Installing solar panels on your home in Pennsylvania can be a great way to save money, increase property value, and with battery storage, even provide a source of backup power in the event of a grid outage. Pennsylvania ranks 22nd nationally for total installed solar capacity, and over the next 5 years, Solar Energy Industry Association (SEIA.org) predicts an additional 3,613.28 MW of solar to be installed.
Pennsylvania’s $5.1 billion solar market – enough solar investment to power 305,358 homes – is undeniable. You have likely seen local homes and businesses get solar panels installed in the past several years and considered solar for yourself. Before working with a solar installer, it is important to understand the different solar incentives in Pennsylvania, how you can take advantage of them, and how they work. This guide will help you get started.
Solar Incentives in Pennsylvania
Solar Tax Credit
Nationally, the Solar Investment Tax Credit (ITC) allows homeowners to deduct 30% of a solar and/or battery project’s cost dollar for dollar off their federal income taxes. These savings can be significant and this incentive lays the foundation for solar economics. With a federal administration change incoming, the future of the Solar Tax Credit is in question. As it stands now, in 2033, the Tax Credit will drop to 26% and in 2034, it will drop to 22%. After 2035, the Tax Credit is set to expire altogether unless renewed by Congress.
SRECs
SRECs in Pennsylvania, also known as Solar Renewable Energy Credits or Certificates are tradable certificates issued each time a solar electric system generates 1,000 kWh or 1 mWh of solar electricity. The price of an SREC in Pennsylvania as of January 2025 is $31.25. A solar electric system producing 10,000 kWh per year would be eligible for 150 credits over a 15-year period. At today’s market prices that is an additional $4,687.50 in income from a solar installation during that 15-year period. The important thing to remember for homeowners about SRECs is this is a bonus incentive in your solar payback. SRECs have nothing to do with what you use or do not use in power or getting paid back from the utility company – that is where Net Metering Comes in.
Net Metering
With the Solar Tax Credit (ITC) providing tax relief, and SRECs producing income from the system, Net Metering, also known as “Netting,” is the way a homeowner or business owner actually saves money off their monthly electric bill with solar panels.
Powering a Building With Solar
With Net Metering in Pennsylvania, a utility customer with solar panels will pay the net of their electricity usage each month. A home or business with solar will have two sources of electricity feeding their main electric panel, power from the local power grid and power directly from their solar panels.
The first stop for solar electricity off the roof is to power the loads within the building. When the solar production is sufficient enough to cover the power demands of the building and when there is additional electricity left over, the excess electricity will feed the local power grid. When the solar electricity system is not producing enough electricity to power the building, or at night when the sun is down, electricity will be pulled from the grid to cover the loads in the building.
Getting Net Metering Set Up
In the permitting stage of a solar project, your solar installer will submit an “Interconnection Application” to the local utility company. This document will request the approval to install the solar electric system. Without the submission and approval of this document, the solar will not be eligible for grid connection.
After a solar installation is completed, the local municipality will conduct either a building or electrical inspection or both. Once the system passes inspection, the AHC (Authorities Having Jurisdiction) will issue the COA (Certificate of Approval). It is this document that your solar installer will then submit to the utility company for the Approval to Operate.
The length of time between passing final inspections and the Approval to Operate can vary. There are 11 different utility companies in Pennsylvania operating at their own accord. The approval to operate can be as quick as one day or up to a month or more.
What triggers the Approval to Operate is the acceptance of the solar system in accordance with the Interconnection Application, and the manual swapping of the utility meter with a new, bi-directional meter.
Net Metering and Your Power Bill
Once the meter is swapped and the Approval to Operate is issued, then the magic really happens with solar. The first bill received will look a little different with a line item for the kWh in, the kWh out, and then banked kWh. When the building is powered directly from the solar panels, it never touches the utility meter. But when there is over production the electricity flows through the meter and to the grid for a credit. Conversely, when there is no electricity or not enough electricity coming from the solar panels, power will flow from the power grid back through the meter and into the building for a charge on the bill.
When the bill arrives your balance due will be the net balance between the kWh in and the kWh out. It may take some time to build up a bank of kWhs depending on the season, the electric production, and the electric demand from within the building. Many solar installations will focus on offsetting 100% of the electric usage on site. If that is possible, over the course of 12 months, the bank should be enough to cover the home’s electric charges.
1 to 1 Net Metering
Receiving a full kWh for kWh credit on the power bill is known as 1:1 Solar Net Metering. This just means that the solar electricity sent to the grid and the grid electricity received have the same monetary value. This is beneficial to solar producers because any extra solar electricity produced will not lose any value financially. Most utilities companies in Pennsylvania offer this incentive, but not all.
Pennsylvania’s Alternative Energy Portfolio Standards (AEPS) require utilities to offer net metering but the terms can vary depending on the utility, customer, and system installed. There are three variations of Net Metering in Pennsylvania.
- 1-1 Net Metering – Excess energy is credited at a retail rate.
- Net Billing – Excess energy is credit at a wholesale rate rather than the retail rate.
- Partial Credit – Utility companies credit only a portion of excess energy.
Examples of the variation in how different utilities approach Net Metering are:
- PECO: Offers traditional 1-1 Net Metering for a full retail rate credit.
- PPL: Offers traditional 1-1 Net Metering for a full retail rate credit by may implement limitations on larger solar systems.
- First Energy (Met-Ed, Penelec, Penn Power, and West Penn Power): Generally follow the utilities laws and offer 1-1 Net Metering but may apply different policies for systems above certain capacities.
- Municipal and Co-op Utilities: Often have unique policies and may not offer 1:1 Net Metering.
For residential solar, it’s uncommon not to receive 1:1 Net Metering in Pennsylvania. For confirmation of the billing credit for your solar project in Pennsylvania, you can contact Public Service Solar for an accurate financial analysis particular to your utility company.
Setting up Net Metering
In Pennsylvania, homeowners who are installed in early spring, like March for example, may successfully build up their bank of kWhs in their first year of operation. This is because, by March, most homes are not using too much electricity from air conditioning, electric heating, or swimming pools, while solar access starts to improve coming out of the winter. The kWh bank does not roll over indefinitely but rather annually with the month of the solar electric system’s interconnection also known as the system’s “Anniversary Date” serving as the “true up” date on the account. The true up date or anniversary date simply means the day when the kWh bank starts over. Any overage left on the account can be paid back to the homeowner at a wholesale price. The most economical approach would not to have too much of an overage at the anniversary date, but rather use the overage throughout the year to evenly roll over and cover electric charges.
Many utility companies in Pennsylvania will give homeowners an opportunity to change their “true up” date one time and one time only. Public Service Solar can help our customers in determining their best Anniversary Date for their system so their extra solar production never goes to waste.
Conclusion
In the most basic sense, Net Metering is paying the “net” of the power usage in a solar powered building each month. Being able to produce solar energy throughout the year and be compensated for the energy produced whether it is consumed directly or fed to the utility grid is essential for basic solar economics to work. Between solar Net Metering, SRECs, and the Solar Tax Credit (ITC), Pennsylvania solar is enticing. For an solar analysis custom to your home or business contact Public Service Solar today.
