The Mid-Atlantic States are becoming an important region of the country for solar energy. Maryland has joined many of its sister states in the region by providing significant incentives to those who want to go solar. Maryland is only one of a few states that has a solar carve out to its renewable portfolio standard, unwire which electric utilities must purchase a minimum percentage of their electricity from solar sources. Maryland has a lot of catching up to do, but with the new incentives in place, look for it to break into the top ten in the next couple of years.
Maryland’s Commitment to Renewable Energy
Maryland began to address climate change with the passage of the Healthy Air Act of 2006 through which the state joined the Regional Greenhouse Gas Initiative (RGGI) — the cooperative effort between Maryland, Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont to reduce carbon dioxide (CO2) emissions from electricity generating plants.
As the first step in fulfilling its RGGI commitment, the state passed the EmPOWER Maryland legislation, which calls for a 15 percent reduction in overall energy usage statewide by 2015, and an increase in the percentage of energy from renewable sources to 20 percent by 2022. To realize these ambitious goals, the state is encouraging solar energy installation as an important piece of achieving a “Smart, Green and Growing Maryland.” So what exactly are the economic incentives now available to home and business owners to make Maryland’s green vision a reality?
State Solar Energy Grant Program Reopens
In October 2009, the Maryland Energy Administration (MEA) reopened the Solar Energy Grant Program thanks to funds made possible by the American Recovery and Reinvestment Act of 2009. Funding is available to Maryland residents and small businesses to install solar photovoltaic, or solar hot water systems.
The grants are awarded based on a $/watt basis according to the following terms:
1) Solar Photovoltaic systems under 20kW (A Mid-Size Solar Energy Grant Program exists for larger systems):
- $1.25/ watt for the first 2,000 watts of capacity
- $0.75/ watt for watts 2,001 – 8,000
- $0.25/ watt for watts 8,001 – 20,000
- Maximum grant amount is $10,000.
- Minimum residential system size is 500 watts; minimum school, government and church system size is 1 kW; minimum commercial system size is 2 kW
2) Solar Hot Water:
- 30% of the installed cost
- Maximum grant amount is $2,000.
Grant applications are posted on the Maryland Energy Administration website: http://energy.maryland.gov/incentives/residential/solargrants/index.asp
Federal Tax Credits
The Federal Investment Tax Credit entitles owners of both commercial and residential renewable-energy systems to a credit of 30 percent of the net system cost, with no set limit, for all systems placed in service before December 31, 2016. The credit can be carried forward 15 years or back three years.
State and Local Property Tax Exemption
Solar photovoltaic (PV) and solar hot water systems are exempt from state and local property taxes. Maryland’s property tax code enables local governments to offer a property tax credit for buildings equipped with solar energy systems used to generate electricity, heat or cool, or provide hot water. Counties determine the credit amount, define the devices that qualify, and determine the length of time that a credit may be available (not to exceed three years). As of 2009, five counties offer a tax credit under this section of the state code: Anne Arundel County, Harford County, Howard County, Montgomery County and Prince George’s County.
Anne Arundel County: Anne Arundel County offers home/building owners a one-time property tax credit equal to the total cost of the solar system and installation, minus any federal or state tax credits. The total exemption cannot exceed the total annual property taxes. Eligible systems include those used for electricity generation, heating and cooling, and water heating (not including pool heating).
The credit is equal to either 50 percent of the cost of solar energy equipment and installation (minus any federal grants, state grants or state solar energy tax credits) or $2,500 — whichever is less. Web Site: http://www.co.anne-arundel.md.us/Finance/index.cfm
Harford County: Hartford County offers a one-time, flat property tax credit for solar or geothermal devices used for generating electricity, heating or cooling. The credit is equal to one year of property taxes or $2,500 — whichever is less.
Howard County: In Howard County, property owners can take advantage of a tax credit equal to 50 percent of the total cost of either a solar PV or geothermal heating system up to $5,000 and 50 percent of the total cost up to $1,500 for solar water heat.
The total credit applied may not exceed the total annual property tax. However, any credit amount not taken may be carried over for an additional two years. http://www.howardcountymd.gov/DOF/DOF_RealPropertyTaxInformation.htm
Montgomery County: Montgomery County residential property owners can take advantage of a 50 percent tax credit for the total system cost for solar systems used for electricity generation, heating, cooling (up to $5,000) and hot water (up to $1,500). The amount of the credit cannot exceed the total annual property taxes. However, any excess credit amount can be carried forward for up to two years.
Only costs incurred during the 12-month period prior to applying for the credit are eligible for a tax credit, and residents can only submit an application for one solar energy or geothermal system per year. Website: http://www.montgomerycountymd.gov/govtmpl.asp?url=/content/finance/index.asp
Prince George’s County: Prince George’s County offers a tax credit for solar-electric PV, heating, cooling and hot water systems. The tax credit is equal to 50 percent of the total system cost, including installation. Currently, a credit limit has not been defined for PV systems. The limit for heating and cooling systems is $5,000 and for water heating systems is $1,500. The credit amount may not exceed the total property tax, however excess credits may be carried forward for up to two years. Eligible costs must have been incurred during the 12 months preceding the application. Website: http://www.co.pg.md.us/Government/AgencyIndex/Finance/index.asp
Sales Tax Exemption
Solar equipment used to generate electricity, heat or cool a building, or provide hot water for a structure are exempt from Maryland state sales tax.
Solar-Renewable Energy Credits (SRECs)
Maryland residents and businesses that install solar PV systems are able to earn and sell Solar Renewable Energy Credits (SRECs). One SREC is equivalent to 1,000 kilowatt-hours of solar power.
Utilities operating in the state of Maryland are required to generate a certain percentage of their electricity from renewable sources. Purchasing SRECs from residents and businesses that are generating solar electricity is one means by which they are able to meet this requirement.
Residents and business must apply to have a completed PV system certified by the Maryland Public Service Commission as a “Solar Renewable Energy Facility,” register the system with PJM Environmental Information Services and create an account with PJM’s Generation Attribute Tracking System in order to sell SRECs.
Net Metering
Residents, businesses, educational institutions and government entities that generate solar electricity are eligible to participate in net metering. To qualify, systems must generate less than 2 MW of electricity annually.
In order to take part in net metering, customers must have their utility company install a bi-directional meter. (This installation is by law done without charge.) The meter will track both the customers energy usage and energy generation – and will in fact run in reverse when the customer is generating more electricity than is being used. That surplus electricity is known as net excess generation (NEG), and is carried over month-to-month to the customer’s next utility bill. Each month, the utility subtracts the kilowatt-hours of electricity produced from the amount used.
If at the end of the year a customer has generated more electricity than has been used over the course of the 12-month period, the surplus goes to the utility company without any compensation to the customer. Customers who participate in net metering remain eligible to sell the SRECs generated by their system, as described above. The state’s net metering program will continue until the combined electricity generation of all net-metered systems reaches 1,500 MW.
To learn more about your utility’s net metering program: Pepco – Green Power Connection™ – http://www.pepco.com/home/choice/dc/greenpower/
Translating Incentives into Energy Solutions
According to Ken Stadlin, President of Millersville-based Kenergy Solar, though there are a lot of moving parts when it comes to solar incentives, home and business owners can rest assured that the economics of solar installations are ultimately going to work in their favor, no matter the system size.
“At Kenergy Solar, we work with many homeowners and business owners who are looking to lower their electricity bills, produce cleaner energy and reduce their energy footprint,” says Stadlin. “We focus on helping our customers understand the pieces and demonstrate for them how the combination of the 30 percent federal tax credit, Maryland state grants and county property tax credits typically offsets more than 50 percent of the upfront installation costs — making solar a viable option within almost any budget.”
Qualified solar installers also make sure customers understand how to realize significant savings over the long term, especially in the face of the escalating cost of traditional electricity. “In Maryland, we typically pay about $.15 per kilowatt hour of electricity. SRECs can be worth twice that, and net metering has the potential to dramatically cut utility bills, ” explains Stadlin. “Forecasting the energy savings over the lifetime of system is as important a consideration as the initial cost to install it.”
Stadlin also points out that there are more financing and leasing options than ever before. “Kenergy Solar and SolarTown are working together to provide customers with better options when it comes to paying for solar systems. Stay tuned in 2010 to learn more!”
If you have additional questions about installing solar in Maryland, visit www.solartown.com or www.kenergysolar.com.
SolarTown Economic Incentives Blog 