Efficiency Credits Across PJM States

Pennsylvania runs the only liquid standalone market for efficiency-based credits among PJM states. That is a narrower claim than the one usually made in multi-state marketing material, and it is the accurate one. Energy efficiency shows up in many state programmes as a ratepayer-funded utility incentive. It shows up in very few as a tradable certificate — and in only one PJM state as a certificate with a functioning secondary market.

For an owner with facilities in several states, the practical consequence is simple: efficiency projects outside Pennsylvania generally monetise through utility rebates, not through credit sales. Getting that distinction right before modelling revenue avoids booking income that no market exists to pay.

New Jersey: no efficiency credit exists

N.J.S.A. 48:3-51 defines Class I and Class II renewable energy entirely in terms of generation resources. Neither class references energy efficiency, demand-side management, or combined heat and power. Every other New Jersey certificate programme — SREC, SREC-II, TREC, and the successor SuSI programme — is solar. There is no New Jersey instrument that an efficiency measure can earn, and therefore nothing on the New Jersey side for a Pennsylvania efficiency project to be dual-qualified against.

New Jersey does run substantial efficiency programmes under the Clean Energy Act of 2018, with utility-administered incentives and a statewide savings target. Those are rebates and performance incentives paid by the programme, not certificates sold into a compliance market.

Maryland: no efficiency credit class

Maryland's RPS has no efficiency credit class. Tier 1 is generation resources; Tier 2 is hydroelectric. EmPOWER Maryland, the state's flagship efficiency programme, is ratepayer-funded and issues no tradable certificates. Maryland efficiency projects earn utility incentives through BGE, Pepco, Delmarva Power, and Potomac Edison — worthwhile money, but not a credit asset.

Ohio: a limited mechanism that ends after 2026

Ohio's energy efficiency portfolio standard terminated on 31 December 2020 under ORC 4928.66. The remaining renewable benchmark ends after 2026 under ORC 4928.64 as amended by HB 15. Whatever residual value an Ohio certificate carries, it is a closing window rather than a market to build a long-dated project around.

North Carolina: the real counterexample

The one genuine efficiency-certificate programme in the region sits with Dominion Energy North Carolina, a PJM member. G.S. 62-133.8 counts megawatt-hours reduced by energy efficiency measures as RECs, and permits up to 40 percent of REPS compliance to be met from efficiency from 2021 onward. NC-RETS, the state tracking system, issues Energy Efficiency Certificates alongside conventional RECs.

That makes North Carolina the correct comparison for anyone asking whether Pennsylvania's approach is unique in kind. It is not — but the North Carolina certificates are created inside a utility's REPS compliance obligation rather than traded in an open standalone market, and the compliance percentages cap how much efficiency can be used. The volume and liquidity are not comparable to Pennsylvania's Tier II market.

Why Pennsylvania is different

Pennsylvania's Tier II tier admits demand-side management and distributed generation directly, credits are issued per verified megawatt-hour, and Act 114's in-state requirement concentrated demand on Pennsylvania projects. The result is the price series below: a weighted average of $1.92 per AEC in RY2020 rising to $26.92 in RY2025 — roughly a 1,300 percent increase in five years, with RY2025 essentially flat against RY2024. See our pricing history for the full series and current market pricing.

What this means for a multi-state portfolio

Catalogue efficiency projects across all facilities, register the Pennsylvania projects for Tier II AECs, pursue utility rebates everywhere a programme exists, and treat North Carolina separately if you have Dominion NC load. Do not carry assumed efficiency-credit revenue for New Jersey, Maryland, Delaware, DC, or Virginia facilities — those states pay for efficiency through incentive programmes, not certificates.

Emergent Energy Solutions works Pennsylvania Tier II AECs and tracks the regulatory picture across the region. If you have facilities in several states and want to know which of them can actually produce a credit, send us the list and we will tell you.