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Baltimore, Maryland Solar Power for Your Home – Leases, Loans, Rebates, and Incentives

Avatar for Ben Zientara
Written by
Published on 08/02/2015
Updated 07/30/2019

There’s plenty to love about Baltimore. From historical sites that date back to the very beginning of our country to the O’s and the Ravens, two of the best pro sports teams any city could ask for, Baltimore has no shortage of things to be proud of. Plus, you know, if we had to live on pit beef and crab cakes, we’re pretty sure we could do it.

One thing that can help ensure B’more stays great is (drumroll, please) home solar power. Having solar panels on your home reduces your energy bills, helps the environment, and actually makes you money every year when you sell the Solar Renewable Energy Certificates (SRECs) your system generates. An SREC is earned each time your system generates a megawatt-hour (MWh) of electricity, and they can be sold to the utility companies as proof of renewable generation. They’ll pay about $160 for one, and a typical 5-kW system earns you about 6 SRECs a year.

With all those financial benefits, solar makes sense—and not just for people with thousands of dollars to spend. In fact, you can go solar for as little as $0 down with a solar lease. Or, if you have some equity in your home, you can take out a loan to pay for solar that will be paid back with the savings. And of course, there’s always the option to purchase a system outright and reap all the financial benefits from day one.

Your Solar Strategy in Baltimore

Figuring out the best way to go solar 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 for you, 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 the option that we think will work best for you. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:



Lifetime Return For 3 Different Methods of Going Solar in Baltimore, MD

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 for a lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, but it also requires a big up-front investment. If you take a home equity line of credit (HELOC), though, your payments over 20 years will be offset with the electric bill savings and SREC sales. You’ll still get the 30% federal tax credit for solar—and Maryland’s $1,000 rebate—just like if you purchased a system. That means you won’t have to put any of your own money down to get solar, and although you’ll see less “profit,” you’ll still save a ton.

The final option represented is a lease, and it’s definitely the simplest. Instead of dealing with loans and investment rates of return, you can sign a $0-down lease and start saving money immediately. In the first year, the savings are only about $10 per month, but as electricity prices rise, so do the savings. It means less money over time than the other methods, but it does save a lot of complications and still saves you over $5,600 in 20 years.

Let’s walk you through how each option could work for you:

 Option 1: Solar Lease or Power-Purchase Agreement

Solar leases and Power-Purchase Agreements (PPAs) can be really great for people who don’t qualify for a tax break or who want to incur less risk (with less reward). The company that installs your system will own the panels and collect the tax credits and SREC sales to make it worth their while. You’ll get cheaper energy bills and a happy feeling from the environmental benefits you’re bringing to the world.

Here are some of the advantages of a solar lease in Maryland:

  • No money down
  • A monthly payment that rises by a smaller increment than electricity prices do
  • The lease is transferable if you decide to sell your house.
  • You just have to find an installer, sign on the dotted line, and then save money
  • The installer takes care of everything, including maintenance and repair

With a lease, you sign an agreement to pay a low monthly price for 20 years. The installation company owns the system, but you get all the electricity it provides, which reduces your electric bill by about the same as your lease payment. Over time, your lease payment rises by a small amount (usually 2.5%), while the cost of electricity historically goes up by about 3.5% per year. That means by the last year of a 20-year lease, you’ll be saving about $435 on electricity, just for having a roof!

A PPA is similar to a lease in that the installer puts panels on your roof that they own, but instead of a fixed monthly payment, you agree to buy all the electricity the system generates for a somewhat cheaper-than-retail price. You pay a little less now, and, just like with the lease, you save more in the future as your costs rise slower than utility rate increases, somewhere between 1% and 2.5% per year.

Here’s the other major benefit of leases and PPAs: because the installation company owns the system, they insure it, and they do all the maintenance and repairs as needed. That takes away a ton of responsibility for you. All you have to do is get quotes from installers in your area, sign up for a lease or PPA through them, and get solar for no money down! You can sign a 20-year agreement with a low monthly payment that will lock in your savings long into the future.

Our example assumes your agreement will run for 20 years with a 2.5% annual increase in payments. You put no money down. And though the savings aren’t major in year 1, they add up over the term of the lease, and each year, the savings get a little bit bigger as electricity rates climb. By the end of the lease, over $5,600 of your money will stay in your pocket. Talk about a sweet deal!

 Option 2: Solar Purchase

Okay, so you’ve got some cash and you’re ready to buy. An outright purchase is the option that returns the most money over time, because you own the system from day one and reap all the benefits. You’ll get the 30% Federal tax credit, Maryland’s rebate, and great electricity savings, all of which add up to a quick payback time and really nice investment return.

In our example, you’re paying the $17,750 cost of a system up front, but at the end of year 1, you’ll get that federal tax credit, energy savings, and SREC sales to reduce that cost. When all is said and done, this is one of the best investments you can make, with tens of thousands in possible returns. That being said, even if you have the money, you should look into option 3 below. The advantages of taking a loan to pay for an income-generating asset cannot be overstated; it’s just a really amazing investment.

If you’re the kind of person who can afford a purchase and you don’t like paying interest (even if it makes you more than you pay), read on:

Here’s how the numbers work for a solar purchase in Baltimore:

  • Installing a typical 5-kW solar system should start at about $18,750. Don’t worry – that number is going to get way smaller in a hurry.
  • The state’s rebate will take an immediate $1,000 off the cost, meaning your out-of-pocket payment is $17,750.
  • At the end of the year, the federal government will give you a 30% tax credit based on the cost of your system after the rebate. That’s $5,325 off. You can take the credit over two years if you don’t owe $5,325 in federal taxes this year.
  • The electricity you’ll save in the first year of operation would have cost $878. That’s enough to pay for date night once a month.
  • Don’t forget your SRECs! The market price for them has been hovering around $165 for a couple years. That’s about $880 per year, every year.
  • All those savings and incentives mean the first-year cost of your 5-kW system is just $11,548.
  • With a conservative estimate of 3.5% per year for the future rise of electricity prices, and SREC sales continuing every year for the life of your system, your investment will be fully paid off after 9 years, and you’ll be making a big profit until 2039 or later.
  • Your total profit in our 25-year estimate will be a stupendous $28,510! The rate of return on your investment will be 13.9%, which is more than one-and-a-half times as good as an investment in an S&P 500 index fund.
  • And don’t forget… your home’s value just increased by close to $18,000, too (your expected annual electricity savings over 20 years), and thanks to Maryland’s property tax exemption for solar, you won’t pay taxes on any of it!

Remember: these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in New Jersey. Just sign up for personalized savings estimates and one of them will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

 Option 3: Solar Purchase with HELOC

This is without a doubt the best option when it comes to percentage return on investment. That’s because it relies on using someone else’s money for the purchase price, which is paid back over time for less than your yearly electricity savings and SREC sales. This assumes a few things about you and your current situation:

  • You can get a home-equity line of credit (HELOC) for $17,750, with a fixed rate of 5% or lower and a 15-year repayment period.
  • You love making money without much risk

The reason this works so well is that you don’t have to put any money down, and your loan payments are almost entirely covered by SREC sales and electricity savings. Those add up to about $154/month to start, while your loan payments will only be about $140/month, so you’ll actually be saving $14/month right away, with essentially no money down. Over time, we estimate that SREC sales will decrease, based on Maryland’s schedule (see more in the SREC section, below), but they’ll still represent hundreds of dollars in income for years into the future.

Here’s how the numbers pencil out for a Maryland solar purchase with a HELOC:

  • Installing a typical 5-kW solar system should start at about $18,750. Don’t worry – that number is going to get way smaller in a hurry.
  • The state’s rebate will take an immediate $1,000 off the cost, meaning you’ll take out a HELOC for $17,750.
  • At the end of the year, the federal government will give you a 30% tax credit based on the cost of your system after the rebate. That’s $5,325. You can take the credit over two years if you don’t owe $5,325 in federal taxes this year.
  • The electricity you’ll save in the first year of operation would have cost $878. That’s enough to pay for date night once a month.
  • Don’t forget your SRECs! The market price for them has been hovering around $165 for a couple years. That’s about $880 per year, every year.
  • All those savings and incentives mean you’ll actually come out way ahead after the first year. You’ll have solar on your roof and an extra $6,483 in your pocket.
  • You’ll continue making money from SRECs and seeing electricity savings for the life of you system. Because of decreasing prices in the SREC market, you’ll end up paying more than your current electricity bill in years 3-15, but only an average of $21/month ($254/year). When your loan’s paid off in year 15, you’ll start see over $1,600 per year in savings until the end of your system’s life.
  • Your total profit in our 25-year estimate will be a stupendous $21,994! All without investing a single cent of your own money.
  • And don’t forget… your home’s value just increased by close to $18,000, too (your expected annual electricity savings over 20 years), and thanks to Maryland’s property tax exemption for solar, you won’t pay taxes on any of it!

Remember: these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in New Jersey. Just sign up for personalized savings estimates and one of them will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

Additional Information about Solar Power in Baltimore

Maryland Solar Power Rebates

Maryland has had a long history of changing up their rebate offering, but it seems to have stabilized in the past couple of years as a straight $1,000 grant for anyone who installs a residential photovoltaic system. That’s not huge, but it goes a little way toward bringing the costs down, and it accounts for a one-year reduction in payback time.

Maryland Tax Exemptions for Solar

Maryland also recognizes the value of solar with some really sweet tax exemptions. All sales tax is waived on a solar purchase, saving you over a thousand dollars at the time of sale. And with the state’s property tax exemption for solar, the value added to your home by the solar panels on your roof will not raise its assessed value. That’s great, considering the research from around the country that shows buyers are willing to pay more for a house with solar. 20 times the annual utility savings, in fact.

Maryland’s SREC Market

Another great financial incentive in Maryland is the SREC market. As we discussed above, an SREC is basically just proof of clean energy generation, and solar owners get an SREC every time their system generates 1 megawatt-hour (MWh, or 1,000 kWh) of electricity. Our standard 5-kW system will generate about 6 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 started at $400 per MWh. That is what gives SRECs their value.

Because of those high fees, prices for SRECs have remained pretty stable over the past few years, averaging $167.50, which means those 6 SRECs from our example system represent about $1,000 a year for 5-kW system owners. Unfortunately, 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:

YearSACP
2015$350
2016$350
2017$200
2018$200
2019$150
2020$150
2021$100
2022$100
2023$50
Ongoing$50

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 great installer in Maryland today!

Last modified: July 30, 2019

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