Oregon’s Solar Energy Financial Incentives
Tax Credits and Cash Rebates
Traditionally, Oregon’s commercial solar photovoltaic system incentives have been a combination of these sources:
- Oregon Business Energy Tax Credit (BETC) – Commonly referred to as “Betsy”, this is an Oregon tax credit of up to 50% of the eligible system cost.
- Federal Business Energy Tax Credit – A straight 30% tax credit to be taken in the tax year of the system start-up. For projects begun in 2010 this can also be taken as a grant. It will affect the basis of the Oregon Business Energy Tax Credit.
- Modified Accelerated Cost-Recovery System (MACRS) – Enables businesses to recover investments in solar, wind and geothermal property through depreciation deductions of 85% of the total system cost over five years.
- Financial Incentive from electric utilities – Rebates of $0.50 to $1.50 per watt of rated DC capacity are available from utilities and/or the Energy Trust of Oregon. These rebates are taxable and vary depending on utility provider and PV system kilowatts.
This approach requires the system owner to have a fairly high tax burden to allow for utilization of the complete package of incentives. However, if the system owner is able to utilize the complete package, system costs are dramatically reduced. Please remember that only your qualified financial advisor can determine which, if any, are applicable to your business.
The Feed-In Tariff
In 2009, the Oregon legislature passed HB3039 directing the Oregon Public Utility Commission to establish the state’s first Feed-in Tariff (The Solar Payment Option for PGE customers, the Oregon Solar Incentive Program for Pacific Power and Light customers.)
It is a pilot program designed to deploy 25 megawatts of solar generating capacity over five years in PGE and PP&L territory. Using this approach the system owner is incentivized through a highly elevated payment from the utility for the power produced. By law, it excludes use of the BETC-ETO incentives although the system owner, providing it’s a taxable business entity, can still leverage the federal ITC and MACRS.
To start the process the potential system owner applies for an allocation of the available kW, usually with the assistance of a PV system integrator, on one of the established application dates – the next being October 1, 2010. Succeeding application dates will be each 6 months –April 1 and October 1 through 2014. Once the approved system is installed and begins producing power, the system owner will receive a combination of net metering credit and cash payments for the actual energy produced on a monthly basis. As with Oregon’s regular net metering rules, the system owner receives no credit for energy produced in excess of annual usage. The “solar year” is April 1 to March 30. Systems can be sized no larger than 90% of the projected annual usage of the facility where the PV system will be installed.
The term for the FIT payments is 15 years from the time of system start-up. After 15 years, the system owner will receive payments for what is termed avoided cost; basically the wholesale cost of energy.
Pacific Power and Light Oregon Solar Incentive Program: http://www.pacificpower.net/env/nmcg/osip.html