Contrary to what some commentators are saying, Oregon did not just adopt a feed-in tariff (FIT). ELAW has been working diligently to ensure that Oregon adopts a FIT because FITs have been proven to be the most effective and efficient means of moving renewables onto the grid. Sadly, Oregon’s program falls far short of the mark.
Although I’m happy to see more incentives for solar PV generation here in Oregon, people should understand that Oregon is not testing a feed-in tariff. Don’t get me wrong — I’m pleased that homeowners have a new net metering program that should pay for installation of a PV system, but Oregon’s pilot program is not a FIT.
Does it matter? Yes. Feed-in tariffs have proven to be a highly effective and efficient means of getting renewables onto the grid, which is why ELAW has been working hard to ensure Oregon adopts a FIT.
Oregon’s program is lacking key elements of a true FIT. A FIT encourages people to install systems that generate as much electricity as possible, because they are paid for all electricity produced. FITs pay a fixed price for all the electricity generated, which enables solar manufacturers and installers to anticipate future demand and build their business. Setting the price and designing a simple program encourages the growth of the local industry, with small local businesses competing on equal footing with out-of-state installers.
Under Oregon’s new program, small and medium sized systems (systems up to 100kW) will not be paid for any electricity they generate that exceeds what they consume. A true FIT encourages installation of more solar capacity, but the Commission is requiring new installations to be limited in size so they do not exceed the average consumption on the site. The electricity generated under a FIT is sent to the grid, ‘greening’ the electricity we all use, while electricity generated under Oregon’s program is used on-site, never making it to the grid. This means it is really an incentivized net metering program, not really a FIT at all.
Under Oregon’s program, large systems (up to 500kW) will participate in an annual bidding process. Bids will be selected from lowest price to highest until the capacity target is achieved. This kind of bidding process fails to provide the pricing certainty that is a key ingredient of a FIT (which enables businesses to project future demand for solar installations) and makes it harder for small, local businesses to participate.
Also, note that we’re only talking about 25 MW of generation over five years for the entire state. The city of Gainesville Florida (pop. 125,000) is implementing a FIT that already has 25 MW of capacity enrolled (at least on the books) through 2016.
The good news? The new pilot program in Oregon may well boost solar production. But, it is not a FIT and we should not think that Oregon is testing how a FIT will work. As we search for energy solutions, we should be clear about what we are testing and what we are learning.
Jen Gleason, Staff Attorney