How Solar Survives Without Government Backing
- Written by Sander Gusinow
- Published in Energy and Environment
- 0 comments
With state subsidies on the chopping block, the future of solar energy could depend on credit unions and entrepreneurship.
This year Obsidian Renewables broke ground on its planned 400 MW Obsidian Solar Center in Lake County. The solar project is seven times larger than the next biggest solar farm in the state, and would not have been possible without government incentives amounting to 30% of the projected cost.
Oregon was the first state to have solar panels mounted on the state capitol building. Today between 8% and 10% of Oregon households generate solar energy, a figure well above the national average.
Much of the state’s status as leader in solar energy can be traced back to aggressive government support. The Energy Trust of Oregon, a nonprofit, has several rebate programs to cover costs of businesses and homes adopting solar, including the Solar Incentive program, which provides up to a $2,800 rebate for Portland General Electric and Pacific Power customers who use solar. It also provides the Solar Plus Storage program, instituted this year, which can cover between 40% and 60% of a solar project’s installation costs.
But the ample government support for solar power may be at a crossroads.
During the upcoming legislative session, lawmakers will have to address a $1 billion budget deficit due to pandemic spending to keep the economy afloat. Renewable energy rebate programs, including the Solar Plus Storage Rebate Program, are on the chopping block.
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With the onset of COVID-19, renewable energy supporters have called for a “green rebuilding,” advocating for stimulus money to be put into green energy projects. It is a hopeful vision, but one that might not take into account the realities of the looming recession.
Climate advocacy groups have implored lawmakers to leave these programs untouched, but the money will have to come from somewhere. Although lawmakers’ commitment to solar power might not have shifted, there are no guarantees any program will be exempt.
One company approaches the residential solar market with a market-based strategy, one which the founder says could continue even if government funding wanes.
Pablo Diaz, CEO of Direct Solar of America, recently expanded his national solar paneling operation to include Oregon. His company has completed nearly 4,000 solar installations across the country. It will open an office in Oregon in October.
His company’s strategy consists of offering no up-front costs of installation for solar panels, letting customers pay in installments. His bet is that the solar panels will, in most instances, pay for themselves, given the amount of money homes will save generating their own energy.
“The reason solar is so successful is that you pay for it with a mandatory bill you were going to pay anyway,” says Diaz. “You see a net positive from the very beginning.”
He has been able to lure customers to solar by showing them the increasing cost of conventional fossil fuel sources, which are growing at a rate of between 4% and 6% every year.
Government restrictions on fossil fuels, such as Gov. Kate Brown’s executive order directing state agencies to reduce greenhouse gas emissions, could make conventional sources of fuel even less viable and put consumers on the hunt for an alternative.
What also might increasingly attract residential customers is the fact that solar panels increase the value of a home, while also making it exempt from property tax.
Another factor that makes the future of solar energy bright in Oregon, even if government funding were scaled back, are credit unions that offer financing on the equipment to lower and middle-income customers.
“We’ve found a couple of credit unions in the area that offer financing. They’re getting more aggressive, slowly but surely. They’ve made it more economically viable,” says Diaz. “Oregon is a new market for us, but we’ve already seen success here.”
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