Extended federal tax breaks and Oregon’s new law to replace coal with renewable energy have combined to put new pressure on local electric utilities to procure more wind and solar power.
Portland General Electric (PGE) and Pacific Power, the two largest electricity suppliers in Oregon, are scrambling to meet the state’s higher renewable energy mandates and take advantage of federal tax breaks before they expire.
The result should be less carbon emissions for the environment and lower prices for customers.
The federal production tax credit, which subsidizes wind power, was extended for four years in December 2015, but the value of the credit shrinks each year, motivating the utilities to begin construction sooner rather than later on new wind power projects, in order to receive the full credit. The Investment Tax Credit for solar power also was extended, for three years.
“The federal tax credit being extended is provided to encourage fast movement,” says Cliff Gilmore, communications director at Renewable Northwest Project.
Senate Bill 1547-B, passed in March, forces Pacific Power and PGE to halt use of coal power in Oregon by 2030 and 2035, respectively. It also raises the state’s Renewable Portfolio Standard, which forces them to boost the share of their power sold in the state that comes from renewable energy.
The Renewable Portfolio Standard has benchmarks utility companies must meet. Every five years the amount of renewable energy produced increases by a certain percent until 2040, when half their energy must come from renewable energy, not counting hydro power.
Pacific Power is moving faster on the new mandates than PGE.
On July 26, Pacific Power presented its plan to the Oregon Public Utility Commission to purchase power from 13 renewable facilities to reach the new benchmarks up through 2028. There will be 12 solar plants and one wind farm, most of them new construction. Oregon will be the location for 10 of the projects, says Pacific Power spokesman Ry Schwark.
“This is a pretty big renewable requirement,” says Scott Bolton, vice president of external affairs for Pacific Power. “It’s kind of like eating an elephant. It’s going to be one bite at a time and this is the first bite.”
Pacific Power chose to adopt mainly solar projects to help them reach the standard because of its availability and the price is going down, Bolton says.
PGE is finishing up a few big projects from 2009 and may propose its new plan to the Public Utility Commission next year, says Steven Corson, PGE spokesman. It was a “very meaty resource plan,” Corson says of the 2009 plan. PGE agreed to procure more natural gas and wind energy and made a commitment to halt the use of coal at its Boardman Plant and replace it with renewable power by the end of 2020, he says.
Although Corson was not able to give details on additional renewable energy PGE is looking to invest in for the future, he says the “practical reality” in the Northwest right now revolves around wind. He agrees solar’s prospects are improving but says it’s “a small piece of the pie compared to wind.”
Aside from new renewable projects, there is another way PacificCorp, Pacific Power’s parent company, is capitalizing on the renewable energy market – sharing energy with other states in the West.
A better-integrated electrical transmission system with other states sharing energy will help utilities use more renewable energy across the U.S., says Andy Ginsburg, the division administrator in energy planning and innovation for the Oregon Department of Energy.
Right now, the California Independent System Operator (ISO) runs the western Energy Imbalance Market, which is an automated, computerized system that allows utility companies to share energy. PacifiCorp has joined the collaborative and PGE plans to later.
For example, if Oregon were gray and cloudy with no wind one day, solar and wind plants would not be generating much energy. The system could then use extra solar energy from sunny California that was not being used. This makes renewables the first energy backup instead of carbon-emitting energy.
This system has saved millions of dollars and reduced thousands of metric tons of carbon emissions. It produced $23.6 million in savings for the entire market in the second quarter of this year and displaced 68,000 metric tons of carbon emissions, according to the California ISO. It saved PacificCorp $10.5 million.
“It’s this win, win that is almost a serendipitous happenstance,” Bolton says.
So far, only PacifiCorp and Nevada’s NV Energy have joined California in the Energy Imbalance Market. These three companies cover seven states: California, Oregon, Washington, Nevada, Utah, Idaho and Wyoming.
ISO says PGE will begin participating in the integrated system in October 2017.
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