Oregonians who are considering solar energy for their homes are lucky to benefit from a wide range of extremely solar-friendly statewide policies that are designed to make it easy for homeowners to make the switch. And, despite Oregon’s infamous rainy and cloudy days, solar panels in Oregon still produce a considerable amount of green energy! Germany is the world leader in solar energy production, and the country shares a very similar climate to Oregon’s. Thanks to Oregon’s long, sunny days in the summer and mild temperatures, which increase the longevity and reliability of solar panels, solar panels in Oregon produce plenty of solar energy, especially in the summer, and homeowners with solar benefit from that energy all year long (even in the winter). All of these factors make solar panel installations an incredibly cost-effective investment for most Oregon homeowners.
How Solar Panels in Oregon Affect the Climate
Oregon is teeming with natural beauty and biodiversity. From the Mars-like Alvord Desert in the Southeasternmost part of the state, to the coastline full of public beaches, to the evergreen forests and famous Mt. Hood, there’s a beautiful locale for everyone in this state. Many Oregonians are passionate about preserving the state’s greenery, which has heavily influenced a generally positive attitude toward solar energy throughout the state.
One of the greatest benefits of going solar is that, in addition to lining your pocket with savings, it’s one of the most impactful steps any individual can take to combat climate change and keep Oregon’s natural beauty green and thriving for years to come. Adding solar panels to your home can reduce your home’s carbon footprint by about 80%. When you go solar, you limit your household’s reliance on fossil fuels, drastically reduce your greenhouse gas emissions, and you lower the overall demand for coal energy. With a relatively small system size of 5kw, your impact on climate change is incredible. Over 25 years, your solar system will eliminate nearly 300,000 pounds of carbon dioxide emissions.
Renewable Portfolio Plans in Oregon
The state of Oregon recognizes the importance of going solar, as do many Oregonians. In Oregon, going solar is relatively easy and incentivized by a variety of state, utility, and government programs. But Oregon’s plans for solar energy don’t stop with homeowners. The state has also pioneered an impressive solar highway project. In 2008, Oregon installed the nation’s first solar highway project through a public-private partnership with Portland General Electric and U.S. Bank. Through the solar highway project, an array of 594 solar panels on ground mounters powers one-third of the energy needed to illuminate the interchange between the I-5 and I-205 highways. The project inspired over 30 other states to follow suit with similar solar energy highway projects. It also set the stage for other public-private partnerships to bring solar projects to other parts of Oregon, like the Baldock Solar Station—another highway solar array that powers an entire rest stop area.
RPS, or Renewable Portfolio Plans, vary from state to state. Oregon’s RPS has made an impressive commitment to producing 50% of its energy from renewable sources by 2040—a commitment set in 2016 by the Oregon state senate. Renewable is defined as an energy source that can be used repeatedly, such as the sun or wind, because it is naturally replaced. Hydroelectricity, sourced from The Bonneville Dam, The Dalles Dam, and others, has long been a key source of energy in Oregon. Now, the state is leaning into solar as a key energy source as well to meet its ambitious RPS goals.
Oregon RPS Solar Carve Outs
Solar carve outs are a type of renewable energy mandate that some state governments apply to utility companies. These carve outs require utility companies (and sometimes residences and/or commercial properties) to “carve out” a specific percentage of their energy usage and ensure that the specified percentage of total energy use is powered by renewable energy. Utility companies that don’t meet these carve outs then have to pay a penalty to the state. This is one of the reasons that states and the federal government offer cash incentives (more on those later!) which help put these ambitious solar production mandates in reach for businesses and homeowners alike.
Oregon’s solar carve out only applies to large projects of 500kW or more. A home solar installation will never be this large, so homeowners in Oregon (and most business owners) do not have to worry about meeting the Oregon solar carve out standards. A 500kW system is typically only something you will see installed on very large-scale commercial solar projects or solar farms.
Switching to Solar in Oregon Can Save You Money
Oregon offers several incentives to make solar installations more affordable for those who opt to buy, rather than lease, their solar PV system. At Smart Solar Energy Co., we typically always recommend that our customers buy their solar system, for several reasons. Solar panels increase the value of your home by about 3%. So, if your home’s pre-solar value is $400,000, solar panels will add an additional $12,000 to the overall value of your home.
Additionally, the solar incentives made available by the state of Oregon and the federal government, as they stand in 2021 and 2022, are so valuable that you essentially never have to come out of your own pocket to pay for your solar system. We’ll break down how this works below. These incentives include:
Energy Trust of Oregon Cash Rebate: Oregon homeowners receive a cash rebate when they install a solar PV system. This rebate is made possible through a partnership between Oregon’s power companies and the Energy Trust of Oregon, and it reduces the overall cost of switching to solar.
Homeowners who are customers of Portland General Electric receive $0.30 per watt, up to $2,400, while customers of Pacific Power receive $0.25 per watt, up to $2,000. While the ETO only partners with PGE and Pacific Power to offer this cash rebate, many other utility companies offer their own rebates as well. The value of the power company’s rebate will vary depending on the power company that you use. You can find your utility company here.
In order to qualify for this incentive, your roof must have a Total Solar Resource Fraction (TSRF) rating of 75% or greater. TSRF is a solar industry term that simply stands for the total amount of sunlight that a specific area will collect throughout a given year. It accounts for factors like the amount of shade a roof receives and the orientation of the roof. 100% TSRF means the roof will get all the sunlight possible, and there’s absolutely nothing in the way (like a tree or a neighboring building) that will obstruct the sunlight. We will help you determine your roof’s TSRF and whether you qualify for the ETO cash rebate with our free home solar audit.
The ETO also offers a cash rebate for new solar panel installations on commercial properties in Oregon. Commercial property owners who install solar receive $200 – $450 per kilowatt, up to $35,000, from Portland General Electric, depending on the size of the system. For example, systems that are 15 kilowatts or fewer will receive $450 per kilowatt. For projects above 15 kilowatts, the rebate will be between $200 – $500 per kilowatt.
Commercial property owners who are tied to the Pacific Power utility company can receive a rebate of $200 – $300 per kilowatt, up to $20,000. Similar to PGE, the incentive amount will vary depending on the size of the system. Projects that are less than 15 kilowatts will receive $300 per kilowatt, while larger projects will receive between $250 – $350 per kilowatt.
Agricultural producers and rural small businesses who wish to install solar on their Oregon properties can qualify for the REAP program to receive grants and/or guaranteed loans to alleviate the costs of commercial solar projects for businesses that are based in rural areas or in the agriculture sector. Learn more about the REAP program here.
Federal Solar Investment Tax Credit (Solar ITC): The federal government incentivizes homeowners to switch to solar energy by offering a dollar-for-dollar cash rebate on the overall cost of your solar system installation, which is applied to the taxes you file for the year you installed solar on your home. In 2021 and 2022, the government is offering a 26% rebate, which means that 26% of the overall cost of your solar system will be deducted from your overall taxes due to the government at the end of the year. In 2023, this tax credit will be reduced to 22%, and in 2024, it reduces to a permanent 10% for commercial solar projects while disappearing entirely for residential solar installations. For this reason, the sooner you make the switch to solar, the more you’ll save on the overall cost.
If your solar system’s total cost is $20,000 and you switch to solar in 2021 or 2022, your ITC cash rebate would be:
$20,000 x 0.26 = $5,200
At Smart Solar Energy Co., part of your solar purchase includes our assistance with filing all the necessary paperwork to ensure you reap all the benefits of this valuable tax credit.
Net Energy Metering: When you switch to solar with a grid-tied solar system, utility companies in Oregon are required to keep track of the energy you produce, in addition to the energy you consume. This is important because when you install solar panels, there will be times when your panels are producing more energy than your home needs – like long sunny days in the summer – and that excess energy gets fed back into the power grid. Additionally, there will be times when you draw energy from the power grid because your home is using more energy than your panels produce – like at night or during short winter days. Net Energy Metering allows utility companies to keep track of energy as it moves in both directions. At the end of the month, the power company will subtract the total amount of energy that your solar panels produced and fed into the power grid from the total amount of energy you consumed from the power grid, which will drastically reduce your monthly power bill. Your excess energy credits will be rolled over each month, and for most Oregon power companies, every kilowatt hour (kWh) is equivalent to the retail market value of a kWh through the utility company. This means that you will essentially “bank” all of the excess power your home produces in the summer and benefit from it through a reduced power bill all winter long.
Buying vs. Leasing Solar Energy in Oregon
All of the above incentives are only accessible to those who buy their solar systems, which is why buying solar is such a great investment. When you combine the outright cost reductions of the ETO cash rebate and the federal ITC with the long-term cost savings of net energy metering, the costs of purchasing solar are drastically reduced.
Additionally, if you opt to purchase your system with financing, you’ll pay nothing up front, and when you receive your cash rebate and tax credit, you can put those dollars directly toward your monthly financing payments – meaning you might not have to come out of your own pocket for quite some time (potentially, for a few years). Additionally, as the price of power continues to increase by 2-3% per year (as it has done historically), you lock in your monthly payments and insulate yourself from those never-ending incremental increases the moment you go solar. After your financing period is over, you’ll pay nothing but the power costs that your net energy metering doesn’t cover. Additionally, if you sell your home, your solar panels will increase your home’s value by an average of 3%.
Homeowners who lease their solar systems in Oregon won’t benefit from all of Oregon’s incredible incentives, and they may also struggle to sell their homes if they choose to sell before the 20-year lease on their solar system is up. Leasing a solar system adds a layer of complexity to selling your home, because you’ll either need to pay the rest of your lease entirely, or find buyers who wish to take over your lease. And, because you don’t have to make a down payment to finance a solar system in Oregon, leasing doesn’t have much of an upside in comparison to buying your solar panels.
Some people choose to lease a car simply because cars depreciate in value so quickly and there isn’t much long-term value in car ownership, aside from not having car payments. On average, cars depreciate by 20-30% in the first year of ownership! Following the first year, cars then depreciate by 15-18% every subsequent year. Luckily for homeowners, solar panels aren’t like cars, because it takes a very long time for their production value to decrease. In fact, at Smart Solar Energy, your solar panels are guaranteed to still produce at least 85% of their original production capacity 25 years after you install them. This means it takes 15 years for your solar panels to depreciate the same amount that a new car would depreciate in 6 months.
You won’t increase your home’s value or save money over time if you lease your solar system, whereas purchasing your system with a reputable local bank or credit union that offers low-interest financing will benefit you financially for years to come, you’ll continue to benefit from solar energy long after your system is paid off, and your home value will increase, putting more money in your pocket if you sell your house.
Solar Panels & Property Taxes in Oregon
Even though installing solar panels increases your home’s value by an average of 3%, solar panels are completely tax-exempt in Oregon. This means that in addition to the ETO cash rebate, the federal tax credit at the end of the first year you install your solar system, and a lifetime of net energy metering, you also won’t pay any taxes on your solar panels throughout their lifetime. This is a big deal, considering that your panels can add anywhere from $10,000 to $20,000 to the value of the average home in Oregon. Here’s how you can expect to see your home increase in value, depending on your home’s pre-solar value:
First, let’s look at the average home in Oregon, which is worth $361,970.
(Average Oregon home value) $361,970 x (Value increase) .03
= Increased Oregon home value by $10,859
This means the average Oregon home will increase by almost $11k after installing solar panels – and none of that added value will be taxed! Now, let’s look at some of Oregon’s cities. In Portland, the average home value is $500,000; in Bend, the average home value is $529,000.
(Average Portland home value) $500,000 x (Value increase) .03
= Increased Portland home value by $15,000
(Average Bend home value) $529,000 x (Value increase) .03
= Increased Bend home value by $15,870
So, the average Portland house will increase by $15k, while the average Bend home will increase in value by almost $16k after installing solar panels. And none of this added value will be taxed, throughout the life of the solar panels. Seems like a pretty good deal, right?
Is Solar Worth the Investment in Oregon?
So, is installing solar panels worth it for Oregon homeowners? We sure think so! Switching to solar is one of the most impactful choices you can make in preserving the environment and reducing your carbon footprint, and it will also save you money, lock in your monthly electric bill, and increase the value of your home. Between the Energy Trust of Oregon’s cash rebates, the federal ITC, net energy metering, and Oregon’s ideal conditions for solar production, Oregonians are in an excellent position to go solar. At Smart Solar Energy Co., we encourage homeowners to find out if their homes qualify as soon as possible – because the earlier you make the switch, the more you’ll save.