Oregon's new community solar program is “a good first step”

Community solar project
August 10, 2017

Oregon’s landmark “Clean Electricity and Coal Transition Plan”, enacted in March of 2016, was designed to prevent utilities from monopolizing community solar in the state. Under the new law, utilities must approve and allow the interconnection of non-utility-owned community solar projects as long as they’re certified. What happened next illustrates why it’s necessary for solar advocates to continue to work together, even after favorable solar legislation is passed.

This year, Oregon’s PUC issued a follow-up ruling that would, according to one estimate, only create 160 MW of community solar statewide. Another source puts the figure closer to 150 MW. The figure is calculated based on 2.5 percent of the 2016 peak electricity load for each utility, according to the ruling. Each new project is to be capped at 3 MW.

Solar advocates are hopeful this allocation for community solar is only a first step and that more tiers of community solar will be added. These advocates pushed the commission to the 2.5 percent figure, after the PUC initially wanted the maximum to be based at 1 percent. They are concerned the new rules leave the credit rate that will apply to the power produced by community solar projects undetermined. The credit rate should be determined next year as the commission is also reviewing a proceeding to determine the value of solar. It is likely the rate for community solar will be set in the same process.

“The bill credit rate is an essential part of determining the financial viability of any community solar project,” said Jeff Bissonnette, Executive Director of the Oregon Solar Energy Industries Association. “To even have a pre-certification process for projects, developers will need to know what that bill credit rate is before submitting projects for pre-certification.”

“This uncertainty of knowing the credit rate makes it almost impossible for developers to plan for and model the economics of community solar in Oregon,” said Jaimes Valdez, Policy Manager for Spark Northwest (formerly Northwest SEED). “We definitely support an interim rate determined sooner, and suggest that retail rate (virtual net-metering) would be appropriate for the first tier of capacity, or until the program is running before the first evaluation period.”

Bissonnette concurs with the necessity of an interim rate: “Nothing in the rules damages anything about setting a rate prior to the settlement of the Resource Value of Solar docket.”

After the law was passed in March of last year, it seemed, according to this article, that Oregon might allow community solar projects anywhere in the state, even outside an owner’s or subscriber’s utility service territory. However, the rules now specify that a community solar project must be in the owner’s or subscriber’s utility service territory to qualify.

Valdez is concerned this restriction will limit community solar’s ability to benefit utility customers in Portland. The utility that serves most of the customers in and around Portland, Pacific General Electric (PGE), is different than the one, Pacific Power, which serves the southern and eastern parts of the state. The latter areas are better suited for community solar because they are sunnier and less densely populated.

“While we would have liked to see a truly statewide program that could leverage urban-rural connections for community investment, I am not surprised that the Commission ruled the way they did,” Valdez said. The community solar legislation does include rules to address the limitation of sites in more urban areas, and an allowance of multiple projects in closer vicinity to get to economies of scale.

Bissonnette argues these rules’ restrictions on system size on farmland put PGE customers at a disadvantage for another reason. No more than 12 acres of farmland can be used for a single system. This limit means the largest solar systems that can be built will be at most 2 MW, smaller than the 3 MW maximum size allowed by the law. Farmland presents some of the best places in PGE territory to achieve economies of scale with community solar. Pacific Power territory has a greater amount of open land that its customers can make use of for community solar projects that are able to maximize their size.

The community solar law is designed to support the expansion of solar to low-income customers by requiring that 10% of the program capacity serve these customers.

“The way the rules envision this working is that every project has to serve a little of that requirement (at least 5%) and the remaining 5% has to come from the rest of the program,” Bissonette said. “This means that there will be some programs that will be dedicated to low-income customers or have a higher-than-5% ratio dedicated to low-income customers.” 

“In terms of meeting the needs of low-income customers, 10% is likely not enough,” Valdez said. “But it depends how much community solar is built and exactly how the bill credits start flowing to low-income customers. Even with millions per year in federal and state energy assistance funding, there is still a shortfall compared to need in our communities. So community solar is not likely alone to be a solution to poverty and disparity of energy burden, but it can be a piece of the solution and a way to empower people to participate and make choices.”

“A lot of people worked very hard to get the rules to the point of adoption,” Bissonnette said. “Industry folks (both national and state-level) worked alongside with labor advocates, low-income advocates, consumer advocates and general renewable energy advocates. All of those interests were pretty well coordinated in their positions. I do think that was helpful in providing a strong foundation for the rules that were adopted. Now all we have to do is make the rules work.”

Valdez cited Oregon’s broad, inclusive coalition of solar supporters as key in helping to create the state’s community solar program. He said it was important to keep messaging simple and focused on the value proposition for customers.

“Having a broad coalition of stakeholders generally aligned on what they value, and bringing new voices to the regulatory (and legislative) arena, are good tactics that we will continue to use in our future work,” Valdez said.