Upon returning home earlier this year from a visit to China, Mark Hutchinson proposed that the massive, partially constructed Tesla gigafactory outside Reno should become a tourist attraction when construction is completed toward the end of this decade. The Nevada lieutenant governor was apparently serious, basing the idea, he said, on the excitement with which his Chinese hosts discussed the Elon Musk-driven project.
If Nevada is indeed serious about creating a “Gigaland,” it had better set a high price for admission to the attraction. In 2014, the state enticed Mr. Musk to locate the factory in the Silver State by promising $1.3 billion in tax credits and abatements — a figure that will require a lot of admission tickets to recoup.
That Nevada would be looking to turn the gigafactory — which, when completed, will be the largest factory anywhere on the planet, according to Musk himself – into a tourist attraction, is but one of many strange aspects of the ongoing saga of solar energy policies in a number of states. But the contradictions highlighted by the goings on in Nevada — pitting traditional utility companies against purveyors of “green energy” such as Musk — have raised the political and economic issues to a new level.
Mr. Musk, with his two most well-known “green” projects — Tesla and Solar City — is widely considered the king of taxpayer subsidies. Without such incentives, his endeavors would be totally unfeasible. His latest venture in Nevada centers around the third leg of his “clean energy” stool (the first two being Tesla vehicles and Solar City’s rooftop solar panels) — batteries for home and business that store energy during the day, for use later.
At least that was the dream that apparently convinced GOP Gov. Brian Sandoval to press the Legislature to approve more than $1 billion in subsidies to lure Mr. Musk’s gigafactory; and, just this month, to sign legislation reinstating another “green energy” subsidy program, “net metering.”
Net metering is a creature of state law by which the government encourages energy consumers — residential and commercial — to install solar panels as a means of producing electricity. The “green” theory is that electricity thus produced will be stored and used later without increasing the energy consumer’s “footprint.” However, as a result of the manner in which Nevada and many other states eager to tout their “green” credentials now incentivize consumers who install solar panels, the excess energy produced during sunlight hours is not so much stored as it is sold to existing utilities, with the consumer reaping generous, state-defined credits that utility companies are forced to “buy.”
The resulting irony in all this is that net metering actually winds up reducing demand for the very energy-storing batteries to be produced by Mr. Musk’s fantastically massive factory. Perhaps with this contradiction in mind, in late 2015 Nevada’s Public Utilities Commission had greatly reduced the state’s net metering incentive program (the one the governor just reinstated). The commission’s move was much to the dismay of green energy advocates, including Mr. Musk, who lobbies hard for subsidies, whether the result of tax breaks for building factories or for installing roof top solar panels or in support of net-metering legislation. He wins both ways: People buy solar panels manufactured by his Solar City, and he receives huge tax breaks for building a battery factory.
To give credit where credit is due, Mr. Musk’s vision of manufacturing and marketing high-tech batteries to consumers and businesses alike to store energy, arguably constitutes one of the more realistic components of a sustainable energy strategy. However, Nevada appears not to share the same visionary capability. It mortgaged a large portion of its future tax base — notwithstanding studies revealing that the employment projections used to justify the $1.3 billion price were overstated — and then reinstated a net-metering program that will further reduce the benefits of that billion-dollar decision.
The bottom line is that Nevada’s one-two punch to free market forces raises questions about its true and long-term commitment to sustainable energy.
Bob Barr is a former Georgia congressman who was also the Libertarian Party’s presidential candidate in 2008.