Editor’s note: The following post by guest blogger Jason Campbell from Blue Delta Energy is an important read! I just learned about Tier II credits which are now similarly valued to Solar Renewable Energy Credits. This is a revenue stream that can be used for retrofits and new construction. Lisa Shulock
Pennsylvania’s Alternative Energy Portfolio Standard (AEPS) provides financial support for a range of clean energy projects, such as wind and solar, but also other sources including distributed generation, and a broad range of energy efficiency projects. Under the AEPS, energy efficiency projects qualify as a Tier II resource eligible to create operating incentives in the form of Alternative Energy Credits (AECs). One AEC is equal to one MWh of electrical generation or energy savings. The Pennsylvania PUC defines energy efficiency projects to include lighting, HVAC, heat pump, efficient appliance, and demand response projects, to name a few. Depending on the specific project type, new construction, retrofits, and early replacement projects are eligible to qualify.
The AECs are valued on the compliance market as driven by demand from Pennsylvania’s load serving entities, who are required to include a specific percentage of electricity from alternative energy resources in the generation provided to Pennsylvania customers. The value of the current market for Reporting Year 2024 Pennsylvania Tier II AECs is approximately $35 per MWh, yielding significant value for qualifying projects. As an example, an energy efficiency project with annual electricity savings of 1,800,000 KWh generates 1,800 AECs per year. At $35 per AEC, the project could generate approximately $63,000 in annual revenue during its crediting period.
AECs are created monthly in a clean energy tracking registry. Importantly, the Pennsylvania PUC allows for AECs to be created and monetized in addition to the receipt of utility rebates.
Blue Delta Energy currently manages a diverse portfolio of Tier II AEC projects in Pennsylvania. As a service provider, the company (1) works with clients, third-party engineers, and the PUC to get projects approved, (2) registers the AECs in the applicable registry, and (3) monetizes the credits in line with client goals.
Jason Campbell can be contacted at jcampbell@bluedeltaenergy.com.