If you’re considering installing a solar panel system in Pennsylvania, one incentive to be aware of is solar renewable energy certificates (SRECs). Pennsylvania is one of the few states that offers this performance-based incentive to property owners generating solar electricity. Pennsylvanians who buy and install a solar panel system can earn hundreds of dollars each year by selling SRECs.
This article describes how the Pennsylvania SREC program works, explores current prices (and price projections) for PA SRECs, and discusses the future of the SREC program so that you can make a well-informed decision about going solar in the Keystone State.
How Pennsylvania’s SREC program works
Pennsylvania has an alternative energy portfolio standard (APS) that requires its utilities to produce 18 percent of their electricity from renewable resources in 2021. Their APS also has a “solar carve-out,” which mandates that 0.5 percent of that renewable electricity target must come exclusively from solar power.
SRECs are a mechanism used to track the amount of electricity that comes from solar. You generate one SREC for every megawatt-hour (MWh) of electricity your solar energy system produces. For example, the average PA homeowner buying a 9-kilowatt system typically generates about 10 MWh of solar electricity per year, equivalent to 10 SRECs.
Utilities purchase SRECs to comply with the solar component of the RPS. The owners of solar panel systems – from individual homeowners to large-scale solar developers – can sell SRECs to utilities through the state’s SREC market.
In Pennsylvania, an SREC has a useful life of three years, which means that SRECs you generate in 2020 can count towards 2020, 2021, or 2022 compliance periods. Importantly, only individuals who own (rather than lease) their solar energy system are eligible to sell SRECs into the PA SREC market.
PA SREC prices (current and projected)
The price of a single SREC isn’t fixed in Pennsylvania – it varies based on supply and demand within the market and can change from day-to-day. According to SRECTrade, one of the biggest SREC aggregators in the country, Pennsylvania SREC prices hovered around $40 at the beginning of 2020.
The future price of SRECs in Pennsylvania depends on market conditions. Recently, the market has experienced an oversupply of SRECs, leading to much lower prices than witnessed in past years. However, pending legislation may make some significant changes that will impact both supply and demand for PA SRECs in the future.
Status of the PA SREC program
Pennsylvania experienced relatively low SREC prices throughout 2018. This was the result of two major factors: the size of the solar carve-out and out-of-state solar projects. Pennsylvania has a relatively small solar carve-out in comparison to other states with active SREC markets, which means demand was lower. Additionally, PA previously accepted out-of-state projects into PA’s SREC program which contributed to an oversupply in the market. However, in late 2017, Governor Wolf signed a law that requires all new systems participating in PA’s SREC program to be in-state projects moving forward, aiming to fix the oversupply issue.
Governor Wolf has also announced his support for Senate Bill 600. This bill, should it pass, will update the state’s renewable portfolio goals. In addition to increasing the overall target for renewable energy generation, the bill proposes upping the solar carve-out from 0.5 percent by 2021 to 10 percent by 2030. Such a change has the potential to increase demand for SRECs and, consequently, result in higher SREC prices down the line.
The bill also proposes restructuring the SREC program to be more similar to that of New Jersey or Massachusetts in the sense that it would have a specified eligibility term (15 years), as well as fixed and pre-determined alternative compliance payments (ACP), which are the fines that utilities need to pay if they don’t meet the solar generation requirements as mandated by the alternative energy portfolio standard. As the PA program stands today, ACPs are set at 200 percent of the average SREC price paid by power providers in that given year and there is no end date to SREC program eligibility.
How you can benefit from Pennsylvania SRECs
How much you’ll earn from selling SRECs depends on the price of each certificate and how much solar electricity your system generates. The best way to get an estimate of how much you can earn from SRECs is to look at multiple options. By joining the EnergySage Solar Marketplace, you can compare up to seven online quotes from local Pennsylvania solar installers. All quotes on EnergySage will include an estimate for SREC incentives over 20 years that’s based on the proposed solar panel system and the current SREC market values.