Maryland Solar Incentives and Rebates Guide
Key Takeaways
- The state of Maryland offers multiple county-level incentives that allow residents to obtain tax credits back from their individual county budgets.
- The federal solar tax credit offers residents of Maryland a 30% tax credit on their solar energy systems through the year 2032.
- Net metering continues to be a viable option for Maryland residents who are looking to put their excess energy generation to good use and save money.
The state of Maryland recognizes that local, state, and federal incentives are vital to keeping Marylanders motivated to switch to a more sustainable energy option by installing solar panels.
Maryland solar incentives provide opportunities for Maryland homeowners and businesses interested in making the switch to solar power but may not be able to afford the upfront installation fees.
Let’s review the solar incentives and other available options to secure savings on solar panels and make the dream of switching to solar a reality.
Maryland Solar Incentives
Property Tax Exemptions
According to the Database of State Incentives for Renewables & Efficiency (DSIRE), The Maryland Department of Assessments and Taxation offers a 100% real property tax exemption for solar energy systems. Applicable sectors for this solar property tax exemption include commercial, residential, and industrial.
Sales and Use Tax Exemption for Renewable Energy Equipment
Under this program offered by the Comptroller of Maryland, Marylanders can get a 100% sales tax exemption for solar panels and solar water heaters.
This program allows for a one-time incentive to eliminate any tax payments when buying solar technologies.
Residential Clean Energy Rebate Program
This program is offered by the Maryland Energy Administration and offers a flat rebate of $1,000 per household for a solar panel installation.
Established in 2005, this rebate incentive can help homeowners whose primary residence is in Maryland. Residential, multifamily residential buildings and low-income residential housing properties are eligible for this incentive.
Installations must be completed by solar installers who are members of the North American Board of Certified Energy Practitioners (NABCEP), a respected certification organization.
Commercial Clean Energy Rebate Program
This financial incentive is available for nonprofits and the commercial and industrial sectors, but it is not applicable to the residential sector.
The maximum solar rebate incentive amount is $30,000 for new solar equipment. The solar installer must be registered with NABCEP.
The goal of this program is to encourage more businesses and commercial properties to install solar.
This program will be retired and replaced by another program in fiscal year 2025.
Solar Renewable Energy Credit (SREC) Program
Many states participate in an SREC program that allows solar panel system owners to sell their clean energy back to the grid. The specific incentive amount varies based on market rates. SREC owners often use a broker to sell back the credit to their utility company.
Maryland’s SREC program allows users to equate 1 megawatt-hour for a single SREC (sometimes referred to as solar renewable energy certificates).
To participate in the SREC program, users must own solar panel systems; this means that individuals who rent solar panels are not eligible to sell back the energy produced from solar resources.
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Local Solar Incentives
Anne Arundel County Solar Tax Credits
Anne Arundel County offers homeowners a one-time property tax credit of up to $2,500 for installing a solar energy system on their property. This tax credit is also good for geothermal heating and cooling equipment.
Baltimore County Solar Tax Credit for Solar and Geothermal Devices
This incentive from the Baltimore County Office of Budget and Finance provides homeowners and multifamily property owners local tax credits of 50% of all eligible costs associated with installing solar and geothermal devices.
Solar panels must meet safety requirements, and there is no maximum incentive amount for solar-produced energy systems.
Eligible technologies include solar water heating systems, solar space heaters, and rooftop solar panels.
Harford County Solar Tax Credits
Offered by the Harford County Department of the Treasury, this property tax credit provides up to $2,500 per solar device and $5,000 per property, per fiscal year.
According to DSIRE, commercial, residential, and industrial sectors are eligible to apply for this incentive, which includes 100% of the total real property tax amounts on the host structure, per year.
Prince George’s County Solar Tax Credits
Offered by the Prince George’s County Office of Finance, this property tax credit program offers an incentive for 50% of eligible costs with a maximum incentive of $5,000 for solar electricity. This alternative energy tax credit program was expanded in 2009 to include anyone who leases panels.
Interested residents of Prince George County can find more on the county’s energy resource page.
Jane E. Lawton Conservation Loan Program
The Maryland Energy Administration offers loans to nonprofits, local governments, Maryland businesses, and state agencies who are looking to improve their energy efficiency.
This loan program has a $4.2 million budget for the 2024 fiscal year. According to the Maryland Energy Administration, fiscal year 2024 includes a 3% interest rate for all “commercial, nonprofit, or non-public facilities…who are requesting a microloan.” There is also “0% interest rate for all Maryland State and local governments and their instrumentalities.”
Federal Incentives
Federal Solar Tax Credit
The Inflation Reduction Act of 2022 modifies and extends the federal solar tax credit, also called the investment tax credit (ITC), which offers a 30% tax credit on systems installed from 2022 through the end of 2032. The tax credit reduces federal income tax payments for everyone, from businesses and local nonprofit organizations to homeowners who purchase solar energy systems.
Qualified low-income individuals with residential solar energy equipment projects can obtain further tax credits. Rates vary depending on the year of construction, the solar project’s status, and labor details.
If you install your solar panel system after 2032, you will be eligible for a 26% tax credit. For installations in 2034, solar system owners will be eligible for a 22% tax credit.
Large installation projects can see valuable savings since this program does not have a financial cap, unlike some smaller programs.
Federal Solar Investment Tax Credit
| Through 2032 | 30% |
|---|---|
| 2033 | 26% |
| 2034 | 22% |
Net Metering in Maryland
Net metering involves receiving credit for any excess electricity your solar photovoltaic system may produce. For example, during the brighter, sunnier hours, the energy generated by your solar panels may be more than you need. Your electric company would not charge you for any excess energy your solar panels produce during this time.
At night, when your solar panels can no longer generate power from the sun, you would be charged at your regular rate. The financial benefit comes from receiving credit in exchange for the excess energy your solar panels produced during the day. That excess solar energy gets sent back to the grid.
Net metering is not just limited to homeowners looking to save. Commercial, industrial, nonprofit, residential, schools, agricultural, and institutional sectors can also enroll through their participating electric utility company.
The Solar Payback Period
Solar promises a return on your investment, but new solar panel owners may wonder how long it will take to see these returns.
The amount of time it takes for savings to be generated by the investment to match its cost is called a payback period. Financial incentives offered by Maryland and its local counties can help shorten the payback period.
Payback periods vary, depending on the size of the solar system and local electricity rates. In Maryland, the payback period is typically 8-12 years.
| Typical 6kW solar system installation cost | $17,700 |
|---|---|
| 30% Federal Tax Credit | $5,310 |
| Total Cost After Incentives Total Cost After Incentives Not including local incentives, which vary | $12,390 |
| Assumed Electricity Produced by a 6kW Solar System in Illinois | 8,786 kWh |
| Annual Electricity Cost Reduced or Offset Assuming 100% utilization by the home | $1,568 |
| Sample Payback Period | 8 years |
Sources: https://www.nrel.gov/docs/fy22osti/83586.pdf, https://globalsolaratlas.info/map (Baltimore); https://www.eia.gov/electricity/monthly/epm_table_grapher.php
Conclusion
The state of Maryland has various incentives to help homeowners, multifamily property owners, businesses, and nonprofits save money on buying and installing solar panels. Between local, county-specific incentives to state-provided rebates for nonprofit and industrial projects, Maryland has a wide range of solar incentives and programs that can help you save on solar systems, solar energy devices, and, ultimately, your future electric bills.
FAQs
What are some pros and cons of leasing solar panels?
Leasing solar panels can help with initial costly installation fees, but you may not be eligible to take part in some programs, such as SRECs and other owner-only incentives. Leasing also does not result in ownership of the solar system; however, avoiding the initial thousands of dollars for ownership is often seen as a worthy alternative for those who do decide to lease a solar system.
Is it worth making the switch to solar in Maryland?
Maryland can help you save money thanks to rebates, tax credits, and other programs, like net metering and solar renewable energy credits. These solar incentives and the federal tax credit help make the switch financially worth it, and eventually, after the payback period ends, the electricity will be free. Plus, users will be happy to know that they are helping reduce greenhouse gas emissions and the negative effects of climate change.
How much does it cost to install solar panels in Maryland?
According to EcoWatch, the typical cost to install solar panels in Maryland is around $34,000 before the federal solar tax credit (ITC). Prices are brought down to about $24,000 after buyers engage the federal solar tax credit. That’s a $10,000 reduction in price for Maryland homeowners and businesses.