ALLISON HAMILTON and I are tromping through fields of scorched yellow grass, just past the off-ramp where Interstate 205 converges with Interstate 5. What with the lack of shade and the cars whipping by, it’s not exactly an idyllic place for a walk. But Hamilton, a 49-year-old project director with the Oregon Department of Transportation (ODOT), couldn’t be more ebullient. “This is it!” she shouts above the din, sweeping her arm across the landscape.

I can’t help thinking that the 146,000 drivers that pass this spot every day probably perceive it as I do now: an unremarkable patch of earth. And yet this field soon may give drivers a reason to rubberneck. By December, ODOT will install 594 solar panels here, hook them up to the grid, and harness the sun’s energy to illuminate the lights along a half-mile stretch of the interchange every night.

Hamilton began pushing for the project in 2007, after watching a documentary about solar power that included a segment on Germany’s Autobahn, where walls of photovoltaic panels deliver power to Munich’s grid. If gloomy, rainy Germany could do it, she thought, why not Oregon? After she rallied ODOT and Portland General Electric to back the endeavor, Oregon agreed last summer to build the country’s first “solar highway.”

But the real value of the $1.3 million project may be what it does for the state’s already green reputation. Erecting a quarter acre of panels along a prime route to its most populous city sends a highly visible message: Oregon is committed to alternative power.

Covered in solar panels, this field may give drivers a reason to rubberneck.

That’s a useful symbol for people like Christopher Dymond, an energy analyst for Oregon’s Department of Energy, who is trying to attract solar manufacturing and installation companies here. Once considered too costly to become a viable green-energy option, the solar power market has exploded in recent years—primarily because Congress passed a slew of federal tax credits that cover up to 30 percent of the cost of solar installations built since 2006. But with federal credits set to expire on December 31, some states, including Oregon, are competing for business with solar energy credits of their own that help fill the funding gap.

“Oregon is ahead of the pack,” says Dymond, an architect of the state’s Business Energy Tax Credit for solar power, which offsets up to 50 percent of the cost of solar projects over five years. If Oregon can continue to offer such strong incentives and woo businesses here—and if the federal government renews the much-needed incentives—Dymond thinks revenues from the solar manufacturing industry could reach $3 billion annually by 2015. “It’s huge,” he says.

Still, Dymond notes that Oregon is sometimes outbid by other states. California, for instance, home to nearly 80 percent of photovoltaic installations in the country, has committed over $3 billion in incentives for solar projects by 2017, a figure that Oregon, which so far has set aside $39 million in credits, can’t match.

Nonetheless, Oregon’s commitment to solar energy already helped lure German company SolarWorld to Hillsboro in the spring of last year. It’s turning a 480,000-square-foot former semiconductor facility into a solar silicon-wafer and solar-cell production plant that will employ as many as 2,000 workers. The presence of other businesses, including Salem-based Peak Sun Silicon Corporation, which set up a silicon-manufacturing plant in Millersburg earlier this year, and California-based XsunX Inc, which has a solar-module manufacturing facility in Wood Village, are evidence that companies are getting the message: Oregon is a good place for the solar biz—no matter what our meteorologists may forecast.