SOLAR MARKET AND GROWTH IN PENNSYLVANIA

Pennsylvania has developed a range of financial tools and incentive programs aimed at making solar energy more accessible and affordable for homeowners, businesses, and agricultural operations. These mechanisms help reduce upfront costs, improve return on investment, and promote the widespread adoption of solar technology across the state.

While availability has varied over the years, Pennsylvania has historically offered state-backed grants, rebates, and loan programs to support the deployment of solar energy systems. Programs such as the PA Sunshine Solar Program have played a key role in incentivizing residential and small commercial solar installations by providing direct cash rebates based on system size and performance.

Other state-level initiatives have included:

• Low-interest financing through programs like PennSEF (Pennsylvania Sustainable Energy Finance Program).
   
• Support for schools, municipalities, and non-profits to adopt solar energy under state-funded clean energy programs.
   

Although some of these initiatives have fluctuated in funding or availability, they have been instrumental in lowering the financial barriers to solar adoption, especially for early adopters.

In addition to state support, Pennsylvania residents and businesses benefit from robust federal financial incentives, which significantly enhance the affordability of solar energy systems.

• The Investment Tax Credit (ITC) offers a 26% federal tax credit for eligible solar installations (dropping to 22% in future years unless extended), helping reduce the upfront installation cost for both residential and commercial projects.
   
• Modified Accelerated Cost Recovery System (MACRS) allows commercial solar system owners to depreciate the value of their system over five years, providing substantial tax savings and improving overall investment returns.
   

Together, these federal incentives form the financial backbone for most solar projects in Pennsylvania and are critical for driving continued market growth.

For customers who cannot afford the upfront cost of owning a solar system—or prefer not to manage system maintenance—solar leasing and PPAs offer attractive alternatives.

• Solar Lease: Customers pay a fixed monthly fee to use a solar energy system installed and owned by a third party. This fee is often lower than their previous utility bill, generating immediate savings.
   
• Power Purchase Agreement (PPA): Customers agree to purchase the electricity generated by the solar system at a predetermined rate, which is typically lower than the local utility rate.
   

Both models require little to no upfront cost, making solar accessible to a broader range of consumers, including renters, schools, and small businesses. These options also allow for predictable energy costs over time, shielding consumers from utility rate increases.

Pennsylvania’s solar industry has significant room for expansion. With a mix of rural land, agricultural opportunity, and increasing clean energy targets under the Alternative Energy Portfolio Standards (AEPS), the state is poised for sustained growth in solar energy deployment.

Pennsylvania’s large rural footprint presents enormous potential for solar development, especially in agricultural communities where open land and high energy demands align well with solar deployment.

• Farmers can install solar panels on rooftops, open fields, or unused land to power farm operations, reduce electric bills, and even sell excess power back to the grid.
   
• Participation in the Solar Renewable Energy Credit (SREC) market allows farmers and rural landowners to generate income by selling SRECs earned through solar production to utilities that must meet AEPS requirements.
   
• Agrivoltaics—the co-location of solar energy systems with crops or grazing land—is also emerging as a dual-use opportunity that supports both food and clean energy production.
   

These opportunities can help diversify farm income, improve energy resilience, and reduce operational costs for rural businesses.

As of 2023, Pennsylvania’s solar market is experiencing steady growth, with increased attention from both policymakers and private developers. Factors driving this growth include:

• Ongoing support from the AEPS, which mandates a certain percentage of electricity be sourced from renewable energy, including a carve-out specifically for solar.
   
• Falling solar installation costs and improving technology.
   
• Greater public awareness of climate change and the financial benefits of clean energy.
   

Looking ahead, Pennsylvania is expected to significantly increase its solar capacity over the next decade, especially as the state modernizes its energy grid and explores options for expanding community solar programs. Utility-scale solar farms, commercial rooftop systems, and distributed generation projects will all play a role in helping the state meet its clean energy goals.