Solar energy growth handcuffed by Pa. policy, industry experts say

Business is growing in the region's solar energy industry, but experts say it's held back by Pennsylvania policy that prevents companies from selling energy to surrounding states.

“Every installer that I know last year, they say it was the busiest year. Going into 2017, there's a lot more interest,” said Ryan Vesely of Green Solar Systems LLC in Greensburg.

Vesely said he and his two employees installed five systems in 2015, their first year of business. In 2016, they installed about 13 systems and purchased a property that will house its totally solar-powered headquarters.

A Pittsburgh-based solar panel installation company, Energy Independent Solutions, started with a workforce of 12 and doubled that number in the past three years, owner Joe Morinville said. Since 2008, the company has installed about 400 systems throughout Western Pennsylvania.

Morinville attributes the growth to a federal tax credit.

The Solar Investment Tax Credit, enacted in 2005 and extended through 2021, allows a property owner to deduct 30 percent of the cost of installing residential or commercial solar panel installations from federal taxes, according to the Solar Energy Industries Association.

“Currently, that's our only incentive,” Morinville said, adding a growing public awareness of solar energy has helped.

“Solar is no longer a weird gadget for hippies. It is fast becoming mainstream,” he said.

When the company first began installing solar panels in 2008, the panels' visibility to passersby drove business, Morinville said.

Jim Vesely of Greensburg, Ryan Vesely's father, has 42 panels on his home's southern-facing roof. The panels produce 10,650 kilowatt hours, roughly a third of his energy consumption and enough to slash about $1,000 from his annual bill. The panels were installed in 2011, and he expects to see a return on investment in 10 to 12 years, he said.

“Solar is the future,” Jim Vesely said, predicting that energy may someday be produced by individuals instead of corporate giants.

But solar pundits believe its future could be brighter if the state changed policies they say prevent companies from selling energy to surrounding states and suppress the market value of energy credits.

“The solar market could double in the number of installs, and probably increase by 30 percent in year-to-year growth,” Morinville said.

The problem, he said, is the state's open borders policy under the Alternative Energy Portfolio Standards Act of 2004, which allows solar companies from surrounding states to sell energy to the electricity grid but not the other way around.

The loophole has created a glut of solar energy in Pennsylvania, he said, which has caused the commodity's market value, called Solar Renewable Energy Credit, to plummet from $400 per megawatt hour a few years ago to under $10 today.

Other states have enacted bills to close borders, keeping their energy credit valued between the $200 and $500 per megawatt hour mark, Morinville said.

According to SRECTrade, a California firm that tracks market transactions, bid prices for solar energy credits in Pennsylvania have been at $7 per megawatt since Dec. 21, 2016. A year ago, that number was $14.50.

In Washington, D.C., bid prices have been $480 since May 27, 2016.

Ohio and Maryland, which have experienced similar plummets in bid prices, have laws similar to Pennsylvania, according to a SRECTrade spokesman.

“Washington D.C.'s SREC (value) is high because their borders are closed, which certainly helps those prices to stay high,” Cameron Bernhardt said. Aggressive policies control the supply of SRECs, which drives demand and in turn creates a competitive market.

Some Pennsylvania legislators have pointed out that the open borders loophole puts the state at a competitive disadvantage.

Sen. Mario M. Scavello, R-Mt. Pocono, along with seven co-sponsors, tried to amend the act during the Senate's last session. The bill never made it to a vote. Scavello and Sen. David G. Argall, R-Mahanoy City, introduced a similar bill Feb. 17.

“Our legislation will essentially ‘close the borders' of the commonwealth on SREC purchases, similar to many neighboring states,” Scavello and Argall wrote in a letter seeking co-sponsorship. It is under review by the Senate Environmental Resources and Energy Committee.

Dillon Carr is a Tribune-Review staff writer. Reach him at 724-850-1298 or dcarr@tribweb.com.