Rows of solar panels in Pennsylvania, circa 2023. By shielding in-state solar producers from competition, Pennsylvania’s renewable credit rules raise costs for ratepayers without delivering any added environmental benefit. (Shutterstock/Henry Bachmann)

West Virginia’s Lawsuit Exposes the High Cost of State Renewable Mandates

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Pennsylvania’s in-state solar credit rules wall off competition, making the adverse cost and reliability impacts of electricity renewable portfolio standards even greater.

A lawsuit filed by the State of West Virginia against the Pennsylvania Public Utility Commission (PUC) may not be front-page news, but it is exceptionally important for two reasons. First, it would have the effect of protecting interstate commerce from barriers erected by states as a means of shielding their costly policies—and in-state interest groups—from competition. Second, it highlights the reality that unconventional electricity from such sources as wind and solar technologies is not competitive in terms of costs, and indeed cannot be competitive because of the basic energy and engineering realities of conventional and unconventional power technologies. 

How Pennsylvania Walled Off Its Renewable Energy Credit Market

Since 2004, Pennsylvania has required that its electric utilities obtain 18 percent of their power supplies from such “Tier I” and “Tier II” unconventional sources as wind producers, solar photovoltaic facilities, hydropower, biomass, geothermal, waste coal, municipal solid waste methane, and others. Utilities could satisfy that requirement by producing or procuring such power directly, or by purchasing energy credits from other producers. When the program began, utilities could purchase such credits from power producers anywhere in the 13-state (plus the District of Columbia) PJM Interconnection regional transmission system.

In 2017 and 2020, Pennsylvania enacted Act 40 and Act 114, which together proscribe in-state power producers from purchasing, respectively, solar credits and all Tier II credits from generators outside the state. Pennsylvania thus has walled off 10.5 percentage points of the 18 percent requirement. The effects were easy to predict and have come to pass: the out-of-state market share of solar credits was over 60 percent in 2017, and then fell to 1 percent in 2025. For out-of-state Tier II credits, the share fell from 40 percent in 2020 to 0 percent in 2025.

Whatever the purported environmental benefits of the 18 percent Pennsylvania market share for unconventional electricity, those effects are independent of the sources of the credits. Accordingly, Acts 40 and 114 cannot yield environmental improvement—they can only shift credit purchases from out-of-state sellers to in-state ones—and the supporters of the Acts, knowing that they could not maintain straight faces were they to argue otherwise, did not make any such claim. Instead, they were quite straightforward: the purpose was to “close the borders” and thus “protect Pennsylvania-based solar,” “thereby limiting the available supply” of the........

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