Your 2020 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 2020 **
Maryland solar incentives continue to save the average homeowner nearly $2,000 in the first year, and the Federal Government will also give you a tax credit equal to 26% of what you pay for solar in 2020. That federal credit steps down again in 2021. All those incentives add up to substantial savings for you who want to do the right thing for the environment and your pocketbook.
Maryland'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. While the RPS is currently pretty strong, it could be enhanced to 100% as promised by other forward looking states, though the SREC solar performance payment and available solar rebate program here provides returns at pace with the historical performance of the stock market.
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 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|
|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 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 over $46,000 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 $27,910 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 $46,000 in income. The reason this works is that electricity in Maryland is EXPENSIVE. Solar offsets enough of it to save you about $1,770 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 $50 each. An average-sized system earns you about 12 SRECs per year for the first 5 years of operation. That translates into an estimated $666 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 $27,910 after the $1,000 Maryland solar 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 26% of $27,910, for a tax credit of $7,257. Your total investment is now down to just $20,653.
- After the tax credit we subtract your first year’s energy savings, which we estimate to be $1,772. That reduces your cost after the first year to only $18,881.
- That isn't the end of the savings train! Maryland's SREC Market will save you $666 this year, bringing the final year 1 cost to just $18,215. That's nearly 35% 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 estimated net profit of $46,061. The internal rate of return for this investment is a stupendous 12.4%!
- And don't forget... your home's value just increased by close to $21,000, 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 218 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 $27,910, 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 $27,910 after Maryland's $1,000 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 $1,772, but your annual loan payments will be 2,562, meaning you would spend $790 on solar this year, but...
- You'll also see a huge tax break! The Feds give you 26% of the cost of your system (after rebate) back as a tax credit, which in this case is $7,257.
- The final bit of savings comes from Maryland's SREC program (discussed below). SRECs will mean an additional $666 in income from solar this year. Altogether, you'll come out $7,133 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 withmore than $35,000 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. 218 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 $158 per month. The new bill would be for about $10 per month, and the new solar bill would be for about $134. In total, that represents an average savings of just over $14 per month, or $173 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 an estimated $9,942. That’s with no money down and no messing with tax credits!
- Environmental savings: The CO2 savings from those panels is like planting 218 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.
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's Renewable Portfolio Standard
50% by 2030
A Renewables Portfolio Standard (RPS) is a law requriring utilities in the state to source a certain percentage of their electricity from clean, renewable sources like solar panels and wind turbines. if those companies don't meet the goals, they have to pay fines to the state. This gives them an incentive to find people who want to add solar panels to their homes and be a part of meeting those goals.
Maryland has a strong RPS that became law in 2019, mandating that 50% of all energy must come from renewable sources by 2030. Maryland’s target of 50% is a very 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 passed this bill all by themselves in 2019, with the bill becoming law automatically, 30 days after the legislative session, because Governor Larry Hogan wouldn't sign it. This marks the second time Maryland's legislature has outpaced the Governor, having overridden a veto of 25% RPS bill in 2017.
You go, Maryland lawmakers!
Maryland's Solar carve-out and SRECs
14.5% by 2028
As part of the 2019 RPS law, Maryland lawmakers extended existing goals for the amount of total energy that must come specifically from solar power. The new goals put Maryland near the top of the pack when it comes to solar-specific requirments. Only Massachusetts is calling for more solar on a percentage basis.
The solar carve-out here basically guarantees Maryland will support solar power long into the future, which is a confort to anyone who is looking to put panels on their roof. And the carve-out means something very important for solar owners from a financial perspective, because it is what determines the value of Solar Renewable Energy Credits, one of the best solar incentives available.
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.
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.
Maryland Interconnection Rules
Maryland Solar Incentives
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 26% of your total system 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:
The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.
Maryland Solar Power 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.
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 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.
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.
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!
Low-income Solar Programs
Grade: FLearn more about low-income solar programs available in the U.S.
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!