The Pennsylvania Commonwealth Court has reversed a PUC order that denied alternative energy credit (“AEC”) eligibility to two off-grid solar facilities, holding that a solar photovoltaic system can qualify for AECs — Pennsylvania’s equivalent of a Renewable Energy Credit — even if it is never connected to the electric distribution grid, so long as it delivers power directly to a retail customer of an electric distribution company (“EDC”). 1
Background
Williams Companies, Inc. (“Williams”) is primarily a natural gas transportation company. Its interstate pipeline system, including Transco, relies on compressor stations that require electricity to operate. Williams proposed to build two 11 MW solar farms and route their output directly into the internal electric systems of Transco’s compressor stations — without connecting the solar generation to PPL’s distribution grid at all. Williams expected the solar farms to supply substantially all of the compressor stations’ electricity needs, reducing the stations’ reliance on PPL.
Williams asked the PUC to certify the two systems as eligible to generate AECs under Pennsylvania’s Alternative Energy Portfolio Standards Act (“AEPS Act”). The PUC denied certification, finding that because the systems would never connect to the grid, they did not meet the AEPS Act’s definition of an “alternative energy system” — a definition the PUC read to require interconnection.
The Dispute
Williams argued that a later-enacted statute, Act 40, 71 P.S. § 714, resolved the question on its face: a solar photovoltaic system qualifies for AECs if it “[d]irectly deliver[s] the electricity it generates to a retail customer of an [EDC]” — with no separate grid-connection requirement.
The PUC disagreed. It argued that Act 40 has to be read together with the AEPS Act’s broader definition of “alternative energy system,” which independently requires interconnection to the distribution system. In the PUC’s view, Act 40 did not eliminate that requirement or create a standalone path to AEC eligibility for solar systems that never touch the grid.
The Court’s Decision
The Commonwealth Court sided with Williams. Drawing on Act 40’s legislative history, the Court held that the statute creates an exception to the interconnection requirement for solar photovoltaic systems that deliver electricity directly to a retail customer of an EDC — meaning such systems do not need to be connected to the distribution grid to generate AECs. The Court reversed the PUC’s order.
Judge Wojcik authored the majority opinion. Judge Dumas and Judge Cohn Jubelirer each filed separate concurring opinions.
Why It Matters
The decision gives large electricity consumers — pipeline compressor stations, manufacturers, data centers, and similar users — a clearer path to build solar generation that offsets their own consumption without ever interconnecting to a utility’s distribution system, while still qualifying for AECs they can sell or use to offset compliance costs. That should make behind-the-meter, non-grid-connected solar meaningfully more attractive for large industrial and midstream energy users in Pennsylvania.
1 Williams Companies, Inc. v. Pa. P.U.C., No. 1232 C.D. 2024, Pa. Cmwlth., Order entered August 19, 2026.
