Costs to Pennsylvania Homeowners Misleading

The media and airwaves have been full of discussion over the Pennsylvania SREC market, as the state legislature considers amending the current RPS law that created the market a few years ago. Perhaps no single group has a stronger interest in the outcome of this proposed legislation and the overall health of the SREC market than Pennsylvania homeowners (whether or not they have panels on their roofs). Unfortunately, opponents of the program’s existence and it’s improvement have made several false claims about the costs that appear on homeowners’ utility bills. The truth is that in combination with a patchwork of other incentives, the SREC market has placed Pennsylvania in the top 10 US states for residential solar installations, and strengthening the RPS would have a very minimal impact on ratepayers.

Anyone that has read a few articles or headlines on the state’s SREC market has at least a general idea of how it has become oversupplied and prices for SRECs have dropped significantly. In other words, the demand for solar and the growth of the industry to meet that demand far outpaced that anticipated levels laid out in the RPS- the program succeeded. State Representative Chris Ross (R-Chester) has called on the state legislature to consider a bill that would strengthen the market as a response to the strong interest in installing solar. It’s not necessarily a faulty point to take note of the other rebates and incentives that contributed to the glut in installations, but what is perplexing to me is how many critics have opposed further (or any) additions of solar electricity to the grid, claiming such measures would drive utility bills through the roof.

First of all, the cost of solar has declined dramatically, in part due to innovative community programs and other targeted incentives, and also due to efficiencies in manufacturing and supply chains. Second, installing solar is a hedge against the inevitable rise in electricity costs, not a cause of it.

Third, the proposed improvements to the market would cost an estimated $.14/year, that’s 14 cents per year, for homeowners in PA over a five-year period. Show me a cost-benefit analysis for a coal or nuclear power plant with similar figures! Lastly, several critics have made the claim that the SREC market has driven up costs, then stated that the subsidy “crashed”, as if the declining SREC prices is somehow an indication that the program failed, or the prices are causing the “spike” in electricity costs. The core ingenuity of SREC markets is the subsidy adjusts to the rate at which the state meets annual targets. the key is to hit the sweet spot in setting up those yearly goals, which if you compare PA to other states, it has done fairly well. Would the same opponents prefer that the state overestimated the rate at which solar would come online, thereby causing higher prices (passed on to ratepayers?) Whether or not the legislature passes the amendment, we should be cautious of people that claim solar is prohibitively expensive and that lavish subsidies need to exist to make it feasible. Looking at the costs of the RPS to date and projected future costs, just the opposite seems to be true for PA homeowners.

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