Pennsylvania’s Alternative Energy Portfolio Standard (AEPS)—also known as a Renewable Portfolio Standard (RPS)—is intended to increase use of renewable resources in the state by establishing the minimum amount of renewable energy that the state’s electricity providers must sell in a given year. This legally-established renewable energy procurement goal gradually increases over time to meet the overall target of 18% renewable power by 2021.
The state profile below explores the design of this policy, highlighting the factors that influence the success of Pennsylvania’s RPS goals and the tradeoffs inherent to it. Once you’re comfortable with the information on this page, you can evaluate the policy’s expected viability with the RPS Feasibility Calculator. You can also use the calculator to change the policy requirements, trajectory, cost cap, and more, to see how altering Pennsylvania’s policy design affects its success.
- 18% of the state’s retail electric sales from must be from renewable sources by 2021, subject to the cost cap
- Carve-out for solar
- Implicit ‘cost cap’ defined by compliance payments
Carve-outs can create economic opportunities in the state by introducing new or promising technologies into the market. However, these standards limit the utilities’ ability to substitute between renewable energy sources, potentially increasing the cost of the policy. Pennsylvania has a two-tiered system, requiring specific technologies within each tier (see Legislation for details). Tier I includes a 0.5% annual carve-out for photovoltaic power.
Compare the goal established in the RPS to what is being achieved.
The following chart compares the variety of sources currently used to generate Pennsylvania’s electricity. The color of each bar is indicative of the carbon intensity of each source.
Cost Cap Details
Pennsylvania does not have an explicit cost cap. However, by allowing alternative compliance payments (ACPs), Pennsylvania sets an effective cap on the premium a utility will be willing to pay for renewable energy. The RPS sets this cap at $45/MWh for the general RPS requirement (both Tiers I and II). Unlike some states, Pennsylvania does not adjust the cost of an ACP over time. If the renewable energy premium exceeds this cap, the utility would prefer to meet the standard by making the lower cost alternative compliance payments. The solar alternative compliance payment (SACP) fluctuates at a rate of 200% times the market value of Solar RECs, plus the levelized value of solar rebates. Using the RPS Feasibility Calculator you can make adjustments to cost of alternative compliance, determining how this impacts the provision of renewable power and the overall viability of the RPS.
Historic retail prices (¢ / kWh)
The above chart presents historical data from the Energy Information Administration (EIA) on the price at which residential customers can purchase electricity. Typically, states set explicit cost caps relative to the retail price (as opposed to the lower wholesale price).
Pennsylvania enacted an Alternative Energy Portfolio Standard in 2004 by S.B. 1030, which required all electric distribution companies and electric generation suppliers to retail customers in the state to source 18% of its electricity from renewable sources by 2020. The law breaks the requirements for alternative sources into two ‘Tiers’, with Tier 1 required to produce 8% of the total requirement and Tier 2 required to produce the other 10%, by 31 May 2021. The legislation also includes a solar photovoltaic carveout within Tier 1 of 0.5% by 2021. Renewable energy may be bundled with alternative energy credits (AECs).
RPS Technical Details
(Tier 1) Photovoltaic Energy, Solar-Thermal Energy, Wind, Low-Impact Hydro, Geothermal, Biomass, Biologically-Derived Methane Gas, Coal-Mine Methane and Fuel Cells.
(Tier 2) Waste Coal, Distributed Generation (DG) Systems, Demand-Side Management, Large-Scale Hydro, Municipal Solid Waste, Wood Pulping and Manufacturing Byproducts, and Integrated Gasification Combined Cycle (IGCC) Coal Technology."
|Geographic Eligibility||Resources must originate within Pennsylvania or within the PJM regional transmission organization in order to be eligable to count towards the requirement. The exception is for regions of the state served by a separate system, MISO. For these regions of the state, out-of-state resources within the MISO can be used to serve regions of Pennsylvania in the MISO.|
|Percent of Total Load||97.3%|
|Technology Requirements||Solar (Photovoltaic)—0.5% of the annual requirement|
|Sectors||Investor-Owned Utility, Retail Suppliers|
|Penalty||$45/MWh, with a separate rate for solar currently at $495.81|
Tools and other links
- Database of State Incentives for Renewables & Efficiency (DSIRE) RPS data page—Datasets available for download in .xlsx format
- National Renewable Energy Laboratory (NREL) Energy Analysis Portal—Resources on renewable energy policies, and interactive web tools
- Energy Information Administration (EIA) U.S. Energy Mapping System—An interactive energy resource map with a myriad of data layers to explore
- DSIRE State RPS Page—Visit for detailed information on RPS and complete legislation
- 73 P.S. § 1648.1—The Pennsylvania Alternative Energy Portfolio Standards Act (2008)
- Natural Resources Defense Council (NRDC) State Profile—Your state has a NRDC renewable energy resources profile; find state resources and learn about the technologies being used
- U.S. Department of Energy Office of Energy Efficiency and Renewable Energy (EERE)—State Profile—Access your state’s EERE page, and find information on renewable resources maps, energy statistics, and news