Residential Solar Power in Maryland

We've dug deep into MD's state incentives and built a complete guide to solar power options for the residents of Maryland

Solar Power in Maryland

The solar power industry in the U.S. is growing. In fact, in 2014, nearly $18 billion in new investment was recorded across the nation, and Maryland is well represented in those figures. During 2015, investments related to solar power in Maryland alone reached $410 million, an 86 percent increase over the amount invested in the previous year.

Adding solar power to your home is a serious decision. Often, people find themselves conflicted when it comes to making the investment. While the upfront costs can seem quite high, the benefits down the road can offset these costs. Additionally, various state and federal incentives can actually make the installation more affordable than many people realize.

To help you through your decision-making journey, here are some important considerations regarding whether you should invest in solar power for your Maryland home.

Maryland Support for Solar

Maryland assumed a fairly aggressive stance in regards to pursuing alternative energy solutions throughout the state. In 2007, the state established a goal to generate 1,250 megawatts (MW) of electricity using renewable energy sources including, but not limited to, solar power. As of 2015, Maryland's solar capacity was 167 MW, establishing its position as 11th in the nation for solar capacity.

The state has also implemented policies designed to promote and support the solar industry across the state. In 2012, the Renewable Energy Portfolio Standard for Solar Energy and Solar Water Heating Systems bill was signed into law. These initiatives accelerated original timetables that were first developed in 2004 and supplemented the overall Renewables Portfolio Standards.

Additionally, most initiatives within the state have focused on sustained, steady growth of solar power throughout the state. The hope was to develop plans that avoided the boom and bust that many other states experienced, helping to create a sustainable industry while also reaching energy goals.

All of these decisions suggest the state is highly supportive of alternative energy sources, including the use of solar power.

Maryland Local Rebates & Credits:

Local Rebates$1,000 for systems up to 20kW
Tax Credits$0.0085/kWh for large systems
Performance PayoutsVaries based on market conditions
Property Tax Exemptions100%
Sales Tax Exemptions100%
To get specific data on your home, enter your zip code:

Maryland Incentives for Homeowners

The state of Maryland offers qualified homeowners the ability to qualify for financial incentives for the installation of approved solar power technologies. This includes solar photovoltaics (PV) and solar water heating (SWH) systems. Incentives for PV and SWH projects are $1,000 and $500 per project, respectively, under the Residential Clean Energy Grant. Installations must meet specific criteria, and awards are granted on a first come, first serve basis.

Additionally, the state exempts certain costs associated with solar power installations from sales tax. This can result in significant savings depending on the cost of your solar power system. For example, with Maryland's current sales tax rate set at 6 percent, that saves $600 for every $10,000 worth of qualifying expenses.

Another program offered by the state is the Maryland Home Energy Loan Program (MHELP). Funds provided through this program are considered a loan and not a grant, so there are repayment expectations. However, it does provide interested homeowners with access to up to $20,000 borrowed at a 9.99 percent interest rate.

MHELP is intended as a supplement to other incentive programs and aims to eliminate any barriers associated with the upfront costs of these projects. Additional information about qualifying can also be reviewed in the FAQ section of the Maryland Energy Center Loan Program site. Interested parties can also apply online.

Maryland Local Homeowner Incentives

Certain local incentives are also available depending on specific residency requirements. Multiple counties offer incentives to homeowners who complete eligible solar power installations, most commonly in the form of property tax reductions. For example, Baltimore County offers a tax credit that can be lower a homeowner's real property tax obligation. Awards are based on 50 percent of the cost of the new solar power unit (including installation) up to $5,000.

As with state-level incentives, credits are provided on a first come, first serve basis. Credits will be awarded based on the availability of funds during each fiscal year, though wait lists may be available even if funds aren't immediately available.

Incentive programs may also be offered by individual utility companies. Often, these programs involve interconnection with the larger electric grid and are based on your solar equipment's ability to generate more energy than is required to sustain your home. In those cases, excess electricity can be fed back into the grid and may result in you receiving a check from your local utility.

Typically, these installations require special electricity meters to be installed, as many older meters aren't designed to measure energy going back into the grid. Contact your utility company directly for information regarding available programs as well as whether a different electric meter would need to be installed.

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US Federal Incentives for Homeowners

The federal government also offers incentives to homeowners for solar power installations in the form of tax credits. Currently, the tax credit is equal to 30 percent of the qualified costs associated with the installation of solar energy systems that serves as the taxpayer's primary residence, including equipment and related labor. That means you may be eligible if you install solar panels on your home, but installation on vacation or rental properties do not qualify for these incentives.

Qualified installations related to solar-electric installations have no limit regarding the maximum size of the credit. This means you would get the full 30 percent regardless of that ultimate total. Additionally, if your tax credit exceeds your tax liability for the year, the remaining tax credit can be carried forward to the next tax year. This helps homeowners increase the likelihood of enjoying the full value of the tax credit even if their tax liability is generally low.

It is important to note that the tax credit is currently equal to 30 percent of the installation, but that will change in the coming year. Between January 1, 2019, and December 31, 2020, the tax credit will be 26 percent instead of 30. The amount of the credit drops again for installations between January 1, 2021, and December 31, 2021. At that time, the tax credit will equal 22 percent.

After December 31, 2021, there is no guarantee a tax credit will be available through the federal government for solar power technology installations on private residences.

Maryland Savings on Utility Bills

One of the biggest benefits of installing a solar energy system in Maryland is the savings on your monthly electric bill. Currently, Maryland has the 13th highest electricity prices in the nation at approximately $0.14/kWh. That means, the more power you generate for yourself, the more significant your cost savings can be.

In 2015, the average amount of electricity used in a U.S. residence was 10,812 kWh. At the price of $0.14/kWh, that means an average household in Maryland spends approximately $1,514 a year, or $127 a month, on electricity. However, for every kWh you can create with solar power, you save yourself $0.14.

To help you understand the potential, here are some estimates based on a solar panel's potential. If you use a single 250-watt panel that gets four hours of full sun a day, that one panel can produce 1 kWh/day, or 30 kWh of electricity in a month. That means that one panel saves you $4.20 every month, or $50.40 a year based on the $0.14/kWh price.

Now, if you install five panels, you will save $21/month, or $252/year. If you install 20 panels, then your savings is $84/month, or $1,008/year. Make it 30 panels, and you'll save $126/month, or $1,512/year! So, if your electricity usage mimics that of any average household, and based on that assumed stats above, you would eliminate your electricity bill with approximately 30 solar panels.

It is important to note that these numbers are examples only. Different solar panels offer varying levels of efficiency and power generation. Additionally, you may create more or less electricity depending on the amount of sun your panels receives on a daily basis. This means you need to review the specifications for the panels you are considering and determine the average amount of direct sunlight per day to determine the number of panels needed. Often a qualified solar panel installer can provide you with information based on your specific location, allowing you to choose a system that will suit your needs.

You also need to review your actual electricity usage when performing your calculations. While the average U.S. household used 10,812 kWh in 2015, your usage may differ. Information regarding your actual usage is available on your electric bill and through your utility company.

Maryland Return on Investment

While savings on your utility bills will potentially begin as soon as your solar power system comes on line, you will have to compare this savings to the costs of installation to determine your return on investment. For example, if your household usage mirrors the national average, and you cover all of your electricity needs (but do not produce any excess) you save $1,514 each year. If the cost of your installation were $15,000, it would take approximately ten years to recoup your investment without taking any tax credits or other incentives or adjusting for interest associated with a loan (if one is used to finance the installation).

Additional savings as a result of tax credits and incentives, which vary depending on your specific situation, will shorten the time required to recoup the costs. Once that point is reached, you are truly experiencing savings. And, if your solar system requires only minor maintenance over its life 20, 30, or 40 years, you could save tens of thousands of dollars before the system would need to be replaced.

Ultimately, whether you choose to install solar is a personal choice. However, there is no guarantee that certain incentives and tax breaks will continue to be available as the years pass. That means now could be an ideal time to make the switch to solar. Consider consulting with a qualified installer to see what a suitable installation would cost, and review any local incentives that may be available. Then, you should have the information you need to make an educated decision about the use of solar power for your electricity needs.

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