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Maryland Offers Generous Solar Incentives
Each state has its own set of solar incentives, and Maryland solar incentives are some of the best. These state-level incentives combined with various federal and local incentives combine to make it the best time ever to invest in solar energy for your home or business.
The cost of solar equipment has plummeted in recent years as the technology advances and manufacturing processes are dialed in, and these incentives sweeten the deal even more. At Avila Solar, our team of experts is dedicated to saving you money, which is why we help you find every applicable incentive for your Maryland solar project.
Residential Clean Energy Grant Program
This residential solar rebate program is super simple: if you install a solar energy system at your home, the state of Maryland will send you a check for $1,000. There are only a few stipulations: the property where the solar energy system is installed must be in Maryland, you must own it, it must be your primary residence, and each property may only receive one rebate.
You simply need to submit an application to the Maryland Energy Administration within 12 months of the completed installation. The application requires you to send in:
- supporting documentation,
- a paid-in-full invoice for the total cost of your solar energy system
- proof that your system has passed inspections for all required permits (this can be photos, scans, or copies of inspection stickers or certificates, or a screenshot of granted online permits),
- photographs of the completed and installed solar energy system that clearly demonstrate where it has been installed, and proof of ownership, age, and primary residence from the Maryland State Department of Assessment and Taxation Personal Property database.
These documents along with the application form itself can be submitted online or mailed in.
Solar Renewable Energy Certificates (SREC)
Maryland also offers Solar Renewable Energy Certificates as a way to achieve the state’s renewable energy production goals. An SREC represents the generation of one megawatt-hour of electricity. Electricity suppliers and utility companies must purchase enough SRECs each year to fulfill their legal compliance obligations or else they are required to pay a Solar Alternative Compliance Payment (SACP) to make up the difference. The SACP amount started at $400 per megawatt-hour but has since declined and is scheduled to bottom out at $50 in 2023.
As of January 2021, Maryland SRECs sell for about $80. That means that an average 5 kilowatt home solar panel system which produces approximately 7 megawatt-hours per year could net you as the homeowner around $560 per year that your solar energy system is operational. A solar energy system usually has a lifespan of 20 or more years, meaning that over the operational period of the system, you could earn more than $11,000 if SREC prices hold steady.
Maryland Net Metering
Maryland’s net metering policy means that you can receive solar renewable energy credit on your utility bill for solar energy that your system produces but that you don’t use. This allows you to bank electricity generated throughout the day, since your solar energy system will produce the most energy during the middle of the day, when energy consumption is usually lowest.
Then later in the evening when your power consumption is likely higher, you can pull energy from the grid but not have to pay for it since you banked your own power earlier. Your utility company will install a special net-capable meter that measures the flow of electricity in both directions – from the grid to your home and from your solar energy system to the grid.
At the end of the month, if your power consumption is greater than your power production, you will just pay for the difference. If your production is greater than your consumption, you will have a credit on your account that you can apply to your bill for the next month.
This program allows you to maximize the benefits of installing a solar energy system without having to also install a battery backup system as well (although those come with their own set of benefits) and it can help balance your energy costs throughout the year since you can use credits you amassed in summer months against your higher winter electricity bills. If at the end of the year you have remaining credits, you can sell that energy as SRECs.
Potomac Electric Power Company (Pepco) offers the best net metering rates in Maryland, offering compensation at the same rate that they charge for grid electricity. Pepco does have some limits on the incentive: only systems 2 megawatts or less are eligible and the system must only produce 200% or less of your baseline annual energy usage. Baltimore Gas and Electric and Potomac Edison Company also offer excellent net metering options.
To take advantage of net metering, you will have to apply for interconnection. Part of this will be completed by your solar company but the application will require your review and agreement. If your system is 10 kilowatts or less and inverter-based, there is no application fee for interconnection with Pepco.
Maryland Solar Power Tax Benefits
Maryland also grants tax benefits to those who install solar energy systems, on top of these other incentives. First, the Sales and Use Tax Exemption for Renewable Energy Equipment means that you will not pay any sales tax on the purchase of your new solar energy system – that’s an automatic 6% savings!
Additionally, the Property Tax Exemption for Solar and Wind Energy Systems means that you will not have to pay an increased property tax amount, even though the solar energy system has increased the value of your home significantly. This tax break applies for as long as your solar energy system is in place, saving you money year after year.
Federal Investment Tax Credit for Solar (ITC)
The Federal Investment Tax Credit allows you to deduct 26% of the total cost of your solar energy system installation from your federal tax liability amount. The deduction amount was set to drop in 2021 but fortunately in December 2020, Congress extended the 26% deduction through the end of 2022.
If the deduction amount exceeds your federal tax liability amount for the year, you can rollover unused tax credits to the next year for as long as the tax credit is in effect. You simply must own the solar energy system (as opposed to leasing it) and you can claim the investment tax credit when you file your annual federal tax return.
Is Solar Worth It in Maryland?
Solar energy is certainly worth it in Maryland. The average cost of installing a system is between about $12,000 and $16,000. However, with the excellent local, state, and federal incentives, these prices can be dropped quite significantly and you have the potential to both save and earn money from your solar energy system throughout its lifetime with SRECs, tax breaks, and greatly reduced monthly energy bills.
The average payback period on a solar energy system in Maryland is 10.48 years, which means that in that time period, you will have saved as much on your energy bills as you spent on the system initially. Then, for the remainder of the solar panels’ lifetime, you can enjoy nearly free energy after already recouping your initial investment.
Are you interested in installing a solar energy system at your Maryland home or business? Contact us at Avila Solar Drafting Services today for a free consultation and project quote. Our friendly local solar experts are more than happy to answer any questions that you might have about the process.