Pennsylvania
Incentives/Policies for Renewables & Efficiency
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Last DSIRE Review: 09/01/2009
| Incentive Type: |
Renewables Portfolio Standard |
| State: |
Pennsylvania |
| Eligible Efficiency Technologies: |
Clothes Washers,
Dishwasher,
Refrigerators/Freezers,
Dehumidifiers,
Ceiling Fan,
Lighting,
Lighting Controls/Sensors,
Chillers,
Heat pumps,
Air conditioners,
Programmable Thermostats,
Duct/Air sealing,
Building Insulation,
Windows,
Motor-ASDs/VSDs,
Custom/Others pending approval
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| Eligible Renewable/Other Technologies: |
Solar Water Heat,
Solar Space Heat,
Solar Thermal Electric,
Solar Thermal Process Heat,
Photovoltaics,
Landfill Gas,
Wind,
Biomass,
Hydroelectric,
Geothermal Electric,
Fuel Cells,
Geothermal Heat Pumps,
Municipal Solid Waste,
CHP/Cogeneration,
Waste Coal, Coal Mine Methane, Coal Gasification,
Anaerobic Digestion,
Other Distributed Generation Technologies
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| Applicable Sectors: |
Investor-Owned Utility,
Retail Supplier
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| Standard: | 18% alternative energy resources by compliance year 2020-2021 |
| Technology Minimum: | Tier I: 8% by compliance year 2020-2021 (includes PV minimum)
Tier II: 10% by compliance year 2020-2021
PV: 0.5% by compliance year 2020-2021 |
| Credit Trading: | Yes |
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Web Site: |
http://www.puc.state.pa.us/
electric/electric_alt_energy.aspx
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Authority 1:
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73 P.S. § 1648.1 et seq.
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| Date Enacted: | 11/30/2004 (subsequently amended) |
| Date Effective: | 02/28/2005 |
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Authority 2:
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66 Pa.C.S. § 2814
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| Date Enacted: | 10/15/2008 |
| Date Effective: | 11/14/2008 |
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Authority 3:
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PUC Rulemaking Order L-00060180
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| Date Enacted: | 09/25/2008 |
| Date Effective: | 11/22/2008 |
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Authority 4:
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PUC Order Docket No. M-2009-2093383
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| Date Enacted: | 05/28/2009 |
| Date Effective: | 06/01/2009 |
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Authority 5:
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PUC Docket No. M-00051865
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| Date Enacted: | 05/28/2009 |
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Summary:
Pennsylvania's Alternative Energy Portfolio Standard (AEPS), created by S.B. 1030 on November 30, 2004, requires each electric distribution company (EDC) and electric generation supplier (EGS) to retail electric customers in Pennsylvania to supply 18% of its electricity using alternative-energy resources by 2020.* Pennsylvania's standard provides for a solar set-aside, mandating a certain percentage of electricity generated by photovoltaics (PV). Pennsylvania's AEPS also includes demand-side management, waste coal, coal-mine methane and coal gasification as eligible technologies.
H.B. 1203 (2007) provided a more detailed solar schedule, clarified the force majeure clause, confirmed REC property rights for generators, added solar thermal to Tier I, clarified that AEPS RECs cannot have been retired for other purposes, and expanded the definition of customer-generator. Revised rules addressing these changes and other necessary clarifications became effective in November 2008.
Separate from the PUC rulemaking that took place during 2008, the Pennsylvania legislature enacted H.B. 2200 in October 2008 further amending the RPS. The amendments added specific low-impact hydropower projects as Tier I resources, and also classified pulping and wood manufacturing by-products as either Tier I (in-state facilities) or Tier II (out-of-state facilities) resources. Prior to this, all facilities of this type were defined as Tier II resources. The Pennsylvania Public Utilities Commission (PUC) is required to increase the Tier percentage (%) requirements on a quarterly basis to reflect these additions to the Tier I resource classification. The PUC subsequently issued an order describing how this will take place, beginning June 1, 2009 (the beginning of the 2009-2010 compliance year).
Although the AEPS will eventually apply in the service territories of all 11 EDCs that operate in Pennsylvania, the law grants compliance exemptions to EDCs that are still under rate freezes or in restructuring cost recovery periods. The exemptions also apply to EGSs that operate within the service territory of an exempted EDC. As of the beginning of 2008, only six EDCs had reached the end of their exemptions. One utility will be added to this list beginning in 2010 and the remaining four will reach the end of their exemptions in 2011.
There are two categories of energy sources under the law, termed "Tiers". The standard calls for utilities to generate 8% of their electricity by using "Tier I" energy sources and 10% using "Tier II" sources by May 31, 2021. Generally, eligible resources must originate within Pennsylvania or within the PJM regional transmission organization (RTO) in order to be counted for compliance. However, out-of-state resources located in the MISO (which also serves a portion of Pennsylvania) may be used in areas served by the MISO. This effectively limits the use of out-of-state MISO based resources to the Pennsylvania Power Co. or EGSs operating within its service territory.
Tier I sources include (new and existing) photovoltaic energy, solar-thermal energy, wind, low-impact hydro, geothermal, biomass, biologically-derived methane gas, coal-mine methane and fuel cells.
Tier II sources include (new and existing) waste coal, distributed generation (DG) systems, demand-side management, large-scale hydro, municipal solid waste, wood pulping and manufacturing byproducts, and integrated gasification combined cycle (IGCC) coal technology. (See 73 P.S. § 1648.2 for detailed definitions of eligible alternative-energy sources.) The revised Technical Reference Manual adopted in May 2009 contains a detailed description of how demand-side management will be addressed under the standard. The eligible energy efficiency technologies listed at the top of this page are selection of specific measured identified in the Technical Reference Manual.
The PUC has adopted the following 15-year compliance schedule to implement Pennsylvania's AEPS:- 06/01/06 - 05/31/07: Tier I (including solar) - 1.5%; Tier II - 4.2%; Solar PV - 0.0013%
- 06/01/07 - 05/31/08: Tier I (including solar) - 1.5%; Tier II - 4.2%; Solar PV - 0.0030%
- 06/01/08 - 05/31/09: Tier I (including solar) - 2.0%; Tier II - 4.2%; Solar PV - 0.0063%
- 06/01/09 - 05/31/10: Tier I** (including solar) - 2.5%; Tier II - 4.2%; Solar PV - 0.0120%
- 06/01/10 - 05/31/11: Tier I (including solar) - 3.0%; Tier II - 6.2%; Solar PV - 0.0203%
- 06/01/11 - 05/31/12: Tier I (including solar) - 3.5%; Tier II - 6.2%; Solar PV - 0.0325%
- 06/01/12 - 05/31/13: Tier I (including solar) - 4.0%; Tier II - 6.2%; Solar PV - 0.0510%
- 06/01/13 - 05/31/14: Tier I (including solar) - 4.5%; Tier II - 6.2%; Solar PV - 0.0840%
- 06/01/14 - 05/31/15: Tier I (including solar) - 5.0%; Tier II - 6.2%; Solar PV - 0.1440%
- 06/01/15 - 05/31/16: Tier I (including solar) - 5.5%; Tier II - 8.2%; Solar PV - 0.2500%
- 06/01/16 - 05/31/17: Tier I (including solar) - 6.0%; Tier II - 8.2%; Solar PV - 0.2933%
- 06/01/17 - 05/31/18: Tier I (including solar) - 6.5%; Tier II - 8.2%; Solar PV - 0.3400%
- 06/01/18 - 05/31/19: Tier I (including solar) - 7.0%; Tier II - 8.2%; Solar PV - 0.3900%
- 06/01/19 - 05/31/20: Tier I (including solar) - 7.5%; Tier II - 8.2%; Solar PV - 0.4433%
- 06/01/20 - 05/31/21: Tier I (including solar) - 8.0%; Tier II - 10%; Solar PV - 0.5000%
The compliance year for the standard runs from June 1 to May 31 of each years, and is followed by a 3-month true-up period. The law establishes an alternative compliance payment (ACP) of $45 per megawatt-hour; however, a separate ACP for solar PV has been set at "200% of average market value" of the solar credits sold during the reporting period. Compliance is based on alternative energy credits (AECs), and banking of excess credits will be allowed for up to two years. Thus an AEC's useful life is three years, the year it was produced and the two subsequent years for which it can be banked. A credit is equal to a megawatt-hour of renewable generation and credits are the property of the renewable energy generator. Notably, the 2008 rule amendments exempt PV systems of 15 kW or less from a requirement that AEC production be verified by metered data, instead allowing the AEC program administrator to verify system output through alternate means. All other systems remain subject to this rule.
Renewable energy credits are tracked by the PJM GATS system. Monies received through the ACP will be transferred into Pennsylvania's Sustainable Energy Funds and used solely to support alternative-energy projects.
The PUC has determined that electric distribution companies may fully recover "the reasonable and prudently incurred costs of complying" with the AEPS. These include the costs for purchases of alternative energy or alternative energy credits, payments to credit program administrators, and costs levied by RTOs to ensure that alternative resources are reliable. Recoverable costs generally do not include ACPs. The costs will be recovered through an automatic adjustment and are considered to be a cost of generation supply. Electric generation suppliers have not been granted cost recovery by the PUC.
The AEPS contains a force majeure clause under which the PUC can make a determination as to whether there are sufficient alternative energy resources in the market for utilities to meet their targets. If the PUC determines that utilities are unable to comply with the standard despite good faith efforts, it may alter the obligation for a given year. The Commission may then require higher obligations in subsequent years to compensate for shortfalls.
The 2007 Annual AEPS Report summarizing progress and compliance with the standard is available on the program website.
* Pennsylvania's rural electric cooperatives must offer retail customers a voluntary program of energy efficiency and demand-side management programs to satisfy compliance with the AEPS.
**With the 2008 legislation designating additional Tier I resources and providing for equivalent increases to the Tier I compliance %, the values listed here no longer precisely reflect actual Tier I obligations. As the increases associated with this change will be based on actual generation from the newly designated Tier I resources, it is not currently known how much the values will change for the current compliance year or for future years.
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