There are a variety of incentives available to Oregon homeowners that install solar. Government incentives are typically, though not always, provided as tax credits. State and local incentives are more likely to be cash rebates paid upon construction of the project or over time. In addition to direct incentives, there are other, indirect benefits, such as property tax exemptions and net-metering.
Incentives and tax credits are always subject to change. A good, central resource for up-to-date incentive information is the Database of State Incentives for Renewables and Efficiency (DSIRE).
Note: The following information on incentives and tax credits is not tax advice. You should consult with a tax professional to understand how tax credits may effect you.
Federal Tax Credit
The federal government offers a tax credit for 30 percent of the cost to install your system, with no cap. To claim the credit, fill out Residential Energy Credit Form 5695 when you complete your Federal income tax return. There is no other application material, though you should keep documentation of your project’s cost and proof of payment for your records.
Tax credits, unlike tax deductions, reduce your tax liability directly: dollar for dollar. Provided you have sufficient tax liability to claim the credit, a $1,000 tax credit will be worth a full $1,000 to you in reduced taxes. If you typically pay your taxes through employer withholding throughout the year, a tax credit will likely result in a refund. If you normally owe taxes at the end of the year, the tax credit will directly reduce how much you would otherwise pay.
If you have insufficient tax liability to claim your entire tax credit in one year, you may carry forward any remaining credit. More details about carry forward can be found on the Form 5695. Note that the Residential Energy Tax Credit is not a refundable tax credit.
State Tax Credits
Oregon Department of Energy offers a Residential Energy Tax Credit of $2.10 per watt of solar electric modules installed, up to $6,000 (and you claim a maximum of $1,500 per year). For solar water heating systems, they provide $0.15/kWh of estimated annual energy savings, up to $1,500.
As with the federal tax credit, if you have insufficient tax liability to claim your tax credit in any given year, you may carry forward the remaining credit, though there are limits on how long you have to use the carry forward. More details at oregon.gov/energy.
Energy Trust of Oregon Incentives
Energy Trust offers cash rebates to customers of Portland General Electric and Pacific Power, as well as NW Natural and Cascade Natural Gas for gas back-up solar water heating systems. They provide incentives for solar electric and solar water heating systems that are installed by qualified contractors in their Trade Ally Network. Their solar electric incentives are subject to change base don demand, so check their website for the most up-to-date information. Energy Trust offers a solar calculator that shows how their incentive works with the state and federal tax credit to bring down the cost of a solar electric installation.
For solar water heating systems, they offer a flat incentive that ranges from $550 to $1,200 per system, depending on system type and location. Learn more on their solar water heating webpages.
Feed-in Tariff Pilot
In 2009, the Oregon legislature passed a law establishing a new solar incentive option in Oregon (feed-in tariff). Oregon customers of Portland General Electric, Pacific Power and Idaho Power can apply to be part of the program as capacity is available. Customers who opt to use this incentive are not eligible for Energy Trust incentives or a state tax credit, though they can still claim the federal tax credit.
A feed-in tariff is an incentive program in which the electric utility pays the owner of a solar electric system a fixed premium rate for every renewable kilowatt-hour generated over a period of time. Those payments allow the owner to recoup their investment over time. This model has been used successfully in Germany.
For more information, visit the utility’s websites: