Oregon Solar – Everything You Need to Know

oregon-solar

Going solar in Oregon is like taking all your vacations on a beach in Mexico: it’s just a good idea.

Oregon homeowners who go solar benefit from some of the best financial incentives in the country and strong solar policies that make Oregon Solar easy and cost-effective.

If you live in Oregon, take a look below for information on financing, relevant policies, and available incentives. It’s your one-stop-shop for information on solar in Oregon.

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#1 Are Solar Panels Worth it in Oregon?

C
Overall Grade
11 years Avg. Payback Time (For Cash Purchase)
9.7 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$14,457 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

While Oregon isn’t exactly known for its clear and sunny skies, homeowners are eligible for truly incredible financial incentives that can drop the total price of going solar by 60% to 70%. This allows homeowners with even the most lackluster installations to save money over the life of the solar system.

#2 Options for Buying Solar Panels in Oregon

Oregon homeowners have three methods of financing their solar installations, each with their own benefits and drawbacks.

Cash Upfront

Buying your solar installation outright, in cash, offers the greatest financial savings over the long run. Beyond the savings, you add a tangible, money-making asset to your home and get to reap all the tax credits and incentives for purchasing your installation. Let’s look at a quick example to see how much money you can save purchasing solar in Oregon: If you install a medium-sized 5 kW solar system on your home, at a cost of $3.72 per watt (the average price in Oregon), you’ll spend $18,616. Wow!

However, once you take into account the federal and state tax credits you’d be eligible for after your installation, your total investment drops to just $7,032 – a 62% drop in price! (If you’re a Pacific Power or PGE customer, you’re eligible for even more incentives. You can read more in the sections below.)

At this price, after 25 years (the expected life of most solar installations) you’d be looking at $14,457 in savings! This takes into account both solar panels’ degradation rates due to wear and tear and extreme weather (equal to 0.8% decrease each year), as well as Oregon utilities’ average rate increase of 3.6% each year.

As the owner of the installation, you’d be responsible for maintaining the installation and keeping it working properly. Solar installations are very hands-off though, and if you’ve got the cash to fund this investment, it’s a small price to pay for the huge savings you could see!

Bottom Line: With paying cash upfront you’d see a return on your investment in just 11 years, at which point you’d be producing clean, no-cost renewable energy for the remainder of the system’s life.

Leases

To take advantage of all the incredible tax incentives available in the state, you have to be the owner of the installation. For that reason, many Oregon homeowners go solar with cash or loans as they are able to save so much more!

Of course, national solar installers like SolarCity and Sunrun offer leases in many states (actually, Sunrun offers power purchase agreements in Oregon, which are similar to leases) and Oregon is no exception.

Like loans, going solar with a lease allows you to avoid that high upfront cost a cash purchase requires. Unlike with loans, in a lease the solar installer is the actual owner of the installation, meaning most of the financial incentives, including the federal tax credit, go to them. On the flip side, as the solar installer is the owner, they are responsible for monitoring your installation and fixing any equipment if it breaks.

Another benefit: with leases, most solar companies guarantee the production of your solar installation, so there’s less risk to you. This means if your installation produces less than what’s stated in your contract, they’ll actually pay you for the amount that wasn’t produced.

Bottom Line: All these perks come with one serious drawback: low financial savings when compared to ownership. You can save money with a lease, but it’s nowhere near the savings of cash or loan installations.
More: Solar Leases

Loans

Solar loans mix the best parts of solar ownership – namely the financial incentives and high savings – with the best parts of solar leases – you don’t have to invest thousands of dollars up front. There are downsides, though. Because of the interest, your savings with a loan are never going to be as high as with a cash purchase.

Here’s another example:
Let’s say you install the same installation above (5kW), but instead of paying cash you take out a 15-year loan with 5% interest. After 25 years you’ll have saved $6,574 – a decent chunk but only half the savings of a cash purchase. Worst of all – and possibly even a deal breaker for most – your return on investment is 19 years. This means it’s going to take you quite a long time to realize the benefits of your investment.

Of course, loans have their advantages.

You don’t have to foot that initial high bill to go solar. As the owner of the installation, you’re also still eligible for all the financial incentives. And of course, you can increase your savings by finding a loan with lower interest rates and shorter payback periods.

Solar companies, banks, and credit unions all offer solar loans these days, so it’s worth calling around and seeing what their terms and interest rates are. If you can get a lower interest rate or even just pay your loan off early, you could potentially save much more money than in our example above.

Bottom Line: A smart move with a loan is to take the federal tax credit received for the solar installation and  pay the loan down with the return – allowing you to pay it off early.
More: Solar Loans

#3 Oregon Solar Policy Information

Over the past 30 years, the state of Oregon has set up, piece by piece, a strong legal framework to both encourage the growth of solar and protect the right to go solar in the state.

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Renewable Portfolio Standard

An RPS is simply a piece of legislation the state lawmakers pass saying that a certain percentage of all electricity in the state must come from renewable sources. The burden to implement these changes usually falls on electric utility companies, who typically begin to construct giant solar power plants, purchase electricity from renewable energy companies, and purchase Renewable Energy Credits.

Oregon originally adopted their first Renewable Portfolio Standard (RPS) in 2007. In 2016 the state updated their RPS goals, mandating that 50% of electricity sold by the large investor-owned utilities in the state must come from renewable sources by 2040 – a huge goal! In fact, only a handful of states like Hawaii, California, and New York have more stringent RPS goals. Smaller utilities in Oregon have smaller RPS goals, between 5% and 25%, depending on the utility size.

What this means is that over the next 20 years solar will likely continue to grow like wildfire in Oregon, as there is an almost guaranteed demand for the technology while the RPS goal is in place. This is great for the solar industry, as they have more business, as well as its customers, as prices will likely fall further as more systems are installed.

More: Renewable Portfolio Standard (RPS)

Electricity Prices

Let’s state the obvious: Oregon has low energy prices. Obviously, this is a great thing for most people, but not so great for the homeowner who really wants to go solar. It seems counterintuitive but think about it. The higher your utility bills, the more money you stand to save by installing your own solar system and avoiding those high utility rates.

Oregon’s average utility price is $0.10 per kWh. Compare this to California’s very high $0.17 per kWh, Hawaii’s astronomical $0.30 per kWh, and the national average of $0.13 kWh. This is likely due to the fact that 43% of Oregon’s electricity already comes from a renewable resource: hydro. Like solar, once a hydro plant is built, you don’t have to buy any fuel, which keeps prices down.

All this means that, if you’re going solar in Oregon, financial incentives and tax credits are indispensable to make your solar installation as profitable as possible. Thankfully, Oregon has those in spades (read the next section for more on incentives).

Net Metering

First off, if you are an Oregon customer of Idaho Power (yes, they are out there), your net metering regulations are dictated by the Idaho Public Utilities Commission (PUC), not the Oregon PUC. So you’ll need to call up your utility to learn about their net metering policies.

For everyone else, the state of Oregon requires all utilities operating in the state to offer net metering programs, and their regulations are pretty in line with other states that also have net metering.

To be eligible for net metering, residential solar installations must be 25 kW or smaller (This is actually pretty big. The average installation size in the US is 5.6 kW).

Rules differ between the state’s 2 large investor-owned utilities (Pacific Power and Portland General Electric [PGE]) and all the state’s municipal and cooperative utilities and PUDs (Peoples Utility Districts).

With Pacific Power and PGE, customers receive bill credits (in kWh, not dollars) for any excess generation their solar installation produces. This continues for the remainder of the annual billing cycle, which ends in March. At this point, the utility pays you for any remaining credits left in your account at their rate of avoided cost – in essence, how much they pay the companies that produce electricity for them – usually around $0.02 to $0.03 per kWh. This might seem incredibly low, you pay $0.09 per kWh after all! However, it is pretty standard across the country.

The cool part about Pacific Power and PGE’s net metering program is that all the excess electricity you’ve accumulated by the end of the billing cycle – once your utility pays you for that electricity – goes to customers enrolled in their low-income programs (p.2).

If you’re part of a municipal or cooperative utility or PUD, net metering can differ drastically, so be sure to contact your utility for specifics. As noted, these utilities must offer net metering to customers. They can either buy your excess electricity at the avoided cost or give you bill credits on your next monthly bill. At the end of the year, all your credits go the utility and they can either grant them to customers enrolled in their low-income programs, provide you credits, or ‘dedicate to other uses’. You’ll need to contact your utility to see which path they take.

More: Net Metering

Interconnection Rules

Like most states with a lot of solar, Oregon has passed legislation ensuring an easy, frustration-free interconnection approval process (which is the process to get your utility’s approval to connect your solar installation to their electric grid).

As usual, the 2 main investor-owned utilities in the state (PGE and Pacific Power) have a special set-up, creating three tiers for the interconnection review:

  • Level 1 applies to installations under 25 kW, which includes most residential installations. Utilities may not charge any application fees. Level 1 is meant to be an easy, fast process for relatively small, straightforward residential installations.
  • Level 2 applies to installations between 25 kW and 2 MW, so if you’ve got a large solar installation, you might fall into this category. Utilities may charge application fees up to $50 plus $1 per kW. The utility can also charge the customer ‘reasonable costs’ for any upgrades to the grid necessary to connect the system, but that’s likely more on the larger side of the pendulum. Most residential solar installations would likely be around 25 kW to 30 kW, so you probably don’t need to worry too much about these potential extra costs.
  • Level 3 is for all installations that don’t fit Level 1 or Level 2. You don’t need to worry about this.

If you’re not a customer of PGE or Pacific Power, you’ll need to call up your utility to find out the exact interconnection process, as each utility’s process can differ from the next.

Homeowners Associations

Besides California, Oregon has some of the most developed solar access laws in the country, protecting both homeowners’ right to go solar as well as access to sunlight.

It all began in 1979, when the state passed the Solar Access Ordinances (ORS 215.044) which allowed local governments to enact solar access laws to protect the south face of buildings by enacting local standards for:

  • The orientation of streets, parking lots, and land
  • Placement, height, and size of new buildings
  • Placement of new trees on public property

In addition, the state Department of Energy actively encourages and assists these local communities in creating and implementing these regulations.

The state of Oregon also passed regulations (in part, ORS 105.895) allowing homeowners to create a solar easement, meaning they can submit paperwork stating that some parts of a property must remain unobstructed to allow sunlight to freely hit their solar panels. The homeowner must submit a sun chart and description of the situation, giving specifics on what areas need to remain unobstructed.

In 2012, Oregon took it a step farther, passing ORS 215.439, putting into law that the right to install solar on residential roofs is protected by law, meaning no HOA or any other organization can stop you from installing solar on your roof, though there are special rules if your solar installation poke out past the top of the roof or it isn’t parallel with the slope of the roof (two design guidelines that virtually all solar installers rarely break, no matter what the local or state regulations are).

If you’re installing solar in Oregon, no need to worry about HOAs or anything like that. Your right to solar is protected!

#4 Financial Incentives, Rebates, and Tax Credits

Oregon homeowners are eligible to receive some of, if not the best, solar incentives in the country!

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Federal Tax Credit

Oregon homeowners who purchase their own installation are eligible to receive the 30% federal tax credit, just like all homeowners across the US.

If you could only take one single incentive for your solar installation, this should be it. It’s not a tax deduction, it’s a tax credit, and as such it’s a dollar-for-dollar discount on your total installation costs. For example, if you spent $14,000 on your installation, you get $4,200 back at tax time, dropping your installation cost to just $9,800!

The credit was originally set to expire in 2016, but federal lawmakers extended the credit to 2019, at which point it drops to 26% until 2021, then 22% until 2022 when it finally dies out.

More: Solar Federal Tax Credit

Oregon Renewable Energy Tax Credit

As if the federal tax credit wasn’t enough, the state of Oregon also offers homeowners a credit on their state taxes for energy efficiency and renewable energy upgrades, including solar installations, efficient water heaters, duct sealing, thermal solar, and even fuel cells.

For solar installations, they provide $1.30 per watt, up to $6,000. You can claim $1,500 each year over the course of 4 years. So, for an average sized 5.6 kW installation, you’d get the full $6,000 refund! That’s an awesome deal that homeowners in most other states can only dream of. And obviously, this is on top of the federal tax credit!

Energy Trust of Oregon Cash Incentive

If you are a customer of PGE or Pacific Power, Energy Trust of Oregon offers incredible cash incentives for purchasing a solar installation (leased systems aren’t eligible). How much you get depends on your utility:

  • Portland General Electric: $0.40/watt with a max of $3,200
  • Pacific Power: $0.45/watt with a max of $3,600

So, if you installed a 5.6 kW installation, you’d get $2,240 if you’re a PGE customer and $2,520 if you’re a Pacific Power customer. Add this to the tax incentives above and your solar installation is down to 30 – 40% of the original cost!

At this point, you might be wondering why only PGE and Pacific Power customers can receive these awesome benefits. It’s a good question. Energy Trust of Oregon is a statewide organization that encourages energy efficiency and renewable energy. Customers of Portland General Electric and Pacific Power (the 2 main investor-owned utilities in the state) pay a surcharge on their monthly bills to fund Energy Trust, so they are the ones who get to benefit from all the incentives.

Solar Property Tax Exclusion

The state of Oregon offers a property tax exclusion for 100% of the value that solar installations bring to a property. This means that if you install a $12,000 solar installation on your $150,000 house, your property taxes are calculated based on $150,000, not the full $162,000 value.

With Oregon property taxes averaging 0.87% of a property’s value, in our example above the homeowner could save over $100 in the first year. Not a huge amount, but a penny saved is a penny earned, right?

General Increase in Home Value

If you own your installation, solar can add great value to your home. Depending on the age of the installation, solar can add upwards of $5.90 per watt for new installations, with an average of $4.51 per watt. So, a 5 kW installation you installed 8 years ago could bring over $20,000 to the value of your home.

While solar leases can save you money month-to-month, a study by the Lawrence Berkeley National Lab found they add no value to your home, though they don’t detract from the value either. Researchers found that leased solar didn’t affect resale value, time on the market, or buyers’ emotions one way or the other.

More: Buyers Will Pay More for Solar Homes. If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.

What to Do Next?

So should you install solar panels in Oregon? Yes! Right now. Go do it. Not only does it help protect and conserve our environment, but you can save thousands of dollars over the life of the installation. Just be sure to do your homework, choose the best financing method for your situation, and take advantage of all the incentives you’re eligible for!

Image Credit under CC License via Pixabay - 1, 3, & Flickr

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