Legislation Introduced in 2013 to Increase the Pennsylvania Solar Carve-Out

28 Mar 2013

On February 25, 2013, Representative Greg Vitali introduced House Bill (HB) 100 to the Pennsylvania House of Representatives, legislation that would amend the Pennsylvania Alternative Energy Portfolio Standards. HB 100 was later referred to the House Environmental Resources and Energy Committee, and hearing has not yet been scheduled. If passed, HB 100 would take steps to revive the suffering PA SREC market. Similar legislation (HB 1580 and SB 1350) was introduced to the PA legislature in 2012; however, neither of these bills made significant progress in the General Assembly.

The original Pennsylvania Alternative Energy Portfolio Standards Act currently requires Pennsylvania’s electric utilities to obtain eight percent of their power from renewable sources by 2021, and of that eight percent, 0.5 percent of their power must be generated by solar energy systems.

To fulfill these requirements, Pennsylvania’s electric utilities either procure solar renewable energy credits (SRECs) from existing residential and commercial solar facilities, or they have the ability to build and generate electricity from their own systems. However, as many solar energy system owners in Pennsylvania have realized, the supply of SRECs in the market is now over four (4) times the required demand for utilities, causing the prices of SRECs to drop as low as $15/SREC. The drastic oversupply in the market makes HB 100 that much more crucial to revitalizing Pennsylvania’s solar market and ensuring a stable market for the future.

If passed, HB 100 would:

  • Increase and extend the solar carve-out requirement to 1.5% by 2023, rather than the current 0.5% by 2021.
  • Reduce the Alternative Compliance Payment (ACP) to $250 per SREC starting in Energy Year 2014 and steadily decline by $25 each year thereafter until a set price of $50/SREC is reached for Energy Year 2022 onward.
  • Close the borders to all systems not located in Pennsylvania registered after the effective date of the legislation.

An increase in the solar carve-out will act as the first step towards reducing the oversupply in the SREC market in Pennsylvania; however, additional levers must be pulled to make a truly lasting impact. Reducing and standardizing the ACP value and closing the borders to out of state systems will provide necessary additions to ensure a more viable and sustainable impact on SREC prices by increasing demand, reducing supply, and creating a more realistic ceiling for the market.

Sol Systems will continue to track the progress of this bill. Please follow our blog for further updates.

About Sol Systems

Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions. Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits. To date, the company has arranged financing for thousands of projects and facilitated hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals.
For more information, please visit www.solsystemscompany.com.

Print Page


Anna Noucas

Anna Noucas