Maryland solar incentives, tax credits and rebates
Financial resources for Marylanders in 2024
There’s no way around it: Installing solar panels is expensive. On the bright side, Maryland residents can take advantage of federal and local tax breaks, rebate programs and solar renewable energy certificates (SRECs) that help offset the upfront costs of going solar. Here’s everything you need to know about how state and federal solar incentives can make installing panels more affordable.
Key insights
- In Maryland, a typical residential solar panel system costs $9,800 to $28,000, depending on the size of your system and what financial incentives you qualify for.
- The 30% federal solar investment tax credit (ITC) is the most significant solar incentive for most homeowners in Maryland.
- Leasing or entering a power purchase agreement (PPA) is often cheaper upfront, but you won’t be eligible for the federal solar tax credit and other financial incentives.
Residential solar incentives in Maryland
The federal solar investment tax credit (ITC) is the best way to save money when going solar in Maryland. It reduces your federal tax liability by 30% of how much it costs to install solar panels. This is different from a deduction, which lowers your taxable income. ITC is a credit, meaning it directly decreases the amount of taxes you owe.
The ITC drops to 26% in 2033 and then 22% in 2034.
For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If in the year your system becomes operational you owe $15,000 in taxes, the ITC reduces what you owe to $12,000.
Tax credits offset your tax liability, so it’s only useful if you owe federal income taxes in the first place. However, the credit rolls over to the next tax year if you don’t use the full amount. You don’t get these benefits automatically, though. You must claim your solar equipment, labor and permits on your federal taxes for the same year you started using your system on Form 5695.
Residential Clean Energy Rebate
The Maryland Energy Administration runs the Residential Clean Energy Rebate Program. The initiative offers a flat $1,000 grant for residential solar photovoltaic systems of at least 1 kW in size. Solar shingles and solar water heaters are also eligible for rebates through this program.
To qualify, you must hire an NABCEP-certified installer for the project, and the property must be your primary residence. Importantly, you need to submit your application within 12 months of installation. Be mindful that grant applications are only accepted during the fiscal year, and funds are limited, so early application is advisable.
More statewide solar panel incentives
Maryland is committed to transitioning to green energy. To further that goal, the state offers lots of local and state tax incentives to make it easier to get solar on your home. You can also sell your energy credits back to the utilities to help them meet their green power requirements.
- Sales and use tax exemption: Maryland has a 100% sales and use tax exemption for solar panels, water heaters and space heaters. It also applies to solar thermal electric projects and geothermal heat pumps.
- Property tax exemption: The Maryland Department of Assessments and Taxation has a 100% real property tax exemption for the value solar and wind energy equipment adds to your property. Eligible technologies include solar panels, solar water heaters, solar thermal electric and all wind projects.
- Energy Storage Income Tax Credit: This tax credit is available for both residential and commercial properties, incentivizing the addition of energy storage systems (like batteries) to solar installations.
Additional solar incentives in Maryland
Check DSIRE for the most comprehensive information about solar incentives and policies in Maryland.
| Incentive type | Amount | Eligible solar equipment | Applicable sectors | Administrator | |
|---|---|---|---|---|---|
| Baltimore County - Property Tax Credit for Solar and Geothermal Devices | Property tax incentive | Varies | Solar panels, solar water heat, solar space heat | Multifamily residential | Baltimore County Office of Budget and Finance |
| Commercial Clean Energy Rebate Program | Rebate program | Varies | Solar panels, solar water heat | Commercial, industrial, local government, nonprofit, federal government | Maryland Energy Administration |
| Parking Lot Solar PV with EV Charge Grant Program | Grant program | Up to $300,000 per project | Solar panels | Commercial, local government, nonprofit, state government | Maryland Energy Administration |
| Maryland Smart Energy Communities Grant | Grant program | Varies | Solar panels, Solar water heat | Local government | Maryland Energy Administration |
What to know about net metering in Maryland
If you install a solar system in Maryland, you can get into the net metering program. That means the electric company will give you full-price credit for any extra energy your system generates, up to 200% of what you normally use. Your system must be under 2 megawatts (MW).
The state has a 3,000-megawatt cap on the whole net metering program, so it might get shut down once it hits that limit. But for now, you can sign up with any utility company to get in on it.
Through the solar renewable energy certificates (SRECs) program, you have another way to earn money with your solar system. Through the program, you can earn credits for the energy you produce. Local electric companies then buy these credits from you for $50 per megawatt-hour (MWh).
Any grid-connected systems can still tap into the local power grid when needed. The alternative is to store it in a battery. That way, you can still turn your lights on when panels aren’t generating electricity, like at night or on especially cloudy days. The biggest downside is that solar storage battery costs can be almost as high as the panels — $7,000 to $18,000.
Solar renewable energy certificates
If you've got solar power at your building in Maryland, whether it's your home or some other facility, you can sell the energy credits (called SRECs) to utility companies. They need to buy those credits to meet the state's renewable energy rules. For each kilowatt-hour you generate, you'll get paid 14 cents. This program is not set to expire.
» GREENEST STATES: Maryland ranked No. 10 in 2024
How much are solar panels in Maryland?
Before considering the federal solar tax credit, solar panel costs in Maryland typically range from $14,000 to $28,000. Your system size greatly affects how much you pay overall. The typical system size for solar systems in Maryland is 10.18 kW (kilowatts).
How do you know if the average size system is enough for your home or if you need a bigger one? Check the amount of electricity you used last year in kilowatt-hours (kWh). You’ll find this information in your electric account dashboard online. Then divide your annual kWh by 1,200 to find the system size you need. For example, if your home used 15,000 kWh last year, you would need a 13-kW system.
Average solar cost by system size in Maryland
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Before federal tax credit | $14,686 | $17,623 | $20,560 | $23,497 | $26,434 | $29,371 |
| After federal tax credit | $10,280 | $12,336 | $14,392 | $16,448 | $18,504 | $20,560 |
Solar resources in Maryland
Maryland Energy Administration (MEA) is the primary state agency responsible for energy policy and programs, including solar incentives. Maryland Department of Natural Resources (DNR) oversees various environmental programs, including those related to renewable energy. Their site may have additional resources or information relevant to solar energy. Below are some additional resources.
Find solar companies in Maryland
A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Maryland’s top solar companies to learn more.
| Company | Customer rating | Pro install | Payment options | Year founded | |
|---|---|---|---|---|---|
 | 3.4 | Yes | Cash, loan, lease | 1985 | Learn more |
 | 4.2 | Yes | Cash, loan, lease | 2007 | Get Started |
 | 4.8 | Optional | Cash, loan | 2016 | Learn more |
 | 1.2 | Yes | Cash, loan, lease and PPA | 2012 | Learn more |
 | 4.7 | No | Cash, loan | 2018 | Learn more |
FAQ
Can I get free solar panels in Maryland?
No, but you can lease solar equipment or enter a power purchase agreement (PPA) with little to no upfront costs. Still, neither is totally free. Solar leases generally require a flat monthly fee; PPAs make you pay per unit of electricity.
» FREE SOLAR PANELS: Are they really free?
How can I pay for solar panels?
You can pay cash, but most people finance solar panels with a solar loan. It works a lot like any other type of loan — there’s an application and approval process, and you pay it back over time (with interest). You also have the option of getting a lease or power purchase agreement.
» SOLAR PANELS: Lease vs. buy
How much can I save with solar panels in Maryland?
On average, Maryland homeowners with solar panels avoid $64,703 in utility costs over 25 years. Your current electric bill is the starting point for assessing the financial benefits of transitioning to solar energy. Knowing your average energy consumption helps determine the size and capacity of the solar system you need. Once you know this, you can figure out potential savings and how long it should take for your solar installation to pay for itself.
How do I know if my house is a good candidate for solar?
It’s best to have plenty of unshaded roof space that faces south or west for optimal sun exposure. It’s also smart to upgrade any old, inefficient appliances first. Reducing your electrical loads now means you can get a smaller system, which will be cheaper.
The condition of your roof matters too — if it needs replacement soon, do that before installing solar panels. Installing solar panels on an old roof might mean you have to remove the panels, replace your roof and then reinstall the panels. This will cost around $5,000 for a 19-panel setup.
Solar photovoltaic (PV) technologies, more commonly known as solar panels, absorb sunlight and convert it into usable electricity. If you have a lot of shading around your house, they might not get enough sun to power your home.
Is my HOA allowed to restrict solar panels?
According to Maryland law, a homeowners association can’t restrict your home’s solar panels in a way that will significantly increase the cost of a solar system or significantly decrease the system’s efficiency.
What has Maryland’s investment in solar been so far?
Total solar investments in the state amount to $5 billion, according to the Solar Energy Industries Association.
Bottom line
The ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar. Turns out, it’s worth it for many homeowners, particularly in Maryland.
Solar costs and savings: Maryland and nearby states
| 6 kW system cost (before incentives) | 10 kW system cost (before incentives) | Typical system size needed* | Average cost per watt | Total utility power cost savings** | |
|---|---|---|---|---|---|
| Maryland | $16,800 | $28,000 | 10.18 kW | $2.80 | $64,703 |
| Pennsylvania | $16,920 | $28,200 | 10.17 kW | $2.82 | $58,076 |
| Virginia | $17,220 | $28,700 | 10.95 kW | $2.87 | $60,802 |
| West Virginia | $18,540 | $30,900 | 9.3 kW | $3.09 | $63,114 |
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- DSIRE, "Maryland Programs." Accessed March 29, 2024.
- EnergySage, “The cost of solar panels in Maryland.” Accessed March 29, 2024.
- Solar Energy Industries Association, "Maryland Solar." Accessed March 29, 2024.
- SolarReviews, “How much do solar panels cost in Maryland?” Accessed March 29, 2024.
- Solar United Neighbors, “Net metering in Maryland.” Accessed April 10, 2024.
- State of Maryland Office of People’s Counsel, “Residential Rooftop Solar in Maryland: Frequently Asked Questions.” Accessed April 15, 2024.
- Maryland Office of the Attorney General, “Things To Consider Before Going Solar.” Accessed Nov. 3, 2023.
- Maryland General Assembly, “Article - Tax - Property.” Accessed May 14, 2024.
