What are AECs or SRECs in Pennsylvania?

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Pennsylvania's Alternative Energy Portfolio Standards Act (Act 213) has ushered in a new era of renewable energy incentives.

This groundbreaking legislation introduced Alternative Energy Credits (AECs), a unique commodity designed to promote clean energy generation and conservation across the state.

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Understanding AECs

AECs are divided into two tiers:

‍Tier I Credits: These premium credits are awarded for energy generated from:

• Wind power
• Solar photovoltaic
• Low-impact hydropower
• Geothermal energy
• Biomass
• Coal bed methane

Tier II Credits: This broader category includes:

• Waste coal
• Distributed generation
• Demand-side management
• Energy efficiency measures

Each AEC represents 1,000 kWh (1 MWh) of electricity generated from qualifying sources. This is equivalent to an SREC, just different terms.

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How AECs Work

Electric Distribution Companies (EDCs) and Competitive Suppliers in Pennsylvania are required to source a portion of their electricity from Tier I and Tier II resources.

This obligation increases annually, with targets set for 2024:

• 15% from Tier I sources (including 3% from solar)
• 13% from Tier II sources

Sellers can meet these requirements by:

1. Generating qualifying electricity themselves
2. Purchasing electricity from qualified facilities
3. Buying AECs

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The AEC Market

AECs create a valuable incentive for renewable energy development.

When a qualified facility generates 1,000 kWh, the owner can register an AEC through the Generation Attribute Tracking System (GATS). This creates a tradable certificate that can be bought and sold to meet compliance obligations.

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Benefits of AECs

1. Promoting Clean Energy: AECs incentivize the development of renewable and alternative energy sources.
2. Economic Growth: The system encourages investment in Pennsylvania's green energy sector.
3. Environmental Impact: Increased renewable generation reduces reliance on fossil fuels.
4. Energy Diversification: AECs support a more resilient and varied energy mix.

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Challenges and Opportunities

While AECs offer significant potential, challenges remain:

• Connecting small-scale generators with energy suppliers
• Educating facility owners about the AEC market
• Ensuring fair valuation of environmental benefits

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Future of AECs in Pennsylvania

As Pennsylvania continues to prioritize sustainable energy, AECs will play a crucial role in driving the transition.

By creating a market-based incentive for clean energy, the state is fostering innovation, reducing emissions, and building a more resilient power grid.

For businesses and individuals interested in renewable energy, understanding and participating in the AEC market can provide both environmental and economic benefits. As the program evolves, it will continue to shape Pennsylvania's energy landscape, moving the state towards a cleaner, more sustainable future.