Peco Energy Co.’s plan to purchase solar renewable energy credits (SRECs) to help meet its alternative energy goals has just been approved by the Pennsylvania Public Utility Commission. The utility has proposed an SREC purchasing plan to last for the next ten years, and its approval is another excellent step forward in Pennsylvania’s solar market. Peco says it will purchase 80,000 SRECs within the decade, a potential investment of more than $24,000,000.
Governor Rendell put the state’s first solar rebate program into action earlier this year, fleshing out the solar incentive policy which had previously only included tax credits. Now, the net cost of a solar installation in Pennsylvania can be more than 60% below gross (for residential solar installations, the rebate provides up to $22,500 on top of the 15% state tax credit and the 30% federal tax credit). Potential income from the sale of SRECs can now help residential and commercial solar installations pay for themselves even more quickly.
Rendell was also behind the state’s adoption of a Renewable Portfolio Standard (RPS) back in 2004. The RPS calls for 18% of the state’s energy to come from renewable sources by 2020. Allowing Peco to purchase SRECs–as opposed to other alternative energy credits or certificates–means the market for SRECs will both firm up and, hopefully, skyrocket within the state, as other buyers will almost certainly be approved if the state approved this one. In New Jersey, basing a solar incentive program largely around the trading of SRECs has shown great early success: each megawatt-hour of electricity produced by a solar installation is bundled and sold on the New Jersey market as a single SREC, and the proceeds go back to the owner. Each SREC has been selling for an average of over $400 (and often more like $600, though the lows have dipped under $200 per certificate).
It will be interesting to see how Pennsylvania’s leap into the SREC market will affect nearby Jersey. Peco has been approved to purchase the SRECs from anywhere within the regional grid (PJM Interconnection LLC), which services all of part of 13 states–of which New Jersey is one.