May 6, 2009

Energy Trust Oregon: A Key Player in Oregon’s Solar Success

In March 2002, the Energy Trust of Oregon, Inc., opened its doors for business, instructed by the Oregon Public Utility Commission (OPUC) to invest in cost-effective energy conservation, help pay the above-market costs of renewable energy resources, and encourage energy market transformation in Oregon. Funding for Energy Trust comes from a 1999 energy restructuring law,…

In March 2002, the Energy Trust of Oregon, Inc., opened its doors for business, instructed by the Oregon Public Utility Commission (OPUC) to invest in cost-effective energy conservation, help pay the above-market costs of renewable energy resources, and encourage energy market transformation in Oregon.

Funding for Energy Trust comes from a 1999 energy restructuring law, which required Oregon’s two largest investor-owned utilities to collect a three percent “public purpose charge” from their customers. The law also dedicated a separate portion of the public-purpose funding to energy conservation efforts in low-income housing energy assistance and K-12 schools. Today, two gas companies in Oregon also contribute to the public purpose charge.

Kacia Brockman, Energy Trust’s Senior Solar Program Manager is doing triple time investing public dollars in new solar energy systems, solar training for the building industry, supporting the City of Portland’s Solar America City initiative, and public outreach. She was overly generous with her time to tell IREC about what Energy Trust is doing. Here’s our conversation:

IREC: Kacia, Energy Trust has an impressive reputation for solar residential and commercial programs. And now that the ITC has an eight-year extension, plus the stimulus money flowing to states, have you seen an increase in consumer response?

KB: We launched Energy Trust’s PV and solar water heating programs together in 2003. The number of installations has increased steadily since then, except in 2005 . Now we fund about 300 PV and 200 solar water heating projects per year. Actually, the recent improvements to the federal tax credits seem to be somewhat offsetting the negative effects of the economy so far in 2009.

IREC: So it’s a wash in terms of number of systems installed so far? I’m curious about 2005; why were the numbers off?

KB: I believe that customers put projects on hold to see if the Energy Policy Act would pass. After it did pass, they waited until 2006 in order to claim the federal tax credits for solar that weren’t available previously.

IREC: Looking at the incentive programs on the Energy Trust website, it looks like Umpqua Bank is a lender for solar PV projects. Did they sign on right away, or were they recruited? Has business been brisk for them?

KB: Umpqua Bank responded to our inquiry with enthusiasm. They are offering GreenStreet Lending with preferred loan rates with no fees for Energy Trust participants who install energy efficiency and/or renewable energy systems. A couple of solar contractors are successfully offering this loan to both residential and commercial customers. So far, only a handful of GreenStreet loans have been issued for PV systems, but we are pleased to see GreenStreet loan activity picking up substantially in March and April of this year.

IREC: What kind of numbers are we talking about, both in number of systems and number of kW (MW?) For homeowners, what’s the typical system size? For commercial systems?

KB: Since 2003, Energy Trust has helped fund the installation of over 1,000 systems totaling 9.7 MW. This includes 7.1 MW through our standard incentives, plus another 2.5 MW of larger, custom projects. Our average residential system size is 3 kW; the average commercial size (since 2008) is 18 kW. Since the third party ownership model arrived in Oregon in 2007, we’ve seen more commercial installations in the 100-250 kW range.

IREC: The OPUC has adopted performance measures against which to benchmark Energy Trust’s performance. One of those measures for 2009 is to secure at least 3MWa of new renewable resources per year, computed on a three-year rolling average, from a variety of small-scale projects. How’s Energy Trust doing to meet that target?

KB: We are on track to meet that goal by the end of this year, thanks to some biopower projects. We also just approved our first geothermal electric project in Oregon.

IREC: Energy Trust doesn’t require that PV or thermal installers be NABCEP-certified. It looks like there are 160 solar contractors, called Solar Trade Allies, all of whom have agreed to Energy Trust program requirements to be eligible to offer incentives to their clients. What are the requirements for solar contractors?

KB: To keep the market open to new entrants, we don’t require NABCEP certification to be eligible for Energy Trust incentives, but seven of the top 15 installers in Oregon are NABCEP certified. We verify that contractors carry appropriate insurance and licenses, and they must sign a contract with us agreeing to meet our installation requirements before an incentive will be paid. Many of the 160 contractors are not active, so we are currently creating a short list that will be more effective for customers.

IREC: Let’s talk about Energy Trust’s solar thermal incentive program, which is available for both residential and commercial customers. What type of solar thermal system has been installed the most frequently? Do you have numbers of total systems installed, and average system size?

KB: We provide solar thermal incentives for systems that provide residential and commercial DHW, residential and commercial pool heating, and commercial/industrial process loads. So far, we’ve funded almost 800 solar thermal systems, the vast majority of which are residential DHW systems, with a significant number of residential pool systems. We’ve funded relatively few commercial solar thermal systems, but we look forward to expanding that market this year.

As with our PV incentive program installers, we don’t require NABCEP-certified installers. And Oregon has very few NABCEP solar thermal installers. We do, however, have detailed installation requirements that must be met before an incentive will be paid. Originally we adopted The Bright Way to Heat Water requirements, which are used as a region-wide standard, and have modified some of the requirements to accommodate our program.

IREC: In addition to the incentive programs, Energy Trust offers regularly scheduled residential and commercial workshops. To whom are these workshops targeted? Are they designed to help potential residential and commercial solar customers know what to look/ask for BEFORE they choose to install a system, or are they more technical? Do you track these attendees to find out who actually install systems?

KB: Energy Trust financially supports Solar Oregon, the local ASES chapter, to regularly conduct ‘Basics of Going Solar’ workshops, available to both residential and commercial audiences, and designed to give a homeowner or business the information they need to feel ready to call a contractor for a bid. Solar Oregon follows up with the workshop attendees via e-newsletter to keep them engaged. The workshops continue to fill up, and interest seems to be growing. The number of installations has not grown at the same rate as the interest, but we’re optimistic that we’re building the pipeline.

Energy Trust’s Residential Solar Project Manager, Lizzie Rubado, will present an interesting session at the ASES conference this month called ‘Listening to the Customer: How Clean Energy Funds Utilize Consumer Insights to Retool Their Incentives Program,’ about how Energy Trust has implemented recommendations from residential solar market research that was conducted in Portland in 2007. Lizzie will talk about how we are working to engage the customer.

IREC: I’ll add that to my list of ‘not-to-miss’ sessions at ASES. It looks to me like Oregon’s solar programs are solid and well subscribed. Has there been anything that’s gotten in the way of more accomplishments? Have net metering and interconnection been significant obstacles in Oregon?

KB: Our programs are solid and well subscribed. In 2007, Oregon implemented one of the best net metering policies in the country with a 2 MW size limit, so that’s not a hindrance. However, some things that have interrupted our progress include periods of uncertainty in the state and federal tax credits, where customers delay their decision and take a ‘wait and see’ approach, and the learning curve on the financially and legally complicated third-party ownership models. Interestingly, these interruptions have resulted in great opportunity, like increased tax credits and having the 3rd party ownership option available to tax-exempt organizations.

Our main limiting factor for PV is our limited budget. The market has the opportunity to grow faster than we can support, so we limit its growth by setting our incentive levels such that we don’t run out of money prematurely. For solar thermal, we’re currently limited by the capacity of the installers, particularly for commercial solar thermal applications. We just haven’t seen the interest from the plumbers to become solar thermal installers like we’ve seen electricians become PV installers.

IREC: The lack of qualified solar thermal installers is problematic nationwide. Besides thinking about ways to increase that installer base, what else is in the queue for Energy Trust? Is there any interest in community solar programs or other innovative financing mechanisms?

KB: We’re targeting commercial/industrial hot water users and swimming pools to drive the commercial solar water heating and solar pool heating markets forward. We also want to encourage existing customers to go deeper with energy efficiency and renewable energy measures, instead of just doing one thing. This is requiring us to take a new look at how we deliver our programs.

And yes, there are some innovative financing models involving public-private partnership for on-bill financing being proposed in Portland and possibly statewide. These would initially focus primarily on the most cost effective energy efficiency measures, but could be used to encourage more solar installations, too.

IREC: Any details on that yet, or is still incubating? What do you mean by ‘on bill financing?’ And if Energy Trust’s not doing enough, I’m guessing Energy Trust is a partner in Portland’s Solar America City Initiative. What’s your role with this?

KB: The on-bill financing would allow loans to be paid back on the customer’s utility bill, and work very well for energy efficiency investments whose energy savings will offset the loan payment. The idea is still incubating. Yes, we support the City of Portland in its activities as a Solar America City. Energy Trust joined Portland in the Solar Now! marketing campaign, and has been funding and coordinating some engineering research to help the City develop structural permitting guidelines for rooftop installations, including systems clamped to metal roofs and ballasted systems. Portland may bring in a Solar America City Tiger Team to assist with this effort.

IREC: Oregon continues to be a leader in solar activities. Like you said, Oregon has some of the most attractive net metering and interconnection rules in place, an enlightened community, and favorable incentive programs. You mentioned some hurdles out there still, like the shortage of solar thermal installers and the steep learning curve of complicated third-party financing mechanisms. I wonder what has surprised you the most about this work.

KB: I think the biggest surprise was what we learned from our residential solar market research: that customers who attend an educational workshop believe this an example of taking action. We think action is installing a solar system, and we honestly thought they would attend a workshop and become so excited that they would install a system. We learned that an educational workshop represents the beginning of a dialog with a customer and not the end of a dialog. It’s changed how we approach our customers, and Lizzie will talk about this at the ASES conference next week. Go hear her.

IREC: That surprises me as well. I’ve already put Lizzie’s ASES presentation in my schedule. Sounds like it might be good for a follow-up article. Kacia, thanks so very much for your time. Keep up the great work you’re doing.