Scott Zollinger was well on his way to building a new barn on his property in Marion County and putting enough solar panels on top of it to offset the cost of electricity for his family’s home.

The design plans were drafted. The first payment was made on the solar panels. Zollinger had even applied and been approved for about $30,000 in state and federal tax credits on the $59,000 solar project.

THANKS TO OUR SPONSOR: Become a Sponsor

Then he got a report from his utility, Portland General Electric, on the impact his project would have on the electric grid.

The report was filled with technical terms, but it ultimately concluded that he couldn’t connect his 24.8 kilowatts of solar power to PGE’s system until significant upgrades had been made to the grid.

The report included a bill for the estimated cost of the upgrades: $539,038.

“My first reaction was: I’m not sure how this is my problem,” Zollinger said. “How is this our problem? … We can’t just pay $500,000.”

Related: Oregon's Largest Multifamily Solar Project Installed In Milwaukie

Aaron Eddy with Earthlight Technologies, who was managing the solar project for Zollinger, said he understood some of the jargon in the technical report, but not all of it.

However, Zollinger was not his first customer in the Willamette Valley to run into this problem.

“So, the first project I was thinking maybe it’s just this one area,” Eddy said. “And then we had two other customers, one in the Silverton area and one in the North Salem area, both run into the same problem.”

The problem, he surmised, was that large-scale solar farms in that area had taken up nearly all the capacity for solar power to be fed into that portion of the grid.

The substations that control the distribution of power were designed to send power in one direction: from the power plant to people’s homes. They have limited capacity to allow power to flow in the opposite direction. And in some parts of the state, large solar farms have taken up most of that capacity.

“From our understanding, those contractors have sized their projects to reach that threshold but not exceed it so they’re not required to pay for the substantial upgrades that are necessary for exceeding that set limit,” Eddy said.

And that means the next project that wants to sell power to the grid — even if it’s just a few rooftop solar panels on a barn — gets stuck with the bill for upgrading the system.

PGE spokesman Steve Corson said that is indeed the situation, albeit in very few parts of the utility’s territory so far. Customers who want to install solar panels that sell power to the grid need to use a system called “net metering” to get credit for the power they’re generating.

“By far, most net metering customers are not going to encounter this,” Corson said. “This is something that’s affecting a small number of projects at this point.”

Right now, PGE has more than 650 feeder lines that radiate out from substations to serve neighborhoods around the state. Only 11 of those lines have reached their capacity to receive solar power. Corson said they’re mostly in the southern part of PGE’s territory, around Salem and Turner, where the utility has seen a lot of new commercial solar developments.

THANKS TO OUR SPONSOR: Become a Sponsor

Under current rules, Corson said, the costs of upgrading the grid often fall to whoever needs the upgrade to accommodate their project. PGE provides estimates of the costs and the capacity limitations to commercial solar developers during the application process. Some developers agree to pay for the upgrade costs required to install their projects, while others take a different approach.

“They might reconfigure their system just to fit right within our capacity,” he said. “And the bad news for surrounding net metering customers is that once that project has used up the capacity on the system, then the next project that comes in ends up having to foot the bill for those improvements and those upgrades.”

Corson stressed that the situation is rare. Since 2016, he said, PGE has had 5,737 net metering application, and 86% of them were approved without so much as an application fee. Only 42 of them, less than 1%, required any kind of system upgrade charges, and most were for transformer upgrades at a cost of $3,000 to $5,000.

The substation upgrades required in Zollinger’s area are rare and clearly much more expensive.

Jordan Sinn, general manager for Earthlight Technologies, often handles customer interactions for the company’s rooftop solar projects, many of which are in the Willamette Valley areas that now apparently have grid capacity issues.

“This is becoming a common thing,” he said. “We’re in an awkward position where we don’t know until we submit quite a bit of paperwork with PGE to find this out. It’s been a bit of a black eye for the solar industry.”

Zollinger’s upgrade costs were by far the highest he’s seen so far. For other customers, the cost of upgrades still would have doubled the cost of their solar projects, and they chose to walk away.

“It’s almost humorous after they get over the shock of, ‘This is real,’” Sinn said. “There’s really no conversation about whether they want to move forward. It’s just kind of, ‘Well, can I get a refund?’”

Zollinger said he now looks at the other rooftop solar projects on his street a little differently.

“There are two other solar projects that got there first but because they can only reach a certain capacity we’re just pushing it past the line,” he said. “At the end of the day it’s really a bum deal for my wife and I who would love to do this.”

He’s still planning to build a new barn, and there’s a chance he could revisit the idea of installing solar panels if a proposed commercial solar project nearby pays for the upgrades to the grid in the next few years.

“It doesn’t blow up our world,” Zollinger said. “It just makes me frustrated. That is not how this should have went. At the end of the day it kind of feels like the big guy shoving us out of the room, and that’s what it is.”

Eddy said the big question is who should be paying for the upgrades that are needed to allow for more renewables to feed into the grid.

“The math doesn’t lie. These upgrades need to happen based on what has been installed in these areas,” Eddy said. “I was surprised that there was no regulation in place to make sure it wasn’t affecting average Oregonians and their ability to install solar.”

Eddy said if the problem continues, he might have to downsize or move his Silverton-based business to another area. He said it seems like the state as a whole has been pushing for more solar and renewable energy, “but we haven’t figured out how to actually make the wires and the nuts and bolts work to do that.”

Angela Crowley-Koch, executive director of the Oregon Solar Energy Industries Association, said grid capacity is a problem across the state — in both PacifiCorp and PGE territories.

In some cases, the utilities should be making the upgrades themselves, she said, and most commercial solar projects do end up paying for the required upgrades.

Meanwhile, she’s helped people send their complaints to the Oregon Public Utility Commission, which has the power to change the rules for who pays for what upgrades.

“I think it’s still an open question,” Crowley-Koch said. “There’s a lot of folks not getting solar that want it because of this issue.”