Pennsylvania State Agency Proposes Utilities Enter Long-Term Contracts

The Pennsylvania Department of Environmental Protection (DEP) has released a final Solar Future Plan for the state which recommends development of guidelines for "limited" use of long-term utility contracts with solar developers

A "proposed strategy" in the report recommends that the state should, "Develop guidelines for limited use of long term contracts (LTCs) for a period of ten or more years to ensure Pennsylvania benefits from grid scale solar energy."

The final report states, "pilot programs could be explored that competitively bid up to 20-year contracts for only grid scale projects. The tariff based incentive mechanism for grid scale solar is essentially a competitive procurement or bidding process among solar developers which bundles the price for electricity and the solar attribute, over a 10 to 20-year term. Unlike an annual schedule for a solar carve out as a growing percentage of total electric usage across the state (i.e., SRECs), the tariff based incentive mechanism would consist of a quarterly or annual schedule of installed solar capacity in megawatts (MW). The energy and solar products would be bundled as a single contract and would be procured outside of the AEPS."

The report recommends in a further proposed strategy that the state should, "Evaluate and consider utility ownership of solar generation especially in cases where market-driven deployment may be insufficient to achieve public goals and/or reliability concerns."

"This may include solar for low-income and Customer Assistance Programs in particular," the report states

"Appropriate enabling legislation, such as PA House Bill 1799 introduced in 2017, could allow utility ownership of solar generation provided such investment is consistent with a utility’s obligation to act in a reasonable and prudent manner to provide service to customers at the least cost. Utility ownership could address access to capital issues by financing installation through the utility rate base. This may be implemented as a voluntary choice on the part of customers, particularly those that otherwise lack solar access that opt for utility-owned generation as an alternative to purchase or lease of generation assets. Or, this could be implemented where the utility owns a generation asset to reduce congestion, meet portfolio standards, acquire generation for default-service customers, or achieve other social goals," the report states

"Some stakeholders envision a more limited role for utilities where they would provide solar to low-income residential customers, affordable multi-family housing projects or to their default service customers. Others, particularly utilities themselves, prefer more flexibility," the report states

The report also recommends an increase in the AEPS solar PV carve-out from 0.5 percent to between 4 and 8 percent by 2030