A Look At The Pennsylvania Solar Market

A Look At The Pennsylvania Solar Market

What does the Pennsylvania solar market look like? Ohio's neighbor to the east gets the same amount of sun with the same amount of Federal incentives. What has been the history of the solar industry been and where is the state going?

First some facts on the Pennsylvania solar industry:

• There are 547 solar companies employing 2,498 people including 284 installers.
• In 2015 13 MW of solar capacity was installed. Cumulatively 265 MW of solar energy has been installed ranking Pennsylvania 15th in the nation.
• Over the next five years Pennsylvania is expected to install 325 MW of capacity, more than double the amount installed over the previous five years.

The following chart shows the industry capacity through 2015:  

Here, we can see tremendous growth in 2010 through 2012 before the bottom fell out of the market in 2013 before rallying with an incredible 65 MW in 2014. Unfortunately for solar, the market collapsed last year where only 13 MW was installed.

The Pennsylvania Sunshine Solar Rebate Program was funded through state bonds and was a $180 million program. It was a hugely popular program and helped Pennsylvania scale up their solar industry in a quick time frame. It was put in place in 2009 and was designed to drive growth for five years. However, the money ran out after three years and the solar industry took a hit along with the dissolution of the program. With the end of the Sunshine Solar Rebate, other programs in neighboring states became more attractive, especially since solar installers who migrated elsewhere could still earn Pennsylvania SRECs for selling into the market.

When the state's Sunshine Program was in effect, it created a solar boom as the number of companies increased from 50 to more than 500. SREC prices were trading for hundreds of dollars and the number of installations soared. But after the Sunshine Program ended, the market for SRECs plummeted from over $400 in 2010 to around $15 today.

Experts say that the main cause of the solar industry struggles in Pennsylvania can be tied directly to a loophole in the state's RPS standard where utilities can import electricity produced by solar from the dozen states that surround Pennsylvania to satisfy their requirements of 0.5% of electricity achieved from solar by 2021. Closing this loophole in state policy would reinvigorate the marketplace and provide a good opportunity for more installations to take place. Failure to close the loophole will result in more of the same, a fallow market for solar installers and a dearth of benefits for Pennsylvania homeowners.

The most drastic change in Pennsylvania policy is the finding by the Public Utility Commission that net metering is not in the public interest. The PUC has "an absurd definition" of what constitutes net metering because it would mean that no one could participate with the way their decision was framed. This would be a devastating blow for solar in the state. The estimate of double the installations for the next five years over the previous five years is currently in serious jeopardy. The sheer size of the state and the proximity to New Jersey, New York, and Maryland would mitigate any significant drop off for solar installation companies, but the net metering ruling puts a serious damper on solar going forward. As of today, net metering has not been rescinded. 

Currently, the main incentives available to Pennsylvania homeowners are the 30% Federal Tax Credit and state-earned SRECs. There are also credits and special loan guarantees for rural producers and small farms. Barring a renewal of the Sunshine Solar Rebate Program, a change in policy to the RPS by the legislature, or additional state incentive programs, Pennsylvania's solar landscape will continue to resemble Ohio's for the foreseeable future.

If we had to summarize Pennsylvania's solar market it would have to include the dissipation of the solar rebate programs, a weak RPS, and the lowly state of the SREC market. For those reasons, the solar industry has struggled to find its footing after a meteoric start to the decade. Still, there is always the 30% Federal Tax Credit and government programs through the USDA to consider solar a viable option. The payback rate is very similar to that of Ohio with similar amounts of sunshine. On the eastern side of the state there are plenty of larger companies in competition driving down the price of installation.