Going solar in Oregon? Here’s what to expect from PGE: The Good, The Bad, and The Ugly
Upgrading a home to solar energy can seem like a daunting prospect. In terms of scale, many who have already gone through the process equate it to adding a room to their house. And as many of us know, remodeling projects can be an annoying hassle. Plus, legislators are always tweaking the rules and regulations governing the energy market. So it can be hard to know if the benefits you heard about last year still apply today. In spite of the effort it takes, the benefits of going solar pay tremendous financial dividends for decades to come. That’s not to mention the significant positive impact on the environment.
So let’s cast some light on the questions—pun intended—and look at the experience of going solar.
Let’s use the State of Oregon as an example since it has one of the best markets for residential solar energy in the country. Then let’s zoom in a little tighter and cover Portland General Electric (PGE) because it’s one of the largest and most influential private utility companies in the state. And then let’s pose some questions like, how do things go for the customer when the interests of regulators, utility companies, and installation contractors overlap? And who facilitates the handoff between those groups?
Hopefully, the example will illustrate the ways public energy policies and private business practices can co-conspire to make the process of going solar turn out good, bad, or ugly for homeowners.
1. Oregon Renewable Portfolio Standards
- How the future of renewable energy looks in Oregon: Good
A state’s Renewable Portfolio Standards (RPS) are a good barometer for the health and stability of their renewable energy market. Solarpowerrocks.com ranks Oregon’s RPS as 7th best in the U.S. Where some states leave RPS as a set of unenforced ‘recommendations,’ Oregon takes renewable energy seriously enough to give their RPS some legal force. Oregon Senate Bill 1547 requires utility companies across the state to shift at least 50 percent of their power-generating capacity to renewable energy sources by 2040. One of the more common ways Oregon utility companies like PGE work toward their RPS goals is by having customers who own solar arrays connected to the PGE grid. Then, to encourage more participation in the renewable energy market, the state has established a pretty respectable set of cash rebates. And keep in mind, those rebates get stacked on top of Oregon’s full retail net-metering rate, plus the 30 percent federal solar tax credit.
2. Oregon Electricity Prices Vs. Net-Metering Rates:
- How good the advantage of going solar is in Oregon: Pretty good but adding monthly rollover would make it great.
Because the Pacific Northwest enjoys an abundance of hydroelectric power, electricity prices in the region stay fairly low. Oregon residents, for example, pay an average price of $0.11 per kilowatt hour for electricity. That’s about one to two cents below the national average. Oregon’s net metering policies require private, investor-owned utilities like PGE to credit utility customers who own rooftop solar arrays the full retail value for surplus energy they feed back into the electric grid. However, when the customer produces more energy than they consume, their surplus energy credits do not roll over from one month to the next.
3. Designing Rooftop Solar for PGE Customers
- How things usually go: Good
Helping homeowners switch to solar energy starts by custom-designing a solar array that generates 100 percent of their energy needs. Several details factor into the design, like the pitch and size of the roof, the angle of the midday sun, and whether nearby trees or other buildings cast shade on the rooftop. But probably the most important factor to consider is the customer’s average monthly energy use. Gathering that information might seem straightforward, but the experience really varies between different utility companies across different states.
PGE customers are fortunate in this regard because they’re given a breakdown of their monthly energy usage right on their bill. They don’t need to make any special requests or file any special documents. PGE customers may not even realize that few utility companies actually follow such customer-friendly billing practices. PGE’s openness with their customers helps smooth the path to creating an accurate solar design proposal. And that results in less hassle overall for the customer.
4. Connecting a PGE Customer’s Solar Array to the Grid
- How things usually go: Good
Oregon’s Public Utilities Commission (PUC) requires residential solar energy systems to include an external disconnect switch. It’s a perfectly reasonable safety feature, but it does add to equipment and labor costs. Aside from that, the state’s interconnection policies are up-to-date, straightforward, and simple. Oregon’s interconnection policies are divided into three different levels. Residential solar customers with inverter-based, net-metered systems with less than 25-kilowatt capacity fall under Level 1 rules. Level 1 calls for a standard application process, a standard agreement, and reasonable procedural timelines for utilities and applicants. That means the hoops customers need to jump through to get their system online are minimized and everybody gets held accountable for their response times.
PGE’s interconnection application is easy and requires only one signature at the beginning of the process. There are no extra docs to sign later. PGE is known for doing a great job keeping the customer—as well as solar installation contractors—in the loop on how the application process is progressing. They also do a good job notifying customers when their interconnection application is approved and when they are ready to schedule an appointment to set the net meter. At that point, it falls to the customer to schedule their interconnection appointment. That means the customer also needs to be diligent and pay close attention to communications and updates they get from PGE toward the end of their installation project.
5. Claiming Solar Energy Rebates for PGE Customers
- How things usually go: Good
Energy Trust of Oregon (ETO) offers eligible PGE customers a cash incentive of $0.40 per watt to install rooftop solar. The ETO incentive gets applied directly to the price homeowners pay their installation contractor to help reduce the out-of-pocket expense of going solar. The ETO incentive is limited to a maximum value of $3,200 and eligibility requirements are a little stringent. For example, it’s available only to homeowners, not renters. And the installation contractor must come from the ETO’s list of approved contractors. That said, once a homeowner has been deemed eligible, securing the ETO cash incentive is pretty easy. Here’s how the Energy Trust of Oregon website explains it:
“Your contractor will handle all the paperwork for your system, prior to installation. Your Energy Trust cash incentive will be applied to the cost of your solar installation upfront—like a coupon—reducing the amount you pay your contractor.”
Oregon customers should know upfront that ETO incentives fluctuate in their amount from one year to the next. And there is some concern that their funding could eventually run out. Plus, those who claim the ETO incentive automatically sign away their Renewable Energy Credits (REC) from the sixth through the 20th year of owning a solar array. During that 15-year window, Energy Trust of Oregon has the right to sell off the customer’s energy credits to other energy buyers looking to meet their own Renewable Portfolio Standards requirements.
6. Claiming Solar Power Performance Payments for PGE Customers
- How things usually go: Good
PGE customers living in Benton, Clackamas, Clatsop, Columbia, Lane, Lincoln, Linn, Marion, Multnomah, Polk, Tillamook, Washington, and Yamhill counties with small-scale solar energy systems of 10 kW or less—most residential systems fit this range—are offered a solar performance payment of $.39 per kilowatt hour. That’s nearly quadruple the retail rate paid to standard net metering customers. In Coos, Douglas, and Hood River Counties, that rate dips slightly to $.311 per kilowatt hour. The one caveat to solar power performance payments is that customers must choose between the energy-trust rebate or solar performance payments. They don’t get both.
7. Minimizing Customer Tax Responsibilities for Oregon Customers
- How things usually go: As good as it gets
By Oregon law, all residential solar panel systems are exempt from property taxes, which means homeowners pocket the home equity without having to pay more in taxes. How much does it amount to? If you take the total amount a rooftop solar array saves you on energy bills over the year, and multiply it by 20, that’s about how much your home value instantly increases. Meanwhile, your annual property tax responsibilities don’t change. And as for paying sales tax on the price of installation, Oregon already has no sales tax.
8. Maximizing Solar Energy Tax Credits for Oregon Customers
- How things go today: Bad
The State of Oregon used to have a generous solar tax credit of $1,500 per kilowatt but it expired at the end of 2017. It’s also important to note that the Federal Solar Tax Credit that grants solar customers an income tax deduction equal to 30 percent of their solar installation costs also begins to drop at the end of 2019. In 2020, the federal solar tax credit drops 26 percent. It drops again in 2021 by another four percent down to 22 percent. And in 2022, the federal solar tax credit will no longer exist for residential solar, at least not without another act of congress.
9. Considering the Solar Carve-Out in Oregon’s Renewable Portfolio Standards
- How things look today: Room to improve
States with solar carve-outs in their RPS require electric utilities to generate some amount of their power using solar energy. Bigger solar carve-outs usually result in greater statewide incentives offered by utility companies to customers. Greater incentives lead to quicker payback times on solar loans and overall greater financial returns in the long term for homeowners. For some reason, Oregon doesn’t have a specific solar carve-out in their RPS legislation. But there is a general renewable energy carve-out that requires at least eight percent of all renewable power generating capacity to come from ‘small-scale renewable energy projects.’
10. Considering Oregon’s Definition of Renewable
- How things look today: Good for now but could deteriorate into bad and/or ugly
Some clean-energy advocacy groups have criticized Oregon for “greenwashing” their Renewable Portfolio Standards. Those critics claim the state maintains an overly-broad definition of “renewable,” which includes energy produced from mill residue, wood waste, landfill & sewage gas, and manure digesters. It’s true that Oregon has the goal to totally eliminate all electricity produced by coal-fired power plants. But their permissive definition of renewable still allows for energy sources that rely on combustion and result in carbon dioxide emissions and other pollutants. Right now, it seems possible for Oregon’s permissive standards to skew the reporting on RPS, especially the eight percent carve-out for small-scale renewable projects. And it seems fair to speculate on how RPS goals fluffed up by semantic loopholes could limit the future growth of the market for small-scale solar energy. That is, unless the state legislature amends the standards. But what a political dogfight that could turn into.
11. Wondering if Solar Even Works in the Pacific Northwest
- How things go today: Way better than you might think
On average, Oregon only gets about 144 sunny days per year on average. But contrary to a common assumption, the local climate does not need to produce a Nevada-esque 250+ days of bright, sunny weather for solar energy to be effective. Sure, sun exposure is important. Remember, it’s one of the primary considerations in the custom design stage of a solar array. And the assumption that less sunlight means less solar energy output is true. But the U.S. Office of Energy Efficiency and Renewable Energy rates solar as Oregon’s most abundant energy resource. And the National Renewable Energy Laboratory estimates Oregon’s sun exposure to be capable of producing between 3.5 and 7 kilowatt hours per square meter per day. That’s pretty much as good as anywhere else in the U.S. except the desert southwest. It all depends on where in the state you live. And in places where daily sunlight falls at the low end of the spectrum, the design solution is simple: Add more panels to boost total output. Problem solved, just as long as there’s enough roof space for it.
The incentives driving customers to switch to solar energy are pretty simple. They want the benefit of lower utility costs, more home equity, and a smaller carbon footprint. Delivering those benefits involves a collaborative effort between homeowners, financing companies, installation contractors, utility companies, and local authorities. It’s a complex issue and a lot could go wrong. But PGE customers in Oregon are a good example of how things can go right most of the time. The customer-focused service model PGE practices is one that helps deliver the advantages of solar energy easier. And as far as solar-friendly states go, Oregon ranks toward the top. Oregon’s Renewable Portfolio Standards and customer-friendly utility companies combined with favorable public attitudes have created a market for residential solar energy that pays some of the best dividends to customers the fastest.