Your 2019 guide to getting solar panels for your home in Oregon
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Oregon home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
** What's new for 2019 **
For a state that loves dreamers and touts itself as a Pacific Wonderland, Oregon lawmakers sure have gotten their heads out of the clouds when it comes to solar energy policy. Salem has been hard at work enacting solar and renewable energy programs to protect the natural beauty all around the state.
Even though the state legislature let the very, very good solar tax credit expire at the end of 2017, if you go solar in Oregon, you can be sure the state will support you for the long haul. Residential solar programs here have been progressive, and here's to it rolling on! Read on to learn why going solar in Oregon in now one of the surest investments you can make... for now.
The Solar Strategy section is focused on the 3 ways of paying for solar in Oregon, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Oregon. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Oregon.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Oregon Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Oregon|
|Solar Loans in Oregon|
|Solar PPAs in Oregon|
|Solar Purchase Payback Time in Oregon|
|Oregon Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Oregon
Figuring out the best way to go solar in Oregon can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
How to pay for solar panels in Oregon
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, solar in Oregon can save you money in many ways! We may pay less for electricity here than most of the nation, but we have great incentives to make solar worthwhile for everyone!
The purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a solar loan (the orange bars) and paying for the system over time means you'll actually come out ahead in year 1!! . The reason this works is because you take a loan for the system, but you get a federal tax credit based on the entire cost. You'll start out ahead, so even though your payments over 15 years will slightly exceed the amount of money you save on energy, you'll still do well with no big payment in year 1. All you need is equity or good credit.
Lastly, take a look at the blue bars. They represent a solar Power-Purchase Agreement (PPA), which is also called "third-party ownership." With a PPA, your solar company installs panels on your roof and you pay them monthly for the energy the panels produce. You accumulate savings because your solar payments start low and rise by less than the electric company's annual rate hikes. PPAs are an excellent option if you don't have any equity or cash to put down, and they still save you money!
How we got these numbers
The numbers you see above are calculated by Solar Power Rocks staff based on several inputs. First, we go the the U.S. Energy Information Administration (EIA) and find how much energy (in kilowatt-hours, or kWh) the average family uses in Oregon. Then we use the National Renewable Energy Lab's PVWatts tool to determine about how many kilowatts (kW) of solar panels are needed to make that much electricity.
Finally, we determine the average cost of a solar installation from industry sources, apply any available incentives, account for retail energy cost increases and solar panel degradation over time, and plot the annual costs and savings on the chart you see above.
In Oregon, you need a 9.4-kW system to generate average household energy needs of 10,900 kWh per year. That system will cost an average of about $3.15 per watt, or nealry $25,000, before incentives.
Read more below about each of three very good options for paying for solar in Oregon.
Option 1: Paying cash for solar
An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true, but based on percent return for the money, a loan is a better option.
If you'd rather make monthly payments instead of putting a pile of cash down on a solar system, and if you have equity in your home or can get some other kind of large loan with an interest rate of 5% or less, a loan is the option to go with. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.
If you've got cash and you prefer to pay up front, you'll have to plunk down $18,750, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced about $20,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you about $644 in year 1, and it just goes up from there. As the electric company raises rates, you save more and more, and more...
Because there are many rebate programs specific to certain areas of the state, we've decided to show an example of a 5-kW rooftop solar system in Portland, for a customer served by PGE. Pacific Power offers rebates, too, and so do electric utilities in Salem, Eugene, and many other parts of the state. Read below to find out more about rebates in your area, or, check how the numbers pencil out in Portland:
- Installing a typical 5-kW solar system should start at about $18,750. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
- Here comes the first cut: Oregon's Energy Trust rebate! For a PGE customer, the rebate takes $3,300 off the starting price of your system. Your day-1 costs will be just $15,450!
- And when you file taxes next year, the state and Federal governments have some tax breaks for you! The Feds calculate their incentive based on actual out of pocket costs, so take 30% of $15,450, for a tax credit of $4,635.
- Oregon's tax credits will wipe away another $1,500 of the cost, each year for 4 years in a row. Oregon has high state income taxes, so this is a big deal! After the tax credits, your first-year cost will be just $9,316.
- Don't forget that your system is kicking out kilowatts every minute the sun is shining! Your first year’s energy savings will be $644, reducing your cost after the first year to only $8,672.
- Your tax credits and electric bill savings will wipe out your system costs in 7 short years, and after that, the savings start to stack up. You'll see a total net profit of $20,249 before the end of your panels' 25-year warranty. The internal rate of return for this investment is an AMAZING 15.2%. Nearly twice as good as—and more reliable than—investing in the stock market!
- And don't forget... your home's value just increased by just about $13,000, too (your expected electricity savings over 20 years).
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 106 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Oregon. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 2: Using a loan to pay for solar
You don't need $19,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.
That’s because, in Oregon, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you state and federal tax breaks. That's right: HUGE tax breaks!. You'll come out thousands ahead this year, and you'll still see a handsome profit over the 25-year life of your system.
But there's another factor that reduces the cost of solar for Oregon homeowners: the state has excellent rebates in many of the biggest cities. Too many to focus on here, in fact. We discuss Oregon's rebate picture further down the page. Suffice it to say, for a home in the Portland metro area served by PGE or Pacific Power, a solar rebate can save you thousands of dollars.
For purposes of example, we'll look at a home in Portland served by PGE. A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can get a home-equity line of credit (HELOC) for $15,450, with a fixed rate of 5% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
- You love making money without much risk.
Here’s how the numbers pencil out for a Portland homeowner who makes a solar purchase with a HELOC:
- After the Energy Trust rebate of $3,300, installing a typical 5-kW solar system should start at about $15,450. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $644, but your annual loan payments will be $1,466, meaning you'll spend $822 on solar this year, but...
- You'll also see TWO huge tax breaks. The Feds give you 30% of the cost of your system back as a tax credit, which in this case is $5,625. Then Oregon gives you another tax credit of $1,500, which you'll get this year and the next three years after! With all those savings and tax breaks, you'll end up AHEAD by $5,312 after the first year, just for getting solar panels installed.
- See how the orange bars in the chart never dip below the $0 line? The incentives in Oregon are so huge that even though you'll be making monthly payments, on average, you'll never actually spend any of your own money on solar. After your tax breaks end in year 4, your loan payments will be about $60/month more than your bill savings, and that difference will get smaller as the utility company raises rates every year.
- By the time you've paid off your loan in 2030, you'll see yearly savings of about $1,100. After 25 years, your total profit will be $13,707. Pretty amazing for a $0-down investment!
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 106 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Oregon. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)
A PPA can be a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. It's possible to get solar panels for $0-down and see savings over 25 years!
As for PPAs in Oregon: The Beaver State has really low electricity prices, so paying for solar energy only save you about $18 a month here. But the price will rise by less than the expected annual increase in utility prices, so with a PPA, you'll keep saving for the whole 25-year contract.
The panels will be installed and maintained by professionals, and all you have to do is brag to the Andersons down the street about your green habits! Over 20 years, our estimate shows a total savings of $2,942, jest for saying yes to solar!
Keep in mind, the numbers above are based on an average home in Oregon. If you're ready for a custom quote for a solar PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Oregon Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Oregon:
50% by 2040
A renewable portfolio standard (RPS) basically requires utilities in the state to get a percentage of its power from renewable resources like solar and wind by a target date in the future.
Oregon’s renewable portfolio standard, which was upated in 2016, is the 7th best in the country, requiring large utilities to source 50% of their electricity from renewables by 2040.
All this aside, if you count hydro power as a renewable resource, Oregon already is 100% renewable for a good part of the year, when thermal (coal, nuclear and gas) generation drops down near zero for many months at a time in the spring. Hydro-power doesn’t count toward RPS standards, and there’s no further target past 2040; but may future improvements in technology make the ultimate goal of 100% renewable energy possible.
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
RPS solar carve out
Oregon took a huge step in 2016, requiring at least 8% of aggregate capacity of all electric companies that make sales to at least 25,000 customers to come from "small-scale renewable energy projects" (less than 50-MW capacity). While it's not a perfect "solar carve-out" because it includes other renewables, 8% from small projects is still a pretty great goal, all things considered. It's enough for an A in our book!
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Oregon Electricity Prices
The average cost of electricity is a relatively cheap $0.11/kwh in Oregon. The reason is that the Pacific Northwest has an abundance of cheap hydro-power; lavishing the region with nearly the lowest cost energy in the nation.
Prices have gone up recently, mostly because utilities are adding more and more wind power. Wind provides lots of low cost energy, but only when the wind is blowing: especially during the spring and at night. Spring coincides with large runoffs in the Columbia river, fueling hydropower to the max. Night time is when people are sleeping and not using the power. The utility has to actually pay the neighboring utilities to use extra power at times: not as great for rate payers here as elsewhere. Also, the huge fluctuations in the power supply require expensive solutions, raising rates. In spite of the difficulties, Oregon remains committed to the carbon offset that wind provides, even in the face of attendant rate increases.
As rates climb, and they will, residential solar will be a better and better alternative to the expected cost escalation. What’s more, unlike the wind, the sun shines during the day when the power is actually needed!
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
Oregon Net Metering
Basically, with net metering if you generate more power than you need, you’ll get a credit on your next bill. Oregon provides 100% net metering, but you can’t keep carrying the credit over from month to month like you can in some states like Connecticut and Nevada. If you could, I would expect solar systems in Oregon to be a bit larger than the typical sweet spot of 3.29 kilowatts (word on the street, Talk to your installer) as encouraged by the Oregon solar incentives.
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Oregon Interconnection Rules
Overall, Oregon makes it pretty easy to connect your home solar panels to the electric grid. However, there are a few things the legislature could still do to make things even easier for homeowners looking to connect their panels to the grid. For example, the state could remove the requirement to have a unnecessarily redundant external disconnect switch. Also, Salem could extend the same straightforward interconnection procedures to all utilities, including small municipalities and electric co-ops in the state.
Overall though, Oregon has done a great job making the task of connecting to the grid as seamless as possible.
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Solar Incentives in Oregon
Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.
These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.
Let's see how Oregon measures up:
Oregon Solar Power Rebates
Up to $6,000
The Oregon Energy Trust has a great incentive for home solar energy installations, but the amount of the rebate is a moving target, and there is fear that it might go away. Not the right feeling to drive investors and suppliers, but it’s free money nonetheless.
Since we began tracking rebates here in 2009, we've noted some fluctuation, and as of late 2018, here is what we've found for Oregon incentives:
|Ashland Electric Utility||$500/kW, up to $7,500||Subject to additional terms|
|Central Lincoln PUD||$500/kW, up to $2,000||Subject to additional terms|
|Emerald PUD||$250/kW, up to $2,500||Must be installed by a registered and approved solar contractor|
|Eugene Water & Electric Board||$400/kW, up to $2,500||Subject to additional terms|
|Lane Electric Coop||$500/kW, up to $1,000||Available beginning 1/1/2016|
|PGE||$450/kw, up to $3,600||Energy Trust keeps a portion of the Renewable Energy Certificates produced by projects that receive an incentive.|
|Pacific Power||$450/kw, up to $3,600||Energy Trust keeps a portion of the Renewable Energy Certificates produced by projects that receive an incentive.|
|Salem Electric||$500 for first 3 kW, $300/kW thereafter, up to $8,400||Rebates cannot exceed 50% of the total project and depend on availability of funds.|
Your best bet is to connect with Oregon solar installers we trust so they can get you the most up to date information.
Regardless, if you get your Energy Trust incentive, which you can and should, the only downside is your performance payment RECs will be owned by the utility. RECs are credits that can be sold to utilities so that they can meet their RPS standards. If you take the Oregon Energy Trust rebate, the utility will already own your RECs, so you can’t go selling them to someone else.
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
Oregon Solar Power Tax Credits
Oregon used to have a tremendous solar tax credit—the 3rd-best in the nation. You got $1,500 per kW of solar, up to $6,000 max. The bad news is the tax credits expired at the end of 2017. Oregon still has great solar rebates across much of the states, so if you're thinking about getting solar on your Oregon home, get solar quotes now.
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Solar Power Performance Payments
Varies based on location
Performance payments are awesome, because you get paid over time depending on how much solar electricity you generate.
Eugene (EWEB) paved the way for this relatively unique solar incentive to flourish, and more recently, PGE and Pacific Power have jumped on board with payments to homeowners that almost quadruple the going rate of electricity.
If you're in Eugene, performance payments are only available for systems larger than 10 kW, twice as large as most solar systems. The payments there range between $0.07 to $0.11/kwh, so you might consider purchasing a larger PV system in Eugene to take advantage of this.
As for Pacific Power and PGE, here are the payment breakdowns:
One thing to keep in mind though, is if you select this performance payment option, you will not get the giant Energy Trust rebate. You will, however still qualify for the state and federal tax credits.
Connect with us to determine which option makes the most sense for your situation.
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
We've got a great article if you like to read more about what SRECs are and how to earn them.
Property Tax Exemption
Oregon solar panel systems are property tax exempt! You’ll be adding a hefty sum to your property value (roughly twenty times your annual utility savings). It’s heartening to know that by doing right by the environment, future generations, and your pocketbook, you won’t be penalized come tax time.
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Some argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing). Other studies seem to indicate a home price premium about equal to the cost of installing the system, minus any incentives like the federal solar tax credit.
For many average-sized solar power systems on a house, that can mean adding $20,000 to your home value. And if you don't believe us, believe the bean counters: Many banks and solar financing companies now offer traditional style equity-based home loans for installing solar. An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. Grades in this category are basically all-or-nothing. Either you got it or you don't. Thankfully, many states have "got it.".
Sales Tax Exemption
No State Sales Tax
Since there's no sales tax to speak of in Oregon, there of course is no additional tax assessed when purchasing a home solar system!
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
The consensus on Oregon solar power rebates and incentives
Oregon spent a decade building funding for its collective PV powered house. That is represented by the Energy Trust of Oregon, as supported by a fairly liberal legislature. The biggest trick is making sure we maintain funding for these excellent programs.
And it only makes sense for the utility that Oregon does that: the Northwest has a ton of wind and hydro, which works almost TOO well during the winter and spring. But come summer, Oregon must fire up a bunch of yucky thermal power plants to meet the electrical load during the day. Don’t forget: during the day, during the summer, it’s actually pretty darn sunny all across Oregon.
The list of improvements includes a solar carve out for RPS standards, performance payments across the state for smaller systems, and to keep funding for the good work. Oregon residents are either very liberal or very independent: two perfect dispositions to make us all residential PV owners. Just what the grid needs if we are to make our target of 100% renewable energy by 2100! Just the logical trend. Seriously though, keep up the good work, Oregon!