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.

Clean Energy Grant Program

Maryland homeowners who install solar panels on their roof get a flat $1,000 rebate through the Clean Energy Grant Program. This rebate is only valid 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 (see below). As a bonus, the $1,000 grant is completely tax exempt, meaning it doesn’t count towards the income of the recipient.

Clean Energy Production Tax Credit

Maryland homeowners who are installing extremely large solar systems (production of >23,500 kWh, ~5x the average system) are eligible for the state’s Clean Energy Production Tax Credit. This credit pays .85¢/kWh against the state income tax, for a five-year period, for electricity generated by eligible resources.

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 Maryland 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).

Property Tax Exemption

Solar systems have a significant increase on the value of a home, with the largest and most recent study indicating an increase of approximately $30,000 for a 10kW system in MD. However, because Maryland has a property tax exemption for solar systems, this increase in home value won’t cost you a penny when tax time rolls around.

Sales Tax Exemption

Since July 2008, Maryland has had a Sales and Use Tax Exemption for Renewable Energy Equipment. This exemption allows us to buy any materials to be used for a solar system without having to pay the normal sales tax of 6%. This translates to a significant reduction in the price of a solar system for Maryland homeowners.

Property Tax Credits

In addition to Maryland’s generous renewable energy policies, several counties have enacted additional measures to promote the use of solar.

  • Anne Arundel County– property tax credit for the lesser of $2,500 or 50% of the net system cost
  • Baltimore County– property tax credit for the lesser of $5,000 or 50% of the net system cost. *The allocated budget for these credit have been met. Applications are being waitlisted for the new budget*
  • Harford County– property tax credit for the lesser of $2,500 or 100% of total real property tax
  • Prince George’s County– property tax credit for the lesser of $5,000 or 50% of the system cost. *This tax credit has been fully subscribed until 2020*

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.

Interconnection

Maryland has enacted strong interconnection standards which outline how you can connect to the grid. Check out Maryland’s Interconnection Rules.