Energy Incentive Programs, Pennsylvania

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Updated October 2015

What public-purpose-funded energy efficiency programs are available in my state?

Pennsylvania's Act 129, signed into law in 2008, set ambitious savings and demand reduction goals for the state's large electric utilities for the period ending in May, 2013. The continuation of the act's directives was predicated on the state public utilities commission's evaluation of that first phase. The PUC found the programs to be, en masse, cost-effective, and consequently extended the initiative into a Phase II, which runs through May, 2016 (after which a five-year Phase III will begin) and includes different savings goals for each utility (Phase II does not currently include demand reduction goals, however, as those programs had not been evaluated by the PUC). All customer classes are covered by the various programs. Most relevantly for federal customers, the act has a special provision that not less than 10% of the energy reductions are to be derived from "units of federal, state, and local government." Across the state, utilities budgeted $280 million in 2014 for customer energy efficiency and load management/demand response programs.

What utility energy efficiency programs are available to me?

Utilities in Pennsylvania are the administrators of the energy conservation programs (see above).

PECO's efficiency programs all fall under the rubric of its Smart Ideas initiative. The business incentives program includes rebates for HVAC equipment – ranging from room air conditioners to large centrifugal chillers – as well as lighting, energy management controls upgrades, drives and motors, and food service equipment; for projects falling outside of these equipment types, there is a custom option that pays $0.10/kWh ($0.08/kWh for lighting) for first-year savings, up to 50% of the project cost. PECO also provides a new construction offering that incentivizes code (ASHRAE 90.1-2007) exceedance by both owners and design teams, either from the whole building or individual systems. Facilities whose peak demand is less than 100 kW can participate in the Smart Business Solutions program, in which participants receive a free energy audit that will provide a series of recommendations for improvements to lighting, HVAC, refrigeration, and electric hot water systems, all of which have associated rebates. The customer can then choose to have some or all of these installed by the PECO-certified contractor; all measures carry warranties.

Some natural gas heating rebates are also available to PECO's gas customers in suburban Philadelphia for both upgrades to high efficiency boilers and furnaces, and also conversions from other heating sources.

PPL's e-power campaign includes a number of opportunities that may interest federal customers. Rebates are offered for appliances, lighting, motors and drives, HVAC, compressed air, and refrigeration measures. In addition, for any measure that might not fit into the array of prescriptive e-power programs, PPL provides custom incentives of $0.10/kWh of first-year savings (and $0.05/kWh for combined heat and power installations). The custom program includes a required commissioning component. Total incentives per customer are capped at $500,000.

Duquesne Light Company's conservation incentives are all organized under its Watt Choices initiative. There is a full array of prescriptive incentives, covering measures from screw-in compact fluorescent lamps to variable frequency drives to insulation on refrigeration suction pipes. Custom incentives are also available to cover less common equipment or more comprehensive "whole building" types of projects. To learn more about these incentives and the Watt Choices Public Agencies Program, contact Duquesne's Ron Rydzak (, 412-393-6608).

FirstEnergy customers – those in the Penelec, Metropolitan Edison, Penn Power, and West Penn Power/Allegheny Energy service areas – can also take advantage of an array of incentives. As with the other large Pennsylvania utilities, FirstEnergy offers a standard set of prescriptive incentives covering the most common types of efficiency retrofits – lighting, HVAC, and motors and drives. There is also a specialty equipment program, which covers refrigeration, food service, and other miscellaneous equipment; and a custom incentive option, which will rebate up to 50% of project cost, covering almost any other type of energy-saving project, including whole-building upgrades. Pre-approval, and in some cases an M&V plan (with pre- and post-metering) are required.

Through its ENERGY SENSE initiative, Philadelphia Gas Works (PGW) offers rebates on efficient (> 85% thermal efficiency, with greater incentives paid for equipment > 90%) commercial boilers and gas hot water heating equipment, ENERGY STAR commercial natural gas kitchen equipment, and repair of broken steam traps. A broader Efficient Building Grants program provides incentives of up to $75,000 for commercial building energy efficiency projects on existing buildings. Eligible projects range from air sealing to control system upgrades to upgraded water heaters. Customers must apply and be approved before starting work.

What load management/demand response options are available to me?

The PJM Interconnection (PJM), a regional transmission organization (RTO), offers several demand response programs. Two specific programs may be attractive to federal facilities in the PJM footprint:

  • PJM's emergency "capacity" program allows demand resources to participate in PJM's Reliability Pricing Model (RPM) forward capacity market via a curtailment service provider (any existing PJM member, such as their utility, a third-party electricity supplier, or a specialty CSP). Participants pledge to either reduce their load by a specified amount (guaranteed load drop, GLD), or to a specific kW level (known as firm service level, FSL), within one or two hours of an event notification. Load reductions are mandatory and may occur up to ten times per year, lasting up to six hours per event. Penalties for non-compliance are substantial. Remuneration is based on the results of the annual RPM capacity auctions in various PJM regions. Remuneration levels for the 2016-17 PJM year (which begins June 1, 2016) are in the $80,000 per MW range for Pennsylvania customers. Participants are also eligible to receive energy payments for actual reductions, if and when the program is called.

  • The Economic Load Response program allows electricity users to provide load reductions in exchange for a payment based on hourly wholesale electricity prices. Participation is fully voluntary. Customers start by submitting load reduction bids (through their CSP) of at least 100 kW into the day-ahead energy market. Participants whose bids are accepted are paid for their load reductions based upon the day-ahead, hourly electricity market prices (the day-ahead "locational marginal price," or LMP). Reductions are figured based on a customer baseline load (CBL), which is essentially the average loads for the same hours in four of the facility's previous non-responding days. Regardless of which type of firm it is, the CSP will generally offer to split the revenues with the customer at a pre-determined percentage.

In both programs, participants can provide load reductions either through curtailing electricity use or by operating on-site generation consistent with local environmental regulations and permits.

PPL offers a direct load control program, Pennsylvania Peak Saver, that pays customers $3 per unit per called curtailment, as well as $10 per unit for just being enrolled, for allowing the company to cycle their packaged air-conditioning units during summer weekdays.

PECO's Smart A/C Saver program is similar, but pays $20 per summer month per enrolled air-conditioning unit.

What distributed energy resource options are available to me?

The Database of State Incentives for Renewables and Efficiency (DSIRE) provides information on programs that offer incentives for renewable distributed generation. The following programs may be of interest to federal customers:

  • The Pennsylvania Energy Development Authority (PEDA), part of Pennsylvania's Department of Environmental Protection, offers periodic opportunities for loans, loan guarantees, and grants for alternative energy (as well as energy efficiency and load management) projects. Check their web site to see what's available at any given time.

  • Philadelphia area facilities can receive incentives of up to 50% of their project cost (maximum $1,000,000) toward qualifying cogeneration installations through the PECO Smart On-Site program. Consult the web site and your utility representative for more information.

  • Pennsylvania's Alternative Energy Portfolio Standard Act, passed in 2004, provides for alternative energy credit (AEC) sales by generators of renewable and alternatively generated power to the state's electric utilities, which are beholden to the AEPS. The act made special provisions for solar photovoltaics, such that solar renewable energy credits (SRECs) were particularly valuable, trading for an average of about $0.25 per kWh; however, with an over-supply the value has plummeted such that PA SRECs recently (Fall 2015) sold for under two cents per kWh. More information on this program can be obtained from the Pennsylvania Public Utility Commission and the Database of State Incentives for Renewables and Efficiency.

Are there energy efficiency programs sponsored by state government?

Pennsylvania's Department of Environmental Protection and Department of Community and Economic Development jointly administer several alternative energy grant and loan programs funded pursuant to the Alternative Energy Investment Act, passed by the state legislature in 2008. However, none of these programs is available to federal government customers.

What additional opportunities are available to me?

Federal customers whose utilities have area-wide supply contracts through GSA (e.g., PGW, PECO, PPL, and First Energy) may be able to take advantage of 3rd-party financed energy efficiency projects called utility energy services contracts (UESCs). Information is available in GSA's Energy Division Library. Federal facilities should contact their account executive to determine the level of each utility's participation.

PJM (see above in the demand response section) now allows energy efficiency projects to participate in its forward capacity markets, based on its Reliability Pricing Model (RPM). To be eligible, energy efficiency projects must reduce load continuously by at least 100 kW during peak summer hours. This load reduction can be bid into PJM's annual (for three years in advance) and "residual" (nearer-term) capacity auctions, and if selected will receive the auction clearing prices. EE reductions are eligible for four years' worth of participation. Interested customers can participate through energy service companies conducting ESPCs or utilities executing UESCs at their sites.