Questions over standards as solar capacity outpaces utility demand

More than a decade ago, Pennsylvania lawmakers set out requirements for electric utilities to purchase increasing amounts of electricity from alternative and renewable energy sources for 12 years. 

As part of the so-called Alternative Energy Portfolio Standards, lawmakers mandated that one-half percent of all utility power purchased in Pennsylvania should come from solar generation by 2021. 

Last month, with more than 11,500 solar-powered generators registered in the state, utilities officially had all the capacity needed to meet that goal — five years early. 

That’s a problem, in the view of solar advocates, who have strongly criticized the one-half percent mandate as weak and would like to see changes to strengthen the program encouraging new solar power.

“You can’t wait until 2021 — that’s absurd,” said Ron Celentano, president of the Pennsylvania Solar Energy Industries Association. “What’s the real goal here? The goal is to be introducing and commercializing solar in the state, and this is now an impediment for us to do it.”

PG graphic: Open borders brings in solar generations built in other states
(Click image for larger version)

Mr. Celentano is lamenting the challenges plaguing the state’s market for solar energy credits. Simply put, any alternative or renewable energy system can be put into the registry and earn credits for each megawatt-hour of power it produces. 

Because the systems generate power that is absorbed into the larger grid, electric utilities buy credits from those systems to prove to the state they’re meeting the renewable energy requirements.

As an example, Duquesne Light Co. sold more than 14 million megawatt-hours of electricity to its customers during the fiscal year ended May 31, 2014, according to its annual report. The solar requirement for all utilities that year was 0.084 percent of power sold, so the utility bought 11,932 solar credits — corresponding to 11,932 megawatts — to satisfy that percentage.

But Pennsylvania utilities are allowed to buy credits from projects generating power in other states within the regional power grid operator’s 13-state territory — as far south as North Carolina, as far east as Delaware, as far west as Illinois.

As of last week, 29 percent of the solar generators in Pennsylvania’s registry accounting for more than two-thirds of the solar power generated were in other states. 

“Pennsylvanians are essentially financing other states to develop solar when we allow out-of-state projects to register their [solar credits] in Pennsylvania,” said Maureen Mulligan, a solar industry consultant. “Pennsylvania doesn’t gain the environmental benefits from those solar projects.” 

The slew of credits also has created oversupply, pushing prices to all-time lows. Solar credits now sit at around $15, after reaching about $300 in 2009. They are lower than the neighboring New Jersey, whose state program shows the going price of a solar credit at around $267. 

Mr. Celentano, who follows the state’s registry closely and has criticized the credit system, said he has been watching the solar capacity grow over the years but was still surprised when he saw the numbers: the some 700 megawatts of registered capacity exceeded the 631 megawatts of solar capacity that — according to the program’s own estimates — would be needed in 2021 to meet the half-percent mandate. 

Of course, that doesn’t mean electric utilities are now buying all the power available from solar generators in the registry. Each year, utilities purchase precisely enough credits — no more, no less — to comply with the requirements. So at the end of May, utilities will have to show they’ve purchased one-quarter of a percent of their power from solar generators. 

More than two dozen other states have similar standards for alternative energy purchases. 

Daniel Moore:, 412-263-2743 and Twitter @PGdanielmoore.

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