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May 31, 2010

Green light for Oregon solar feed-in tariff incentives

Regulators in Oregon have given the green light to a new incentives system to reward people for generating their own solar power.

The Oregon Public Utilities Commission approved new rules on Friday that will establish a four-year pilot program to trial a solar feed-in tariff.

It will see new incentives offered for solar systems installed after July 1, 2010.

We are trying to strike a balance between providing an incentive while keeping an eye on controlling utility costs” - Ray Baum, Oregon PUC

The system will not rely on state tax credits, but instead will involve utilities paying residents a guaranteed amount for their power over a 15 year period.

Rates will be set at a fixed rate for small-scale and medium-scale solar installations. For large-scale plants, a competitive bidding process will be carried out.

Commission Chairman Ray Baum said: “While Oregon may not be the first state that comes to mind when you think about solar, I believe this state has a lot of potential and these pilot projects will show us if we can encourage the use of this renewable resource in a cost effective way.”

Payments

The pilot project will be available to customers of Portland General Electric (PGE), PacifiCorp, and Idaho Power – utilities that combined serve roughly three-quarters of Oregon’s electric users.

The pilot scheme will be limited in the amount of projects it supports to a total of 25 megawatts (2,500kW), enough electricity for around 2,500 homes.

The amount of the incentive payments for small-scale solar systems (less than 10 kilowatts output) has been set at between 55 cents and 65 cents per kilowatt-hour (kWh) of power produced.

This varies between the four regions of Oregon – slightly lower for the sunnier regions that have better potential for solar energy generation – so that areas that would otherwise see slightly longer payback times for solar equipment would have slightly higher incentives.

Medium-scale solar installations – of 10kW up to 100kW – have a 55-cent per kWh rate the same across the whole state.

Review

The Public Utilities Commission will review the rates every six months of the four-year scheme, to decide whether it needs adjusting.

“We are trying to strike a balance between providing an incentive for solar development while at the same time keeping an eye on controlling utility costs. If the initial rate is set too low, customers may be reluctant to sign up,” said Commission Chairman Baum.

Large solar systems above 500kW will not be subject to the feed-in tariffs scheme, which is being implemented under the 2009 bill, HB 3039.