PA Tier II AEC Pricing History: From $0.10 to $41.00 in Nine Years

Pennsylvania's Tier II Alternative Energy Credit (AEC) market has undergone one of the most dramatic price transformations in the U.S. clean energy sector. In nine compliance years, the weighted average price has climbed from $0.10/MWh to $26.92/MWh, with individual transactions reaching as high as $41.00. This article walks through every compliance year, the policy and supply events that drove each move, and what the upcoming PRESS Act transition means for future pricing.

The Full Price History: CY 2016 Through CY 2025

Source: PA PUC AEPS Annual Reports, PennAEPS historical pricing database.

Act 114 of 2020: The Event That Changed Everything

Before Act 114, Electric Generation Suppliers (EGSs) could source Tier II AECs from anywhere in the 13-state PJM region. Act 114 restricted compliance to Pennsylvania-certified generators only, effective with compliance year 2021. This single rule change eliminated the entire pool of out-of-state supply that EGSs had relied on, and is the inflection point visible in the table above — the jump from $2.40 in CY 2019–20 to $5.80 in CY 2020–21, followed by sustained acceleration in every year since.

For project owners considering registration, Act 114 is the reason today's current AEC market prices bear no resemblance to the pre-2021 era — and why the supply pool is now structurally constrained to in-state generators.

The Supply Picture: Why 50.5% of Tier II Credits Are at Risk

Per the PA PUC AEPS Annual Report, waste coal accounts for 50.5% of all Tier II AECs retired in compliance year 2025. Waste coal facilities are aging, economically marginal, and retiring on a predictable schedule — meaning more than half of current Tier II supply has a finite remaining lifespan.

Energy efficiency projects, by contrast, represent just 0.5% of current supply. The most accessible category for building owners — LED retrofits, HVAC upgrades, VFDs, controls — is also the most under-penetrated in the AEC supply mix. As waste coal exits, energy efficiency is positioned to absorb a growing share of compliance demand.

The ACP Ceiling and Its Implications

The Alternative Compliance Payment (ACP) is the per-AEC penalty an EGS pays when it cannot source enough credits to meet its Tier II obligation. The current ACP is $45.00/AEC, which functions as a soft price ceiling: no rational buyer pays more than $45 for a credit when the penalty alternative is $45.

With the current weighted average at $26.92, the market has $18.08 of headroom to the ACP ceiling. The CY 2024–25 price range of $1.00–$41.00 reflects a bifurcated market: some buyers paying near the ACP for guaranteed compliance-year supply, others transacting distressed or retroactive vintage credits at deep discounts.

What PRESS Means for Future Prices

The PRESS Act (HB 501) introduces a two-phase dynamic that reshapes the price trajectory:

• Phase One (2027–2029): The Tier II obligation drops from 10% to 6%. Demand falls meaningfully, and prices are expected to moderate into the $10–$20 range as supply temporarily exceeds the reduced obligation.
• Phase Two (2029+): Grandfathering for legacy waste coal expires, those facilities exit the supply pool, and the market faces a supply cliff just as the obligation re-tightens. Prices are projected to approach the new $35 ACP ceiling.

The strategic implication for project owners is clear: 2025 market state of play shows current pricing near historical highs. How to register your project now means locking in registration before the Phase One demand dip — and well before the Phase Two supply cliff that will reward generators already inside the program.

Frequently Asked Questions

Q: Where does PA Tier II AEC price data come from?

The PA PUC AEPS Annual Report, published each fall, is the primary source. It reports total AECs retired, weighted average transaction prices, and price ranges for each compliance year. PennAEPS publishes this data at pennaeps.com/pennsylvania-aeps-historical-pricing.

Q: Why did prices only increase slightly from $26.47 to $26.92 in 2024–25?

The weighted average increased slightly but the price range widened considerably — from $1.00 to $41.00. This indicates a bifurcated market where some buyers paid near the ACP ceiling for guaranteed supply while others transacted distressed or retroactive credits at very low prices.

Q: Is there a minimum price for PA Tier II AECs?

There is no regulatory minimum. AECs trade at whatever price the buyer and seller agree to. The $45.00 ACP creates a practical ceiling, and market forces create a floor. Emergent Energy's aggregation model ensures generators receive competitive market pricing.