Pennsylvania SRECs: Prices, projections, program status

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.

We describe how the Pennsylvania SREC program works, explore current prices (and price projections) for PA SRECs, and discuss the future of the SREC program so that you can make a well-informed decision about going solar in the Keystone State.

Pennsylvania's alternative energy portfolio standard (APS) requires utilities to produce 18% of their electricity from renewable resources in 2021. Their APS also has a "solar carve-out," which mandates that 0.5% 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 life of three years, meaning that SRECs you generated in 2021 can count towards 2021, 2022, or 2023 compliance periods. Only individuals who own (rather than lease) their solar energy system are eligible to sell SRECs into the PA SREC market.

The price of a single SREC isn't fixed in Pennsylvania – it varies based on supply and demand within the market and can change daily. According to SRECTrade, one of the biggest SREC aggregators in the country, Pennsylvania SREC prices are hovering around $40 in the summer of 2021.

The future price of SRECs in Pennsylvania depends on market conditions. Recent prices are relatively high, but pending legislation could make significant changes that would impact supply and demand for PA SRECs.

Pennsylvania experienced relatively low SREC prices throughout 2018. This resulted from two major factors: The size of the solar carve-out and out-of-state solar projects. Pennsylvania has a relatively small solar carve-out compared to other states with active SREC markets, meaning demand was lower. Additionally, PA previously accepted out-of-state projects into PA's SREC program, contributing 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 also announced his support for PA State Senate Bill 600, which would've updated the state's renewable portfolio goals. In addition to increasing the overall target for renewable energy generation, the bill proposed upping the solar carve-out from 0.5% by 2021 to 10% by 2030.

The bill also proposed 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% of the average SREC price paid by power providers in that given year, and there is no end date to SREC program eligibility.

Unfortunately, the bill was never voted upon during the 2019 - 2020 regular session. However, in 2021, PA State Senators Daniel Laughlin and Art Haywood introduced a new version of the bill, PA State Senate Bill 501. This bill would increase the solar carve-out from 0.5% in 2021 to 5.5% in 2026. Such a change can potentially increase demand for SRECs and, consequently, result in higher SREC prices down the line.

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 estimate your earnings from SRECs is to look at multiple options. By joining the EnergySage 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 based on the proposed solar panel system and the current SREC market values.