Earlier in July the Pennsylvania Department of Environmental Protection (DEP) issued a draft plan named “Finding Pennsylvania’s Solar Future”. It unveils 15 strategies to increase in-state solar power to 10 percent of electric generation by 2030. This level was selected because the DEP considered it to be achievable while also challenging the business-as-usual model for Pennsylvania. Importantly, the regional organization responsible for maintaining a reliable power grid, PJM Interconnection LLC, was consulted and judged that the existing network is capable of supporting up to 30% wind and solar energy today.
The plan is a result of a modeling process that reflects the knowledge and perspectives of over 500 expert stakeholders across the state, acquired through public meetings and working group discussions. This group was deliberately diverse, including industry experts, the public, utility representatives, and academia. We are proud of the fact that both Mark and Dara Bortman have been following this closely and have participated in the development of the plan as industry experts.
According to the DEP analysis, the overall target of 10% will have a net positive impact on the state economy:
- By one measure it would add roughly 30,000 jobs at median wages of between $20 and $38 per hour.
- Following any of the strategies could also result in approximately 11 gigawatts of solar energy generating capacity. Currently the state has less that 400 megawatts of total capacity. The business-as-usual trajectory would likely result in less than 1.5 gigawatts.
Key Strategies Needing Support
The various strategies that were analyzed affect every level of solar energy implementation, from rooftop residential solar (distributed) to full utility scale solar. Some strategies are termed “cross-cutting” for having a beneficial impact on all levels.
Although all paths significantly grow the utility scale solar capacity, the financial impact on every homeowner is small by comparison. The best path for families to realize the biggest electricity cost savings is to put solar on their home. For homes and families that are not well suited for solar energy, the plan includes strategies that give them options through utility purchases and community solar programs.
In order to help expand homeowner access to savings, there are two objectives we use to view the different strategies and make recommendations for people to support them.
- Policies that make distributed solar more affordable.
- Policies that give more families access to financing a solar energy system.
Making Solar More Affordable
As any industry increases sales, all customers typically benefit when costs lower. Still, for added cost reduction the DEP solar plan suggests evaluating Pennsylvania tax policy and considering exemptions that encourage the development of solar PV systems. Unlike many other states, solar systems are still subject to sales and property taxes, with only limited exceptions. Changes to bring the state more in line with others, including New Jersey, could put $1,000 or more back into the homeowner’s pocket.
Making Solar Financing Easier
In the past we shared information about how solar energy is not just for the rich. The primary reason more middle income and lower income homes adopt solar is directly tied to policies and programs that make that possible. In Pennsylvania, there is considerable room for improvement.
The DEP plan includes some strategies that are critical to increasing access to all for solar:
➠ Access to Loans
By far the fastest way to start saving and to maximize lifetime savings is by owning the solar energy system. The most useful strategies to increase ownership will make more loans available to more people, some of whom may find it difficult to qualify today.
- Expand solar lending products
- Provide loan guarantees and loss reserves, giving incentive to lenders to lower interest rates.
Increasing loan competition and reducing lender risk will grow loan portfolios and open up opportunities for more people. In the past, federal solar loan guarantees have stimulated much more solar economic activity for every dollar provided. Programs are designed to incorporate private funds with public money. In Pennsylvania, the Commonwealth Financing Authority maintains a Solar Energy Program (SEP) that can be modified and expanded.
To be most effective, the DEP plan also suggests what it calls an Energy Investment Partnership (EIP), which is commonly known as a Green Bank in other states. An EIP program would require funding from scratch compared to expanding the existing SEP. However, other Green Banks are very successful in bringing together large investors over longer periods of time.
➠ Making Payments Easier
The most effective strategy offered for homeowners is the Property Assessed Clean Energy program (PACE) which has been implement in many locations across the U.S. for both commercial and residential property owners. PACE is a mechanism property owners can use to finance a solar energy project with a private lender and then pay back the loan through their property tax bill.
A big advantage for PACE is that the loan is secured via the property and hence is stays with it after any home sale. Not only will this potentially simplify repayment, but it typically helps with loan access, opening up more loan offers and possibly resulting in lower interest rates.
The DEP studied the history of installations since the year 2000. A lack of stability is another key finding that the department aims to improve upon. As this chart shows, there have been sharp increases and decreases in capacity additions in the market. In order to build a thriving and growing industry, a stable workforce is required. Sudden and severe drops are difficult to manage, and often force companies to fold.
REMINDER: Following normal protocol, the DEP is encouraging public input in order to craft a better policy. We strongly encourage you to visit our page Act to Impact Pennsylvania’s Solar Future which highlights information you might use as a guide to help you make official comments.