Pennsylvania Solar Incentives and Rebates Guide
Key Takeaways
- Pennsylvania offers a Solar Alternative Energy Credit Program as an incentive for low-income households so that solar can be both accessed and affordable; this program is similar to SRECs.
- Federal incentives include the Federal Solar Tax Credit that offers residents of Pennsylvania a 30% tax credit through the year 2032 with varying tax credit percentages in the following years.
- Local programs include a city-specific solar incentive rebate program for the residents of Philadelphia.
- Since 2005, net metering has been an option for Pennsylvania residents who obtain energy from many different utility providers.
Although solar energy is a great way to help the environment and your overall bank account, upfront costs can deter users from making the switch. The initial solar installation fees and the time it takes to see savings on energy bills may cause users to continue with their electric services, believing home solar systems to be out of their price range. For homeowners, there may be a fear of taking out a loan and selling the home before the loan has been fully paid off.
Pennsylvania, however, provides a variety of financial incentives for residents looking to take advantage of solar energy through federal, state, and local programs. In fact, the city of Philadelphia just completed its Adams Solar Project, which means that now, close to 30% of the city’s energy portfolio is considered clean energy.
For rural areas, specifically agricultural-producing farmers, the Pennsylvania government has resources that explore how much farmers will save if they start to implement solar energy into their daily lives. For example, farmers can review resource guides that walk them through how to evaluate if switching to a solar panel system is right for them and what may be some short- and long-term benefits.
Let’s take a closer look at the Pennsylvania-specific programs available.
Pennsylvania Solar Incentives
Business Incentives
At the state level, Pennsylvania offers a rebate program through PPL Electric Utilities. Applicable sectors include agriculture, commercial, and industrial, with a maximum incentive of up to $500,000. According to the Database of State Incentives for Renewable and Efficiency (DSIRE), there are some equipment requirements to be eligible for this incentive. The incentive amount is $0.03/kWh of energy reduction.
Solar Alternative Energy Credit Program
Pennsylvania’s Solar Alternative Energy Credit Program (SAEC) is similar to Solar Renewable Energy Certificates (SRECs). The SAEC program applies to various sectors, including residential, low-income, multi-family, commercial, and industrial. This program’s incentive amount varies based on the market conditions. While there are no system size limitations, systems generally require a utility-grade performance meter with some exceptions.
Solar Energy Loan Program
The state of Pennsylvania also offers a loan program (the Solar Energy Loan Program or SEP) for commercial, industrial, local government, nonprofit, schools, and agricultural sectors to help with any solar equipment and installation costs. The goal of the loan is to promote both research and the development of solar energy and for this energy source to become more accessible and affordable to users. While this loan may not be the right fit for residential homeowners, it primarily aims to connect the local communities to solar energy.
Pennsylvania Property Assessed Clean Energy (PACE) Program
The state of Pennsylvania participates in an incentive program called PACE that specifically caters to residential homeowners. Part of the reason homeowners may be hesitant to invest in solar panels is the worry that they may be unable to pay off the loan in full before selling their house. Through this program, however, homeowners don’t have to worry about an outstanding loan if they decide to move before payment has been made in full. The PACE program attaches the loan to the property instead of the owner. This means that the new homeowner will take over the loan. In addition, Pennsylvania created C-PACE legislation in 2018, allowing local governments to create PACE programs for commercial entities to use.
Homeowners Energy Efficiency Loan Program (HEELP)
Another great incentive program for homeowners looking to improve their energy systems, the Homeowners Energy Efficiency Loan Program (HEELP) offers Pennsylvania residents loans between $1,000 and $10,000 at a fixed interest rate of 1%. So often, homeowners are hesitant about home-improvement projects because of the high interest rates on loans. But with a fixed interest rate of 1%, homeowners can finally install solar panels as part of their energy-focused improvements. The PA Housing Finance Agency even offers a search tool to help you find HEELP-approved solar industry contractors within your area. And with the average cost of a photovoltaic system in Pennsylvania being around $27,710 this loan program can help when it comes to going solar.
Local Incentives
The city of Philadelphia has a Solar Rebate Program for all of its residents. The incentive amount caps off at $100,000 and, according to the program’s eligibility section, includes the following: for residential properties, $0.20 in the form of a rebate per watt of solar installed; for commercial properties, $0.10 in the form of a rebate per watt of solar installed. Although the Philadelphia Solar Rebate Program is currently closed due to COVID-budget restrictions, applications remain open, and individuals are encouraged to apply. Once you apply, you will be put on a waiting list.
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Federal Incentives
Federal Solar Tax Credit
The United States continues to encourage all its residents to participate in solar and reduce their carbon footprint. The Inflation Reduction Act signed into effect by the federal government in 2022 extended the Federal Solar Tax Credits (ITC) for solar installations. The act includes a 30% tax credit for solar systems installed from 2022 through the end of 2032.
At the end of 2032, installations will receive up to 26% of a tax credit; for 2034, the federal tax credit amount will be up to 22%. One of the many benefits of the Residential Renewable Energy Tax Credit program is that there is no cap to the incentive provided. This is perfect for solar installation projects that might otherwise see caps if they were to participate in local or state-provided programs.
Federal Solar Investment Tax Credit
| Through 2032 | 30% |
|---|---|
| 2033 | 26% |
| 2034 | 22% |
Pennsylvania’s Net Metering Program
Net metering is the process of receiving credit toward your electric bill for the energy your solar system already generates during the day that you don’t use. In other words, whenever your solar panels produce more energy than you consume (usually during sunny hours), you will not be charged for any electricity consumption during that time period. Then, when you need to use electricity at night, you will be charged at your standard rate.
The excess energy that you produced during the day, however, will count towards a credit on your electricity account, reducing your overall utility costs. Net metering may be one of the best options for Pennsylvania residents who don’t have local or business-specific incentives.
According to DSIRE, the state of Pennsylvania began its regulatory policy in 2005 with the following utility companies as participants: Citizens Electric Company, Duquesne Light Company, Metropolitan Edison Company, Pennsylvania Electric Company, PPL Electric Utilities Corp, Pennsylvania Power Company, PECO Energy Company (formerly Philadelphia Electric Company), Pike County Light & Power Company, UGI Utilities, Inc, Wellsboro Electric Company, and West Penn Power Company. Be sure to reach out to your local utility provider, especially if yours is listed above, and inquire about net metering.
Solar Renewable Energy Certificates (SRECs)
Solar Renewable Energy Certificates (SRECs), sometimes referred to as solar renewable energy credits, are another great incentive for people to invest in solar panels for their homes or businesses. These certificates work by allowing solar system owners to sell back certificates for cash to either their utility provider or certificate broker. Each certificate represents an amount of energy generated by the holder’s solar system panel (measured in megawatts per hour).
This certificate exchange program helps Pennsylvania homeowners with their overall electricity bills. If you want to take advantage of the SREC program, visit the Pennsylvania Public Utilities Commission (PUC) website for more information.
Impact on the Payback Period of Solar
People looking to make the switch may wonder how soon they may see energy savings after they pay the solar panels’ high installation costs. The payback period for any investment can be explained as the time it takes for the savings generated by an investment to match its cost.
Although the average payback period for solar systems is about 10 years, the incentives mentioned above can help reduce this payback period so you can realize your savings quicker. Available incentives you are eligible for vary in your area, along with the cost of your solar power system. These two factors and your average electricity rates all play a role in determining your payback period for solar power systems. You can calculate your potential payback period by entering some basic information, starting with your zip code.
| Typical 6kW solar system installation cost | $17,700 |
|---|---|
| 30% Federal Tax Credit | $5,310 |
| Total Cost After Incentives Not including local incentives, which vary | $12,390 |
| Assumed Electricity Produced by a 6kW Solar System in Pennsylvania | 8,584 kWh |
| Annual Electricity Cost Reduced or Offset Assuming 100% utilization by the home | $1,461 |
| Sample Payback Period | 8.5 years |
Sources: https://www.nrel.gov/docs/fy22osti/83586.pdf, https://globalsolaratlas.info/map (Philadelphia); https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
Conclusion
Although the state of Pennsylvania varies widely, residents from cities to farms can take advantage of solar incentives. From net metering to the PACE program, Pennsylvania offers residents a wide range of financial saving opportunities for their solar system installations. Gone are the days when residents may see going solar as an unattainable dream—with local, state, and federal incentives, it’s easier and more cost-effective than ever before.