Market Details

Market Overview

The Pennsylvania Geothermal REC market encompasses various renewable energy technology types, including demand side management and energy efficiency, which would include geothermal heat pumps. These pumps, intended for use in HVAC applications, have a measured life of 15 years and are eligible for replacement on burnout, new construction, or early replacement projects.

The quantity of RECs is based on the energy efficiency of a system. A System will generate a set number of RECs annually based on the total conditioned square footage, the type of heating system being replaced, water heater type, and other home energy efficiency factors.



For residential systems, purchase high-efficiency CAC, ASHP, GSHP, PTAC, or PTHP. Claim cooling savings through Manual J calculations or ENERGY STAR procedures. Properly sized baseline systems are exempt from savings claims.

For industrial or commercial systems to qualify, geothermal heat pump systems must be high-efficiency and meet or exceed the energy efficiency requirements of the International Energy Conservation Code (IECC) 2015, Table 403.2.3(1). Retrofit scenarios cover various applications in existing or new non-residential buildings.


Retroactivity / Eligibility Start Date

Facilities on estimates will earn credit beginning with the first full month following application submission, and we can register systems installed after 1/1/2017.


Alternative Energy Portfolio Standards Act

Pennsylvania’s Alternative Energy Portfolio Standard (AEPS) was created in 2004.

The AEPS Act requires that a certain percentage of all electric energy sold to retail customers be derived from alternative energy sources such as solar, wind, hydropower, biomass, biologically derived methane gas, and demand-side management resources. Certain minimum thresholds must be met for the use of Tier I, Tier II, and solar photovoltaic resources. 


What is a Tier II REC

A commodity unique to Pennsylvania, called an Alternative Energy Credit (AEC), provisions for two distinct classes of credits categorized into one of two tiers.

Tier II sources include (new and existing) waste coal, distributed generation (DG) systems less than 5 MW in capacity, demand-side management, large-scale hydro, municipal solid waste, wood pulping and manufacturing byproducts from energy facilities located outside the state, useful thermal energy, and integrated gasification combined cycle (IGCC) coal technology.

Provision for “useful thermal energy” is defined as thermal energy created from the production of electricity. This technology and fuel-neutral definition of useful thermal energy essentially allows combined heat and power (CHP) facilities to qualify as a Tier II resource; however, this definition expressively prohibits combined-cycle electric generation facilities from being considered an eligible resource.

All solar systems interconnected in PJM territory are eligible for the Pennsylvania Tier 1 REC market from D.C., DE, IL, IN, KY, MD, MI, NJ, NC, OH, PA, TN, VA, and WV.

GRECs are listed under Pennsylvania Tier II Alternative Energy Certificates (“Pennsylvania Tier II REC”) are issued by PJM-GATS for qualifying generation.

Outside states can not participate in PA Tier II GRECs.  


Rules for Qualifying for PJM Geothermal RECS

When 1,000 kWh have been generated from a qualified Tier II source, the owner of the rights to the credits or their designee must post the required information into a tracking system called the Generation Attribute Tracking System (GATS) - in this case, PJM-GATS.

GATS will originate a certificate number for each AEC. The certificate number is used to track current and future ownership as well. Once a buyer has used a certificate to meet an obligation, that certificate and its number are permanently retired.


Contract Options for Customers

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Full Upfront - One Upfront Lump-Sum Payment

This option is one payment upfront. This is a “pre-payment” for 25 years of GRECs generated. We calculate this payment based on the size of the system and the energy efficiency of a system. Determining factors include the total conditioned square footage, the type of heating system being replaced, water heater type, and other home energy efficiency factors. Payment is made in full within 30 days of all registrations being approved. 

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Overview of the Process and Timeline


The registration process will begin after a system has been installed and inspected and the system owner has signed a REC contract with Carbon Solutions Group. Carbon Solutions Group will register the system with PJM GATS (A REC generating and tracking system). This process generally takes between 4-6 weeks. Payment to the customer is net 30 from the system registration date in PJM GATS.

Information/Documentation Requirements

  • System Details 
  • Owner and Installer Affidavits
  • Local building permit final approval and/or proof of paid invoice
  • System Specs (typically on the proposal/sales contract)
  • ClimateMaster Saving Calculator (Residential) or CSG calculator in portal
  • Installer’s Engineering Study (Non-residential)
  • Certificate of Good Standing if the owner is a corporation
  • System Photo
  • Cut sheets for original and GHP equipment



Alternative Energy Compliance Act

GREC Basics


We appreciate the opportunity to work with you.

Carbon Solutions Group Contact Information                                                       

Schedule A Call To Connect

Phone: 888-316-GREC




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