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Cloudy day for solar homes

Incentives that got some Pennsylvanians to commit to alternative energy are quickly disappearing.

By Hal Marcovitz

When I converted my Bucks County home to solar power in 2009, I was delighted to learn that utilities in Pennsylvania and elsewhere would pay me for the right to claim the energy produced on my roof as their own. Last year, I earned more than $1,600 selling what are known as alternative-energy credits.

Pennsylvania and other states require utilities to generate a portion of their energy from renewable resources such as sun and wind. Since utilities in the Northeast generally don't maintain large solar or wind farms - as their counterparts in places like Arizona and New Mexico do - they satisfy the requirements by claiming ownership of power produced by rooftop systems.

For home and business owners who shoulder the significant up-front costs of converting to solar power, alternative-energy credits are crucial to making the expense worthwhile.

But clouds have gathered over the rooftops of Pennsylvania's solar-powered homes and businesses. The state's alternative-energy credit law, adopted in 2004, has fallen woefully out of date. As a result, credits here are selling for a small fraction of what they earn elsewhere.

The state's law set the renewables threshold - the amount of power utilities must generate from sun and wind - very low. The current solar requirement is a paltry 44 megawatts a year. Since the state's solar-system owners are producing more than 80 megawatts a year, it's easy to see why the bottom has fallen out of the market.

Last year, I earned $275 for every 1,000 kilowatt-hours my system produced. But the agent who sells my credits on the market recently told me that he expects to receive no more than $90 or $100 per 1,000 kilowatt-hours.

When the 2004 law was passed, there were only about 200 homes and businesses powered by solar in Pennsylvania. Now there are more than 3,300. Those of us who have converted have done so out of a commitment to clean energy, to be sure, but the economic incentives matter.

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Pennsylvania lags

Congress has provided some generous tax credits for those who convert to solar, and the state provides grants under the Pennsylvania Sunshine Program. Together, they can cover nearly two-thirds of the cost of a system. Still, since the typical conversion can cost $30,000 or more, sales of credits remain important.

Other states' lawmakers have recognized the importance of renewable energy and increased their requirements. Last month, California Gov. Jerry Brown signed legislation that will eventually hike that state's threshold to 33 percent. Illinois will require that 25 percent of its power come from renewables by 2025, and Maine will have a 40 percent threshold by 2017. Pennsylvania's goal is only 18 percent by 2021, including 0.5 percent from solar.

As states ramp up their thresholds, the value of their credits increases. In New Jersey, where the current solar threshold is equal to about 3 percent, credits sell for about six times the Pennsylvania price.

In the past, credits could be sold across state lines, so it didn't matter that states like Pennsylvania had ridiculously low solar thresholds. But that's changing: To help enhance the value of their residents' credits, many states are closing their borders by ordering their utilities to buy only homegrown alternative energy. I can't blame them for looking out for their residents' interests.

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Intense lobbying

If only Pennsylvania lawmakers felt as strongly about the welfare of citizens and businesses who have made a commitment to solar power here. But they seem more concerned about traditional energy interests that want to kill any progressive legislation that might affect their bottom line. Last fall, a bill to raise the state's renewable-energy threshold to 3 percent died in committee, thanks largely to intense lobbying by the coal industry.

Some help is on the way, though. State Rep. Chris Ross (R., Chester) has unveiled a bill intended to enhance the value of the state's alternative-energy credits. It would close Pennsylvania's borders to out-of-state producers and temporarily raise the threshold for 2012, while maintaining the goal of 0.5 percent by 2021. It's meant to be a quick fix: In the short term, credit values will rise, but since the overall goal remains low, prices are sure to drop again.

The legislature should support Ross' bill, but it should also make a long-term commitment to green energy. Only a vigorous alternative-energy market can keep the state's homeowners and businesses investing in solar power.