Solar electric systems remain popular with Oregon homeowners and small businesses thanks to falling costs, but the array of incentive programs leaves some would-be participants confused, according to a recent report by the state Public Utility Commission.

The PUC, in a report to the Legislature released July 1, also cited the cost of installation, repetitive paperwork involved in incentive programs and questions about how long those programs will continue as impediments to further developing solar power in the state.

“What stood out are some of the barriers we identified,” said PUC spokesman Bob Valdez. “There are different hybrids of different programs out there, and they are often confusing.”

Solar system installers, according to the report, “described the difficulty of explaining the different available incentives to potential clients.”

Consumers reported difficulty finding the program best for them, and none of the incentive programs implemented by the Legislature lowered costs more effectively than any other, the PUC found.

“Once you put all of the various solar incentive programs on a level playing field, comparing apples to apples, no one program is actually better than another in terms of costs or convenience to people,” said PUC Chairwoman Susan Ackerman.

The report also questions the extent to which taxpayers and utility ratepayers without solar installations benefit from solar energy programs. Customers of Pacific Power, Portland General Electric and Idaho Power and taxpayers subsidize solar programs through surcharges on utility bills and tax credits that result in lost state revenue. But everyone benefits, to some extent, because solar and other alternative power sources lower the utilities’ cost to generate and transmit electricity.

“Mainly what this investigation looks at are what the benefits are for the utilities and consumers. In other words, we need to get a handle on what is the value” of solar power, Valdez said. “We need a better handle on the costs and benefits and then decide whether to promote new programs.”

Ackerman said analysts, depending on how they conduct their studies, identify a wide range of cost benefits. According to studies of solar programs in other states cited in the report, solar power may lower the overall cost to generate electricity by as much as 25 cents per kilowatt-hour to as little as 4 cents. The commission plans further hearings on the benefit of solar power and the extent to which non-participants bear part of the costs.

Although solar power generates less than 1 percent of the electricity Oregon consumes, the number of systems of all sizes installed grew from 1,000 in 2009 to more than 8,000 last year, according to the PUC report. At the same time, installation costs fell on average from $6.63 per watt to $4.69 per watt of capacity, the report states. Systems range in size from residential rooftop installations of 1-10 kilowatts up to utility-size systems of hundreds of megawatts.

The costs of solar panels, the largest part of equipment costs, fell by two thirds between 2010 and 2013 to $1.25 per watt. Non-equipment costs, such as permitting, labor and financing, also dropped, but only by about $1 per watt.

“Dealers like ourselves are getting higher volume, which translates to lower overhead costs and competition,” which also brings down the cost of solar, said Paul Israel, president of Bend-based Sunlight Solar Energy Inc. Israel is also president of the Oregon Solar Energy Industries Association.

“In the U.S., for electricity, 20 percent of all new generation (in 2013) was solar. It’s no longer an alternative, but a primary energy source. Who would have believed 20 years ago that I was able to say that?”

Installing a solar electric system on a qualified roof can cost a homeowner thousands of dollars upfront. Many homeowners opted for paying installers directly and recouping their costs through Energy Trust of Oregon rebates and state and federal tax incentives.

Since 2011, however, most consumers opted to work with third-party companies that install and own the solar electric system, according to the report. Homeowners then pay a monthly lease or a long-term, fixed rate for the power produced. The third-party company receives some of the tax credit, and the homeowner benefits from lower installation costs and lower power rates.

Ackerman said the state Energy Department and Energy Trust of Oregon are working to streamline incentive programs. Susan Fletcher, Energy Trust spokeswoman, said the organization had no immediate comment on the report itself.

“As a promoter of solar as a valuable energy resource, we are pleased to see customers respond to the range of solar options available and the decrease in solar system costs over time,” she wrote in an email Friday. “We view that as a positive development for all Oregonians.”

One of Israel’s employees said part of his job is helping consumers make the right choice in solar installations.

“It can be a little bit confusing, yeah,” said Joe Mazzarella, system designer for Sunlight Solar Energy. “But once people have it explained to them and they understand, most people think, ‘Oh, yeah, that makes sense.’”

For example, homeowners can recoup in state and federal tax credits all but $2,500 of the approximately $12,000 direct cost to install a 3.3-kW system, Mazzarella said. A prepaid power purchase agreement with a third-party solar developer combined with tax credits can drop that cost to $1,500, he said.

The PUC noted that most taxpayers and ratepayers underwrite tax credits and incentive programs whether or not they install their own solar power systems. State residential tax credits, which cover a number improvements to energy efficiency other than solar electric, averaged $6 million per year since 2010, according to the report.

The business energy tax credit, which also funds more than solar, averaged $19 million per year between 2008 and 2012, the year it expired.

Customers of Pacific Power, which provides electricity to large parts of Central Oregon, and Portland General Electric pay a 3 percent charge on their bills, a portion of which funds solar power rebates through the Energy Trust of Oregon.

Energy Trust will pay a contractor as much as $7,500 to offset the installation costs for eligible residential customers of Pacific Power, the report states.

Homeowners and small commercial users of solar power have one more chance to recoup their installation costs over time through a state pilot program. It directs the power companies to pay those who install new solar-electric systems a fixed rate for the power they generate.

The last lottery for spots in the pilot program is scheduled for May 1, 2015, Valdez said. Participants in the program are not eligible for Energy Trust rebates or the state tax credit. The program was meant to attract residential and small commercial solar users.

Although the incentive rate has dropped overall — from 60 cents per kilowatt-hour to 25 cents in Central Oregon — the program succeeded in signing up participants, Valdez said.

“People recognized an attractive price at the get-go,” he said. “Even though those rates were reduced in two (lotteries), there were still people out there interested and willing to embrace solar power as an option.

— Reporter: 541-617-7815, jditzler@bendbulletin.com