Renewable Energy Tax Credits in Oregon
Introduced in 1979, the Oregon Business Energy Tax Credit (BETC) encouraged investment in energy conservation measures and renewable energy projects. Significant growth in the value of tax credits granted, combined with concerns over a growing state budget deficit, prompted the Oregon Legislature to pursue a study of the program’s cost-effectiveness. Specifically, the Oregon Department of Energy hired IEc to examine whether the credits promoted new investment, or whether they funded projects that would have proceeded even in the absence of the program.
IEc’s analysis focused on projects in each of four renewable energy project categories (wind, solar photovoltaic, biomass combustion, and biofuels) and four conservation project categories (lighting modifications; weatherization; heating, ventilation and air conditioning; and variable frequency drives). Financial models simulated projected cash flows and internal rates of return accruing to project proponents at the time of their tax credit application. A comparison of the estimated internal rate of return, with and without the BETC, to a target return range allowed IEc to assess the influence of the tax credit on investment behavior.
IEc completed the necessary analyses and delivered a final report within a tight timeframe to satisfy the Oregon Legislature’s deliberation schedule. The Pew Center on the States rated IEc’s analysis as the best evaluation of Oregon tax incentives.Client Oregon Department of Energy