Your 2019 guide to getting solar panels for your home in Maryland
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Maryland home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
** What's new for 2019 **
Maryland solar incentives can save the average homeowner nearly $2,000 in the first year, and the Federal Government will also give you a tax credit equal to 30% of what you pay for solar. All those incentives add up to substantial savings for homeowners who want to do the right thing for the environment and their pocketbooks.
Thos savings only increase over time as your solar panels make electricity for the next 25 years or more. Every time the utility company raises rates, you'll smile knowing you've locked in free solar electricity for the long haul. If you pay more than $100 in monthly electric bills, solar will help you eliminate those bills now and in the future!
The state's solar success is driven by its Renewable Portfolio Standard (RPS), which ensures a commitment to growing the share of electricity generated from renewable sources. But the law only aims for 25% renewables by 2020. That's next year!
We'd like to see an increased commitment to renewable energy for Maryland's future. In order for the state to really take off, we need a 100% renewable commitment similar to those in Hawaii, California, and New Mexico. Maryland gets plenty of sun and wind, so let's make it happen!
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the strong Maryland solar incentives you see below.
What you'll find on this page:
The Solar Strategy section is focused on the 3 ways of paying for solar in Maryland, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Solar, Step by Step section is a guide to everything that happens from before you get solar quotes to the time when the panels are on your roof and you're getting ready to claim that sweet solar tax credit.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Maryland. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Maryland.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Maryland Solar Strategy|
|Maryland Solar, Step by Step|
|Maryland Solar Policy Information|
|Maryland Solar Incentives|
|Your Maryland Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in Maryland|
|Solar Loans in Maryland|
|Solar PPAs in Maryland|
|Solar Purchase Payback Time in Maryland|
|Maryland Solar, Step by Step|
|Getting & Comparing Quotes|
|Financing Your System|
|Signing a Contract, & What Comes After|
|Installation, Inspection, & Interconnection|
|Operation, Maintenance & Claiming the Tax Credit|
|Maryland Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Maryland
Figuring out the best way to go solar in Maryland can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
How to pay for solar panels in Maryland
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, and the savings are HUGE in MD.
But paying up-front requires a big cash investment. That's why the solar loan option is better. If you take a loan or HELOC, you pay the system cost down monthly, but you still get a huge tax credit, meaning you'll come out way ahead in the first year. Your payments over 15 years will be only a little more than your savings, and you'll still come out tens of thousands ahead in the end.
The option with the smallest savings is for a solar Power-Purchase Agreement (PPA), which means you put $0 down on a rooftop solar system and pay monthly for the electricity, while you accumulate electricity bill savings over time. PPAs are an excellent option if you don't have any equity or cash to put down, and they still save you thousands in MD.
Read more below about each of three very good options for solar in The Old Line State!
Option 1: Paying cash for solar
The cash option used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true. You'll see a net return of almost $41,000 over 25 years if you pay up front. But it requires a significant up-front investment.
in the mid 2010s, banks and other financing companies realized what a good investment home solar can be, and they started providing solar loans. If you have good credit or equity in your home, that's likely your best option. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.
If you've got cash and you prefer to pay up front, you'll put down $29,380 up front. By the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced about $41,000 in income. The reason this works is that electricity in Maryland is EXPENSIVE. Solar offsets enough of it to save you about $1,700 in year 1, and it just goes up from there. As the electric company raises rates, you save more and more, and more...
On top of the electric bill savings, your home solar installation earns you extra credit for every megawatt-hour (MWh) of electricity it generates. The credits are called SRECs, and are worth about $20 each. An average-sized system earns you about 12 SRECs per year for the first 5 years of operation. That translates into about $240 this year and a handsome bonus over time. Read more about Maryland's SREC market below.
Here’s how the numbers pencil out when you pay up front for an average-sized rooftop solar system in Maryland:
- Installing a typical 9.8-kW solar system should start at about $29,380 after the state's generous rebate. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
- The Feds calculate their incentive based on actual out of pocket costs, so take 30% of $29,380, for a tax credit of $8,814. Your total investment is now down to just $20,566.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be $1,712. That reduces your cost after the first year to only $18,854.
- That isn't the end of the savings train! Maryland's SREC Market will save you $245 this year, bringing the final year 1 cost to just $18,609. That's nearly 40% off the starting price!
- Your system will pay for itself in just 10 years, and over its 25-year life, you'll see a total net profit of $20,451. The internal rate of return for this investment is a stupendous 10.3%!
- And don't forget... your home's value just increased by close to $22,000, too (which just coincidentally equals the cost of the system after incentives)!
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 204 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Maryland. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 2: Using a loan to pay for solar
Don't have $30,000 sitting around to pay for solar? No sweat! As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.
That’s because, in Maryland, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break. Your tax savings will be huge in the first year—more than enough to offset the small difference between the loan payments and electric bill savings. All this means you'll never have to spend a cent on solar, and you'll still come out way ahead over 25 years.
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can qualify for a solar loan or home-equity line of credit (HELOC) for $29,380, with a fixed rate of 5% or lower and a 15-year repayment period.
- You love making money without much risk
Here’s how the numbers pencil out for a Maryland solar purchase with a loan:
- Installing a typical 9.8-kW solar system should start at about $29,380 after Maryland's solar rebate. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $1,712, but your annual loan payments will be $2,697, meaning you would spend $985 on solar this year, but...
- You'll also see a huge tax break! The Feds give you 30% of the cost of your system (after rebate) back as a tax credit, which in this case is $8,814.
- The final bit of savings comes from Maryland's SREC program (discussed below). SRECs will mean an additional $245 in income from solar this year. Altogether, you'll come out $8,074 ahead after year 1. The cost of your loan will only never wipe away that windfall, and aftert the loan's paid off, your net savings will skyrocket.
- The benefits of taking the loan are so great that after the loan is paid off, your profits stack up just like if you bought the system outright. You'll end up with $29,703 in profits over our 25-year example—all without putting a single penny into it. That's HUGE.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too. 204 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Maryland. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)
In a Power Purchase Agreement, your solar company installs panels on your home, but you don't own them. You agree to buy the electricity from the panels at a set rate that's lower than your existing electric rate.
PPAs can be a smart choice if you have decent credit, low income, and/or are newly retired. And even though the savings are smaller than if you purchased a solar system, you can still avoid thousands in payments to the utility company. Though, if you can't commit to a 20 or 25-year contract, it can be a hassle to transfer the PPA when you sell your home.
Here’s how the numbers pencil out if you sign up for a solar PPA in Maryland:
- The agreement: You sign a contract to purchase solar electricity at a set rate. These rates vary, but we’ll use $.12/kWh as an example.
- How it works: The solar electricity replaces most of your utility bill, but you now get 2 bills each month; 1 from the utility company for a small amount, and 1 from the solar company. In our example, your previous utility bill would have been around $153 per month. The new bill would be for about $10 per month, and the new solar bill would be for about $123. In total, that represents an average savings of $20 per month, or $240 per year.
- Lifetime savings: That might not seem like a lot, but it adds up. And the savings get larger over time, because the PPA cost increases by only 3% per year, whereas electricity from the utility has gone up by an average of 3.5% per year for the past few decades. Over a 20-year PPA contract, you’d save almost $9,900. That’s with no money down and no messing with tax credits!
- Environmental savings: The CO2 savings from those panels is like planting 204 trees per year, every year!
Keep in mind, the numbers above are based on an average home in Maryland. If you're ready for a custom quote for a solar PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Is solar right for your Maryland home?
If you answer “yes” to each of the following questions, you’re probably a good candidate for solar.
- Do you own your home?
- Does your roof get direct sun for most of the day?
- Does your electricity bill bother you (specifically how much you have to pay)?
The ideal home for solar has a south- or west-facing roof that gets little to no shade throughout the day. The roof can be covered with anything from asphalt shingles to clay or slate tiles, but the easiest roofs to work with are asphalt and standing-seam metal roofs.
Even if your home does not completely meet these conditions, you may still see huge savings from going solar. Your installer will take everything into account when providing you with a savings estimate.
And hey, if your roof just isn't right at the moment, that doesn't mean solar power can't improve your life. For a quick way to bring some of the benefits of solar, check out outdoor solar lights. Installing them beats running wires under your yard!
We get more in-depth with roof shape, covering, and orientation in two useful articles:
The step-by-step process for going solar in Maryland
The most important thing to know about the entire process of going solar is that your solar installer is good at this stuff.
They'll make sure all the T's are crossed and the I's are dotted during the whole process:
- Step 1: Getting and comparing quotes
- Step 2: Financing your system
- Step 3: Sign a contract with an installer, and what comes after
- Step 4: Installation, Inspection & Interconnection
- Step 5: Operation, Maintenance and Claiming the Tax Credit
Step 1: Getting and Comparing Quotes
There are now many slick solar estimate tools online. Some have you draw lines on your roof from satellite imagery to place your panels and explain your savings. Others pit solar companies against each other in an automated battle for your dollars. Others still track the sun over the course of the year to show you your electric production with the panels you just struggled to draw on your roof.
In our view, they're all a waste of time. If you're serious about installing panels, the best way to get an accurate view of your costs and savings is to get actual quotes instead of messing around with these online tools.
After all, you're not a solar PV designer, it's better to let an expert who knows what they're doing use their own fancy tools for you (believe us—they have fancy tools).
Also, nothing beats a human connection from a trusted source. We've been forging relationships with strong partners and installers since 2007. They know what they're doing, and they're good people.
When you complete our form, we'll connect you with them. You’ll quickly get an accurate reflection of how much electricity your roof can make, how much your system will cost, and how long it will take before you see a profit. In Maryland, with a loan or PPA, you'll be in the green immediately.
What you should look for in a solar installer
If you seek solar quotes directly from providers without our help, be sure to judge them by the following criteria. All partners in our network are:
- Trained and Skilled - The standard for solar installers is certification by the North American Board of Certified Energy Practitioners (NABCEP for short). That means they’ve undergone training and passed tests that ensure they know what they’re doing.
- Experienced - How many solar systems has the company installed? A minimum of 10 is a good number to shoot for, unless you know they company well. Of course, choosing Tesla or Sunrun means you’re with a company that has installed thousands of systems, but their process can seem less personal, and their prices are often higher than smaller companies.
- Well-regarded - Look at reviews of solar providers on Yelp and Google and other review sites. Or simply ask the salesperson to speak with one of the company’s former clients. Solar owners generally love talking about their systems, and you can benefit from their experience.
- Licensed, bonded, and insured - Make sure the installation crew includes a licensed electrician, because if not, that can be a surprise charge to get the system hooked up.And of course, the company you’re going with has to be bonded and insured in case they do any damage to your home.
The solar quote process
Your first contact with one of our solar providers will be over the phone. They’ll take a look at a satellite photo of your roof and verify some simple details about you and your home. Many will be able to provide you a complete estimate without coming to your house. If you prefer, you can review your estimate in person.
Information included in solar quotes
Your quote will include information about how many panels will be used, how much electricity they can produce, your expected savings over time, and more.
- System size - System size isn't just about the square footage the panels will occupy on your roof. In the solar industry, size refers to the number of watts your system can produce in full sun. The average solar panel puts out 250 watts at a time, so your installer would call a system of 20 panels a "5-kW system."
- Energy production - Your solar panels' energy production is measured in kilowatt-hours (kWh), just like your electricity usage is measured by your utility company. The quote will include an estimate of the average kWh your system will produce per year, and might even show you how the seasons affect expected production by month.
- Cost and incentives - Solar system prices are quoted as "total cost" and "dollars per watt." For example, a 5-kW system that costs $15,500 has a $3.10 cost per watt. These are the first figures to compare what you’re being offered. The installer should also show you the available incentives that being the net cost of the installation down. Everyone is eligible for the federal solar tax credit of 30% of the system's cost, but there may be local incentives available, as well.
Note: if you're considering a PPA, you won't be eligible for incentives, and the cost section will include your expected costs per kWh.
- Equipment - Not all solar panels are created equal, but nearly all the panels used by reputable installers should be able to reliably make electricity for the next 25 years. The options are numerous, and your installer should be able to provide you quotes for a few different kinds. For example, if having panels made in the USA is important to you, your installer should be able to offer you a quote for a system using panels from the USA and panels made elsewhere.
- Warranties - A solar system has multiple warranties that cover the panels, the inverter, and the installer’s work on your roof. What can change between quotes is the length of the warranties and what they cover. Read our full post on solar warranties and what they cover.
Deciding which solar quote is the best
Now for the easy part: choosing which solar company has the best offer. If one installer offers a lower cost per watt using great equipment, they might be the best choice. Just keep in mind that important considerations other than price set solar companies apart.
Larger installers are all about full service and efficiency, making the process of going solar fast and streamlined. They all offer in-house financing options and multiple ways to pay, and they might also throw in bonuses like free monitoring equipment and long-term warranties.
Smaller installers don’t have the overhead of national solar companies, so they can compete more on price. You might even develop a meaningful relationship with a member of your community who has been doing this for a while, and if something goes wrong with your system, it might feel better to pick up the phone to call them rather than an 800 number tied to a high-volume call center. Just keep an eye on their financing offerings. Third-party lenders for solar financing sometimes include finance charges or higher interest that can mean you save less in the long run.
For more of our guidance on choosing an installer, check out these useful articles:
- #1: Why you should get multiple solar quotes and check the math
- #2: 9 crucial things to look for in a solar installer
- #3: How to negotiate with a solar installer.
Step 2: Financing your system
If you plan to pay up front, this step is easy. Just get your checkbook out and make it happen, high-roller! But if you’re interested in a loan or PPA, it’s time to explore options.
Many installers will offer you financing at this point. Compare their offer to the other options you have. If they offer third-party financing, it might be time to explore a HELOC with your bank before you sign their financing arrangement.
We discussed the options in the section on loans above, but here’s a quick refresher:
- Home Equity - Probably the best way to pay for solar, because you control it, the rates are lower, and you can repay it in a more flexible way.
- Solar loans - Most solar companies work with a financing partner to offer solar loans. If you choose a big installer like Sunrun, Vivint or Tesla/Solarcity, your loan will be handled through their own online portal. Many small and mid-sized installers offer loans that are managed by a partner like Mosaic, though whose website you'd be signing documents and making payments. These loans are usually structured with the solar tax credit as a balloon payment after 1 year, and the balance of the system cost as a long-term loan at 5%-7% interest.
- PACE loans - Property-Assessed Clean Energy financing is good for people who don’t have amazing credit or tons of equity, but who plan to live in their home for years to come and don’t mind slightly higher interest rates. The loan is repaid through your property tax bill, the interest is often tax-deductible, and repayment can be spread across as many as 25 years.
Don't forget about PPAs
If you don’t mind giving up a little control and letting your solar company own the panels, choose a PPA instead. These are only available through an installer, since they’ll be the ones who own the system.
Again, a PPA is best if you don’t have enough income to take advantage of the 30% federal solar tax credit, but it can work for anybody. It’s generally simpler than owning your own system. You just sign on the dotted line and start getting lower cost electricity from your solar company.
Step 3: Signing a contract, and what happens after
So, you’ve settled on a solar installer, and lined up the funding to pay for your shiny new panels! After you sign on the dotted line, it’s time for the pros to begin their work!
First up, you’ll be seeing a few folks out for site inspections. There will be a master electrician out to look at your main circuit panel and wiring, a solar contractor to do a detailed analysis of your roof and determine the best placement for the panels, and a roofing contractor to examine the structural integrity of your roof.
Design and permitting
Following the inspections, the system designer will get to work on a digital design for your system. Your solar company will finalize the design and components, and give you a final price for approval. Once you’ve authorized the final design, your solar installer will finalize the documents and submit them to your locality for permitting.
Step 4: Installation, Inspection & Interconnection
Maryland is a mature solar market and most installers have their procedures down pat. Installation, which used to take several days, now usually takes between 4 and 8 hours. Unless your roof is complicated or your electrical systems need updating, your crew should arrive, perform their duties, and be done within one day.
Your installer will have already completed their site surveys and the workers on the truck will know exactly what they're installing and where. The crew will arrive at your home, set up their gear and get to work on your roof.
The first thing they'll do is mark off all the places the solar panel mounts will be placed, then attach those mounts to your roof. If you'd like to know more about the big metal bolts that will be screwed into your rafters, check out an article on how solar panels are attached to your roof.
The crew will then install the racks and panels, making connections that either wire the panels together in strings, or bring the wires from the micro-inverters together. If the crew includes a master electrician, that person will make the final connections between the panel, inverter, and your main AC panel (you may have to wait a day or two for the master electrician to finish the wiring).
What the heck are micro-inverters?
Traditionally, solar panels are wired in a series and connected to a single inverter box, which converts the electricity from DC to AC so it can be used in your home. Those large inverters work great for most people, but tend to make the system overall a tiny bit less efficient. Also, if a shadow or cloud passes over and blocks sunlight to some of your panels, the whole system suffers.
Micro-inverters, on the other hand, are attached to the back of every panel, which ensures that the maximum energy output of each panel reaches your home wiring. They cost a little more, but for a house with a partially-shaded roof, they can pay for themselves quickly.
Here's an infographic showing how the two types of inverters differ:
Inspection and Interconnection
After your system is installed, it needs to be connected to the grid, and for that, you’ll need to have it inspected. Your installer will line all this up for you, too, and it may take between a couple days and a couple weeks to get the final inspections scheduled and completed.
Your city may require an inspection from the fire department, but the most important inspection will come from the utility company, who will send out someone to examine your system’s components and wiring and install the new electric meter that will record your solar kWhs.
At this point, you might even get a chance to turn the system on yourself!
Step 5: Operation, Maintenance, and claiming your tax credit
So you’ve got a shiny new solar system installed and it’s working. Now what? To be honest, not much. Solar panels are the platonic ideal of a Ron Popeil creation: set it and forget it. Still, you might find yourself compulsively checking your monitoring software to ensure those panels are working as promised.
After the deep breath of fresh air that comes with seeing your new electric bills, you'll relax into a state of solar bliss. During other moments, you'll smile as you think of all the acreage of forest you basically just planted using only the few hundred square feet of your roof.
There are a few important things to know after your panels are installed:
- How to maintain your solar panels
- How to tell if your panels are working
- What to do if they break down
- How to claim the federal tax credit for solar
How to maintain your solar panels
Maintaining solar panels is a breeze. Solar panels are designed to handle rain, wind, snow, hail, and whatever nature throws at them for 25 years or more. All the maintenance a solar panel system needs is a yearly rinse and squeegee to take off extra dust and grime; maybe 2 or three times yearly if you live in a very dusty place. You can get by with a hose, if you need to, but you can also contract out the work to a cleaning company for a relatively low annual cost.
How to tell if your solar components are working
Other than cleaning, you may someday experience the failure of one or more components. Right off the bat, you should be able to see whether your panels are delivering energy on the panel of your inverter or net meter.
Read the user manual of your inverter to find out how to access the proper information, but most inverters will have a real-time production number on an LCD readout right on the front.
If you have a system with a central inverter, you will likely need to replace it after 10-15 years. If, instead, you have micro-inverters attached to each panel, they should last for the life of your system, and if not, they’re usually covered by 25-year warranties.
Your installer may also have included monitoring software as part of your installation, either on a screen attached to your system or on the web. The monitoring software will tell you if the system is functioning properly, and, if you have micro-inverters on each of your panels, can even tell you if any panels are not working as they should.
If you discover that one or more of your panels isn’t working, it’ll be time to file a warranty claim.
What to do if your panels stop working
If you’ve done a good job by choosing one of our installer partners, you’ve got warranties that cover the installation (e.g., watertightness of roof penetrations and structural integrity of your roof), the panels (manufacturing defects) and the energy (production guarantee).
Your first step is to figure out who to contact. If you have a PPA contract, that step is simple: call your installer or contact them via their customer portal. That might also be the case if you sign up for a solar loan from a big installer. Oftentimes, the loan comes with a similar kind of protection.
If, however, you went with a different installer, perhaps sourced through a different website, you’re probably stuck looking through the paperwork you got with the system to find the manufacturers of your panels, inverter, or other components.
How to claim the federal tax credit for solar
Claiming the Federal Solar Investment Tax Credit (ITC, for short) is easy, just have your personal assistant fax all the necessary paperwork to your accountant in the Caymans, and wait for your huge refund.
Oh wait, you don't have millions in an offshore account? Then we've got the necessary info for you. The ITC is claimed by filling out a special schedule, Form 5695, and entering the credit amount from that into your 1040 form.
For your edification and convenience, we've prepared a step-by-step guide to claiming the solar tax credit.
Maryland Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Maryland:
Maryland RPS Law
25% by 2020
A Renewables Portfolio Standard (RPS) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels. Maryland has a pretty ambitious RPS, mandating that 25% of all energy must come from renewable sources by 2020. Maryland’s target of 25% is a relatively strong RPS overall, especially when compared to states that have yet to jump on the RPS bandwagon.
Perhaps more impressive is the fact that the state legislature overrode a veto in 2017, increasing the RPS to 25% and moving the deadline for compliance two years earlier, from 2022 to 2020. You go, Maryland lawmakers!
Maryland’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.
Maryland Solar Carve-Out
2.5% by 2020
What’s more, the 2017 amendment to the RPS requires utilities to draw at least 2.5% of the state's electricity from good, clean solar power by 2020. Maryland is forecasting robust growth in the local solar market as a result of this legislation. They are projecting 1,650 MW of solar power by 2020. That’s a lot of solar power!
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Maryland Electricity Prices
The average cost of electricity in Maryland is 14 cents/kWh. That’s slightly above the national average of 13.6 cents/kWh. At Solar Power Rocks, we think the national average is too cheap, so we think energy in Maryland is currently too cheap as well. We know you hate high electric bills, but hear us out.
Most of our electricity still comes from burning millions of tons of fossil fuels. The cost of those fossil fuels in dollars and cents may be low for now, but the environmental costs are astronomical. Switching to solar power now saves you money down the road and helps save the planet. You can thank us later.
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
Maryland Net Metering
Net-metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume to make sure you get credit for the surplus.
Maryland’s net-metering rules let you connect your solar panel system to the grid, and if you generate more kWh than you use, your electric company is required to credit you the going rate toward future bills.
If at the end of a 12-month billing cycle you have generated more electricity than used, you'll get a check at market rates for the difference. However, you still retain the associated SRECs your system produces over that time period.
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Maryland Interconnection Rules
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Solar Incentives in Maryland
Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.
These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.
Let's see how Maryland measures up:
Maryland Solar Rebates
$1,000 for systems up to 20kW
Maryland has altered their state solar power 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 solar panel rebate is valid only for systems sized 20kW and below. If you’re planning a larger system, you do not qualify for this grant, but you are then eligible for the state production tax credit below.
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
Maryland Solar Tax Credits
$0.0085/kWh for very large systems
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 -- we're talking 28-kW of panels, which is nearly 3 times bigger than the average system. So if you have the roof space on your mansion, you can get at least a $1,000 state tax credit.
How do you get there? 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, Daddy Warbucks.
For those of us with less-than Titanic-sized incomes, everyone can benefit from the 30% Federal Solar Tax Credit. There's no cap on the federal tax credit and fortunately for Maryland, having a smaller state rebate to deduct means a larger tax credit coming your way.
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Solar Performance Payments
~$245 per year, varies
Another great financial incentive in Maryland is the SREC market. As we discussed above, an SREC is basically just proof of clean energy generatio-n, and solar owners get an SREC every time their system generates 1 megawatt-hour (MWh, or 1,000 kWh) of electricity. The average 9.8-kW system will generate about 12 SRECs per year.
Utility companies buy SRECs from generators (aka homeowners with solar) because they need to show the state that a certain percentage of their energy supply comes from renewable sources. If the utility doesn’t meet that percentage, they have to pay Solar Alternative Compliance Payments (SACP), which are high fees that start at $150 per MWh. That is what gives SRECs their value.
Because of those high fees, prices for SRECs were initially very high, tracking pretty close to the SACP. Unfortunately, the draw of high SREC prices led to a lot of solar installed in a short period of time, resulting in an oversupply of SRECs on the Maryland market, and prices have dropped precipitously. Recent Maryland SREC prices are around $20, and it's hard to know if that'll ever go up again. It could go way up, if the state adopts a new RPS law, as Governor Hogan has called for. Stay tuned.
For reference, Maryland has built in a step-down reduction in the cost of SACPs, which will ultimately end at just $50 by 2023. Here’s a look at the scheduled reductions:
In Maryland, SRECs are bundled and sold through brokers, so there’s a bit of paperwork to fill out, and a bit of a fee to sell your SRECs through the broker. The good news that your installer knows the ins and outs of the system, and they’ll help you get the SREC transfers set up so you can just kick back and enjoy the savings. What are you waiting for? Find a solar installer in Maryland today!
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
We've got a great article if you like to read more about what SRECs are and how to earn them.
Property Tax Exemption
Maryland lawmakers enacted 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.
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Some argue that solar power adds approximately 20 times your annual electricity bill savings (if you own the system and are not leasing). Other studies seem to indicate a home price premium about equal to solar panel cost, minus any incentives like the federal solar tax credit.
For many average-sized solar power systems on a house, that can mean adding $20,000 to your home value. And if you don't believe us, believe the bean counters: Many banks and solar financing companies now offer traditional style equity-based home loans for installing solar. An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. Grades in this category are basically all-or-nothing. Either you got it or you don't. Thankfully, many states have "got it.".
Sales Tax Exemption
What’s more, the purchase of your solar panel system is also sales tax exempt thanks to a sales tax exemption enacted in 2011. Thanks, Maryland!
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
The final word on Maryland home solar rebates and incentives:
The consensus on Maryland solar power rebates and incentives
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 strong RPS (including a solar carve out) and some important solar power 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. Don’t miss the boat!
Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!