Introduction
Pennsylvania's Renewable Energy Credit (REC) market has seen significant growth over the past few years - particularly within the Tier II market, which includes energy efficiency, waste coal, and combined heat and power (CHP). This post breaks down the current REC prices in PA, explores the factors influencing price movement, and explains why Tier II energy efficiency credits are gaining value faster than ever.
Current REC Prices in Pennsylvania (2024)
REC Type Average Price / MWh Price Range
Tier I $31.00 $5.25 - $50.27
Tier II $26.47 $0.01 - $40.00
SRECs (Solar) $23 - 32 Varies
What are Tier I and Tier II RECs?
- Tier I RECs include wind, solar, low-impact hydro, biomass, geothermal, and landfill gas. These credits are commonly associated with "classic" renewable energy.
- Tier II RECs, however, include a broader array of technologies such as:
- Waste coal generation
- Large-scale hydropower
- Distributed generation
- Energy efficiency projects
- Combined heat and power (CHP)
- Municipal solid waste-to-energy
What's Driving REC Prices Up?
1. Tighter Supply (Especially in Tier II)
After Pennsylvania passed Act 114 (2020), only in-state Tier II projects became eligible to generate RECs. This significantly shrank the supply pool, especially for energy efficiency.
2. Rising Compliance Obligations
Pennsylvania's AEPS requires utilities and suppliers to source increasing portions of electricity from alternative sources:
- 8% Tier I
- 10% Tier II
Some proposals like PRESS (PA Reliable Energy Sustainability Standard) would push Tier I requirements up to 35% by 2034, indirectly tightening Tier II margins as well.
3. Complex Qualification Process for Tier II Energy Efficiency - Unlike solar or wind, energy efficiency projects require:
- Detailed Measurement & Verification (M&V) Documentation and Processes
- Lengthy baseline data
- GATS Registration and administrator approval
4. REC Banking and Retirement Trends
Market participants are holding onto RECs longer to speculate on pricing. As utilities get closer to their AEPS deadlines, demand surges - especially in under-supplied categories.
Final Takeaways
- If you are managing a facility in Pennsylvania and implementing energy-saving projects or have implemented a project in the past few years, reach out to us to learn more about the project qualification process.
- Tier I RECs are steady due to PJM-wide demand and capped by ACP (Alternative Compliance Payment) levels.
- Tier II RECs, especially for energy efficiency, have become a standout opportunity due to limited supply, complex qualification, and in-state restrictions.
- The AEPS policy structure, combined with future legislative proposals, is expected to keep pressure on both markets.
To learn more about the process or to submit a project for our review, please reach out to us at sales@emergentenergy.us.