Oregon Slashes Residential Solar Tax Credits

Oregon has long been considered a progressive state when it comes to renewable energy. Perhaps that is changing with the announcement that it has slashed residential solar tax credits. 

Oregon has encouraged its citizens to move to renewable energy platforms in a manner that is common with government. It promised major financial incentives, primarily in the form of tax credits. Tax credits are incredibly value because they reduce the tax you owe on a dollar for dollar basis. If you owe $5,000 when your tax return is finished, a tax credit of $2,000 would then reduce the amount you owe to $3,000 for example. 

In the case of Oregon, the financial incentives were simply outstanding. Anyone not pursuing residential solar panel systems in the state was a financial cripple. Why? Well, consider the hard numbers. When all financial incentives on the federal, state, and local area were taken into account, an Oregon citizen would pay a miserly $650 for a $13,000 residential solar panel system. Yes, you read that right. The utility savings would pay for the system in about four to six months. It was the ultimate no brainer for anyone living in Oregon.

Alas, all good things must come to pass. The Oregon Energy Department made a decision on July 1, 2010, to cut back on a good chunk of the incentive. Realizing it would probably be flayed alive, the agency did what any good government agency would do – they took action without announcing it! Ah, your tax dollars at work…well, so long as you live Oregon. 

All is not lost. The cost of going solar in Oregon is still an incredible steal. The change in incentives has raised the out of pocket cost for a homeowner to about $3,200. This is a big increase over the $650 pre-adjustment price. That being said, it is still a pittance to pay for a residential solar panel system. With utility bill savings, the system should pay for itself in about two years, which isn’t bad given it will last for 25 or so. 

Why did the Department of Energy order the change? I’m sure you can guess. Like most other states, Oregon has a budget problem. Cutting the solar incentives is one way to deal with it.