Solar Energy Incentives Program

Note: The deadline for the most recent solicitation under this program has now passed. The program is currently closed, pending revisions to the program guidelines. Please see the program web site for further details. The Pennsylvania Department of Community and Economic Development now provides the Alternative and Clean Energy Program in place of this one.

In July 2008, Pennsylvania enacted legislation providing $650 million to support a variety of renewable energy and energy efficiency technologies. Included in this legislation was a provision authorizing the creation of a $80 million grant and loan program for solar energy technologies. The program is jointly administered by the Department of Community and Economic Development (DCED) and the Department of Environmental Protection (DEP), under the direction of Commonwealth Finance Authority (CFA). Program guidelines were first issued in April 2009 although they have been revised since that time. Incentives are available to businesses (including non-profits), economic development organizations, and political subdivisions (e.g., local governments, schools, etc.).

The program will offer support for solar technologies in the form of loans, grants and loan guarantees (i.e., grants to be used in the event of a financing default). Eligible facilities are defined as those that generate, distribute, or store solar energy; manufacturing or assembly facilities for solar panels or other solar equipment; and solar technology R&D facilities. This definition includes both solar photovoltaic (PV) and solar thermal systems. All systems must have a lifetime of at least four years. Funds may be used for the following project costs:

• Acquisition of land and buildings, rights-of-way, and easements necessary for project construction
• Clearing and preparation of land to build an eligible project
• Construction or renovation of a building to manufacture solar components and systems
• Equipment purchases for the manufacture of solar systems
• Purchase, installation and construction of facilities to produce, distribute, and store solar energy or produce hot water using solar energy
• Project planning and feasibility studies
• Permit fees
• Administrative costs associated with an eligible project, not to exceed 3% of funding

The individual support mechanisms are described in more detail below. For all types of support, there is a general requirement that applicants provide matching funds equivalent to the funding offered under the program. Energy generation projects must undergo a solar shade analysis which shows annual energy production of at least 80% of optimal. In addition, all PV energy systems must be new and UL-listed and solar thermal systems must be new and SRCC OG-100 rated (or comparable rating approved by the DEP). All systems must be installed in accordance with the applicable construction codes and standards.

Loans
Loans are available at a fixed interest rate -- 5% as of August 2011 -- for terms of up to 10 years (equipment) or 15 years (real estate). Loans for manufacturing facilities are limited to $35,000 per job created within three years of loan approval. Loans for energy production projects are generally limited to $5 million although larger loans of greater than may be considered on a case-by-case basis. Loans for PV energy production projects are also limited to $2.25 per watt.

Grants
Grants for manufacturing facilities are available for up to $5,000 per job created within three years of grant approval. Grants for energy production facilities are generally limited to $1 million, although larger grants may be considered on a case-by-case basis. Grants for PV energy production projects are also limited to $2.25 per watt. Planning and feasibility studies are also eligible for grants of the lesser of 50% of the cost of the study or $175,000. The guidelines state that the CFA prefers to support generation projects through loans rather than grants; however, it will consider grant requests from projects for which there is not a long-term contract (10 years or more) in place for the Solar Renewable Energy Certificates (SRECs) produced by the project.

Loan Guarantees
Loan guarantees will take the form of a grant that may be used in the event of financing default on the part of the applicant. Loan guarantees are limited to 75% of the deficiency up to $30 million. The term of the grant may not exceed five years.

Visit the program web site and review the funding guidelines for additional program details and application procedures.