Combined with IRA benefits, commercial solar costs are reduced at least 35-40%.
In June, PECO launched a new solar energy incentive for commercial property owners. This incentive is part of its Act 129 program which incentivizes reduction in electricity use. In this case, the incentive is for production of “behind-the-meter” solar energy. The program provides $0.10 per kWh of energy generated based on the property’s first year of annual solar production, minus any excess kWh that is greater than the kWh demand in the same period. In other words, PECO will provide an incentive on the kWh that commercial properties produce and consume.
We estimate that this incentive will reimburse property owners between 4 -10% of a typical total solar system’s cost, though it will be at least six months before there is actual data from PECO to confirm our estimates.
This PECO reimbursement, combined with the IRA’s expanded Investment Tax Credit (or Elective Pay for non-tax paying entities) of at least 30%, brings the total cost of commercial solar projects down by 35-40% or more. (More information about the federal tax benefits can be found here).
We looked at two projects recently completed by our Solarize partner, Solar States, to understand the likely benefit this new incentive will provide to these projects.
Small Scale Solar Project
A small higher education institution outside of Philadelphia recently installed solar panels to power an energy efficiency system within the HVAC system in one of their academic buildings. Solar States estimated that their solar system will generate 14,042 kWh of electricity annually.
System Specs
| Solar System Generation (kWh) | Total Cost of System ($) | System Size (kW) |
| 14,042 | 36,000 | 11.90 |
The university can take advantage of this new incentive from PECO on the solar energy they use, but not on excess electricity that is sent back to the grid. So, if they annually use 12,000 kWh (Scenario 1), they would receive $1,200 from the $0.10 per kWh incentive. They would not receive the incentive on the 2,042 kWh that was sent to the grid in excess. In Scenarios 2 & 3 they would receive $0.10/kWh for all solar generation.
Incentive Earned
| Scenario | Electricity Demand (kWh) | Excess Electricity (Solar System Generation – Electricity Demand) (kWh) | Incentive Earned ($) | Percent Cost Reduced by Incentive |
| 1 | 12,000 | 2,042 | 1,200 | 3% |
| 2 | 14,042 | 0 | 1,440.20 | 4% |
| 3 | 15,000 | 0 | 1,440.20 | 4% |
Medium Scale Solar Project
An early childhood education center will likely receive approximately $32,000 from PECO. The center installed a solar project which Solar States projects to generate 319,400 kWh of electricity annually.
System Specs
| Solar System Generation (kWh) | Total Cost of System ($) | System Size (kW) |
| 319,400 | 312,000 | 116.4 |
If their energy demand is only 300,000 kWh (Scenario 1), the center would receive $30,000 from the incentive. The excess 19,400 kWh of electricity would be fed back to the grid and the center would not receive the incentive on this energy. In Scenarios 2 & 3 they would receive $0.10/kWh for all solar generation.
Incentive Earned
| Scenario | Electricity Demand (kWh) | Excess Electricity (Solar System Generation – Electricity Demand) (kWh) | Incentive Earned ($) | Percent Cost Reduced by Incentive |
| 1 | 300,000 | 19,400 | 30,000 | 9.6% |
| 2 | 319,400 | 0 | 31,940 | 10.2% |
| 3 | 400,000 | 0 | 31,940 | 10.2% |
As a result of this incentive, commercial property owners can expect to save money on annual electricity costs, shorten payback periods for solar installation, increase property value, and boost their reputation with their business’s commitment to sustainability.
Have questions about solar for your property? Please email us at solarize@philaenergy.org.