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Incentives/Policies for Renewables & Efficiency

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Solar Alternative Energy Credits   

Last DSIRE Review: 12/04/2014
Program Overview:
State: Pennsylvania
Incentive Type: Performance-Based Incentive
Eligible Renewable/Other Technologies: Photovoltaics
Applicable Sectors: Commercial, Industrial, Residential, Nonprofit, Schools, Local Government, State Government, Multi-Family Residential, Agricultural, Institutional
Amount:Varies based on market conditions; during 2014 the market price for PA-sourced SRECs has ranged from approximately $13 - $60/MWh ($0.013 - $0.06/kWh) although individual trades have taken place at substantially lower and higher prices.
Maximum Incentive:Varies based on market conditions; SACP does not represent a price ceiling because it is only determined after the fact
Eligible System Size:No system size limitations
Equipment Requirements:Systems generally require a utility-grade performance meter (exception exists for some facilities of 15 kW or smaller)
Web Site:
Authority 1:
Date Enacted:
Date Effective:
73 P.S. ยง 1648.1 et seq.
11/30/2004 (subsequently amended)
Authority 2:
Date Enacted:
Date Effective:
PUC Rulemaking Order Docket No. L-00060180

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 roughly 18% of its electricity using alternative-energy resources -- roughly 8% from Tier I technologies and 10% from Tier II technologies -- by 2021. The standard also contains a solar set-aside requiring obligated entities to procure a small percentage of their electricity sales from photovoltaic (PV) systems as part of the Tier I requirement. As with the other components of Pennsylvania's AEPS, the percentage requirement ramps up slowly over time. The obligation was set at 0.0120% for the compliance year running from June 2009 - May 2010, accelerating to an ultimate target of 0.5% in compliance year 2020-2021.

Under Pennsylvania law, a solar alternative energy credit (SAEC) represents proof that 1 megawatt-hour (MWh) of electricity was generated by a qualifying PV facility. In many other states the term "solar renewable energy certificate" or "SREC" is used to represent the functional equivalent (i.e., a means of compliance with a solar energy standard) of an SAEC in Pennsylvania. Electricity suppliers must purchase SAECs in order to meet their compliance obligations under the law, or pay a Solar Alternative Compliance Payment (SACP) for any shortfalls in SAEC purchases.

In Pennsylvania the SACP varies from year to year based largely on the market price of SAECs traded during the prior compliance year, thus it is only known after the end of a compliance year. The SACP is for a given year is calculated as 200% times the sum of (1) the market value of SAECs for the reporting period and (2) the levelized value of up-front rebates received by sellers of SAECs (see PUC order listed above for a more detailed description). For the 2011-2012 compliance year the SACP was $360.79, the largest part of which is attributable to the weighted average SAEC market price of $180.39 per SAEC for the period. The average market price for Pennsylvania-sourced credits for the year 2014 has ranged from roughly $13 - $60 per SAEC/SREC as tracked at SRECtrade, with significant variations above and below this average for individual transactions.*

Under this system SAECs represent a potentially significant source of revenue for owners of qualifying PV facilities with a value determined by demand in the trading market. Eligible generators in Pennsylvania, including on-site generators, retain ownership of SAECs generated by their system until they voluntarily transfer them to another party. A generator remains eligible to generate SAECs for as long as the facility remains certified as an eligible generator. An SAEC may generally be used for compliance by a utility for the compliance year during which it was generated or the two subsequent compliance years. However, SAECs purchased by a utility during a time period for which the utility is under rate caps -- rate caps for some utilities did not expire until January 1, 2011 -- may be used by the utility in the compliance year the rate caps are lifted or in the subsequent compliance year.

In order to begin producing SAECs that can be used for compliance with Pennsylvania's AEPS, a generator must apply for and be certified as an eligible generator. In order to be considered an eligible generator for the purpose of the AEPS, the generator must generally be located either within the state of Pennsylvania or within the broader PJM region. The exception to this rule is that energy from resources located within the footprint of the Midwest Independent Systems Operator (MISO) -- which also serves a small portion of Pennsylvania -- may be used for compliance in areas served by the MISO. The practical impact of this exception is that out-of-state resources located in the MISO may only be used for compliance by the Pennsylvania Power Co. or energy suppliers operating within its service territory.

Systems must be operational before the owner can apply for a certification number. Once a generator has received a certification number from the program administrator, they may create an account on the PJM-EIS Generation Attributes Tracking System (GATS). The GATS is used to track the generation and transfer of SAECs from an eligible facility. The GATS issues SAECs to correspond with energy generation readings that the system owner uploads to the system. Systems of 15 kilowatts (kW) or less that are not equipped with production meters may elect to use an engineering estimate of expected energy production in lieu of uploading actual meter readings into GATS. 

Pennsylvania will only recognize the generation of SAECs by a system after the date of the application for certification. If the facility is located in another state that allows the use of energy production estimates for systems of 10 kW or less, the same estimates will be used in Pennsylvania, provided that the system meets the Pennsylvania requirements for allowing estimates.

The program website contains additional information on Pennsylvania's AEPS, registering a facility, and using credit brokers and aggregators.

*It is important to note that SAECs/SRECs produced by facilities located in Pennsylvania may be eligible for other compliance markets such as that in Ohio. The prices quoted here include transactions where Pennsylvania-sourced SAECs/SRECs have been sold into markets beyond Pennsylvania.

  Dina Deana
Clean Power Markets, Inc.
511 Schoolhouse Rd, Suite 200
Kennett Township, PA 19358
Phone: (877) 237-7773
Fax: (610) 444-9213
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

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