Community solar, sometimes referred to as “shared solar” and discussed in more detail here, allows households to receive the benefits of solar energy when they are not able to install it on their own. Roughly half of residences in the U.S. can’t host a solar installation because the occupants don’t own the property, the roof is too old, too shady, or faces the wrong way for optimal sun exposure. Community solar eliminates these issues.
Instead of buying and installing solar panels on a home or property, a person can subscribe to a piece of a large local solar project nearby, often along with a few dozen to a few hundred other people who live in the area. A portion of the electricity generated by these projects gets credited directly to a subscriber’s utility bill, the subscriber gets a predictable price on electricity usually for 20 years, and it typically requires no upfront costs.
In recent years, numerous states have enacted policies to encourage community solar projects. Currently, 19 states plus the District of Columbia have enacted community solar policies, and more than 42 states have some kind of community solar program. As of 2018, 1,387 MW of community solar has been installed in the U.S. (a single MW of solar powers 164 homes). In the next several years, as much as 3 GW of community solar projects could be added to the grid, which would be enough to power almost half a million homes.
Pennsylvania’s Community Solar Legislation
This year, Pennsylvania legislators have introduced a bill (HB 531) to allow for community solar projects in the state. The bill amends the Alternative Energy Portfolio Standard (AEPS) to include community solar facilities and allows subscribers of such projects to receive a credit on their monthly bills for the clean energy produced by these facilities. The legislation also calls for the adoption of regulations to ensure that moderate- and low-income customers are able to participate in these projects. According to Vote Solar, if the legislation is enacted, it could lead to a 26% increase in solar jobs in the state, $706.4 million in local economic benefits, and $361.6 million in earnings for Pennsylvanians employed by community solar companies.
Pennsylvania’s Solar Policy Is in Need of Reform
Although enacting HB 531 would provide a boost for community solar, Pennsylvania’s renewable energy policies are in need of more fundamental reform. In recent years, renewable energy has grown rapidly in the United States due to falling costs, technological improvements, and targeted incentives like state Renewable Portfolio Standards. These changing economics have translated into a massive increase in renewable generation. In 2008, less than 1.5 percent of the electricity generated in the United States came from wind and solar power. Since then, wind and solar generation have increased by 550 percent, to almost 9 percent of electric generation. Overall, renewables (including wind, solar and hydro) now account for around 16 percent of electricity generation in the U.S. In 2018, eighteen states generated 10 percent or more of their electricity from the sun and wind, and eleven states generated at least 20 percent.
However, this growth in renewables has largely bypassed Pennsylvania, which gets less than five percent of its electricity from renewable sources (and less than 0.5 percent from solar). A primary reason for this is the state’s AEPS, which currently has only an eight percent goal for solar, wind, low-impact hydropower, geothermal, and other “Tier I” resources. Within this eight percent, there is a “carve-out” of one-half of one percent (0.5 percent) for solar photovoltaic (PV) electricity by 2021. Because this target is so low, solar credits have long been “oversupplied” in Pennsylvania, especially because until 2017, both in-state and out-of-state solar projects could qualify for Pennsylvania solar credits. This depressed credit prices and drove solar investment away from the Commonwealth to other states. The passage of Act 40 in 2017 improved matters by restricting credit allocation to Pennsylvania projects. Still, the overall 0.5 percent goal will be reached quickly, and will plateau in 2021.
If HB 531 is enacted, community solar projects would compete with other solar projects for a share of this 0.5 percent, further oversupplying the number of projects competing for credits. Consequently, without a significant increase in AEPS, community solar will not significantly advance clean energy in Pennsylvania.
Pennsylvania Has the Potential to Significantly Scale Up Solar While Providing Well-Paying Jobs
According to the state’s Department of Environmental Protection, Pennsylvania has the potential to economically increase grid-scale (i.e. large-scale) solar 3,687 percent and distributed-generation (i.e. rooftop) solar 255 percent by 2050. In its recently completed Pennsylvania’s Solar Future project, the DEP explored a narrower question: whether Pennsylvania has sufficient technical and economic solar potential to meet 10 percent of in-state electricity demand with in-state solar generation by 2030. The report found that Pennsylvania does have such potential and recommended fifteen strategies for achieving it, including increasing the solar target in the AEPS to between four and eight percent by 2030. The project also found that increasing solar to 10 percent by 2030 would create between 60,000-100,000 or more jobs. From installers to system designers, these solar jobs have median wages of $20–$38 per hour, and will be available in rural, urban, and suburban areas, and could result in a net benefit of over $1.6 billion annually from 2018 to 2030. Raising the renewables targets not only increases the number of installation jobs, but also significantly encourages investment that ripples throughout the supply chain including manufacturing, distribution, engineering, real estate, legal and financial services.
By scaling up renewable energy through a strengthened AEPS, Pennsylvania could create tens of thousands of new good-paying jobs. Since 2015, Environmental Entrepreneurs (E2) and the Keystone Energy Efficiency Alliance (KEEA) have released annual reports enumerating the Commonwealth’s jobs in energy efficiency, renewable energy, battery storage, and clean vehicles. The 2018 Clean Jobs Pennsylvania report counted more than 8,500 renewable energy jobs. But because Pennsylvania’s renewable energy goals lag behind those of neighboring states, the state’s job-creation rates also lag. For example, New Jersey and New York, which have both set goals to obtain 50 percent of their electricity from renewable sources, have 1,321 and 918 clean energy jobs per million residents, respectively. Pennsylvania has only 681 jobs per million residents.
The AEPS Must Be Strengthened
The first step that Pennsylvania must take to realize its solar potential is to strengthen the AEPS. Pennsylvania legislators could do so now by passing SB 600 and HB 1195, which, if enacted, would modernize the goals of the AEPS by increasing Tier I resources from 8% to 30% by 2030 with a goal of 10% in-state solar generation. The bills also call for the state Public Utility Commission to conduct a renewable energy storage study and set a goal for energy storage in the state based on the study. To provide a reliable market signal for utility-scale solar, the bills also include provisions that require utilities to enter into long-term contracts for renewable energy procurement. Because the long-term contracts provide a more reliable signal to investors than renewable energy credits for grid-scale solar, these provisions are an important part of the bills. (The credits are most valuable for smaller-scale distributed generation).
An AEPS amendment introduced earlier this year, House Bill 11, would have added nuclear power to the AEPS. HB 11 failed to attract support, and since the owner of the Three Mile Island nuclear plant announced in May that the plant would shut down in September, attention in Harrisburg has increasingly focused on carbon limits and pricing. Indeed, just this week Senate Minority Leader Jay Costa proposed a “cap-and-invest” bill that Pennsylvania could implement by joining the Regional Greenhouse Gas Initiative (RGGI).
Passing this bill would be a huge step forward in reducing carbon pollution in the Commonwealth’s power sector. But because of the regional nature of RGGI, carbon limits wouldn’t automatically translate into more renewable energy, with all its attendant economic development benefits, within Pennsylvania’s borders. An increase in Tier I of the AEPS would virtually guarantee renewables growth. As the DEP’s latest Climate Action Plan makes clear, Pennsylvania needs a multi-pronged approach to addressing climate change that includes carbon limits, an increase in Tier I of the AEPS, higher energy efficiency goals, and clean transportation goals.