in renewable energy use. This is in part because renewable sources like solar and wind are generated geographically further from the city centers they serve, resulting in higher infrastructure and transmission costs, but also due to costs imposed when energy companies are mandated to abandon old technologies and systems. Indeed, Question 6 could mean Nevada utilities have to abandon existing power plants before their useful life is completed. Furthermore, ratepayers will still be required to pay for those unused power plants.
There is also some controversy over what types of technologies would get designated as renewable. Hydroelectric dams, for instance, provide very renewable energy but do not qualify as an approved renewable source in Nevada. Generally, regulated utilities can generate power internally or purchase it wholesale from an independent power producer utilizing an approved technology. Regulated utilities have an incentive to own and operate their own power plants since their allowed rate of return is based on a percentage of equity. NV Energy has been criticized in the past for supporting plans to prematurely shutter its power plants and replace them with solar plants in part to increase the utility’s equity and rate of return for shareholders while causing rates to increase for businesses and households.
It is also possible an RPS could be optimally effective at lower rates than 50 percent. There is some evidence that these requirements have helped to lower the costs of renewable energy generation by giving manufacturers of solar panels and wind turbines a guaranteed market into which their products will be sold.
California has recently experienced rolling blackouts, in part, because of its abandonment of traditional power sources for renewable sources. Although solar panels tend to produce electricity reliably during peak hours, wind turbines have highly variable outputs that tend to peak during off-peak hours when it is less useful. By contrast, nuclear and coal-fired power plants can supply a steady level of baseload power and natural gas turbines can be quickly scaled up on-demand, as needed. Grid managers must balance the supply and demand for electricity at any given moment, which can be more challenging with renewable sources since the production of wind turbines especially can vary greatly over short time periods. If reducing carbon dioxide emissions is the underlying goal of Renewable Portfolio Standards, there are many ways of achieving the goal without specifying in the state constitution what utilities must do.