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Pennsylvania Community Solar Legislative Brief

Everything you need to know about emerging community solar legislation in Pennsylvania on proposed eligibility rules, crediting mechanism and other important market details, created by Perch’s internal policy team. We help asset owners navigate the growth of community solar in markets across the country, and as new laws are considered and passed, Perch will provide updates and perspective on how it impacts your business.

5 min read • Last updated: Sep 24, 2024

Topics covered

Prospects for Community Solar in Pennsylvania
Bills Under Consideration
- SB 550
- SB 230 / HB 1476
Analysis & Next Steps

Prospects for Community Solar in Pennsylvania

After some failed attempts to pass a bill, the Pennsylvania General Assembly may have found renewed motivation to enable community solar in 2023. While a bill is yet to be passed, leadership in the Senate is considering community solar as a way to address Pennsylvanians’ higher energy costs from volatile natural gas markets.

Additionally, Pennsylvania ranks among the lowest in renewable generation capacity. Pennsylvania notably stands as an outlier amongst its neighbors with a renewable portfolio standard, called the Alternative Energy Portfolio Standard (AEPS) that has not been updated since its original adoption in 2004, with low targets it has long since passed.

Two Bills – SB 550 which sets community solar rules, and SB 230 which updates the AEPS to 30% renewable electricity standard by 2030 – are up for consideration. Pennsylvania’s leadership in both parties likely recognize the value in expanding renewable energy from federal dollars in the Inflation Reduction Act (IRA), not to mention a significant Penn State University study that found community solar projects could create more than 11,000 jobs statewide and generate $1.8 billion in economic activity.

While the proposed community solar program in SB 550 will open a new market and direct the Public Utility Commission to craft the program in a way that benefits LMI customers to align with the IRA, other provisions to fine tune the program – like mandated utility consolidated billing (UCB) – will likely not be incorporated into the first generation of Pennsylvania’s community solar program.

Bills Under Consideration

SB 550

An Act amending Title 66 (Public Utilities) of the Pennsylvania Consolidated Statutes, providing for community solar facilities.

Bill Sponsor(s)

Senate: Sen. Rosemary Brown (R)
- First term Senator elected in 2022, previously served 6 terms in House
- Cosponsors: Kearney (D), Laughlin (R), Cappelletti (D), Schwank (D), Santarsiero (D), Tartaglione (D), Regan (R), Kane (D), and Street (D)
House: Rep. Peter Schweyer (D)
- House representative since 2015
- Sponsoring House companion bill

Committee Assignments

Senate: Consumer Protection and Professional Licensure, standing committee
- Cosponsors of SB 550 Sen. Regan (R) and Sen. Santarsiero (D) are on this committee
House: N/A

Support and Opposition

This legislation has support from both Republicans and Democrats, community solar advocates like CCSA and SEIA, labor groups like the Pennsylvania Building & Construction Trades Council. Opposition has not been publicly identified but can likely be expected from community solar’s usual opponents.

Program Details

There is no program cap
It is at the discretion of electric distribution companies (EDCs) to offer consolidated billing. In that event, an EDC must agree to enter into a net crediting agreement and may charge no more than 1% of bill credit value
The Public Utility Commission (PUC) must develop program rules within 1 year of the bill passing with the ability to set interim rules for up to 2 years

Project Specifications & Subscription Details

5MW facility capacity
20MW facility capacity for brownfield and rooftop facilities
No subscriber may take up more than 50% of project capacity, except for master-metered multifamily and commercial buildings
Commercial customers may have multiple subscriptions but only one can be on consolidated billing
50% of the facility’s capacity must be available to customers with subscriptions 25KW or less
No upfront, signup costs, or credit checks are allowed

Incentive & Credit Mechanism

Projects are paid a “grid services payment” of $0.18/watt measured as nominal DC output paid annually for the first five years
- After the threshold date, the value shall be determined by the commission and set at a rate and term that will ensure the reasonable continuation of the community solar market
First payment made within 60 days with proof that project is at least 75% subscribed
Bill credits are valued at the price to compare (PTC) and can offset any part of the bill other than volumetric or demand-based charges.
Alternative energy credits produced by a community solar facility that receives a grid services payment shall be given to the electric distribution company for the first 25 years of production

LMI Provisions

The PUC, in collaboration with the Office of Consumer Advocate, EDCs, community solar organizations and low-income stakeholders, may adopt mechanisms to ensure participation by low-income customers
The PUC shall submit a report within 5 years to the General Assembly detailing the participation in community solar programs by each customer class and economic group, including the participation by low-income customers

SB 230 / HB 1476

An Act amending the Alternative Energy Portfolio Standards Act.

This bill would provide definitions, alternative energy portfolio standards, solar photovoltaic technology requirements, community solar program standards, and for contracts for solar photovoltaic technologies by state agencies. The AEPS would require a minimum of 30% renewable electricity by 2030 with carveouts for rooftop solar (4%), community solar (2%), and non-rooftop or noncommunity solar (8%) by that date.

Bill Sponsor(s)

Senate: Sen. Santarsiero
- Cosponsors: Santarsiero, Comitta, Haywood, Miller, Hughes, Fontana, Kearney, Costa, Schwank, Collett, Capalletti, L. Williams, Saval and Dillon
House: Rep. Otten
- Cosponsors: Madden, Schlossberg, Khan, Vitali, Sanchez, Hill-Evans, Guenst, Warren, Fleming, Brennan, Krajewski, Schweyer, Innamorato, Isaacson, N. Nelson, Briggs, Shusterman, Daley, Freeman, Green, Frankel, Salisbury, and D. Williams

Committee Assignments

Senate: Consumer Protection & Professional Licensure
- Sponsor Sen. Santarsiero and cosponsors Sen. Dillon (D) and Sen. Collett (D) are on this committee
House: Environmental Resources & Energy
- Sponsor Rep. Otten and cosponsors Rep. Salisbury (D) and Rep. Isaacson (D) are on this committee

Analysis & Next Steps

It is worth remembering that in 2021 Pennsylvania was the third highest consumer of natural gas, behind only Texas and California, and the second largest producer of natural gas behind Texas. With an economy so tied to fossil fuel production, it is no wonder that opposition to the expansion of renewable energy from industry and utilities would exist.

Reliance on gas, however, has proven to be a double-edged sword: with volatile gas price spikes, legislators have signaled they are more eager than previous years to use community solar to soften their constituencies' energy costs. Legislators are particularly attuned to their constituencies in this regard as they have highlighted the expectation that the IRA must positively impact project financing insofar as it relieves Pennsylvania ratepayers from program costs to some degree.

A major shift from labor, however, has greatly improved the outlook of SB 550. Previously opposed to the bill, the labor coalition in Pennsylvania has become a strong and vocal supporter of community solar enablement after the inclusion of prevailing wage provisions. This inclusion dovetails with the IRA’s labor provisions as they increase the tax credit bonus, and is bolstered by the positive economic impact identified in the Penn State University study.

Any successful bill in the Commonwealth’s Senate will need the support of Senate leadership, specifically President Pro Tempore Kim Ward who is an ex-officio voting member of all standing committees, including Consumer Protection & Professional Licensure. Additionally, public hearings for bills in the Senate are at the discretion of the committee chair and vice chair in agreement, making it difficult for a bill to get a hearing without support from leadership. When attempting to garner support for bills, stakeholders should focus their efforts on committee chairs and leadership posts for the greatest impact.

SB 550 has bipartisan support with Republican sponsor Sen. Brown and two other Republicans as cosponsors, with considerable Democratic support. The Senate is split with 28 Republicans and 22 Democrats underscoring the need for leadership’s support to have this bill successful transit the legislature to Governor Shapiro’s desk.

SB 230 is likely a high priority for Governor Shapiro given the 30% by 2030 was a priority during his campaign. However, the senate bill lacks any Republican cosponsors – who may wish to deny the Governor the ability to follow through on his campaign promises.