Nevada: NV Energy, MGM and "Leaving the Grid"

Cross-posting a comment/letter I made on a story that gets at the core of Peak Power LLC's work merging DER and renewables into the utility grid.

Greentech Media's excellent Energy Gang podcast featured a segment last week about a large commercial customer (MGM) deciding to directly procure its own renewable power, rather than buying from the utility, Nevada Power.

The Gang calls MGM's move "leaving the grid", or leaving Nevada Power, full stop; they suggest it may be the start of the utility death spiral. At one point renewable energy pioneer and personal hero Jigar Shah seems to suggest MGM's move is something between karma and empirical refutation of NV Energy's recent retrade on solar net energy metering (NEM)-- here is a sophisticated customer willing to pay a premium to unplug from the grid! 

The segment's portrayal of MGM's move had me questioning a lot of what I thought I knew about distributed (or community-style) renewables vs. centralized generation: i.e., that a building is rarely and island, and it is hard to replicate the grid's diversity benefits of being connected to a large network of users and suppliers. 

It turns out that the reality is a lot less dire or monumental than the segment, at least to me, implied. 

An NV Energy statement (widely reported) unambiguously states, "[the utility] will continue to work with MGM to meet their needs as a transmission and distribution customer of NV Energy”. So MGM is not defecting from the grid after all!

In this light, the MGM move has nothing to do with net energy metering, nor is it evidence of commercially viable grid defection. It more closely resembles an argument for 90s-style deregulation--of generation. 

This is a large customer cancelling its subscription to NV Energy's vertically-integrated / "triple play" offering, but very much maintaining the utility's core grid services. MGM is screwing the rest of the rate base with uncompetitive plants, and perhaps forcing hard regulatory decisions-- stranding uneconomic generating assets vs. rate hikes and, yes, the risk of a death spiral. 

MGM's continued reliance on utility T&D infrastructure in a formal tariff structure is a crucial detail that the story somewhat irresponsibly omits.