For years, Nevada taxpayers have spent millions subsidizing homeowners who install rooftop solar panels – but that’s about to end.

In a controversial decision, the state is phasing out that subsidy over the next 12 years, a move being met with protests, lawsuits and even a failed bid to put the issue before voters. Last week, Nevada's Supreme Court ruled that a referendum from solar activists challenging the decision would not be allowed on the November ballot. 

The changes and challenges are now being watched carefully by other states and the solar industry as a whole – as it could signal a shift away from government support for solar energy.

Until now, Nevada homeowners subsidized roughly 17,000 customers with solar panels, to the tune of about $16 million every year. This was done under a program known as net-metering, which reimbursed residential energy customers for excess power generated by their rooftop panels.

Paul Thomsen, chairman of Nevada's Public Utility Commission, said the perk was unfair, because it meant homeowners who didn't have solar panels were subsidizing those who did.

"As the rooftop solar industry has gotten larger and larger, we've seen this subsidy grow," Thomsen said. "What started as a legislative policy to kickstart the industry, now 18 years later, it's time for that industry to stand on its own two feet."

But customers are blasting the state's decision to phase out net-metering, as well as a decision to raise monthly fixed fees for solar customers, from $12.75 to $38.51.  

"The PUC and Governor Brian Sandoval have backstabbed us, and have gone against the little person," Nevada solar customer Eric Heine said.

Many homeowners say without that perk, they wouldn't have shelled out thousands of dollars to go solar, and blame the Nevada Public Utility Commission for what they call a "bait and switch."

Activists are fighting the new policy in the courts, a legal battle other sunny states like Arizona and California are watching closely.

Meanwhile, many solar companies are down-sizing -- and several, including Solar City, have stopped doing business in the state, eliminating 550 jobs.

Solar activists say they're hopeful that customers who went solar before the PUC decision will be able to keep the rates they signed up for. A task force created by Republican Gov. Brian Sandoval has recommended the rates be grandfathered in for customers who submitted applications before 2016, and continue for 20 years.

That recommendation is expected to go before the Nevada state legislature early next year.

Claudia Cowan currently serves as Fox News Channel's (FNC) San Francisco-based correspondent. She joined the network in 1998.