Oregon governor Kate Brown has signed into law the popular Oregon Clean Electricity and Coal Transition Plan. This landmark piece of legislation, among other things, (i) completely phases out the supply of electricity from coal fired generation facilities for Oregon utility customers, (ii) increases the renewable portfolio standard in Oregon and (iii) establishes a community solar program statewide. 

The legislation was supported by business groups, environmental organizations and the state’s big utilities, Portland General Electric and Pacific Power, and should spur the development of renewable energy projects throughout the state.

 

Coal fired generating plants currently supply the state with approximately 1/3 of its electricity needs. The new state law requires that by the year 2035 no electricity in Oregon generated by an investor owned utility be fueled by coal.  Electric cooperatives and municipal utilities are exempt, but the two IOUs (PGE and Pacific Power) serve approximately 70% of Oregon electricity demand.  Oregon is the first state to ban electricity from coal fired plants, but other states (such as New York) are currently contemplating similar legislation.  While coal fired plants will be allowed to shift their product to neighboring states, a 33% shift in energy generation should open the door to a significant number of generating assets coming online in and around Oregon in the next 20 years.

 

The new law also significantly increases the mandated renewable portfolio standard in Oregon. 2007 legislation required that by 2025, 25% of the state’s electricity be generated by renewable powered generating facilities.  Under the Oregon Clean Electricity and Coal Transition Plan, by 2040, 50% of electricity sold by an electric company to retail electricity consumers must be generated by a facility powered by a renewable energy source.   A potential compliance loophole exists in that there is a maximum 4% premium that that the utilities can pay for mandate-compliant renewable. This 4% cap is intended to protect consumers from significant rate increases.  Additionally, the Oregon PUC can temporarily suspend the portfolio standard if grid reliability is threatened.  The new 50% requirement allows Oregon to join California, Hawaii and Vermont as the only states with goals of 50%+ and should lead to increased development of solar, wind, geothermal and biomass powered generating facilities within the state.

 

A third major component of the Oregon Clean Electricity and Coal Transition Plan which should lead to increased development of renewable energy projects in Oregon is the establishment of a community solar program. The legislation requires the Public Utility Commission to establish qualifications for community solar projects and prescribes the entering into of 20-year power purchase agreements with such community solar projects.  Community solar projects must have at least one solar photovoltaic energy systems with a minimum generating capacity of 25 kilowatts.

 

The above described provisions of the Oregon Clean Electricity and Coal Transition Plan should lead to significant renewable energy development in the State of Oregon, creating opportunities for developers, utilities and investors.

 

The full text of the Oregon Clean Electricity and Coal Transition Plan can be found here.