Solar Volumetric Incentive and Payments Program

Summary

NOTE: This incentive program is no longer taking new applications. 

In June 2009, Oregon established a pilot solar volumetric incentive rate and payment program.* Under this incentive program, systems of up to 500 kilowatts (kW) are paid for the kilowatt-hours (kWh) generated over a 15 year period, at a rate set at the time a system is initially enrolled in the program. The Public Utilities Commission (PUC) established rates and rules in May 2010. This program must be offered by the three investor-owned utilities in Oregon and will be administered by the utilities, though the PUC will periodically re-evaluate rates. The program costs are recoverable in utility rates and utility-owned systems are not allowed to receive the incentive.

In May 2013, the program cap was increased from 25 megawatts (MW) to 27.5 MW, and the deadline for the program was extended to March 31, 2016. The original 25 MW aggregate program cap was divided by utility based on 2008 retail sales revenue, with specific sub-allocations for small, medium, and large scale systems. Portland General Electric (PGE) had a total allocation of 14.9 MW, Pacific Power had 9.8 MW, and Idaho Power had 0.4 MW (limited to residential systems under 10 kW). The additional 2.5 MW capacity added in 2013 has been allocated as follows:

• PGE: 1,433 kW (860 small/573 medium)
• Pacific Power: 1,012 kW (607 small/405 medium)
• Idaho Power: 55 kW (all small)

Rates differ by system size and geographic zone, and are re-evaluated for every enrollment window. Small- and medium-scale systems participate in a program that is modeled after net metering, where customers are paid for the amount of utility electric load consumption that is offset by on-site solar photovoltaic generation. The incentive paid to the customer is the volumetric incentive rate minus the retail rate. Participating PV systems must be sized no larger than 90 percent of historical energy usage for a home or business, must be grid-connected, metered, and meet all applicable codes and regulations. Systems must be "permanently installed" and must  remain in service for the entire useful life.  After the 15 year contract ends, systems may continue to be paid for electricity generation, with the rate based on the "resource value." As defined by the legislation, the resource value is determined by the avoided cost of energy and the avoided cost of transmission and distribution.

Systems receiving the incentive payment may have reduced eligibility for some other state incentives. Systems may either take the incentive payment or the state tax credit and Energy Trust rebate; systems are not eligible for the incentive payment and the tax credit and rebate. Enrollment in the pilot program will be closed when the 27.5 MW cap is reached, or on March 31, 2016, whichever is earlier.

Small Systems

The original program did not specify a minimum size for eligible systems, but HB 2893 specifically refers to systems with a nameplate capacity between five and 100 kW; therefore, all projects receiving incentives in 2014 and later must be greater than 5 kW. While initially program capacity for small and medium system was allocated on a first-come, first-served basis, it is now done by lottery for small systems.

Current Volumetric Incentive Rates for Small Systems (5-10 kw) are as follows:

Medium Systems

Medium sized systems are between 10 and 100 kW in nameplate capacity. The process for setting the incentive amounts for medium sized systems alternates between competitive bids and a lottery with rates set by the PUC. Rates for the May 2015 enrollment window will be set by competitive bid, with bids due by May 1. 

Large Systems

Systems sized larger than 100 kW can participate in the competitive bidding portion of this program. Utilities issue a request for proposals once per year. At that time, systems can put in a bid to participate and winning bids will be selected based solely on price factors. The actual rate paid will be determined by bids received and will be set at the time of enrollment.

Prior to the April 2014 enrollment window, the remaining capacity allocated for large systems was too small to generate large projects, so the PUC added this capacity allocation to the medium size class. The most recent winning bids for large systems were just under $0.11/kWh.

*While certain legislative bills referenced the development of a "solar feed-in tariff", the rules and rates for this program were to be determined by the PUC. Due to concerns regarding FERC jurisdiction and the ability of the state to set rates for the feed-in tariff, the current pilot program differs from a typical "feed-in tariff".

**The actual rate paid to small-scale systems will be the volumetric incentive rate listed minus the retail rate, as these systems are participating in the net metering option and are being paid for offsetting consumption.