Oregon Rooftop Solar Squeeze: Tax Credit Expiring, Rebates Shrinking

Image courtesy of Solar Oregon

Thinking of going solar in Oregon? It could pay to move fast — the faster the better.

Not only will Oregon’s $6,000 residential solar tax credit disappear at the end of this year, but cash incentives offered through Energy Trust of Oregon are likely to shrink quickly before then.

The two programs aren’t directly linked, but Energy Trust rebates, financed through a surcharge on utility bills, are designed to step down as more and more people take advantage of them. And that’s exactly what the organization thinks could happen as Oregonians rush to cash in on the expiring solar tax credit, which the Legislature failed to renew in the recently completed 2017 session.

In a message to its registered contractor network, Energy Trust said it anticipates “solar project volume will be higher than normal through the end of 2017, leading to more frequent incentive reductions in response to demand.”

The Energy Trust incentive rates have already been declining. They averaged $0.80/watt in the first quarter of 2015, or around $4,000 for a typical 5 kW installation. By January this year, rates were about half that, and three subsequent drops now have rates set at $0.30/watt for both Portland General Electric and Pacific Power customers.

Subsequent step-downs to $0.25/watt and then $0.20/watt are expected, with the timing dependent upon demand.

The Residential Energy Tax Credit, meanwhile, will be in place until the end of the year at a set rate: $1.30/watt of installed capacity, up to $6,000, which can be taken over four years. The vast majority of users get big enough arrays to qualify for the full rebate, and at current solar prices use the tax credit to trim around one-third off their total system bill.

To get in the projects have to be under contract and an initial deposit paid before the end of the year. And the system must be installed by April 1 next year.

Solar installers and their representatives lobbied hard for an extension, arguing that prices hadn’t fallen enough to put the fast-growing industry on firm ground without the tax credit. But a renewal or remake of the credit never came together amid budget and administrative concerns.

Installers fear a big drop in business without it and are promising to lobby for a new credit in the short 2018 legislative session.