A recent change to Pennsylvania law is expected to give a
boost to the state’s solar industry.
On Oct. 30, Governor Tom Wolf signed a bill that will
provide more protection for home-grown projects and prevent out-of-state solar
power from affecting Pennsylvania’s marketplace for alternative energy.
StateImpact Pennsylvania discussed the significance of the
change with Christina Simeone, Director of Policy and External Affairs for the
Kleinman Center for Energy Policy at the University of Pennsylvania.
Note: this interview has been edited for length and clarity
Q: There was some good news recently for the solar
industry in Pennsylvania, right?
A: Very good news for the solar industry in
Pennsylvania. A change in law was made that will incentivize more solar being
built in Pennsylvania. People are basically saying this is now “closing
Pennsylvania’s borders.” I’ll explain that, but to understand what happened
recently, you have to look at the past.
In 2004, Pennsylvania established a law that a certain
amount of electricity sold by utilities to consumers to be supplied by
renewable energy.
Q: That’s the Alternative
Energy Portfolio Standard.
A: Yes—that law required that by 2021, 18 percent of
the electricity sold to consumers in Pennsylvania be supplied by alternative
and renewable sources. Of that 18 percent, a half a percent would have to come
from solar.
But the way the law was written, even though Pennsylvania
ratepayers were paying for this renewable energy to be built, it didn’t
necessarily have to be built within Pennsylvania. It could be built anywhere
within the broader 13-state (plus DC) electricity grid, called PJM Interconnection. A lot of renewable energy got built in
Pennsylvania and outside of Pennsylvania. Those projects generated credits that
could be submitted for compliance with Pennsylvania’s law.
Q: Those are called Solar Renewable Energy Credits.
A: Yes, Renewable Energy Credits (RECs), or Solar
Renewable Energy Credits (SRECs). The law was passed in 2004, but it turned out
the amount of solar built grew much faster than the law anticipated. Some of
that was because of the Recovery Act,some of it was the [Pennsylvania] Alternative Energy Investment Act of 2008.
Also, the cost of solar came down tremendously. What
ended up happening was Pennsylvania had much more solar than initially
expected. So, you had a high supply of solar, but the law only demanded a
certain amount, and that dynamic led to the price of the SRECs dropping.*
A: So before this recent change–before the borders were
closed–you could get credit for solar power produced outside of Pennsylvania.
Right. The oversupply problem has been lingering for many
years. We just haven’t been able to dig out of the hole, because other states
just keep adding solar before we can, because they may have more attractive
incentives.
Q: Who benefits most now from the borders being closed?
A: I think it’s a benefit for Pennsylvanians, because
now Pennsylvania ratepayer monies will go into building solar within
Pennsylvania. Eventually as more solar comes online, the price of the SREC
will start to go up.
Several years ago, we were seeing tremendous solar growth
and a big uptick in solar jobs. We missed an opportunity to continue that
growth by not realigning our law to where the market was. So I think this
[change in the law] is an important step forward.
*For example, a Pennsylvania SREC sells for about $5, while
neighboring state New Jersey sells for $193.
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