Black Hill Regional Park, Boyds Maryland
Solar Legislator Score: 
Welcome to the Maryland solar incentive and rebate information page. If you have any questions, our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our solar group purchase page. Being part of the program will also entitle you to discounted pricing as low as $5,000/kW. This is paired with the superior Maryland incentives below.
January 2012 Update:
Maryland, home of the Star-Spangled Banner, the Orioles, the Appalachian Mountains, Chesapeake Bay, and the warm friendly beaches of the Eastern Shore. Whether you want to go hiking, head for the ballpark, take in some of our nation’s great historical sites, or relax on the beach, you’ll want to do that in a clean safe environment. To keep the Maryland environment looking good, renewable energy like solar power is the word. Here’s what the Maryland legislature has been working on to make that a an affordable reality.
State Legislation:
Maryland got an early start using renewable energy. 2001 law mandated six percent of government building electricity come from renewable sources. That was one of the first government mandated renewable targets across the country.
Also, in 2010, all state buildings reduced their energy usage by 15% from a decade prior.
Perhaps most important for the solar industry was the Maryland legislature establishing a strong renewable portfolio standard (RPS).
Maryland’s Renewable Portfolio Standard:
The Maryland legislature has set ambitious targets to ensure a big chunk of electricity generated in the state comes from renewable sources instead of fossil fuels.
They’ve mandated that at least 20% of the power used in the state by 2022 needs to comes from renewable sources.
What’s more, a 2007 amendment requires utilities to get at least 2% of that electricity to come from good, clean solar power by 2022.
If the utilities do not comply, they have to pay a fee to the state. Therefore, there’s now a thriving renewable energy credit market as that deadline nears.
What that means for you is, your utility company would rather pay you a little bit less than that nasty fee to the state just for saying they are meeting their numbers for solar electric power production instead of paying hefty fees to Annapolis.
Yes, that’s right, they’ll be paying you cold hard cash for the electricity you generate with your solar panels on your rooftop, just to claim that your kilowatts are connected to the grid – even if you use all of what you produce on site!
Maryland is forecasting robust growth in the local solar market as a result of this legislation. They are projecting 1,500 MW of solar power by 2022. That’s a lot of electricity!
To understand how those utility company payments would affect the return on investment of your solar power system, we recommend getting a free customized solar quote.
Just so you can get a ballpark idea of how all the credits and rebates might look for you, we calculate a sample 5kW installation investment further below.
We calculate a Maryland 5kW system put into service in 2012 will pay for itself in just 8 years. That’s the main reason the state scores so highly.
Maryland Electricity Prices:
The average cost of electricity in Maryland is $0.15/kwh. That’s a reasonable amount to pay for electricity, given the polluting consequences of use of mainly fossil fuels like coal or natural gas to power toasters and plasma tvs. We project electricity costs to continue to rise over the next decade, and as that happens, rooftop solar panels will be even more competitive with grid power.
Performance Payments:
Since the Maryland utility companies are now in a scramble to meet their RPS goals, you will be issued 1 state renewable energy credit (SREC) for every 1,000kwh your solar panel system produces.
In Maryland, a typical 5kW system will generate about 5,850kwh a year. That means you can sell between 5 and 6 of those credits back to the utility company.
How much are those SRECs worth? They are market driven based on supply and demand. The friendly folks at SRECtrade keep track of market prices and as of January 2012, SRECs are worth about $200.
As you can see the value of SRECs has come down quite a bit from their highs, though we estimate there will continue to be strong demand over the next 10 years as utilities are required to snap them up.
Even so, for our calculations in the sample 5kW system farther down the page, we were very conservative with an expected starting SREC value of $200, and decreasing 10% annually until 2022. It’s very possible SREC prices may increase back up into the $300-$350 range based on how the utilities are doing in relation to their targets.
To sell your Maryland SRECs, you can sign up with an SREC aggregator like SRECtrade, since the utility companies are not set up to purchase small amounts of SRECs from individual homeowners and would prefer to buy much bigger blocks.
Ask your solar installer how this works, they’ll probably handle all the SREC paperwork for you so all you’ll have to do is sit back and collect an annual check from your utility company.
Tax Exemptions:
In 2007, the legislature voted to give you a property tax exemption for your solar panels. That means that making your house more valuable by installing a solar system won’t cost you a penny when tax time rolls around.
You can expect an increase in your home value by a factor of 20 times your annual electricity savings. For a 5kW solar system installed in Maryland, that’s about $17,000.
What’s more, the purchase of your solar panel system is also sales tax exempt!
Net Metering:
Maryland’s net-metering rules, established in 1997 and most recently amended in 2007, let you connect your solar panel system to the utility grid, and if you generate more kwh than you use, your utility company is required to credit you the going rate of electricity toward your future bills.
The only down-side to this rule is that if at the end of a 12-month billing cycle, you have still generated electricity more than you use, you grant any credit to your power company.
However, you still retain the associated SRECs your system produces over the amount you use.
State Rebate Program:
Maryland has altered their state rebate from previous years. Now, every homeowner installing solar panels on their roof gets a flat $1,000 rebate through the Clean Energy Grant Program.
That grant is valid only for systems sized 20kW and below. If you’ve got a larger system, you do not get this grant, but you are then eligible for the state production tax credit below.
Clean Energy Production Tax Credit:
For homeowners with deeper pockets and lots of land, you can qualify for the state’s Clean Energy Production Tax Credit. To qualify, your solar system needs to be pretty big. How big? Big enough to generate at least a $1,000 state tax credit. How do you get a $1,000 tax credit? Maryland will credit you $0.0085 (that’s a fraction of a cent) for each kwh you feed back into the grid toward your annual state tax.
So your system would need to kick out at least 23,530 kwh to hit that magical $1,000 level. Only systems sized 20kW and up can do that.
If you are in the position to install a system that large, you can take your production tax credit annually for 5 years. Not too shabby.
Example 5kW System Investment Return:
Here you are on the cutting edge of clean solar power in Maryland; you’ve decided to install a 5kW solar electricity system on your rooftop.
- Upfront cost: Initially, it will run you about $5,000/kW if you’re part of an active group purchase program, so roughly $25,000. Keep in mind there may be some things that could inflate your price a little.
- State rebate and 30% Federal Tax Credit: Don’t forget though that you get a $1,000 rebate from the state and you’re eligible for the 30% federal tax credit (taken after the $1,000 rebate), so deduct another $7,200.
- SRECs: Next, take off about $1100 from your projected sales of SRECs in the first year (you’ll be getting this payment for at least 10 years!).
- Electricity savings: Finally, don’t forget about the electricity expenses you’ll wind up saving! A 5kW system in Maryland will cut about $73 off your monthly bill, or a savings of $878 annually.
- Cost after year 1 and payback: Now, after one year, your cost is less than $15,000. Also, you’ve improved your property value by already more than that (20 times your annual electricity savings). At our calculated rate of SREC payback (about $1000/year for 10 years) and electric bill savings, you can expect your system to pay for itself in just 8 short years. Everything from 2020 onward is pure gravy profit.
- Maryland solar lease possibilities: Now, even if you don’t have $25,000 lying around to purchase a system, you can easily qualify for solar leases in the state so you don’t have to pay anything up front and your power bill decreases immediately. If you go that route though, keep in mind you may have to sign over your SRECs to a third party.
If any of this is confusing, ask our on call solar expert friends at One Block Off the Grid how things can work for you. They’re super friendly and will even get you a free customized quote.
As of January 2012, there’s an active group purchase program going on which can save you big bucks off the typical solar installation price!
Consensus:
Maryland has been making some good progress on building up the solar energy market in the state. The legislature has set the bar high with a very strong RPS and some important utility rebates and incentives are now flowing into homeowner’s pockets as a result.
Solar is now a no-brainer idea in Maryland: good for your kids, environment, local economy, and most importantly – your finances.
With as much coastline as Maryland has, combatting global climate change with nice clean solar power is a must. Don’t miss the boat!
Click here to get hooked up with a local solar installer for your Maryland home or business
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