Maryland Solar Incentives, Tax Credits & Rebates (2024 Guide)
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Maryland is committed to investing in solar energy. Its Renewable Portfolio Standard (RPS) aims to generate 50% of the state’s electricity from renewable resources by 2030. Specifically, 14.5% must come from solar resources by 2028. According to the U.S. Energy Information Administration, the state is also committed to reaching net-zero emissions by 2045.
EcoWatch reports that the average Maryland solar system costs nearly $30,000, but the state offers numerous solar incentives to reduce this cost significantly. Our guide details solar incentives, credits, and rebates available in the Free State, plus provides recommendations for the best solar companies.
What Are the Available Solar Tax Credits and Rebates in Maryland?
Maryland homeowners can benefit from several payback programs that reward excess energy generation. Additional incentives include tax exemptions, solar storage credits, and city-based rebates. Below is an overview of Maryland’s current solar incentives.
Energy Storage Income Tax Credit
The Maryland Energy Administration (MEA) offers the Energy Storage Income Tax Credit for solar battery installations. This first-come, first-served program pays back 30% of your total installation costs up to a maximum of $5,000. Homeowners can apply this tax credit to their Maryland state tax liability. The program ends in 2024 and offers a maximum total payout of $750,000 annually. The MEA reports that as of Feb. 23, 2023, 82% of the total tax credit allowance for the 2023 tax year is still available.
More resources: The Maryland Energy Administration website
Maryland Solar Renewable Energy Certificates (SREC)
The Maryland SREC program credits customers for each megawatt-hour (MWh) of clean energy their system generates. Homeowners can sell these solar renewable energy credits to utility companies throughout the state.
Market pricing varies based on demand, so your final SREC value will fluctuate. According to SRECtrade, Maryland SREC has sold at $60 to $80 in the last two years. Since selling these credits count as income, you must pay federal and state taxes on any profits.
Residential Clean Energy Rebate Program
The Residential Clean Energy Rebate Program, also known as the Residential Clean Energy Grant Program, pays homeowners $1,000 for installing solar systems or solar shingles. Additional payouts include $3,000 for geothermal heat pumps and $500 for solar water heaters. This one-time payout is offered on a first-come, first-served basis, so interested Maryland residents should apply soon.
The MEA requires the following criteria to qualify:
- Homeowners have installed a renewable energy system that includes either solar water heating, solar panels, solar shingles, or a geothermal heat pump.
- Minimum capacity exceeds 1 kilowatt (kW) for solar panels and shingles, 1 ton for geothermal systems, and 10 square feet for solar water heating systems.
- An installer certified by the North American Board of Certified Energy Practitioners (NABCEP) completed the installation.
- The MEA received the application within 12 months of the installation.
- The installed system is located at a residential property, serves as the primary residence, and is owned by the primary resident at the time of application.
Maryland homeowners should visit the MEA website for more information.
More resources: Residential Clean Energy Rebate on the MEA website
Solar Property Tax Exemption
Adding a solar system will increase your residential property value. This boost helps with future home sales, but any increase in property value typically comes with additional taxes. Fortunately, Maryland has exempted added property taxes for solar energy systems. You benefit from the long-term savings of solar without paying additional tax.
More resources: Maryland General Assembly website
Solar Sales Tax Exemption
Maryland also exempts its 6% sales tax on solar panel installation costs and other project expenses. The exemption applies to any eligible solar equipment that generates electricity or hot water or regulates your home’s temperature.
More resources: Comptroller of Maryland website
Net Metering
The best solar panels produce more energy than your home needs. Net metering programs allow homeowners to sell this excess energy back to the grid for credits on future electric bills. Utility companies in Maryland must honor these credits at the full retail rate of electricity. This means that the rate you pay for your electricity must be matched 1:1 for your payout. Credits remain on your account for a 12-month period, which ends in April each year. The customer receives a payout for any unused credits at the end of the annual period.
Net metering laws apply to all utility companies in the state, though individual company policies may vary. Several Maryland utility companies offer net metering programs, including
Baltimore Gas and Electric Company (BGE) and Potomac Electric Power Company (PEPCO). Check with your utility company for more details on the application process, associated fees, and eligibility.
More resources: Maryland Public Service Commission website
Additional Local Incentives
In addition to statewide incentives and rebates, homeowners might find more savings at the city or municipality level. These programs are available to residents only and have varying criteria and payouts. Below are some of the local incentives available to Maryland homeowners.
- Anne Arundel County Solar Tax Credits: Residents qualify for up to $2,500 of property tax credit for residential homes that use solar energy systems for heating and cooling, electricity generation, or water heating.
- Baltimore County Solar Tax Credits: You can receive a property tax credit of up to $5,000 for using a solar energy-powered system on your residential property. Qualifying systems include solar panels, water heaters, and HVAC units.
- Harford County Solar Tax Credits: Harford residents can earn up to $2,500 of property tax credit for solar heating and cooling, energy generation, and water heating systems.
- Prince George’s County Solar Tax Credits: Homeowners receive up to $5,000 in alternative energy tax credits for solar energy equipment in residential installations.
Check the Database of State Incentives for Renewables and Efficiency (DSIRE) for the most up-to-date information on local solar incentives.
More resources: Database of State Incentives for Renewables and Efficiency (DSIRE) website
How Does the Federal Solar Tax Credit Work?
Maryland homeowners can supplement state rebates and incentives with the federal government’s solar investment tax credit (ITC). Also known as the federal tax credit, this incentive returns up to 30% of solar installation costs to residents. Instead of a cash refund, you’ll receive a credit on your federal tax liability that reduces or eliminates any owed federal taxes. Taxpayers can roll over the remaining credit to the next tax season.
You must legally own your solar system to qualify for the federal solar tax credit. Homeowners should choose solar financing options such as cash payments or solar loans to own their system. These financing options also qualify you for additional solar incentives, rebates, and credits. Other payment options, such as solar leases and power purchase agreements (PPAs), keep system ownership with the solar company and disqualify you from most incentives.
Our Conclusion
Maryland has ambitious renewable energy goals and numerous incentives to make going solar more affordable. Many Maryland programs have budgetary limitations, so it’s important to apply as soon as possible. Homeowners should combine statewide and local incentives with the federal solar credit to maximize savings. The financing option you select can greatly affect which incentives you’re eligible for, so keep this in mind when considering your payment choice.
We’ve reviewed some of the best Maryland solar companies to help you begin your search. Here are a few of our top picks in the state:
- Palmetto Solar: This solar installer provides extensive customer support options via email, chat, and phone, plus offers a tiered coverage plan to protect your solar system better.
- Sunrun: Sunrun offers various financing options, from up-front cash payments to prepaid leasing plans, allowing homeowners to choose what best suits their budget.
- Trinity Solar: Trinity Solar has almost 30 years of solar industry experience, offering solar systems backed by extensive knowledge and expertise.
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FAQ About Solar Tax Incentives in Maryland
Does Maryland offer any solar incentives?
Yes, Maryland offers an excellent selection of solar incentives, including tax exemptions, net metering, SRECs, and state tax rebates. Residents can also apply for the federal solar tax credit and receive up to 30% back from their installation costs.
Is Maryland a good state for solar power?
Yes, Maryland is a good state for solar power due to its ambitious clean energy goals and diverse solar incentives. The state government is committed to allocating 50% of its electricity production to renewable resources, with 14.5% coming from solar energy. Maryland offers several states and local incentives to make the move to solar energy more affordable for its residents.
How much do solar panels cost in Maryland?
According to EcoWatch, solar panels cost around $27,700 in Maryland, higher than the U.S. average of $23,940. Using federal and state solar incentives can lower these costs to under $20,000.
What is Maryland’s solar rebate program?
The Maryland Residential Clean Energy Rebate Program provides $1,000 grants to homeowners with solar panel or shingle installations. Systems must be installed at your primary residential property and have a capacity of at least 1 kilowatt (kW). In addition, you must use a NABCEP-certified solar installer.
Our Rating Methodology
We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:
- Solar equipment, installation, and services (25%)
- Warranty and performance guarantees (25%)
- Brand reputation and certifications (15%)
- Financing options (15%)
- Experience (10%)
- Availability (10%)
Total scores are divided by 20 for a final 5-point rating scale.
To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.