If you own or are thinking about installing solar panels on your property, you may be able to earn hundreds of dollars through a Pennsylvania incentive program known as solar renewable energy certificates (SREC).
Mixing Alternative Electricity Generation in Pennsylvania
In 2004, Pennsylvania passed its Alternative Energy Portfolio Standards (AEPS) Act to increase alternative sources of electricity generation in the state.
AEPS requires that 18 percent of the electricity supplied by Pennsylvania’s electric distribution companies (EDCs) and electric generation suppliers (EGSs) comes from alternative energy resources by 2021.
The AEPS specifies that 0.5 percent of electricity generation must come from solar power, what is commonly referred to as a “solar carve out.”
If a state utility cannot generate solar power, then the Act compels it to purchase SRECs from an SREC market.
How Solar Renewable Energy Certificates Work
SRECs are the mechanism Pennsylvania uses to track and exchange electricity generated by homeowners using solar power.
For every megawatt hour (MWh) of electricity a solar installation produces, the owner earns an SREC. As an example, a Pennsylvania homeowner might generate up to seven MWh of electricity per year using a five-kW solar installation and earn seven SRECs. The owner can then sell the certificates to utilities using the state’s SREC market.
What’s an SREC Worth?
The value of an SREC in Pennsylvania is variable, changing with supply and demand. In October 2020, SRECTrade, one of the industry’s largest SREC transaction and management firms, listed the bid price for a Pennsylvania SREC at $20. As a point of comparison, in January 2020 when demand was higher, an SREC was worth $40.
It’s important to note that an SREC in Pennsylvania is valid for three years from the date it was created. SRECs may be transferred to another owner or sold at any time.
Increasing the Value of an SREC in Pennsylvania
Both bills increase the solar alternative compliance payment (SACP), which is the penalty utilities pay for not buying SRECs, to $125 per SREC starting in 2021. As has been the case in other states that have enacted similar rules, the industry expects SREC values to steadily climb and peak at or around $125 per SREC if the bills are successful.
It is worth noting that both bills are sponsored by Republican lawmakers. At the time of this writing, Republicans control both the state Senate and House, which bodes well for passage of the bills.
Making the Case for Solar Power
By generating their own electricity, businesses can benefit the environment while reducing or eliminating their reliance on utility-generated electricity. Through the use of SRECs, businesses can recover some of the costs of installing and maintaining their solar installation. The more solar energy they produce, the more money they may be able to earn.
 SRECTrade, Market Prices, https://www.srectrade.com/markets/rps/srec/pennsylvania, Accessed October 30, 2020.