"Feed-in tariff rulemaking extends into April"
Oregon hopes to replicate Germany’s success with its own feed-in tariff, which would allow a maximum of 25 megawatts of small-scale (500 kilowatt-hours or less) solar photovoltaic projects to be reimbursed by participating utilities for the power they produce.
Solar installers like Brent Gunderson, president of the Oregon Solar Energy Industry Association, are readily anticipating Oregon’s feed-in tariff pilot program, which would pay ratepayers for energy they produce by installing PV (Photo by Dan Carter/DJC)
Germany is the world’s leader in solar photovoltaic system installations, thanks in part to its feed-in tariff. Through the incentive program, an electric utility pays customers a set rate for the electricity produced from solar photovoltaic systems installed on their homes or businesses.
Now, Oregon hopes to replicate Germany’s success with its own feed-in tariff, which would allow a maximum of 25 megawatts of small-scale (500 kilowatt-hours or less) solar photovoltaic projects to be reimbursed by participating utilities for the power they produce.
“The Oregon solar industry needs financing for our customers to see a positive cash flow from solar,” said Brent Gunderson, president of the Oregon Solar Energy Industries Association. “Every homebuyer will want to do this. Now when you put a solar system on (a) home, that’s income in the customer’s pocket.”
But the rate-setting process for the feed-in tariff is complex. And though the Oregon Public Utility Commission hoped to issue a final rules document on April 1, the Renewable Northwest Project and the Citizens’ Utility Board of Oregon have asked the commission to reopen the process and reassess the cost of solar photovoltaic installations, which the two groups say has declined over the last two quarters.
The cost of solar installations is one of the key factors in determining how much money utilities should pay ratepayers under the feed-in tariff, according to Maury Galbraith, manager of the electric rates and planning section at the Public Utility Commission.
“The primary driver of the rates is the installed cost of PV systems,” Galbraith said. “We are looking at four rate zones in Oregon based on solar output in different areas of the state. We’re calculating these rates to provide payback on the installation over 15 years.”
Bob Jenks, executive director of the Citizens’ Utility Board of Oregon, said he is concerned that if the cost of installation is inflated, this could Oregon’s first, and last, feed-in tariff program.
“We are concerned that if the prices are listed higher than they actually are, what we’ll learn from this pilot program is that solar is unaffordable instead of something that works,” Jenks said. “Our understanding from Energy Trust and things that have happened in the Portland market is that the price has come down over the last six months.”
According to John Audley, deputy director of the Renewable Northwest Project, the Public Utility Commission had been developing rules based on information stating that solar installations cost approximately $20 per watt. However, solar installations today can cost as little as $6 per watt, according to the Energy Trust of Oregon.
Gunderson said the reason for the decline is that photovoltaic panels, which are the most expensive part of a solar installation, cost less now. Solar installation should be affordable to everyone, Gunderson said.
“It needs to be so that anyone at any income (level) could do this and still make money,” Gunderson said. “That really changes the dynamics and opens it up to more potential customers. Right now, we’re selling mostly to wealthy people with tax liabilities.”
Customers who take advantage of the feed-in tariff will not be able to use the Business Energy Tax Credit or solar incentives from the Energy Trust of Oregon for their solar photovoltaic projects. The BETC and Energy Trust incentives are given to a solar customer up front, while the feed-in tariff pays the customer as electricity is produced from the installed PV system.
Though he is based in Portland, Brian Heather, owner of solar installation company Solterra, said he has seen a lot of business in Washington because of its Renewable Energy Production Incentive, which pays grid-tied PV system owners from 15 cents to 54 cents per kilowatt-hour for the electricity their systems produce.
“In Oregon you have up-front incentives like BETC,” Heather said. “But we’ve had a lot of business up in Washington, which has an incentive based on output. I think the feed-in tariff can be a good thing for business in Oregon.”
Galbraith said amended rules for the feed-in tariff will be filed on April 30, and then the Public Utility Commission will have 30 days in which to review the rules and to issue a final order recommending them. Utilities will then have until July 1 to prepare for the new program. Under House Bill 3690, which directed formation of the feed-in tariff program, only investor-owned utilities Portland General Electric, PacifiCorp and Idaho Power are required to participate in the program; however, others may participate.
“The biggest challenge for us is not knowing the volume of applications we’ll have at the launch of the program,” said Mark Osborn, distributed resources manager for Portland General Electric. “It depends on what they set the price at. If there’s a high price for (payback for) the feed-in tariff, more customers will sign up. Overall, we’re excited in terms of stimulating the growing solar community in Oregon.”