Maryland’s Key Solar Incentives: A Breakdown

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Maryland is one of the best states in the U.S. for solar incentives. Maryland offers a variety of incentives to encourage the adoption of solar energy, making it an attractive state for homeowners and businesses looking to go green. 

Residential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC)

The ITC offers a federal tax credit for solar energy systems installed on residential and commercial properties. As of 2024, it provides a 30% tax credit on the cost of installing solar panels.The solar PV system must be installed and operational during the tax year to qualify for the credit.

When filing your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. To qualify for the ITC, you must purchase your system with cash or through a solar loan—leasing a system does not make you eligible.

Additionally, you need to have a sufficient tax liability, though you can carry over any unused credit year-to-year until the ITC expires at the end of 2034. The only exception for direct payment eligibility is if you are a tax-exempt entity, such as a nonprofit organization.

Maryland Solar System Sales Tax Exemption

The Maryland Solar System Sales Tax Exemption provides financial incentives for residential and commercial solar energy systems. Homeowners can receive grants for solar photovoltaic (PV) systems and solar water heating systems. The grant amounts are typically based on the system size and type, encouraging more Maryland residents and businesses to adopt renewable energy solutions. This program helps reduce the upfront costs of solar installations, making clean energy more accessible and affordable. 

• Incentive value: 100% of the sales tax on your solar system
• Frequency: Applied at the time of purchase

All taxpayers in Maryland are exempt from paying sales tax on solar equipment. 

Property Tax Exemption for Solar and Wind Energy Systems

• Incentive Value: 100% of the added residential property value from installing a renewable energy system

• Frequency: Ongoing after initial home value assessment

Maryland residents are exempt from paying taxes on the increased property value resulting from the installation of solar or wind renewable energy systems. After installing a solar panel system, a property value assessor will determine the value of your home without including the system, ensuring you benefit from the incentive.

Residential Clean Energy Rebate Program

The Maryland Clean Energy Grant Program offers financial incentives to help residents install clean energy systems. For fiscal year 2024, the program includes rebates for solar photovoltaic (PV) systems, solar water heating systems, geothermal heat pumps, and other renewable energy technologies. Homeowners can receive up to $1,000 for solar PV systems and additional funds for other eligible installations. This initiative aims to reduce the financial burden of adopting renewable energy, promoting wider use and contributing to Maryland’s sustainability goals.

The upcoming Fiscal Year 2025 (“FY25”) R-CERP will be the FINAL OFFERING of the solar portion of the Program. R-CERP solar rebates will be replaced by the new, upcoming FY25 Maryland Solar Access Program (MSAP) in January 2025.

Net Metering

Net metering allows solar system owners to sell excess electricity back to the utility grid for billing credits. In Maryland, all utility companies must offer full retail rate net metering, meaning you earn credits at the same rate as grid electricity. Any unused credits can be redeemed at the commodity energy supply rate in April.

How To Enroll in Net Metering

• Install rooftop solar: Complete the installation of your solar system.
• Submit interconnection request: Your solar installer will help submit this request to your power company.
• Sign the interconnection agreement: After approval, sign the agreement to proceed.
• Install bi-directional meter: The utility company will install this meter to track energy credits.
• Activate your solar system: Once the meter is installed, your system can be turned on to start generating energy and earning credits.

Virtual net metering is the vehicle Maryland is using for its three-year community solar pilot program. Once the pilot ends, the Public Service Commission will make recommendations to the legislature for future virtual net metering legislation.

Energy Storage Income Tax Credit

The Maryland Energy Storage Income Tax Credit Program (MESITC Program) is available to residential and commercial taxpayers who have installed an energy storage system on their property in Maryland. According to the enabling statute, the Maryland Energy Administration (MEA) may award up to $750,000 in tax credit certificates during a given tax year. These certificates will be granted to eligible applicants on a first-come, first-served basis. Please note that applying does not guarantee a tax credit will be awarded.

As of May 1, 2024, all residential tax credits for energy storage systems installed in 2024 have been allocated. Eligible applicants can still apply, with the residential waitlist open until June 30, 2024. Starting July 1, unallocated commercial tax credits will be available to waitlisted residential applications, which will be processed in the order received. The Maryland Energy Administration encourages eligible applicants to submit their applications promptly to increase their chances of receiving a tax credit.

Solar Renewable Energy Credits (SRECs) 

A Solar Renewable Energy Certificate (SREC) signifies the environmental benefit of generating clean energy through a solar panel system. In Maryland, you earn one SREC for every 1,000 kWh (one megawatt-hour) of solar energy produced. Owners of solar systems can participate in the SREC market by selling these certificates to electricity suppliers. These suppliers buy SRECs to meet the state’s Renewable Portfolio Standards (RPS) or goals for renewable energy.

The Homestead Property Tax Credit

The Homestead Property Tax Credit, available through Live Baltimore, is a financial incentive aimed at reducing property taxes for homeowners in Baltimore City. This credit is designed to provide relief by capping the taxable assessed value of residential properties, preventing substantial increases in property taxes due to rising property values.

Homeowners eligible for this credit benefit from a limit on how much their property taxes can increase each year, despite fluctuations in market values. To qualify, applicants must own and occupy the property as their principal residence. This initiative aims to make homeownership more affordable and stable for residents of Baltimore City, encouraging long-term residency and investment in local communities.

Solar for All

• The Community Power Coalition (CPC)’s SFA program, “Powering America Together,” will collaborate with and enhance the impact of the US Department of Energy’s National Community Solar Partnership and Community Power Accelerator program. Led by Inclusive Prosperity Capital, Inc., CPC comprises seasoned community solar experts who have contributed to the Community Power Accelerator as developers, lenders, trainers, and technical assistance providers. 
• The Maryland Solar for All (SFA) Program brings together a coalition of government, industry, utility, academic, and non-profit organizations, all committed to achieving the desired outcomes with these federal funds. The initiative will focus on mobilizing capital, facilitating workforce preparedness, and building capacity for low-income, underserved, and disadvantaged communities to access solar energy benefits. Investments will target both single-family and multi-family residential properties, reducing energy burdens and providing ownership opportunities for eligible households across the state.
• The Clean Energy Fund of Texas (TxCEF), in collaboration with the Bullard Center for Environmental and Climate Justice at Texas Southern University (BCECJ), collectively known as CEFBC, is dedicated to deploying technical assistance, private capital, and grants to minority-serving institutions. Together, these organizations aim to facilitate the establishment of residential-serving community solar projects in low-income and disadvantaged communities that face significant challenges related to energy policy and grid vulnerability. These projects are anticipated to result in emissions reductions, savings on household utility bills, generation of shared revenues through community ownership, and the mobilization of private capital.
• Teaming up with lead applicant GRID Alternatives, a coalition of ten mission-driven nonprofit solar and affordable housing providers and allies has collaborated to develop the Solar Access for Nationwide Affordable Housing Program (SANAH). SANAH is meticulously crafted to maximize benefits for households and communities while advancing equity, reducing harmful pollution, and combating climate change. 

The program offers a multitude of advantages, including expanded access to solar and storage for income-qualified households, significant energy savings and relief from burdensome costs, as well as additional benefits like efficiency improvements and electrification. 

Disclaimer

The information provided herein is for informational purposes only and is accurate as of the time of publication. Please be aware that the solar energy landscape, including technology, regulations, incentives, and market conditions, changes frequently. Therefore, it is essential to consult with qualified experts and professionals before making any decisions regarding solar energy installations or investments. This will ensure that you receive the most current and applicable advice tailored to your specific circumstances.