The complete list of Pennsylvania solar incentives and tax credits for 2023
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Electricity costs are higher than average in Pennsylvania and there are several great incentives for home solar in the Keystone State. No wonder there are nearly 45,000 solar installations in Pennsylvania, and nearly 200 solar installers and developers working here, according to the Solar Energy Industries Association (SEIA).
Why are Pennsylvanians so keen on solar? For a start, there’s a decent market here for solar renewable energy certificates (SRECs), meaning homeowners can earn several hundred dollars a year from their solar energy systems. Pennsylvania also offers generous net metering benefits and homeowners can access a variety of solar rebates, especially if they live in Philadelphia, which is very pro-solar.
Pennsylvania Solar Incentives
| Incentive | Description |
|---|---|
| Solar rebates in Pennsylvania | Until the end of 2024, Philly residents can access rebates for installing solar; First Energy also offers a $500 rebate for solar water heating installations. |
| SRECs / AECs in Pennsylvania | Pennsylvania allows homeowners to sell renewable energy credits to utilities, netting around $200 for most residential arrays in the state |
| Discount solar for Philly residents | Solarize Philly, Solar Savings Grants, and an EZ building permitting program all help save Philadelphia money when installing home solar |
| Net metering in Pennsylvania | Pennsylvania mandates net metering for all utilities, with full retail rate credits for excess energy |
Solar rebates in Pennsylvania
The City of Philadelphia enacted a Solar Rebate in 2019.
Under this program, homeowners can access rebates of $0.2/W for residential solar installations and $0.10/W for commercial installations. The Solar Panel Incentive Program is set to expire on December 31, 2024, though.
For homeowners installing a 5 kW array, these incentives amount to $1,000 off the cost of going solar.
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Solar water heater rebate
First Energy utility offers Pennsylvania customers a $500 rebate on eligible solar water heaters. These must be Energy Star® certified. There are three ways to receive the rebate:
- Purchase through select retailers offering the rebate at checkout (currently Lowe’s and Home Depot)
- Apply online for the rebate after purchase
- Download, fill out, and mail the rebate application.
You can see all eligibility requirements on the application. Rebates are available for qualified products and services purchased between June 1, 2021, and May 31, 2026. You must submit your application within 90 days of buying the solar water heating system.
SRECs / AECs in Pennsylvania
Pennsylvania enacted its Alternative Energy Portfolio Standards (AEPS) in 2004. This created an Alternative Energy Credit (AEC) where owners of solar installations can earn AECs for energy produced each year. These are akin to solar renewable energy certificates (SRECs) in other states.
The average price of a Pennsylvania SREC in 2021 and early 2022 was $37-$45, and the average solar array generates 3-5 SRECs annually in Philadelphia, netting homeowners around $185-$225 annually. To monetize your SRECs, you must register with the Pennsylvania AEPS and GATS systems. Your solar installer can help with registration.
Homeowners can also donate their SRECs to support solar installations in low- and moderate-income communities across Philadelphia (sign up here). Pennsylvanians can also sell their SRECs in Ohio, though the price is much lower.
Various modifications to the AEPS have been introduced since 2004. For instance, the AEPS was modified by Act 40 of 2017 to only allow Solar AECs to be granted to owners of solar PV systems physically connected to a Pennsylvania EDC’s transmission system within the Pennsylvania EDC’s service territory. This was a big deal for SRECs in Pennsylvania as prior to Act 40, Pennsylvania allowed utilities to use credits generated out of state to meet the state’s AEPS requirements.
Discount solar for Philly residents
Solarize Philly is a citywide group buying program that helps make going solar at home more affordable for Philadelphians. The Philadelphia Energy Authority (PEA) negotiated discounted pricing with pre-approved installation partners and offers additional customer protections for those installing solar through the program.
The PEA also offers a Solar Savings Grant Program, providing grants for low- and moderate-income households to cover a portion of the cost of installing solar at home. Philly Green Capital (PGCC) manages the SREC Revolving Fund that supports these grants to enable low-cost solar installations.
Philadelphia also offers some homeowners combined “EZ” building and electrical permits to streamline the process of installing solar and reduce fees.
Net metering in Pennsylvania
Net metering is legal in Pennsylvania and utilities are required by law to offer one-for-one credits for excess energy exported to the grid by solar customers. Utilities are not allowed to charge net metering customers fees that they would not charge a non-net metered customer (unless otherwise approved by the Public Service Commission).
PECO offers the most generous rates for net metering (as of August 2022). Duquesne Light offers full retail rate compensation to residential solar customers. At the annual tune-up date, the company will send payment to customers for any outstanding unused credits at the current price to compare, which is the full retail rate minus distribution charges.
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Final thoughts on state solar incentives in Pennsylvania
Is it always sunny in Philadelphia? Not quite. But that hasn’t stopped the city taking the lead in terms of pro-solar policies. Residents here can access a whole heap of financial incentives for installing home solar panels. Elsewhere in Pennsylvania, rooftop solar is still a good bet, given high costs of electricity and the federal tax credit.
Pennsylvanians can also benefit from excellent net metering rules, helping to offset utility bill costs. The sale of SRECs (known as AECs in PA) can also bring in annual income. The downsides of solar in Pennsylvania? There’s no exemption for sales tax or property taxes when going solar at home.