David Brown is on a mission, one that would have been considered unlikely, even outlandish, a few years ago. But it's one he's convinced will prove environmentally righteous, economically sensible, and profitable to boot.

When the Northwest's aging and polluting fleet of coal-fired power plants begin shutting down in 2020, starting with Portland General Electric's 600-megawatt workhorse in Boardman, Brown is hoping to replace them, in part at least, with a sea of solar panels and backup battery storage.

His company, Obsidian Renewables, has optioned 7,000 acres of high desert sagebrush territory along existing transmission corridors in south-central Oregon. In the next five years, he hopes to install a series of arrays there with an aggregate capacity of 600 megawatts, backed up by 400 megawatt hours of battery storage.

It's a mega-project, though not by California standards. That state's 20,000 megawatts of solar capacity means that solar energy can meet half of its electricity needs -- as long as the sun is shining. But it also puts California grid operators in the position of having to dump surplus electricity into neighboring states for free, then scrounge to meet power demand when the sun sets and evening demand kicks in.

Oregon, meanwhile, didn't surpass the 300-megawatt mark until last year. Those projects deliver less than 1 percent of overall demand. The largest single plant, the 56-megawatt Gala Solar Project southwest of Prineville, was completed last year by Avangrid Renewables and Sunpower to supply power to Apple.

Brown's proposal, then, is audacious. It's a byproduct of plummeting solar prices and comes as Oregon's green energy advocates press a 10-year plan to meet 10 percent of the state's electricity needs with solar by 2027. That would require growing the current installed capacity by more than tenfold. The goal, 4,000 megawatts in capacity, would generate enough electricity to supply 500,000 homes, or one third the homes in the state.

Last year was a solid year for Oregon's diminutive solar sector, though the-100 plus megawatts that came online still fell well short of the breakout year that some industry groups and market researchers had predicted. The sector is still poised for growth, though the picture is clouded by both national and state policies that could change the trajectory.

NEW TARIFFS ON PANELS

Just last week, President Donald Trump slapped tariffs on imported solar panels, starting at 30 percent in the first year and declining incrementally to 15 percent by year four. Hillsboro-based SolarWorld Americas was one of the co-petitioners on the tariff request to protect itself from illegal competition from China and other Asian countries.

It's still unclear whether the tariffs will be sufficient to save the financially troubled and relatively small manufacturing operation. SolarWorld has downsized its Hillsboro labor force from a high of more than 1,000 to about 300 last year. And while it is reportedly ramping up production again, its German parent company is currently working with an investment bank to sell off pieces of its operation.

Meanwhile, the tariffs could raise project costs, reduce profitability and thus the pipeline of investment in the sector. Jon Miller, the executive director of the Oregon Solar Energy Industry Association, predicts the tariffs could cut the state's 4,500-strong solar workforce by anywhere from 20 to 50 percent.

Those are drastic estimates, which some dismiss as scare tactics. Many industry insiders are more sanguine, saying it will take some time to see how the tariffs shake out. Still, most agree there is downside potential.

In theory, the tariffs should have the least price impact in the residential sector, as panel prices make up a much smaller portion of the cost of rooftop systems than they do for commercial or utility scale installations.

Robert Sandberg, owner of Portland-based solar installer Lightsource Energy, says he pre-ordered a supply of panels in anticipation of the tariffs. Though the 30 percent tariff isn't as bad as anticipated, he said, it would still raise the price of a typical home installation by 7 percent or so.

"It's going to have a chilling effect. Everyone is faced now with longer payback periods, 12 to 15 years payback versus 10," he said, referring to how long it takes homeowners to recoup investment costs through energy savings.

POTENTIAL STATE INCENTIVES

The tariffs are "just one more thing," said Rio Davidson, who owns Cascade Coast Solar in Newport. The bigger problem, he contends, is the Legislature's decision to let the state's long-running Residential Energy Tax Credit program, or RETC, sunset at the end of the 2017. That subsidy cut the cost of a rooftop system by as much as $6,000 and markedly reduced payback periods, a crucial selling point for residential customers.

As a result, Energy Trust of Oregon has stepped up subsidies for rooftop systems to a maximum from $4,400 to $4,800 per home, depending on the utility. And the Legislature will consider a bill that would restore a production-based incentive for rooftop systems that would max out at $4,500 per system initially, then ramp down to $2,000 over three years. Those incentives would replace some of the Energy Trust dollars.

"In residential rooftop, a lot of it depends on incentive packages in place," said Jeff Bissonnette, a longtime energy advocate in Oregon. "Anything that puts the payback period past 10 years, homeowners start thinking, 'Do I put in marble countertops instead?'"

The tariffs would impose higher costs on commercial installations. Plummeting panel prices from overseas have helped the commercial solar sector recover from the loss of the Oregon's Business Energy Tax Credit Program, which covered as much as half the cost of an installation. And again, the Energy Trust has stepped up its incentives in the sector.

Businesses typically demand shorter payback periods than residential customers, so any increase in costs will put some projects on the bubble and cut into growth, said John Grieser, owner of Portland's Elemental Energy.

"We're most concerned about what impact (the tariffs) would have on the pending Community Solar program," he said.

Lawmakers included the Community Solar program in 2016 legislation that doubled the state's renewable energy mandate – now 50 percent by 2040 for large utilities – and aims to eliminate coal power from Oregon's energy supply by 2030. The program will allow utility customers to buy into large solar projects and receive a credit on their bills for the power the projects produce.

The size of those credits, or the "resource value of solar," is the subject of debate at the Oregon Public Utility Commission, with utilities lobbying for credits in the neighborhoods of 5 cents per kilowatt hour, and solar advocates hoping for double that level. The viability of the projects, which are expected to appeal to residential and commercial customers, will depend on the level of the credits and the cost of the arrays.

"Assuming the credit comes out at a reasonable level, we expect to see 160 or 170 megawatts built out rapidly," said Miller, the trade group director. "That'll be the next big wave."

UTILITY PROJECT GROWTH

The Trump tariffs are expected to have the largest impact in utility-scale installations, those above 2 megawatts, where panel prices make up the highest percentage of project costs and the power is sold to utilities or large companies seeking to green up their power supply. It's also the sector that has seen the most rapid growth in Oregon.

The state saw a burst of activity in utility-scale installations in 2016 and 2017. Much of that activity came under the Public Utility Regulatory Policies Act, or PURPA, which requires utilities to buy power from "qualifying projects" that can deliver electricity less expensively than the utility can generate or buy the energy itself.

PacifiCorp spokesman Ry Schwark says the utility saw 80 megawatts of such projects come online at the end of 2017 and expects about the same volume this year.

PGE has seen only a fraction of that activity because most of its service territory is outside the sunniest areas of the state. It has only four qualifying projects delivering energy at the moment, with a nameplate capacity of 3 megawatts (solar plants typically deliver about 15 percent of their nameplate capacity). Another six projects totaling 13.2 megawatts of additional nameplate capacity are expected to be completed in the next three months.

But the utility has a massive overhang of potential projects. It has contracts with 69 qualifying facilities representing an aggregate nameplate capacity of 443 megawatts and has another 95 projects in various stages of contracting representing another 877 megawatts of aggregate capacity.

Steve Corson, a PGE spokesman, says the utility has little control over how many of those projects end up completed and actually delivering power. Developers have four years from the date the contract is signed to start providing energy, and the decision to go forward depends on equipment pricing, potential profitability and the availability of financing.

"The tariff will mean some of the projects we had approved will not get built," said Jeff McKay, a spokesman for Cypress Creek Renewables, a California-based developer that has invested heavily in Oregon. "It's too early to predict which projects those will be, but 30 percent tariff could mean some of these become less viable."

That leaves the utilities themselves, and projects like Brown's behemoth in southern Oregon. Obsidian is aiming at an entirely different market than a typical solar project -- combining storage with the solar arrays to maximize the power delivered into the grid and make it available when its needed most to replace coal and natural gas.

PGE will shutter Boardman in 2020. Another big coal plant in Centralia, Washington, will start ramping down the same year, leaving Puget Sound Energy in need of new capacity. And PacifiCorp plans to shut a number of coal units over the next decade. Meanwhile, companies like Apple, Microsoft and Facebook are in the market for green power to feed their data centers in Oregon.

Brown refers to his approach as solar 2.0, charging batteries overnight with energy from the grid, which can then be used to meet early morning demand. The solar system then wakes up and starts delivering power to the grid, or recharging the batteries during the early afternoon, when demand is typically low. And that storage can be used to meet evening energy production needs.

He says he hasn't figured out what combination of utility and corporate demand will support the project. But he estimates he can deliver electricity for $36 a megawatt hour. The storage will add another $8 per megawatt hour, which would still make the output competitive with both renewables and fossil fuels.

The economics are based on capturing the federal investment tax credit, which means beginning construction before the end of 2019 and finishing before the end of 2023. And the panels won't be installed until after 2021, which means escaping Trump's tariffs.

It sounds good on paper. And, as Brown says, "being a solar developer isn't for the faint of heart."

"I don't think I've discovered anything unique," he said. "The energy I generate will be about a third of energy generated by Boardman and a fifth of Centralia, so if we're really going to replace the coal plants we'll need more of these."

- Ted Sickinger

503-221-8505; @tedsickinger