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Pennsylvania's SREC Market: The Borders Have Officially Closed

In October 2017, Pennsylvania lawmakers and Governor Wolf passed Act 40. The law aimed to fix the oversupply in Pennsylvania’s solar renewable energy credit (SREC) market by closing the borders to out-of-state solar energy systems, preventing them from selling their SRECs into the state.

Since then, there has been confusion about how the law would be interpreted by the Pennsylvania Public Utilities Commission (PUC), as the law itself was vaguely-written and unclear as to its intent. The question at hand was whether out-of-state systems that were already registered to sell SRECs into the Pennsylvania market could continue to do so, or if the law was meant only to prevent new systems from qualifying. Therefore, the PUC tentatively proposed an interpretation that would have “grandfathered” existing qualified out-of-state solar energy systems, but they also requested input from the public to help make their determination.

After several months of public comment, Pennsylvania lawmakers, environmental groups, the local solar industry, and solar homeowners in Pennsylvania overwhelmingly wrote to the PUC that the law was intended to exclude all out-of-state systems, even those already registered.

With these considerations in mind, on Thursday, April 19th, the PUC provided guidance on the implementation of Act 40. They voted to reject their tentative interpretation that would have “grandfathered” out-of-state solar energy systems, and instead they moved to de-certify these systems.

What Does This Decision Mean for Out-Of-State Systems Currently Selling SRECs in Pennsylvania?

With this decision from the PUC, systems that are not within the geographical boundaries of the state of Pennsylvania, and not contracted directly with a compliance entity (like a utility), will now only be eligible for PA Tier 1 renewable energy credits (RECs), not SRECs. This applies to most systems outside the state, as a contract with a SREC aggregator (like Sol Systems) is not enough to preserve SREC qualification. Even if a system is already registered for SRECs, it will be de-certified. Additionally, any SRECs generated from out-of-state systems after Act 40 was signed on October 31st, 2017 may also be retroactively de-certified. This means they will no longer be eligible to be traded in Pennsylvania’s SREC market. However, they remain eligible to be traded in Pennsylvania’s Tier 1 REC market.

The PA PUC has not yet issued their Final Implementation Order with the exact next steps, though their decision is final and marks the new status quo in Pennsylvania’s SREC market.

Sol Systems will keep our installer partners and customers updated as we learn more about the implementation of Act 40 and what options may be available to out-of-state systems.

By Lauren Miller

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered 700 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

Photo Credit: Tony Castellani via Flickr

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