Solar Incentives in Pennsylvania
Pennsylvania homeowners considering solar in 2026 have access to several active state-level programs. Under Pennsylvania's net metering rules, electric distribution companies must offer net metering to customer-generators using qualifying alternative energy sources, including solar PV, on a first-come, first-served basis. Excess kilowatt-hours are credited forward at the full retail rate during the year; any remaining balance at year-end is paid out at the utility's price-to-compare rate, which varies by utility. Pennsylvania's Alternative Energy Portfolio Standards (AEPS) Act also allows solar owners to generate Alternative Energy Credits (AECs) — one per megawatt-hour of solar generation tracked through PJM-GATS — which can be sold into a market whose prices fluctuate with supply and compliance demand. Two additional programs target specific applicants: the Solar Energy Program, administered by the Commonwealth Financing Authority, offers grants and loans for solar generation projects, and the Solar for Schools Grant Program (created by Act 68 of 2024) provides grants to eligible Pennsylvania schools to offset installation costs.
The federal landscape has changed significantly for 2026 installs. The residential Clean Energy Credit under Internal Revenue Code §25D — commonly described as the 30% federal tax credit — expired for systems placed in service after December 31, 2025, under the One Big Beautiful Budget Act (Pub. L. 119-21). Homeowners installing a new residential solar system in 2026 do not qualify for that credit, which materially lengthens the time needed to recover installation costs compared to prior years.
Pennsylvania's residential electricity rate averaged approximately 20.92 cents per kilowatt-hour as of March 2026, up roughly 2.50 cents from the prior year. Higher electricity rates generally improve the bill-savings value of solar generation, but the loss of the federal credit means overall payback periods are longer than they were for pre-2026 installations.
Figures here are verified as of June 2026 against official sources; programs and rates change with each legislative session and utility rate case, and the Pennsylvania Public Utility Commission and Pennsylvania Department of Community and Economic Development remain the authoritative sources for current program details.
Federal credit update. The federal residential Clean Energy Credit (the 30% “solar tax credit” under §25D) expired for systems placed in service after December 31, 2025. New 2026 residential installs do not qualify; a 2025 install can still be claimed on a 2025 return (IRS Form 5695). What this means for 2026 →
Current solar incentives in Pennsylvania
Net Metering
Pennsylvania electric distribution companies must offer net metering to customer-generators using Tier I or Tier II alternative energy sources, including solar, on a first-come, first-served basis. Excess kilowatt-hours are carried forward and credited against later usage at the full retail rate, and at the end of each year the default service provider pays the customer for any remaining excess at the provider's price-to-compare rate. Virtual meter aggregation is also available.
| Amount | Full retail rate credit for excess generation during the year; year-end payout of remaining excess at the price-to-compare rate. |
|---|---|
| Who qualifies | Customer-generators with independent electric load behind the meter; system capacity up to 50 kW at residential service locations, up to 3 MW at other locations (5 MW for qualifying large customer-generators); systems of 500 kW or more need Commission approval. |
| Administered by | Pennsylvania Public Utility Commission |
Source: 52 Pa. Code § 75.13; Alternative Energy Portfolio Standards Act of 2004 Official source →
Solar Alternative Energy Credits (AEPS)
Under the Alternative Energy Portfolio Standards Act of 2004, Pennsylvania electric distribution companies and generation suppliers must obtain a percentage of the electricity they sell from qualified alternative energy resources, with solar PV qualifying under Tier I. Compliance is demonstrated with Alternative Energy Credits generated by certified systems, so owners of certified solar facilities can sell the credits their systems create. Owners certify their facility through the PennAEPS portal, then register with PJM-GATS and report generation to create credits.
| Amount | Market-based; one AEC is created per megawatt-hour of generation reported through PJM-GATS. Credit prices vary with the compliance market. |
|---|---|
| Who qualifies | Owners of qualifying alternative energy facilities in Pennsylvania, including residential and commercial solar PV, certified through the PennAEPS application portal. |
| Administered by | Pennsylvania Public Utility Commission (AEPS program administrator, PennAEPS) |
Source: Alternative Energy Portfolio Standards Act of 2004 (73 P.S. § 1648.1 et seq.) Official source →
Solar Energy Program (SEP)
The Solar Energy Program provides grants and loans to promote solar generation and solar equipment manufacturing in Pennsylvania. It is administered jointly by the Department of Community and Economic Development and the Department of Environmental Protection under the Commonwealth Financing Authority. Grant recipients for solar PV projects must transfer the system's SRECs to the CFA for the life of the project, and a dollar-for-dollar matching investment is required.
| Amount | Grants for generation/distribution projects up to the lesser of $1 million or $1.50 per watt; loans up to the lesser of $5 million or $3.00 per watt; manufacturer grants up to $5,000 per new job and loans up to $40,000 per new job; loan guarantees up to $5 million. |
|---|---|
| Who qualifies | Businesses, economic development organizations, and political subdivisions (municipalities, counties, school districts); $1 match required per $1 of program funds; not a homeowner program. |
| Administered by | PA Department of Community and Economic Development / Department of Environmental Protection, under the Commonwealth Financing Authority |
Source: program page (Alternative Energy Investment Act, Act 1 of Spec. Sess. 2008 program) Official source →
Solar for Schools Grant Program (S4S)
Created by the Solar for Schools Act (Act 68 of 2024), this DCED grant program reduces the cost of installing solar energy systems at Pennsylvania schools, including school districts, intermediate units, career and technical schools, charter and cyber charter schools, community colleges, and two state technology colleges. Eligible costs include energy storage, permit fees, and utility interconnection. Grant ceilings scale with the applicant's market value/personal income aid ratio.
| Amount | Maximum grant is the lesser of $600,000 or 50% of project cost for the neediest applicants (MV/PI aid ratio >= 0.7), stepping down to the lesser of $360,000 or 30% of project cost for the wealthiest. |
|---|---|
| Who qualifies | Pennsylvania school entities: school districts, intermediate units, area career and technical schools, charter/cyber charter schools, schools for the deaf or blind, community colleges, Thaddeus Stevens College of Technology, Pennsylvania College of Technology. |
| Administered by | PA Department of Community and Economic Development |
Source: Solar for Schools Act, Act of Jul. 17, 2024 (P.L. 813, No. 68) Official source →
Verification note. Some official source pages for this state block automated access from our servers, so one or more figures here rest on the underlying statute or an official search result pending a final browser check. The cited official source is authoritative — confirm current terms there before you rely on a figure.
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Programs verified as of June 2026 against official state and federal sources (each cited above); refreshed quarterly as legislatures and utility rate cases change the rules. How we verify this data. This page is informational only — not tax or legal advice.