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PUC restricts solar-credit program to in-state projects

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State utility regulators voted this week to block out-of-state solar projects from benefiting under a solar-energy incentive program in Pennsylvania.

The unanimous vote Thursday by the Pennsylvania Public Utility Commission carries out a state law, Act 40, adopted last fall to encourage in-state solar projects.

"It’s actually about as favorable as we would expect for the in-state solar facilities," said Tim Beiler, CEO of Paradise Energy Solutions LLC. Based in Paradise Township, Lancaster County, the company installs solar arrays at homes, farms and small businesses in Pennsylvania and other states.

At issue is what solar arrays can generate credits for sale to utility companies in Pennsylvania.

Utilities buy the credits to meet state requirements for generating power from renewable sources - and in the process give a boost to investments in solar. By 2021 solar must make up 0.5 percent of electricity supplied by Pennsylvania utilities.

The PUC is allowing previously certified out-of-state solar arrays to continue selling credits only under contracts as they existed as of Oct. 30, 2017. Otherwise, credits are limited to certified in-state projects.

"The Commission is clarifying Act 40 implementation in a way that has broad-based support among stakeholders and is consistent with legislative intent," PUC Chairman Gladys M. Brown said in a statement. "As other states that have passed similar legislation have recognized, this is an important tool for Pennsylvania to promote environmental stewardship and economic development."

Under previous law, the credits did not have to come from solar arrays in Pennsylvania, and the market became flooded, with prices falling to about $5 per credit. In the early 2010s, credits had cost as much as $300.

Prices have rebounded to about $10-$12 per credit since the new law was passed, Beiler said.

Prices may rise more, he said. But as solar becomes more economical overall, projects are relying less on credits to make financial sense.

"That’s definitely the trend," Beiler said.

The PUC also is planning to develop a procedure to deal with the sale of credits generated out of state in previous years and banked for future use. Credits can be banked for two years after the year in which they were produced.

A year for purposes of the credit program runs from June 1 to May 31. A credit represents one megawatt-hour of power. 

In comments to the PUC, utilities have expressed concern that overly restrictive rules on out-of-state credits would drive up prices and thus drive up electricity costs, especially as the state ratchets up requirements for using solar.

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Joel Berg

Joel Berg

Joel Berg is editor of the Central Penn Business Journal. Born in Philadelphia, raised in Northern Virginia and now living in York, he's a graduate of Franklin & Marshall College and the University of Maryland. Have a question or story idea? Email him at jberg@cpbj.com. Follow him on Twitter, @JoelBYorkPa.

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