Historically solar prices have had trouble keeping up with the competing with utilities’ electricity prices due to a lack of state incentives, high installation costs, and low utility prices. However, in recent years solar energy has become more competitive due to falling solar panel prices and favorable state incentives. The Maryland Clean Energy Jobs Act, which went into effect Oct. 2019, increased the state’s solar requirement to 14.5% and the state’s Renewable Portfolio Standard (RPS) to 50% by 2030.
Thanks to the bill, solar energy is much more competitive with brown power, or power from the electric grid. This has created a great opportunity for Maryland businesses that are looking to save money on their electric bill. Interested in taking advantage of this? Here are just a few ways your business can save money by installing solar:
Reduce Your Taxes Through the Federal Investment Tax Credit
Investing in solar energy can help reduce the amount of income tax businesses pay, thanks to the federal investment tax credit (ITC). If businesses install a solar system, 30% of the project’s costs can be claimed as a tax credit. For example, if the cost to install solar systems were $10,000, then the amount of income tax businesses pay would be reduced by $3,000. The tax credit will be decreasing to 26% in 2020, 22% in 2021, and 10% in 2022 so it’s important to take advantage of the credit as soon as possible to maximize the benefits of the credit.
Take Advantage of Solar Renewable Energy Certificate Increase
Due to the RPS increase, Solar Renewable Energy Certificates (SREC) in Maryland increased from $11/MWh to $70/MWh. Businesses receive 1 SREC from the local utility for every 1 MW h of electricity their solar system generates. For example, if the system generates 1000 MW h in a year, you will receive 1000 SRECs from the utility. You can then sell the SRECs into the SREC market. If we use the example above, your system would generate $70,000($70*1000 SRECs) worth of SRECs annually. You can also use the money earned from SRECs to help pay off the solar installation.
Get Paid by Your Utility Through Maryland’s Net Metering Program
Maryland has one of the best net metering policies in the country. Solar energy systems generate more electricity than you use during the day and, through net metering, the local utility will provide credits for the excess electricity that solar systems generate every month. In Maryland 1 credit is equal to what you pay for 1 kWh of electricity. You can use the credits the utility provides to pay a portion (or all) of your electricity bill every month.
If you don’t use the credits, they will rollover to the next month until the end of the annual billing cycle, which in Maryland is April. Once the billing cycle is over the utility pays you for the excess credits and you will start accumulating credits again right before the summer starts.
Get Financed through Maryland’s Commercial Clean Energy Rebate Program
Maryland’s Commercial Clean Energy Rebate Program provides rebates for solar systems between 1-250 kW. The program’s rebates vary from $1,000 to a max of $20,000, depending on how much energy businesses use which will determine the size of the system. For example, if your solar system is 5 kW, you will get the $1,000 rebate. If your solar system is 200 kW, you will most likely get the $20,000 rebate. This can help cover the upfront costs of installing a solar system which, depending on the size of the system, costs an average of $13,000.
The Commercial Clean Energy program is expiring July 2020 and runs running on a first come first serve basis. The net metering program will expire once there are 1500 MW of solar installed in the state. Due to the RPS increase, it the program is expected to reach its limit in the next few years.
In order to take advantage of these incentives your business must first qualify for solar. Evolution Energy Partners can review a recent energy invoice showing the last 12 months of usage, and help you determine if you are a potential candidate. Developers can then begin reviewing your business to determine your system size by reviewing energy invoices, roof conditions and exterior conditions. If your roof is too old or is in bad condition, you will not qualify for solar.
Andrew Beckett is an Energy Analyst at Evolution Energy Partners and an active participant in the Renewable Energy Practice at Evolution Energy Partners. Contact us to learn about Renewable Energy requirements and projects for your firm