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Pennsylvania, New Mexico, and Virginia: Emerging States for Solar Energy

Faiza Haq
September 9, 2021

The U.S. solar energy industry has experienced immense growth over the past decade. Between 2011 and 2021, solar capacity has increased from 4.38 gigawatts (GW) to 102.8 GW — a whopping 2,247 percent growth in 10 years (SEIA).

A lot of the growth can be attributed to certain key states — such as California, New York, and North Carolina — with progressive solar policies. State legislatures in these respective states enacted policies that made solar economics favorable and incentivized solar installation on both sides of the meter.

Several other key players are now developing their own legislation to bring the solar revolution to their own states. So, who are these newcomers and what kinds of policies are they implementing?

The DG+ team recently developed state-level solar market reports, including ones for Pennsylvania, New Mexico, and Virginia. In this article, we take a look at some of the solar policies that are expected to shape these key markets.

New Mexico

New Mexico may be one of the sunniest states in the country, but until very recently, it did not take advantage of its abundant sunshine as a key energy source.

New Mexico enacted the landmark Energy Transition Act (ETA) in March 2019, setting the state’s first RPS goal. The Act mandates all investor-owned-utilities (IOUs) and rural electric cooperatives (co-ops) to procure 100 percent of their electricity from renewable energy by 2050.


The ETA does not have a solar carve out, which means IOUs and co-ops can source their electricity from any renewable energy facility. Nonetheless, it is a huge step towards incentivizing growth in New Mexico’s solar market.

New Mexico does have other policies that are explicitly solar-focused. In March of this year, New Mexico became the 21st state to enact a community solar legislation by passing Senate Bill 84 (SB 84), also known as the Community Solar Act. The bill has authorized 200 MW of community solar capacity to be built over the next three years.

In addition, in July 2020, New Mexico renewed the New Solar Market Development Income Tax Credit. The goal of the program is to incentivize residential and commercial customers to install solar by providing them with a 10 percent tax credit, with savings up to $6,000. The program has a yearly allotment of $8 million and is on a first-come-first-serve basis.

The demand for solar energy in New Mexico is growing thanks to these policies. According to PNM, the largest investor-owned utility in the state, there has been a 44 percent increase in interconnection applications for solar energy between 2019 and 2020.

Pennsylvania

Pennsylvania is an interesting case because it was one of the first states to introduce a renewable portfolio standard (RPS) goal and it has many solar-specific incentives. However, due to a lack of coordination, communication, and support from residents, solar never really took off in the state.

This is about to change as Pennsylvania deliberates several solar energy bills that have been introduced to the state legislature. In particular, lawmakers introduced Senate Bill 472 (SB 472) in March of this year, which is advocating to enact the state’s first community solar legislation. The bill would allow for two or more entities to subscribe to a solar project.

Many are hopeful about SB 472 as it has strong bipartisan support and is also popular with voters. According to a survey conducted by Susquehanna Polling and Research, 80 percent of Pennsylvanians want their representatives to approve community solar and more than 60 percent that they would subscribe if they were given the opportunity. The Pennsylvania Farm Bureau also supports the bill as it will benefit farmers, providing a revenue source for underutilized farmlands.

Developers are aware that Pennsylvania is on the cusp of a solar boom and want to enter the market before it is flooded. This explains why Pennsylvania’s solar capacity grew from 495 MW to 761 MW between 2019 and 2020.

Virginia

The Virginia Clean Economy Act spurred the recent growth in solar across the state. Enacted in 2020, the bill established the first renewable portfolio standard (RPS) and solar target for Virginia. The Act requires Virginia’s two largest utilities, Dominion Energy and Appalachian Power, to source 100 percent of their electricity from renewables by 2040 and 2050 respectively. In addition, Dominion Energy is required to procure at least one percent of their RPS program requirements from solar, wind, or anaerobic digesters each year. Lastly, there is a target to acquire 16,100 megawatt (MW) of solar by 2035 in order to serve public interest.

The bill has put measures in place to ensure that Dominion Energy and Appalachian Power meet their targets on time. If either utility does not meet the requirements by the scheduled year, they will be required to pay a deficiency payment or purchase renewable energy certificates (RECs). From 2021 to 2024, both utilities can source renewable energy credits (REC) from any renewable energy project located in Virginia or within the PJM wholesale electricity market.

However, Virginia does not have a set method to calculate how much of the capacity is coming from solar. This is why the Virginia State Corporation Commission (SSC) is currently in the process of establishing the state’s first solar REC (SREC) market.

The Importance of Emerging Markets

The United States may be amongst the top three countries in the world in terms of solar capacity, but the growth of the solar industry has not been equal across all 50 states.

As other states start to slowly adopt new policies that make solar more favorable, energy project developers and owners will enter those markets. In turn, this will allow residents and businesses all across the country to access the benefits of going solar.

Go Deeper with State Solar Reports

DG+ recently launched a suite of clean energy market products, including ten state-level solar reports that dive into current events, opportunities and challenges, policy summaries, pricing analysis, and market share data. For more information on available market research reports, including New Mexico, Pennsylvania, and Virginia, visit our product page.

DG+ market research reports
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