Maryland Solar – Everything You Need to Know

maryland solar

Information about Solar Panels in Maryland

Solar panel installation growth in Maryland has seen fantastic growth over just the past couple of years. In 2015 alone, installations increased by 86% over the previous year, and this number is expected to continue to go upward.

At 144 megawatts of solar capacity installed in 2015, the state came in at the number 11 slot nationwide, and with 349 megawatts of total installed capacity, it sits at 13th in the country.

Maryland gets about 57% sunshine per year, making it a perfectly suitable place to take advantage of the sun’s power production. Even some major corporations have jumped on the alternative energy bandwagon – Staples, General Motors, Walmart, Kohl’s, and more. In fact, IKEA in Perryville boasts one of the largest PV systems in the state, at 4.9 MW of capacity.

If you’re considering installing solar panels in Maryland, now is a great time – the cost of these systems has fallen by nearly half since 2010. It is a major decision, however, so let’s look at all of the aspects involved:


#1 Are Solar Panels Worth it in Maryland?

Overall Grade
10 years Avg. Payback Time (For Cash Purchase)
10.5 % Estimate IRR (Return on your investment on cash purchase over 25 years)
$25,688 Your Net Profit Over 25 Years (Cash Purchase)

* Note that these are estimated values for informational purposes only, and do not take into account the full complexity of all financial projections. They also only apply to cash purchases, which means your numbers will be different if you lease your system or pay for it with a loan (factoring in interest). Also note that we are not financial advisors, so this information should not be construed as financial advice.

#2 Options for Buying Solar Panels in Maryland

Purchasing a solar system in this state can run between $15,000 and $30,000. Not everyone who is interested in solar has that kind of change hanging around, so if you don’t plan to pay for your system in cash you’ll need to decide between the other financing options.

Cash Upfront

From an ROI perspective, paying cash upfront for your system is the most advantageous when compared to other financing options. You avoid interest on loan payments as well as any monthly lease payments – both factors that decrease your overall savings.

You also own your own installation (and therefore power). Between the federal tax credit, incentives from the state of Maryland, possible county incentives, and SRECs that you sell each year, payback time can be quite impressive.

Paying cash removes any concern over making future payments and gives you complete freedom to do whatever you wish, including selling your home.

As mentioned, it takes about $16,700 to install a 5kW installation in Maryland. After throwing in the 30% federal tax credit and Maryland Residential Energy Grant Program (more on both of these later), that initial investment drops to just $10,690.

While significantly less than the sticker price, $10k is still quite a lot! However, after 25 years of producing electricity (the estimated lifespan of most solar installations), you’ll be able to pocket about $25,688 in net savings with a respectable 10 year payback period.

Pros of a Cash Solar Purchase:

  • Paying cash offers the quickest possible payback time on a solar system.
  • You will be free of loan and interest payments.
  • You’ll own your system free and clear and be able to do with it as you choose.
  • It’s much easier to sell a home with an outright owned system rather than one that comes with a contract requirement.
  • All financial incentives offered by the installer and governments are yours and yours alone.

Cons of a Cash Solar Purchase:

  • Some experts argue that the money spent on a cash solar purchase may be able to earn a higher ROI in a different investment, making a loan an equally smart option.
  • You will be responsible for the repair and maintenance of your equipment.
Bottom Line: If you’re looking for an investment, purchasing solar offers a low-risk, slow-growth way to save money while decreasing your own carbon footprint at the same time. Of course, you still want to make sure all elements of this choice fit your needs!


Maryland is one of the approximately half of US states that allow leasing (one of two forms of what’s known as third-party solar financing) as an option for consumers to install solar on their property. What is solar leasing? An installer puts their own system on your roof and you make monthly payments which ideally end up being less than the amount you save on your electricity bill.

The terms of the lease vary from company to company, but 15-20 years is a common length.

Pros of Solar Leasing:

  • There’s no delay between installation and savings – you’ll see a financial benefit on your first energy bill.
  • Homeowners can avoid the barrier of pricey down payments, bringing solar energy into the reach of more people than would be able to afford it otherwise.
  • The installer typically takes care of any maintenance issues, and equipment is commonly accompanied by a warranty. It’s important to verify all terms with the installer to make sure of exactly which responsibilities they expect the homeowner to take care of.
  • If your energy bill savings are more than your lease payment, you will end up with a cash-positive transaction each month – meaning you’ll actually make money on your system.

Cons of Solar Leasing:

  • If your home consumes more electricity than your system produces, you could end up in the red between power bills and the lease payment. This is uncommon, but there are no guarantees when you sign the contract.
  • You could be responsible for some maintenance costs (which are typically minimal on a new system) or for replacement in the event of a natural disaster. This is where it’s important to make sure the warranty covers these types of events.
  • Solar leases typically include an annual price escalation clause, meaning your bill can go up between one and three percent each year. For example, Sungevity’s disclaimer states a possible 1.5-2.9% escalation on their leases. Traditional energy rates also tend to rise, and in MD they go up by an average of 4% per year – higher than the national average of 3%, according to the U.S. Energy Information Administration. This means leasing may put you on the better end of the deal.
  • There are a number of federal and state incentives for installing alternative energy sources. When you lease, you forfeit the rights to these incentives, although in some cases you may be able to retain your SRECs (credits that you can sell to the utility company).
  • Selling a home with an existing solar lease may cause issues with selling your home. The buyers either need to be able to meet credit and other requirements for the lease, or you will have to buy out the remainder of your contract.
    Homeowners are usually prohibited from making any home improvements that could affect the functioning of the system.
Bottom Line: Leasing your solar energy system is one option, just be sure to look at all of the pros and cons before making a decision on the best financing for your individual situation.

More: Solar Leases

Power Purchase Agreements (PPAs)

Solar PPAs (the second of the two third-party solar financing options) offer a slightly different option from leasing. A Power Purchase Agreement resembles a solar lease in that the homeowner does not buy the system, instead making monthly payments to an installer.

The difference between a lease and a PPA is that a PPA requires you to agree to paying a certain price per kWh of energy, rather than a fixed monthly payment. As with a lease, an escalator may be involved, so again it’s wise to compare projected rates for both the solar company and your local utility to see which option is most financially logical.

Pros of PPAs

  • There is typically a low down payment, or no money at all required prior to installation.
  • The responsibility for maintenance and repairs typically falls upon the installer’s shoulders.
  • Provided local utilities raise their rates higher than the terms of your fixed kWh price, you could save some serious cash on monthly energy bills.
  • Some PPA agreements allow you to buy the system down the line – typically after about five years – if you so choose.

Cons of PPAs

  • A PPA brings the same challenges with selling your home as a lease does. It will be your responsibility to find a buyer who not only wants your system but can also meet the requirements necessary to take over the contract.
  • As with a lease, most of the rebates and incentives go to the owner of the system.
  • If you do decide to buy your system from the installer down the road, you may pay more than if you had bought new to begin with.
  • Being locked into a fixed rate per kWh means that decreases in local utility rates will not net you any benefit. It is, however, rare for energy rates to go down – typically they rise each year – still, it’s wise to be aware of all possibilities.
Bottom Line: PPAs, like leases, require a certain credit score and possibly other qualifying criteria which must be met. And as with leases the arrangement offers benefits and drawbacks, each of which you should examine closely to determine whether a PPA is the right choice.

More: Power Purchase Agreements


Most people don’t have $17k in cash tucked away that they can earmark for putting into a solar system, yet more and more are avoiding leases as well. If you’re considering a solar installation and would like to own your own power, you may consider a loan. There are a number of ways to get financing for your system, including:

  • A personal loan – these are typically available in both secured and unsecured options, with better interest rates for a secured loan (i.e. using your home as collateral). This type of loan could include an origination fee, and usually comes at a higher rate than a home equity loan.
  • A HELOC – a home equity loan, or Home Equity Line of Credit, can typically offer a better interest rate – currently under 5% – but is secured by using your home as collateral.
  • Installer financing – some solar companies offer their own financing options. These are often achieved via a third-party lender, with an attempt to offer competitive interest rates. As always, read the fine print – know from whom you are borrowing and the exact terms of the loan.
  • Fannie Mae – the federal government offers loans for renewable energy home improvements through its Residential Energy Efficiency Improvement Loans. These loans may be offered at below market rate interest, and you can borrow up to $15,000 for your system.

It’s advantageous to investigate several different avenues for obtaining solar financing. Credit unions, your personal bank, the installer, and the government will all have different terms and you’ll want to do the math when it comes down to exactly how much you’ll be paying in the end.

Because of the rapid growth of the renewable energy industry, there is a competitive environment which can result in you being able to negotiate a good rate often with no money down.

Let’s take a 15 year loan with 5% interest, for example. Using this loan to finance the 5kW installation in the Cash Upfront section above, we tack on an additional $7,071 in interest, leading us to a total net savings of $18,617 and a 15 year payback.

Pros of Solar Loans:

  • A loan allows homeowners to see immediate savings, because the payments are highly likely to be below what you will save on the first power bill.
  • You can usually get your system installed with a minimum of upfront cash outlay.
  • A loan means you still own your own PV system and so all available incentives, rebates, and tax benefits belong to you.
  • The payments are usually lower than with a PPA or solar lease.
  • Your system can be paid off in as little as 7-15 years, unlike with a lease or PPA.

Cons of Solar Loans:

  • You may have to put some cash into a down payment, and/or put your home up as collateral should you default on the loan.
  • You’ll pay more in the end than you would paying cash outright, due to interest added onto the loan.
  • If your loan is not paid off at the time you sell your home, you’ll still be responsible for the payments (although this problem is often offset by the fact that home values increase significantly when equipped with solar panels).
  • You will have to take care of any repairs or maintenance since the system belongs to you. PV systems typically require very little in the way of maintenance, however, and equipment is usually covered by a warranty of 15-20 years.
  • A loan application usually takes longer to process than PPAs or leases.
Bottom Line:Solar loans are a boon to homeowners who qualify – you get all of the benefits of owning your system, while being relieved of the obligation to come up with all of the money at once. Just make sure to consider the upsides and downsides of this financing option.

More: Solar Loans

#3 Maryland Solar Policy Information

Maryland is on the right track as far as incentives to encourage the use of alternative energies. They offer several attractive benefits for those who install solar panels, bringing the cost of these systems down for residents.


Renewable Portfolio Standard

Two-thirds of states now have a Renewable Portfolio Standard, or RPS. This is essentially a set of energy-related goals for the state to reach by a predetermined year. Power sources used to reach these goals include wind and solar. Carve-outs are used to provide consumers with incentives to install these systems because they provide the opportunity to sell renewable energy credits to utilities so they can meet the RPS requirements.

Why would utilities want to buy your certificate of alternative energy produced? Because if they can’t prove to the government that they are producing a certain amount of power through green methods, they pay fines called ACS – Alternative Compliance Payments.

Maryland’s RPS is moderate – the state has an overall renewable energy generation goal of 20% by the year 2022, and a solar goal of 2% by 2020. The RPS was recently amended to accelerate the solar goal to this level from a previous timeline of 2022.

More: Renewable Portfolio Standard (RPS)

Electricity Prices

Electricity in Maryland is on the higher side at $0.14 per kWh, about a penny higher than the national average, three pennies more than Virginia, and about the same as Pennsylvania.

As mentioned though, current prices aren’t the whole picture. Since your solar installation will be up on your roof for the next 20 to 30 years, we have to predict future prices as well.

According to EIA data, since 2001 Maryland utilities have raised prices around 4.5% each year – the 2nd fastest rate in the country!

Why is this important? Well, the higher your electricity prices, the more you save by going solar. And the quicker you install your own green generator, the faster you can avoid those rising costs and start saving money.

Net Metering

Net metering is just a fancy way of expressing the ability of utility companies to take reverse measurements of your home’s energy, so to speak. Rather than just measuring the power your home consumes, net metering allows them to monitor the excess amount produced by your PV panels in order to give you credit for sending power back into the grid.

No one is able to use all the electricity their solar panels generate right in the home, so with net metering you’ll receive credits on your bill when you produce more electricity than you can use.

Net metering isn’t technically a revenue-producing aspect of your system, such as SRECs, but it’s an integral part of your financial investment. If you didn’t have net metering, your total savings would suffer greatly.

In Maryland, excess power generation carries over for one year (until April, specifically) and after that it is paid out to you at the utility’s energy supply rate (typically a fraction of retail rate).

More: Net Metering

Interconnection Rules

Interconnection is the process of hooking your PV system up to your local utility company’s power grid. There is an application process that must be carried out in order to ensure that all codes are met, and that the system will not interrupt the safety and reliability of the existing network of equipment.

The type and size of system is assessed during this process to verify that everything will work properly together. The protocol is also in place to facilitate net metering – a way of allowing consumers to get credit for extra power their unit may produce, which is essentially “sold” back to the utility company in exchange for energy bill credits.

There are seven major electric providers in the state of Maryland and each has their own individual interconnection application process and requirements. For example, PEPCO administers interconnection in a two-part process, and there is no application fee for systems under 10 kW (the typical residential system is 5-8 kW).

Installers commonly work with the utility companies and assist you in the process of applying for interconnection and obtaining all of the required documentation.

#4 Financial Incentives, Rebates, and Tax Credits

There are several great benefits for solar owners in Maryland, at the federal, state, and county levels. As noted earlier, if you choose a PPA or lease option, you will not be eligible for most of the incentives mentioned here. You must own your system either outright or via loan financing in order to take advantage of the tax credits, exemptions, and SRECs.


Federal Tax Credit

By far the most financially rewarding aspect of buying a solar power system is the federal tax credit – this credit consists of 30% of the cost of your system, as long as specific requirements are met:

  • You must own your PV system, whether through a cash purchase or by way of a loan. PPAs and leases may not claim this credit.
  • The installation must have taken place between January 1, 2006 and December 31, 2019. While the credit was previously slated to end in 2016, last-minute legislation allowed for the credit to be extended through 2022, at which point it will have decreased to 10%. After this point the credit will be eliminated, barring another extension.
  • The system must be there as a result of your own installation. You cannot buy a house and claim the solar tax credit on a system that is already installed.

The federal tax credit, known as the ITC (Investment Tax Credit) is calculated on a basis of the net price – in other words, you will receive 30% of the final purchase price after sales promotions offered by the installer and any other rebates. Should your tax liability be lower than the amount of your credit, you may carry over the remaining amount to the following tax year.

The credit in non-refundable, but you can break the total out over several years to be able to claim the entire amount. Consult your tax preparer in order to be sure you meet all necessary guidelines and file all of the required documents to ensure you get the maximum possible credit.

More: Solar Federal Tax Credit

Residential Clean Energy Grant Program 

The Maryland Energy Administration offers a unique program for owners of solar systems (as well as solar water heating, wind turbines, and geothermal heating and cooling). Homeowners who install a PV system between 1 and 20 kW may apply for the grant of $1,000. There are a few requirements to receive the grant, including:

  • Application must be made to the MEA within one year of installation.
  • The location of the installation must be the owner’s primary residence.
  • The property cannot be held in an irrevocable trust.

You will need to provide a number of documents including photographs, proof that the system is paid for, proof of proper permits and inspections, and proof of residency at the property on which the system is installed. In addition, if you do receive the grant, that $1,000 is tax exempt in the state.

Maryland Solar Power Performance Payments

SRECs are a significant motivating factor in many solar customers’ decisions to go ahead with the purchase. Solar Renewable Energy Credits go hand-in-hand with the RPS – the utility companies must meet the yearly renewable energy production requirements, and if they can’t do it on their own, they can buy certificates from homeowners with PV panels in order to avoid paying steep fines.

A typical residential solar setup can produce up to five to six credits worth of renewable energy per year. The amount of money you get for these credits is directly correlated with the amount of the ACP – Alternative Compliance Payment. The ACP is the set price each utility company must pay per MW of green energy they fail to produce.

In 2016, the ACP in Maryland is $350. You will get less than this amount per unit, however, because the money changes hands a couple times throughout the process, and the utilities would rather just pay the ACP if they must pay homeowners close to the same amount for their SRECs anyway. In 2017 the ACP is slated to drop to $200, meaning the amount residents get for their certificates will drop significantly as well.

In most states system owners can choose to sell their SRECs to special brokers who handle these transactions for consumers. Maryland is a bit different in that solar energy producers must offer their SRECs directly to electric companies first. If the certificates don’t sell within 10 days the owner may do what they wish with them. The Maryland Public Service Commission provides a website that facilitates the process of selling SRECs to power companies.

Property Tax Exemption

Each year researchers are learning more about just how much solar panels increase a home’s value. Now, a study by the Lawrence Berkeley National Laboratory shows that the green energy may add as much as $4 per watt to the selling price. On a 5 kW system that’s a hefty $20,000.

In Maryland, you won’t have to worry about this increased property value causing you more pain at tax time – the state (as welll as a few counties) gives solar owners a pass on this portion of their property taxes.

Sales Tax Exemption

You won’t pay any sales tax on your solar equipment in this state. The potential savings are no chump change – with a 6% sales tax rate and equipment accounting for about 40% of total installation costs, you’ll avoid an additional $400 in costs on a $25,000 system. There’s nothing special you need to do in order to take advantage of this exemption, you simply won’t be charged the tax when paying your installer.

General Increase in Home Value

Solar isntallations are similar to any other specialty item (such as a Jacuzzi or wine cellar) when it comes to selling a house. Some buyers will be attracted and some will consider it a liability. As solar’s popularity soars, the issue is being looked at in more and more detail, and there is now evidence that homeowners are willing to spend an additional $4 per watt on average for homes with solar.

If you decide to put your home up for sale, you’ll need to be prepared to address potential buyers’ questions and concerns. These are likely to include:

  • Is there maintenance and repair involved in owning solar panels? If so, what’s required, and is there an active warranty on the equipment?
  • How much of a problem will it be if the roof should need replacing?
  • How much savings can I expect to see on my energy bill? (Be prepared to provide past bills.)

If there’s one ace up your sleeve in the process of selling your Maryland home with solar, it’s the fact that the state has high energy costs and with the system already in place the buyer must do nothing but sit back and enjoy the savings.

While producing an exact number is tricky because each family’s usage differs and production can fluctuate from month to month and year to year, all told, assuming the system produces all or most of the necessary power, your potential buyers may save upwards of $25,000 over the course of 20 years (on top of SREC sales).

One of the major advantages of having solar when you sell is that it typically bumps up the selling price. In the same study mentioned above, out of Lawrence Berkeley National Laboratory, homes with a 5kW installation may bring in roughly $20,000 more than they would without it.

While it may be a little more difficult to sell a home with a lease or PPA, it’s certainly not impossible. You will have to disclose the existence of the contract to potential buyers, and interested parties will have to apply to the installer in order to find out if they qualify to assume the payment.

If they don’t, you might want to consider negotiating upwards on the price in order to make it easier for you to pay off your contract. Depending upon how long you’ve had the system you could be looking at $20,000 in costs.
When deciding on leasing, buying, or PPA, consider how long you plan to be in the home.

If you think you may have to sell in less than seven years or so, you may want to forego installation altogether. If you’re in your “forever home” then buying or leasing are both viable options.

More: Buyers Will Pay More for Solar Homes

If you’d like to dig even more on local incentives and rebates, check out the DSIRE database.

What to Do Next?

Maryland is a rising star in the world of renewable energy. The state’s legislators have taken a proactive role in ensuring that residents have multiple financial incentives to go green, as well as to encourage utility companies to become more earth friendly as well.

The state has stronger policies than most in tax incentives, net metering, and the solar carve-out, and makes frequent amendments to its policies in order to keep up-to-date on renewable energy goals.

Due to Maryland’s high power rates, going solar can offer residents significant savings over their current bills, as well as future costs as energy prices are rising at a steady clip.

Image Credits with CC Licence via Pixabay & Flickr