Oregon Governor Kate Brown has signed legislation enacting a new community solar program permitting utilities and third parties to own or operate a community-based renewable energy project. The law also sets a specific target date to eliminate coal-fired power, making Oregon the first state to do so explicitly, requiring that the state's two largest utilities stop supplying coal-fired energy to Oregonians by 2030.

The legislation, signed into law on March 8, 2016, also doubles state mandates on renewable power by 2040. Specifically, the bill increases the renewable portfolio standard (RPS) for the state’s two biggest utilities to 50 percent by 2040. The previous RPS, established in 2007, required those utilities to obtain 25 percent of their power from renewable resources by 2025.

Oregon joins 13 other states and the District of Columbia with similar programs. See our previous alerts on the creation of community solar programs in New York and Connecticut, Hawai'i, and Maryland. Community solar projects expand access to renewable energy by allowing multiple residential, commercial, or industrial electric customers to subscribe to a proportion of the output from one central solar energy project. The subscriber's electric utility bills are typically offset through a virtual net metering mechanism based on the subscriber's credit for a share of the solar energy generated by the project. While the traditional solar model generally requires that the installation is located on the home or business premises, community solar programs remove this obstacle. Community solar projects can be sited in a variety of locations, whether ground-mounted on open land, or installed on the roof of a commercial or government building, or onsite at a community center.

Under the new Oregon law, an individual electric customer can either be an ''owner'' or ''subscriber'' of the project. An ''owner'' is an electric customer who owns a portion of the project, such as the direct ownership of one or more solar panels, or shared ownership of the project's infrastructure. A ''subscriber'' is defined as an electric customer who leases a portion of a project for a minimum of 10 years. The project is managed by either an electric company or an independent third party.

The Oregon Public Utility Commission (PUC) is required to adopt rules implementing the community solar program no later than July 1, 2017, but the legislation provided guidelines the PUC must follow, including:

• Each community solar project must have at least one solar photovoltaic energy system with a minimum generating capacity of 25 kW and must be physically located within Oregon.
• Individuals who are subscribers or owners must be located in Oregon and within an electric company's service territory.
• An owner or subscriber cannot contract with the project for more than its average annual energy consumption.
• The owner or subscriber will be credited on their electric bill for an amount that represents the resource value of solar energy, as determined by the PUC, unless the PUC adopts another rate.
• Owners and subscribers own all the renewable energy certificates associated with the energy generated by the project.

The legislation directs the PUC to require that electric companies must enter into 20-year power purchase agreements with a certified community solar project. The PUC must minimize the shifting of costs from the project to ratepayers that do not own or subscribe to the project. The law permits the PUC to suspend the program if the PUC has good cause to do so.