Pennsylvania Limits Solar Incentives

by | November 15, 2017

By Andrew Maykuth

To boost home-grown solar energy, Pennsylvania has built a legal wall at its border to keep out-of-state solar power from entering the state's alternative-energy market.

Gov. Wolf on Monday lauded a change to the state's Alternative Energy Portfolio Standards Act that prohibits out-of-state solar power from qualifying for renewable-energy credits. The change, included in an omnibus bill signed into law Oct. 30, is intended to lift Pennsylvania's solar industry, and give a boost to owners of solar systems.

"We're making sure the benefits of increased renewable jobs, a cleaner environment, and a growing renewable economy is going to be felt right here in the commonwealth of Pennsylvania," Wolf said at an event Monday at a solar installation in Elizabethtown.

Under the portfolio-standards act, signed in 2004, 0.5 percent of electricity consumed in Pennsylvania by 2021 must come from solar sources. Power produced from solar installations in more than a dozen nearby states previously qualified for Pennsylvania solar credits, causing a glut of solar credits and a fall in prices. The price-plunge reduced the incentive to build solar installations in Pennsylvania.

The price impact of the new law may take several years to materialize because existing contracts with facilities outside Pennsylvania are grandfathered, according to the law firm McNees Wallace & Nurick. The change applies only to any new solar installations seeking qualification under the state's solar program.

The market for Solar Renewable Energy Credits, the currency of the state law, has gone bust in Pennsylvania since 2010, when SRECs routinely traded for more than $300 for each megawatt hour of energy produced -- or 30 cents per kilowatt hour of power. They now trade for about $5 a credit, or about a half-cent per kWh.

By comparison, solar credits trade currently for about $190 in New Jersey and $350 in Washington, D.C., which have restricted markets, according to the Flett Exchange, an SREC broker.

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