Federal Tax Credit

The single most important incentive available to anyone considering purchasing a solar system is the Federal Renewable Energy Tax Credit. This credit pays new solar owners 30% of the total cost of their systems via a personal income tax credit. As an example, someone who purchases a $30,000 system will receive an extra $9,000 back on their annual tax refund as long as they paid at least that much in federal income taxes over the course of the year. If the person only paid $8,000 in taxes, that extra $1,000 would be carried forward to the next year.

SRECs

Solar Renewable Energy Certificates (SRECs) are certificates that represent proof that one megawatt-hour (MWh) of electricity was generated from solar resources. SRECs can be sold to utilities in D.C. which are required to produce a certain percentage of their electricity from renewable resources, a requirement known as a Renewable Portfolio Standard (RPS) or solar carve-out. The sale of these certificates is completely different from the actual sale or credit from exporting electricity into the grid, which is related to Net Metering (see below).

Net Metering

Net metering is a stipulation that requires utility companies to give you credit for any excess electricity your system produces. For example, a home that consumes 20 kWhs of grid electricity during the night and produces an excess of 20 kWhs of solar electricity during the day would register as having used no grid electricity at all. 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.