The complete list of Maryland solar incentives and tax credits for 2023, plus how to take advantage.
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Maryland may be famous as the homeplace of the national anthem, but the Free State is also making waves when it comes to solar power. Thanks to state solar rebates and tax credits, net metering laws, and other policies, Maryland helps reduce the cost of going solar at home and increases homeowner’s potential income from a residential solar array.
Maryland Solar Incentives
|State solar rebate||The Residential Clean Energy Rebate Program offers rebates of $500 or $1,000 for solar water heating systems or solar PV, respectively|
|State solar storage tax credit||Maryland offers an Energy Storage Income Tax Credit for homeowners who install solar batteries – this 30% personal income tax credit is worth up to $5,000|
|State sales tax exemption||Save the 6% state sales tax on solar installations|
|State and local property tax exemption||Maryland law offers an exemption for solar energy systems from both state and local property taxes|
|Net metering||Utilities must offer net metering, with credits rolled over month to month and paid out at the energy supply rate (less than retail) annually in April|
|Maryland Solar Renewable Energy Certificate (SREC) market||Maryland has a well-established market for SRECs, netting some homeowners hundreds of dollars a year|
|Local tax incentives for solar in Maryland||Some counties and cities offer tax credits for solar and storage – mostly property tax credits worth up to $5,000 in some places!|
SRECs in Maryland
Maryland has a well-established market for Solar Renewable Energy Certificates (SRECs), thanks to its Renewable Portfolio Standard (RPS) with a solar carve-out set in 2007. The current legislation lays out a target of 14.5% of energy from solar by 2030, which is pretty high for states in the U.S.!
Thanks to this legislation, utilities are clamoring to install solar projects of their own and buy up homeowners’ SRECs in the meantime. That helps drive a decent price for SRECs in Maryland.
For homeowners, every megawatt-hour of electricity produced by a home array generates one SREC. Utilities will typically buy these on the Maryland SREC market for $55-$75. In Maryland, an average 10 kW solar array generates around 12 MWh of electricity each year, meaning 12 SRECs to sell to utilities. That could net you around $720 a year, helping to cut your solar payback period substantially in Maryland.
State solar rebates in Maryland
The state’s Residential Clean Energy Rebate Program is super simple and a great way to cut your cost of going solar in Maryland. Thanks to this program, eligible homeowners can get a rebate of $1,000 for installing a solar energy system of at least 1 kW (including solar panels or shingles), up to 20 kW. You’ll need to install the system at your primary residence and use an NABCEP certified installer (which is standard in Maryland).
Solar water heating systems also qualify for a $500 rebate under the clean energy rebate program.
Seriously, that’s it. Install solar panels, fill out the paperwork, get $1,000 from the Maryland government. No calculations needed!
State tax credits for solar in Maryland
Maryland no longer offers tax credits for homeowners who install a solar energy system alone, but it has started offering an Energy Storage Income Tax Credit. This tax credit covers solar batteries and is a 30% personal income tax credit up to $5,000.
Residential and commercial taxpayers can apply for the tax credit on a first-come, first-served basis. Current law only authorizes the program through to the end of 2022, however. Additional funding may extend the program.
State sales tax exemptions in Maryland
Maryland homeowners who install solar are exempt from the state’s 6% sales tax. For a typical installation in the state, costing in the region of $14,000, this amounts to savings of around $800.
Home solar installers should exclude sales tax from any estimates and invoices. If you get a quote with sales tax listed, ask the installer why.
Note, however, that the exemption does not extend to “equipment that is part of a non-solar energy system or that uses any type of recreational facility or equipment as a storage medium”. Basically, the exemption is for solar PV, not for solar pool heating equipment, passive solar materials, or similar. Again, your solar installer should handle the exemption, so ask them for more information if you’re unclear if sales tax applies.
State property tax exemptions in Maryland
Maryland has a statewide exemption to prevent increases in property tax associated with residential solar installation.
While the original exemption was put in place in 2007 to exempt solar energy installations from state property taxes, an amendment in 2008 extended its reach. Now, solar installations are exempt from ‘real property taxes’, meaning both state and local property taxes.
Local level tax credits
In addition to the statewide solar storage tax credit, some individual counties and cities offer tax credits of their own to homeowners installing solar and storage. These tend to be tax credits you can use to reduce the amount of property tax owed.
Anne Arundel County, for instance, offers solar and geothermal equipment property tax credits to its residents. This tax credit is worth up to 50% of the cost of materials and installation of the solar energy equipment, less the amount of federal and state grants and state solar energy tax credits. The maximum credit you can claim is $2,500.
Prince George’s County residents can access a Solar and Geothermal Residential Property Tax Credit of up to $5,000 for installing solar PV.
Harford County also offers a one-time property tax credit of $2,500 for homeowners who install solar. This credit is applied against property taxes owed in the year solar was installed and any outstanding credit can be carried forward for up to two years.
Net metering in Maryland
Maryland has a statewide net metering program that allows you to sell excess solar energy back to the grid in exchange for credits that can go toward any future utility bills.
The net metering policy signed into law in 2016 requires utilities to give customers full credit on their utility electric bills for any surplus energy exported to the grid. Customers can carry over these credits month to month at retail rate. Any surplus credits are then reconciled annually in April at the utilities’ supply rate (less than retail).
There is a current cap of 1,500 MW for net-metered systems in Maryland, and each individual customer is capped at 2 MW, or 200% of their baseline energy use.
Final thoughts on state solar incentives in Maryland
The cost of electricity in Maryland is higher than the national average. That alone makes it worth considering installing solar panels in the Free State. Add in some generous state and local incentives, plus the federal solar tax credit and you’re looking at a short payback period for solar in Maryland.
One of the biggest boons for home solar in Maryland is a thriving SREC market. This allows homeowners to make around $800 every year, in addition to saving on property taxes and claiming income tax credits. All in all, with an average cost for residential solar in Maryland coming in at just $14,000, those panels could pay for themselves in just over five years, leaving you another 20 years or more to enjoy free electricity and annual income!