Reduce Cost of Solar Panels in Maryland: Solar Incentives, Rebates, Credits

Maryland residents can expect to pay almost $28,000 for a basic residential solar panel if they don’t take advantage of available tax incentives.²

But, residents may also not be aware that they could potentially recoup a lot of their solar energy investment costs for a limited time.

This complete guide outlines how to lower the cost of solar panels in Maryland using Maryland solar incentives that include tax credits, state issued rebates, net metering options and a host of programs that are designed to increase renewable energy use in the state.

Maryland Solar Incentives

Conservatively speaking, it can cost about $17,700 to $19,000 to install a 5 kW solar panel array system in the state of Maryland.¹

However, this assumes that you have taken advantage of numerous solar energy-based tax rebates and incentives.

And there are several kinds of solar energy-based tax rebates, credits, and incentives on the municipal, state, and federal levels.

And if you really don’t know about solar energy credits, incentives, and rebates can end up costing you a lot. Additionally, depending on where in the state you live and your solar panel setup you could potentially save 25% or more on your setup costs via tax incentives.

Most of the existing solar energy credits, incentives, and rebates have upcoming expiration dates for application. While it is possible that future local and federal legislation could be implemented to create additional solar tax incentives, it is not a given.

Cost of Solar Panels in Maryland for Home Installation

If you live in Maryland and are interested in acquiring solar panel equipment, the time to do so is right now. There are too many Maryland solar incentives available that will help you to reduce the cost of solar panels in Maryland.

Here is everything you need to know about reducing your solar energy startup costs in Maryland. Before taking that deep dive, let’s talk about the Maryland state clean energy initiative, the basics of setting up a solar panel array on your property, and cost calculations before installing such a system.

Maryland Solar Incentives: What Is a Solar Panel System?

To make the most of taking advantage of Maryland solar incentives, and to better understand how to reduce the cost of your initial solar panel installation, here is a basic primer on how solar panels operate.¹²

Solar panels convert sunlight, which is also known as photons, into electricity. One of the most commonly used solar panel systems is known as photovoltaic solar panels, which is named after the photovoltaic effect.¹³

The photovoltaic effect can be explained simply, solar energy converts into electric currents down to the atomic level after the sunlight shines upon semiconductor material. This scientific effect was coined and created by French scientist Edmund Bequerel in 1839.

Chemically treated semiconductor wafers, usually made of substances like silicon, absorb the sunlight that shines upon them. As the sunlight hits the semiconductor, electrons are knocked away from the photons.

This reaction in turn creates an electric current.

Solar panel modules are arranged in large groupings on the ground or on rooftops to capture as much direct sunlight as possible. The electricity that is generated via solar panel conversion is DC, or Direct Current, and must be converted into AC, or Alternating Current, to be used as energy.

Cost of Solar Panels in Maryland (What To Consider)

To determine if an investment in solar panels is the right choice for you, there are numerous factors that you must consider along with the cost of solar panels in Maryland.

The facts and figures presented in the portion of this guide use calculations before any tax incentives, credits, or rebates are applied.

Solar Panel Cost Calculator Maryland: How Much Are Solar Panels in Maryland?

The typical Maryland household uses 973 kWh of electricity monthly and pays a monthly $128 energy bill.¹⁴ That amounts to about a $1,536 annual electricity bill. And that bill amounts to over $38,400 over 25 years.

An average Maryland homeowner can calculate their solar energy offset, or the amount of solar energy they use against how much their system generates over a period of time.

If you took advantage of every solar energy tax break, credit, rebate, and incentive possible, your solar energy offset could be as much as $41,000.³

In other words, your solar panel system could completely pay for itself in 25 years if you installed it today.

The Number of Sunny Days in Maryland

While it’s true that most solar panel systems can draw energy from indirect sunlight, such systems work optimally when exposed to direct sunlight.

Maryland experiences over 200+ sunny days annually. Since Maryland is on the eastern seaboard of the United States, it is sometimes prone to experiencing inclement weather like severe thunderstorms and hurricanes.

Ensure that you live in an area where your solar panel system will receive maximum sunlight exposure.

Square Footage of Space

A licensed and professional solar panel contractor can tell you how many solar panel modules you will need to be installed on your property. There is no standard number of solar panels that need to be installed on properties, every installation is a customized service.

The number of panels that you need to be installed will depend on the kilowatt generation of the system and available square footage.

Typically, it costs almost $3 per watt per solar panel module.

For example, if you want a 5 kWh solar panel system, it might require the installation of 20+ solar panels over an area of 300 square feet. You may need about 1,900 square feet of available space to install a 10 kWh solar panel system.

The average Maryland household features over 2,200 square feet of space.⁴

Cost of Solar Panels in Maryland (How Much To Install Solar Panels Before Maryland Solar Incentives)

As previously mentioned, there is no centralized metric for determining the exact cost of installing a solar panel system on your property.

What follows is a general guideline for determining the cost of solar panels in Maryland based on the square footage and kilowattage of the system.

Please keep in mind that these solar panel estimates are only generalizations. You could pay more or less based on various personal and financial data metrics.

Electrical Power/Area (in Square Feet)	Estimated price
7 kilowatts/1,300 square feet	$19,400
8 kilowatts/1,500 square feet	$22,200
9 kilowatts/1,700 square feet	$ 25,000
10 kilowatts/1,900 square feet	$27,700
11 kilowatts/2,100 square feet	$30,500
12 kilowatts/2,300 square feet	$33,250
13 kilowatts/2,500 square feet	$36,000

Cost of Solar Panels in Maryland (After Maryland Solar Incentives)

Now, consider these same cost estimates after applying any applicable Maryland solar tax incentives, credits, or rebates:

Electrical Power/Area (in Square Feet)	Estimated price
7 kilowatts/1,300 square feet	$13,600
8 kilowatts/1,500 square feet	$15,500
9 kilowatts/1,700 square feet	$17,500
10 kilowatts/1,900 square feet	$19,400
11 kilowatts/2,100 square feet	$21,300
12 kilowatts/2,300 square feet	$23,270
13 kilowatts/2,500 square feet	$25,200

Maryland Renewable Energy Consumption

There is nothing cheap about installing solar energy equipment on a residential property. Some renewable energy experts believe that there is a societal inevitability of acceptance when it comes to solar energy.

Such an acceptance is happening, albeit slowly. And it is better to get ahead of the curve now to take better advantage of limited time.

Clean energy is the future. Along with reducing the global ravages of fossil-fuel-based pollution, renewable energy sources like solar could make energy crises a thing of the past.

The world is changing, why not adapt now and save some money on startup costs while you’re at it?

For example, the world’s energy infrastructure could be primarily powered by renewable energy sources, like solar, by as soon as 2025.⁵ The world could be primarily powered by renewable energy instead of coal for the first time in history.

The world’s renewable energy capacity could comparatively surge by as much as 2,400 gigawatts.

For context, one gigawatt of energy is the equivalent of one billion watts of energy.¹⁵ One gigawatt of energy is enough energy to power 300 skyscrapers or 750,000 residential homes running 24/7 and with the air conditioning on full blast.

According to some exacting energy research studies, over 145 countries could completely convert their energy infrastructures to 100% solar within six years if a global effort was seriously initiated.⁶

But any lasting change on such a scale that could benefit the world must start locally. If you live in Maryland, you actually have no good excuse to not install a solar energy panel system on your property.

In May 2023, the Maryland state government ratified legislation that made it the 23rd state to join a national collective of solar energy-based community states.⁷ This means that the state is legally mandated to provide accessibility to clean and renewable energy sources to every Maryland resident that wants it.

Solar Farms In Maryland Locations

The Maryland government is also embarking on an ambitious energy initiative to convert its statewide energy infrastructure to 100% clean and renewable energy by 2035.

So, what does this mean for the average Maryland resident? Why would you need to know all of this data?

It means that even though the world may be slowly catching up to the idea of slowly converting to renewable energy, the state of Maryland is already creating infrastructure and financial incentives for you to do so now. If you are a Maryland resident, then you have no reason not to try to convert your home energy infrastructure to solar.

You could recoup 25% of your upfront costs in the short term. And after 25 years, your solar panel system could more than pay for itself if you avail yourself of every applicable solar tax incentive.

Maryland Solar Panel Tax Credit

There are numerous solar tax credits, incentives, and rebates that you can avail yourself of when installing panels on your property.⁸ You must remember that you have to wholly own any solar panel equipment that you want to get solar tax benefits from; you can’t apply for such benefits if you are renting or leasing any such equipment.

There are solar tax incentives on the municipal, state, and federal levels. While the information that you find in this guide is comprehensive, you should always consult your local government website or with a tax specialist to see if there are other tax incentives you may qualify for.

Here is a list of some available Maryland solar incentives that you can take advantage of now.

Federal Solar Tax Credit (Solar Investment Tax Credit)

The federal solar tax credit is a solar investment tax credit (ITC) that Americans from any state can claim on their federal income tax forms. When you apply for a federal solar tax credit, you can potentially reduce your tax obligation during the year you file.

Additionally, there is no maximum legal amount that homeowners can claim on this credit.

To qualify, you must own a residential home or property in the United States that has had a solar panel system installed within the last tax year. This federal solar tax credit can only be applied to photovoltaic solar panel systems.

Additionally, the solar credit can only be applied to newly installed systems that are currently generating energy on your residential property.

This solar tax credit automatically rolls over annually if your owed taxes amount less than the tax credits that you earn. This tax credit covers the costs of labor, installation, and the purchasing of PV equipment.

Solar Panel Tax Credit Deadlines

As long as you have a PV solar panel system installed on your property anytime between January 1, 2006, through December 31, 2032, then your tax credit savings is 30%.

For example, if your PV solar panel system cost $19,000 to install, then your tax obligation could be reduced by $5,700 after applying for this federal solar tax credit.

Starting in 2023, you can even receive a 30% tax credit if you have any battery devices that help you store the solar energy you generate on your property.

Unfortunately, this solar tax credit reduces after 2032 and then completely disappears after 2035.

It will reduce to 26% by the year 2033. In 2034, the federal solar tax credit will fall to 22%. By 2035, the federal solar tax credit will no longer exist.

To claim a federal solar tax credit, download IRS form 5695 and consult a tax specialist.¹⁶

Maryland Solar Rebates

The Maryland Energy Administration offers a simplified rebate program that gives Maryland residential homeowners money for installing solar panel equipment on their property.¹⁷

This rebate initiative is designed to be an incentive to get Maryland residents to install solar panel equipment in their primary homes.

The solar panel energy systems that you install on your property must be able to generate between 1 kW to 20 kW. You can earn $1,000 just for installing a photovoltaic solar panel system or solar shingles.

Maryland residents can earn $500 just for installing a solar-powered water heating system. The MEA grants $3,000 to Maryland residents who install a solar-powered geothermal pump on their property.

While applying for an MEA solar rebate incentive is a very straightforward process, there is an application process.

Firstly, you will have to submit basic information about yourself, your solar panel energy system specifications, your property, the contractor and installation process, and proof that you acquired all necessary permits.

Most importantly, you will have to provide documentation of the final permit and inspection issuances.

You will also have to provide photographs that show every component of the solar panel system. The photographs should clearly and visibly show where the system is installed on your property.

You will have to show a copy of the last invoice detailing that the project was paid in full.

If this Maryland solar incentive interests you, then you should apply as soon as possible. The program is wildly popular and available funds are being rapidly exhausted.

You may have to wait until next year to apply depending on demand.

Maryland SREC Market System

The Maryland Solar Renewable Credit System, also known as “SREC,” is a state clean energy market initiative that rewards its public utility companies for using every means to use clean energy.

In other words, it’s a public clean energy marketplace where utility companies can buy SREC certificates from residential homeowners based on each megawatt hour of solar panel electricity generation. Any utility company that does not avail itself of such SREC certificate redemption opportunities could end up paying expensive clean energy compliance penalties to the state government.

The price for such SREC certificates fluctuates all the time. But at the posting of this guide, one Maryland SREC certificate had an SREC market value price of $52 to $75.

A Maryland resident who installs a 10 kWh solar panel system on their property may be able to accrue 10 to 13 SREC certificates annually.

You could potentially make $700 to $1,000 annually selling Maryland SREC certificates to public utility companies. And that is on top of the solar panel offset savings you gain by owning solar panels as well.

The Maryland Energy Storage Income Tax Credit

Along with promoting its statewide clean energy initiative, the Maryland state government is also financially incentivizing its residents to buy ancillary solar energy storage battery equipment.

Maryland residents who buy solar battery storage equipment are incentivized to use their solar panel systems, keep them in good working order, save energy for future use, and take advantage of net metering initiatives. (More on that later.)

The Maryland Energy Storage Income Tax Credit offers a 30% solar energy and personal income tax credit for solar energy battery storage systems up to an amount of $5,000.

This Maryland solar incentive program should be available until 2024 and could be discontinued unless state legislation is ratified to continue it. This solar tax credit for solar energy storage is offered on a first-come, first-served basis.

The program could end once its budget is exhausted. This program is legally authorized to award $750,000 in solar energy storage income tax credits annually.

The Maryland Energy Storage Income Tax credit can potentially be paired with the federal solar tax credit to optimize your saving potential if the new battery system is connected to a new or preexisting solar panel system.

Maryland State Sales Tax Exemption for Solar Panel Installation

If you live in Maryland and have a PV solar panel energy system installed on your residential property, then you are automatically exempt from the 6% state sales tax. Your solar panel contractor and the installer should automatically exclude the state sales tax from your invoice.

Maryland Net Metering

In 2016, the Maryland state government created a net metering initiative that enables Maryland residents the right to sell any excess solar energy they generate to a public utility grid in the form of credits.¹⁸

Maryland’s net metering system is a smart grid utility system. It only charges residents for the net amount of electricity they utilized during a billing cycle while sending any excess solar energy they generated back to the utility company.

To take part in net metering, you will need to ask a utility company to install a smart grid meter on your property.

If the utility company delivers less energy than the customer generated via solar energy, then a credit is issued.

Any excess solar energy generated by a Maryland resident can be sold to a utility company as a credit that can be applied to the future bills of the resident. The maximum capacity for Maryland’s net metering initiative is 3,000 MW.⁹

Maryland Inflation Reduction Act

The Inflation Reduction Act,¹⁹ which is a national tax incentive initiative, offers tax rebates and credits for homeowners who buy or upgrade solar energy systems, electric vehicles, solar water heaters, and other clean energy upgrades in the pursuit of lowering carbon footprint and adapting to renewable energy.

Maryland residents can use the IRA to get a tax credit of up to 30% to partially recoup against their startup costs.

Maryland Municipal Level Solar Tax Credits

There could be solar energy-based tax credits, rebates, and incentives that you can apply for at every level of government. This could also include solar tax credits even at the city and county government levels as well.

Refer to your local city or county government websites for more information.

Here are four small counties in Maryland that offer significant solar tax credit incentives.

Anne Arundel County Solar Tax Credit

This is a one-time tax credit that can be applied to your residential property taxes if you live in Anne Arundel County. The caveat for the tax credit is that you install and use solar energy-based, PV, or geothermal equipment for cooling, heating, and creating energy.

You can gain a $2,500 one-time solar tax credit or 50% off your solar panel installation startup costs less any state or federal tax credits, whichever is the lesser amount.¹⁰

Harford County Solar Tax Credits

Maryland residents living in Harford County can claim a property tax credit of $2,500 if they use solar panel equipment for electricity generation, heating water, and cooling or heating.

This solar tax credit can apply to non-residential and residential buildings.

Baltimore County Solar Tax Credits

Maryland residents living in Baltimore County can claim a property tax credit of up to $5,000 if they use solar panel equipment for electricity generation,²⁰ heating water, and cooling or heating.

This solar tax credit can be applied to single-dwelling or multi-unit residential properties.

Prince George’s County Solar Tax Credits

Maryland residents living in Prince George’s County can claim up to $5,000 when they install a solar panel system on their residential properties.²¹

Is There Such a Thing as Free Solar Panels Maryland?

No. The cost of solar panels, solar panel equipment, labor and installation, the permit and inspection process, ongoing maintenance, and much more, is never free.

As previously mentioned, the typical cost of installing solar panels in Maryland ranges between $17,000 to $36,000 before any applicable solar tax incentives.

Homeowners who invest in solar panel energy systems are encouraged to apply for solar tax incentives, rebates, and credits to help offset the significant initial costs.

It must also be mentioned that a solar panel energy system is more than just the solar panel modules themselves. A licensed, professional, and qualified solar panel contractor must install them on a roof with a rack and mounting system.

Inverter equipment must also be installed with the system to convert the DC current generated by the solar panels into an AC current that can be used in a household.

The point is that there is absolutely nothing free when it comes to solar panel energy systems and you should be wary of anyone or any company offering such.²²

Solar Panels Maryland Schemes (Or Scams?)

There are several solar panel-based business schemes that salespeople and companies use to finesse homeowners into leasing or borrowing solar panel energy systems instead of outright owning them. So, if you see anything advertised as free via such schemes, you should realize that there are always hidden costs involved.

Some solar energy companies offer a service called a Power Purchase Agreement, or a PPA. The solar energy company will install solar panel equipment on your roof at a reduced cost or even for free, but you don’t own the equipment.

In return, you agree to buy the electricity generated by the equipment and any other agreed-upon fees.

In other similar schemes, a Maryland homeowner might be approached to sign a lending or leasing contract allowing a company to install solar panels and accompanying equipment on their residential property. In return, the homeowner agrees to pay a monthly rental fee for the equipment based on the lease terms as well as for the energy they use generated by the equipment.

There are three problems for any Marylander agreeing to such an arrangement.

Maryland Solar Tax Credit (Either for You or the Company)

Firstly, if you allow a company to install solar panel equipment on your property, they own it, not you. So, you won’t be able to qualify for any of the Maryland solar incentives presented to you in this guide.

Secondly, you won’t be able to take advantage of any solar energy net metering initiatives or sell any SREC certificates. In fact, by falling for such a scheme, you allow utility and solar energy companies to take advantage of all and any clean energy and solar energy tax initiatives offered by the state while denying you the same.

And in the meantime, you will pay these companies to place their own solar panels on your residential property.

Lastly, you will have to trust that such companies are not secretly cheating you or generating far more lucrative energy amounts on your property than they are claiming to you.

Installing solar panels on your property is no small undertaking. And if they are installed on your property, you may as well own them outright and solely benefit from all applicable solar tax incentives.

Will the Maryland Solar Energy Grant Program Be Extended?

The current solar tax initiatives and incentives offered by the Maryland Energy Administration have budget caps.²⁴ Many of the programs operate on a first come, first served application basis.

The popularity of the programs, as well as measurable metrics of success, will determine if they are extended in the years to come. Since Maryland is determined to become a clean energy state, a successful outcome to the programs suggests they will continue.

How Can You Dispose of Maryland Solar Panels?

You can dispose of solar panels at any participating solar panel recycling center in the state. Solar panels are made of glass, silicon, aluminum, and plastic, which are all recyclable.

The Maryland state government is currently making plans to start a state wide network of recycling centers and facilities that specifically recycle solar panel waste materials.²³

Off-Grid Maryland Solar Panel Systems

If you are very interested in investing in a solar panel system for your home, you may want to consider going fully off grid. An off grid solar panel system is one that is connected to a home that is completely off the utility power grid and is 100% self-sustaining.

Over 250,000 Americans live self-sustainingly in off grid solar panel enabled homes.¹¹ You would have to consider many significant factors to judge whether this would be right for you.

You could potentially save big money by not being connected to a local, state, or national energy grid. However, you will need to know how to maintain your solar panel equipment so that it doesn’t break down when you need it the most.

Additionally, you may have to worry about added costs for off grid solar panel systems if you need to hire contractors to service and maintain the equipment regularly.

You also assume a lot of risks if the equipment breaks down or if you experience more cloudy days than expected.

Even with added battery storage capacity, you may have to adopt a minimalist lifestyle and schedule your household activities exactingly to remain as energy inefficient as possible.

Maryland homeowners who live in an off grid solar panel-enabled home are still eligible for Maryland solar tax incentives, barring any net metering or SREC certificate initiatives.

However, you may need to invest in a larger solar panel system, more solar panel modules, an extensive battery storage system, a larger inverter, and so on. You may end up needing to spend tens of thousands of dollars more than what an average solar panel system would typically cost.

The Maryland solar tax incentives, credits, and rebates that you do qualify for may not offer significant enough savings to offset your initial startup costs to live an off grid life.

Maryland Solar Answers

Many people ask, Why are solar panels so expensive? Solar panel equipment is extremely specialized and requires expert installation.

They also wonder, Does solar increase home value? Only if they are deemed valuable by prospective buyers. For example, if the panels are 20 years old, they likely won’t increase home value significantly.

Is there a way to learn How to get solar panels for free? You may only be able to do so by renting or leasing equipment from a company instead of owning it, and even then, there are some costs involved.

Is carbon footprint solar panels an issue? Solar panels don’t have a carbon footprint while generating electricity, but its mining and manufacturing processes are carbon intensive, causing the panels to have to operate for years before hte break even point. Especially when the batteries are factored in.

The world will eventually embrace the inevitability of renewable energy and solar panels sooner or later, but the state of Maryland is embracing the concept a lot quicker than most.

So, if you’re a resident, why not reduce the cost of solar panels in Maryland by taking advantage of Maryland solar incentives this year?

Frequently Asked Questions About Maryland Solar Incentives