The program is available to electricity customers of Portland General Electric, Pacific Power and Idaho Power, and is an alternative to existing incentives.
Participants will sign a 15-year contract that requires the utility to pay a specific price for the solar electricity they produce and consume. The amount varies between 55 and 65 cents per kilowatt-hour, depending on the system size and geographic area. Our story, "New Oregon Incentive Likely to Make Solar a Bargain for Some," gives more details.
Solar owners taking part in the production payment program will not be eligible for state tax credits, net metering or incentives from the Energy Trust of Oregon. Those with tax liabilities may still be eligible for a federal tax credit that pays 30 percent of the cost of a solar PV installation.
The pilot program has caps in place that will limit its availability. It is designed to promote solar installations by covering the cost of a typical installation for an owner with ample sunshine access.
Although production payments will range from 55 to 65 cents per kwh, the owner's current retail electricity price per kwh will be subtracted from the payment amount, so the actual payment received will be lower.
The payments are designed to offset a system's cost over time. If a Portland-area homeowner purchased a 3-kilowatt system at a gross installed price of $6.50 per watt, the price would be $19,500. A federal 30 percent tax credit could reduce the net cost to $13,650.
Although solar modules are typically warranted for power production for 20 or 25 years, inverters, which convert DC electricity produced by an array into alternating current or "house current," have typical warranties of five to 15 years. Today's cost for a 3-kw inverter averages about $2,200 from Internet suppliers. If that future cost is added to the $13,650 net, the total 15-year cost would be $15,850.
Maintenance costs are expected to be minimal for solar installations, but insurance beyond that of a typical homeowner's policy may be required for participants in the production incentive program. Insurance costs for solar installations vary, and consumers should shop carefully.
In the Portland area, a 3-kw array in an ideal, south-facing, unshaded location might generate as much as about 2,890 kilowatt-hours the first year, according to a production calculator called In My Backyard, available from the National Renewable Energy Laboratory. Over 15 years, such an array might generate about 40,000 kwh, after accounting for an annual output decline of 1 percent.
If the program participant received a net production payment averaging about 50 cents per kwh after subtracting the local retail electricity rate, the 40,000 kwh over 15 years could yield a total of about $20,000, which exceeds the possible cash cost, excluding insurance, of about $15,850.
If a system's cost could be recovered within 15 years, including a new inverter added during that period, the electricity produced during its remaining lifetime, which could be 10 to 15 years, and perhaps longer, might have no cost or very little cost.
Few if any incentives available to small-scale solar owners in the United States are as potentially generous as the pilot Oregon Solar Incentive Program. Incentive programs called feed-in tariffs, with similar structures, have promoted massive solar adoption in countries such as Germany, Italy, Spain and Canada.
More information about the program is available from the utility companies Portland General Electric, Pacific Power and Idaho Power.
Treasure Valley Wind and Solar
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