A pilot program that will begin July 1, 2010 will pay Oregonians to install solar photovoltaics on their homes and small businesses. For every kiloWatt hour generated, customers will receive approximately $0.65 (current utility rates put the cost of a kiloWatt hour at about $0.10). Not only will residents get free power, but they will be paid additional money to help offset the cost of equipment and installation.
Of course there are a couple of conditions. One of the big ones is that customers who join the pilot program will not be eligible for the state’s generous tax credits and other local incentives. These typically cover 50% to 75% of the cost of installing a photovoltaic system. However, customers can still claim federal tax credits.
Also, the pilot program is limited to 25 megaWatts (or 2500 kiloWatts) total generated. This is enough to power approximately 2500 homes. The payments are guaranteed for 15 years.
“We are trying to strike a balance between providing an incentive for solar development while at the same time keeping an eye on controlling utility costs. If the initial rate is set too low, customers may be reluctant to sign up,” says Oregon Public Utility Commission Chairman Ray Baum in an article posted on the Commission’s web site.
There is some concern, however, that the seemingly large payouts will cost the PUC in an already tight budget climate. The Commission reserves the right to review the incentive rates every six months to decide if they need to be adjusted. Rates will vary from region to region within the state, with sunnier areas receiving slightly lower incentives.
Bob Jenks, executive director of the Citizens’ Utility Board of Oregon, says in an article in Salem’s Statesman Journal that customers shouldn’t see a large increase in utility costs due to the small scale of the pilot program. Jenks goes on to say, however, that providing a $0.65 per kiloWatt hour incentive for power that sells for $0.10 per kiloWatt hour can’t work in the long run. “I don’t think it’s the role of ratepayers to support industry. Economic development isn’t a traditional role for utility rates.”
Oregon’s beleaguered incentive program has been a hot topic in recent news. Due to several large-scale solar photovoltaic projects and wind farms popping up in the eastern part of the state, much of the incentive pool has been drained. Tougher guidelines have been placed on the programs that fund these projects in an attempt to reduce the hemorraging.
While incentives can be a great way to offset initial first costs and provide a carrot for the industry to wave in front of consumers, the costs and funding sources of these programs needs to be analyzed to make sure that they remain sustainable.
Photo courtesy of Wayne National Forest, through a Creative Commons License.