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Maryland Solar Incentives

Live in another state? See all our Solar Incentives by State

All of Maryland can take advantage of the 30% Federal Tax Credit, which will allow you to recoup 30% of your equipment AND installation costs for an unlimited amount.

There may still be other local rebates from your city, county, or utility. Check below!

Maryland Solar PV Rebates & Incentives

Data from DSIRE. Last updated: 11/13/2019

NameAdministratorBudgetLast UpdatedEnd DateDSIRE ID
Summary
State Agency Loan ProgramMaryland Energy AdministrationFY 2014: $1.7 million11/20/1511/13/19163

The State Agency Loan Program (SALP) was established in 1991 using funds from the Energy Overcharge Restitution Fund. Through this revolving loan program, the Maryland Energy Administration (MEA) provides loans to state agencies for cost-effective energy efficiency improvements in state facilities. Typical loan amounts range from $50,000 to $250,000. State agencies pay zero interest with a one percent administration fee. Their repayments are made from the agency's fuel and utility budget, based on the avoided energy costs of the project. Repayments replenish the fund so that it can continue to make additional loans each year. During 2011 alone the MEA reports making $6.5 million in loans which are expected to result in energy cost savings of over $13 million over the life of the improvements. It also reports that since 2007, it is has issued loans totaling $16.2 million with projected energy cost savings of over $2 million.

Just over half of all SALP loans are directed to Energy Performance Contracts (EPCs) that the Maryland Department of General Services coordinates with the State’s agencies. These EPCs are typically large scale projects that are designed to reduce energy costs and consumption. Each year from October to November, the MEA solicits interest from facilities managers and energy coordinators in state agencies for energy efficiency projects to be funded the next fiscal year (which begins July 1). The annual solicitation is for energy efficiency projects that typically are not covered in Energy Performance Contracts (i.e., smaller projects for which the EPC process is not appropriate).

The program was capitalized between 1991 and 1996 with approximately $3 million in Oil Overcharge Restitution Trust funds. An additional $800,000 was added to the fund in Fiscal Year (FY) 2009 from the proceeds of carbon emission allowance auctions under the Regional Greenhouse Gas Initiative (RGGI) and further funding of $6.9 million was added by the American Recovery and Reinvestment Act (ARRA) in 2010.  In the past, approximately $1 million in new loans have been awarded each fiscal year, though as noted above, in recent years additional funding has permitted the program to expand. During FY 2014 the total program budget was $1.7 million.

The SALP provides a financing mechanism useful to agencies in meeting the requirements of Executive Order 01.01.2001.02 "Sustaining Maryland's Future with Clean Power, Green Buildings and Energy Efficiency."

Local Option - Property Tax Credit for Renewables and Energy Conservation DevicesPrograms locally administered08/06/1511/13/19232

Title 9 of Maryland’s property tax code provides local governments the option to allow a property tax credit for buildings equipped with a solar, geothermal or qualifying energy conservation device. These devices may be used to heat or cool the structure, to generate electricity to be used in the structure, or to provide hot water for use in the structure. The law was initially enacted in 1985, but at that time applied only to heating and cooling and water heating applications. Electricity production for on-site use was added in 2006.

Under this provision, counties determine the amount of the credit and are given the freedom to define solar, geothermal, and energy conservation devices. Counties also determine the length of time that the credit may be available up to a maximum of three years. It should be noted that the statute includes the city of Baltimore in this provision because Baltimore, the city, has its own jurisdiction as a county. Maryland’s local option tax incentive is unique because it is applied in the form of a credit -- not an exemption or exclusion as in the case of many other property tax programs. As of July 2012 at least five counties in Maryland offer a property tax credit under this section of the state code:

Interested parties may view the details of the local tax credits in each county (including county specific contacts) using the links above. Please check with your local country if it offers a tax credit. 

Business Energy Investment Tax Credit (ITC)U.S. Internal Revenue Service03/01/1811/13/19658

Note: The Consolidated Appropriations Act, signed in December 2015, included several amendments to this credit which applied only to solar technologies and PTC-eligible technologies. However, the Bipartisan Budget Act of 2018 reinstated this tax credit for the remaining technologies that have historically been eligible for the credit.  

The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently in February 2018. The table below shows the value of the investment tax credit for each technology by year. The expiration dates are based on when construction begins.   

Technology 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Future Years
PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat 30% 30% 30% 30% 26% 22% 10% 10%
Hybrid Solar Lighting, Fuel Cells, Small Wind 30% 30% 30% 30% 26% 22% 22% N/A
Geothermal Heat Pumps, Microtubines, Combine Heat and Power Systems 10% 10% 10% 10% 10% 10% N/A N/A
Geothermal Electric 10% 10% 10% 10% 10% 10% 10% 10%
Large Wind 30% 24% 18% 12% N/A N/A N/A N/A


  • Solar Technologies. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible.

  • Fuel Cells. The credit is equal to 30% of expenditures, with no maximum credit. However, the credit for fuel cells is capped at $1,500 per 0.5 kilowatt (kW) of capacity. Eligible property includes fuel cells with a minimum capacity of 0.5 kW that have an electricity-only generation efficiency of 30% or higher. 

  • Small Wind Turbines. The credit is equal to 30% of expenditures, with no maximum credit for small wind turbines placed in service after December 31, 2008. Eligible small wind property includes wind turbines up to 100 kW in capacity. (In general, the maximum credit is $4,000 for eligible property placed in service after October 3, 2008, and before January 1, 2009. The American Recovery and Reinvestment Act of 2009 removed the $4,000 maximum credit limit for small wind turbines.) Small wind turbines must meet the performance and quality standards set forth by either the American Wind Energy Association Small Wind Turbine Performance and Safety Standard 9.1-2009 (AWEA), or the International Electrotechnical Commission 61400-1, 61400-12, and 61400-11 (IEC)
  • Geothermal Systems. The credit is equal to 10% of expenditures, with no maximum credit limit stated. Eligible geothermal energy property includes geothermal heat pumps and equipment used to produce, distribute or use energy derived from a geothermal deposit. For electricity produced by geothermal power, equipment qualifies only up to, but not including, the electric transmission stage. For geothermal heat pumps, this credit applies to eligible property placed in service after October 3, 2008. Note that the credit for geothermal property, with the exception of geothermal heat pumps, has no stated expiration date.


  • Microturbines. The credit is equal to 10% of expenditures, with no maximum credit limit stated (explicitly). The credit for microturbines is capped at $200 per kW of capacity. Eligible property includes microturbines up to two megawatts (MW) in capacity that have an electricity-only generation efficiency of 26% or higher.

  • Combined Heat and Power (CHP). The credit is equal to 10% of expenditures, with no maximum limit stated. Eligible CHP property generally includes systems up to 50 MW in capacity that exceed 60% energy efficiency, subject to certain limitations and reductions for large systems. See the note at the bottom of this page for more details. The efficiency requirement does not apply to CHP systems that use biomass for at least 90% of the system's energy source, but the credit may be reduced for less-efficient systems. This credit applies to eligible property placed in service after October 3, 2008.

  • Production Tax Credit-Eligible Technologies. Technologies that are eligible for the Production Tax Credit (PTC) were eligible to opt for the ITC in lieu of the PTC if construction commenced prior to January 1, 2015. As of January 1, 2015, only wind energy systems are eligible to claim the ITC in lieu of the PTC.  

In general, the original use of the equipment must begin with the taxpayer, or the system must be constructed by the taxpayer. The equipment must also meet any performance and quality standards in effect at the time the equipment is acquired. The energy property must be operational in the year in which the credit is first taken.

Significantly, the American Recovery and Reinvestment Act of 2009 repealed a previous restriction on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies. Businesses that receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit.


* Combined heat and power systems can only receive the full credit if the system has an electrical capacity of 15 MW or less, and a mechanical energy capacity of of 20,000 horsepower or less, or an equivalent combination of electrical and mechanical energy capacities. Larger combined heat and power systems (up to a maximum of 50 MW and 67,000 horsepower) can qualify for a reduced tax credit equal to the ratio between the actual system capacity and 15 MW.  For example, a 45 MW system can qualify for a tax credit worth 15/45 of the otherwise allowable credit. 

History

The federal business energy investment tax credit available under 26 USC § 48 was expanded significantly by the Energy Improvement and Extension Act of 2008 (H.R. 1424), enacted in October 2008. This law extended the duration -- by eight years -- of the existing credits for solar energy, fuel cells and microturbines; increased the credit amount for fuel cells; established new credits for small wind-energy systems, geothermal heat pumps, and combined heat and power (CHP) systems; allowed utilities to use the credits; and allowed taxpayers to take the credit against the alternative minimum tax (AMT), subject to certain limitations. The credit was further expanded by the American Recovery and Reinvestment Act of 2009, enacted in February 2009. The credit was most recently amended by The Consolidated Appropriations Act of 2015, which extended the expiration date, but also introduced a step-down in the value of the credit for solar technologies and PTC-eligible wind. 


Residential Energy Conservation Subsidy Exclusion (Personal)U.S. Internal Revenue Service05/16/1811/13/19666

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.

The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525.


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Modified Accelerated Cost-Recovery System (MACRS)U.S. Internal Revenue Service08/21/1811/13/19676

Note: The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023. 

Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define eligible property. Such property currently includes*:

  • a variety of solar-electric and solar-thermal technologies
  • fuel cells and microturbines
  • geothermal electric
  • direct-use geothermal and geothermal heat pumps
  • small wind (100 kW or less)
  • combined heat and power (CHP)
  • the provision which defines ITC technologies as eligible also adds the general term "wind" as an eligible technology, extending the five-year schedule to large wind facilities as well.

In addition, for certain other types of renewable energy property, such as biomass or marine and hydrokinetic property, the MACRS property class life is seven years. Eligible biomass property generally includes assets used in the conversion of biomass to heat or to a solid, liquid or gaseous fuel, and to equipment and structures used to receive, handle, collect and process biomass in a waterwall, combustion system, or refuse-derived fuel system to create hot water, gas, steam and electricity. Marine and hydrokinetic property includes facilities that utilize waves, tides, currents, free-flowing water, or differentials in ocean temperature to generate energy. It does not include traditional hydropower that uses dams, diversionary structures, or impoundments.

The 5-year schedule for most types of solar, geothermal, and wind property has been in place since 1986. The federal Energy Policy Act of 2005 (EPAct 2005) classified fuel cells, microturbines and solar hybrid lighting technologies as five-year property as well by adding them to § 48(a)(3)(A). This section was further expanded in October 2008 by the addition of geothermal heat pumps, combined heat and power, and small wind under The Energy Improvement and Extension Act of 2008.

Bonus Depreciation

Bonus Depreciation has been sporadically available at different levels during different years. Most recently, The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023.

Bonus Depreciation History

The 50% first-year bonus depreciation provision enacted in 2008 was extended (retroactively for the entire 2009 tax year) under the same terms by the American Recovery and Reinvestment Act of 2009 (H.R. 1), enacted in February 2009. It was renewed again in September 2010 (retroactively for the entire 2010 tax year) by the Small Business Jobs Act of 2010 (H.R. 5297). In December 2010 the provision for bonus depreciation was amended and extended yet again by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853). Under these amendments, eligible property placed in service after September 8, 2010 and before January 1, 2012 was permitted to qualify for 100% first-year bonus depreciation. The December 2010 amendments also permitted bonus depreciation to be claimed for property placed in service during 2012, but reverted the allowable amount from 100% to 50% of the eligible basis. The 50% first-year bonus depreciation allowance was further extended for property placed in service during 2013 by the American Taxpayer Relief Act of 2012 (H.R. 8, Sec. 331) in January 2013. The Tax Increase Prevention Act Of 2014 (H.R. 5771, Sec. 125)extended  these provisions through to December 31, 2014, and thus retroactively for the 2014 tax year.

For more information on the federal MACRS, see IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562. The IRS web site provides a search mechanism for forms and publications. Enter the relevant form, publication name or number, and click "GO" to receive the requested form or publication. For guidance on bonus depreciation, including information relating to the election to claim either 50% or 100% bonus depreciation, retroactive elections to claim 50% bonus depreciation for property placed in service during 2010, and eligible property, please see IRS Rev. Proc. 2011-26.


*Note that the definitions of eligible technologies included in this entry are somewhat simplified versions of those contained in tax code, which often contain additional caveats, restrictions, and modifications. Those interested in this incentive should review the relevant sections of the code in detail prior to making business decisions.

Residential Energy Conservation Subsidy Exclusion (Corporate)U.S. Internal Revenue Service05/16/1811/13/19727

According to Section 136 of the U.S. Code, energy conservation subsidies provided (directly or indirectly) to customers by public utilities* are non-taxable. This exclusion does not apply to electricity-generating systems registered as "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 (PURPA). If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or to improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling units and other units, any subsidy must be properly allocated.

The definition of "energy conservation measure" implies that utility rebates for residential solar-thermal projects and photovoltaic (PV) systems may be non-taxable. However, the IRS has not ruled definitively on this issue. Taxpayers considering using this provision for a renewable energy system should discuss the details of the project with a tax professional. Other types of utility subsidies that may come in the form of credits or reduced rates might also be non-taxable, according to IRS Publication 525. 


* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Renewable Electricity Production Tax Credit (PTC)U.S. Internal Revenue Service02/28/1811/13/19734

Note: Wind facilities commencing construction by December 31, 2019, and all other qualifying facilities commencing construction by January 1, 2018 can qualify for this credit. The value of the credit for wind steps down in 2017, 2018 and 2019. See below for more information. For all other technologies, the credit is not available for systems whose construction commenced after December 31, 2017. 

The federal renewable electricity production tax credit (PTC) is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy resources and sold by the taxpayer to an unrelated person during the taxable year. The duration of the credit is 10 years after the date the facility is placed in service for all facilities placed in service after August 8, 2005.

Originally enacted in 1992, the PTC has been renewed and expanded numerous times, most recently by the American Recovery and Reinvestment Act of 2009 (H.R. 1 Div. B, Section 1101 & 1102) in February 2009 (often referred to as "ARRA"), the American Taxpayer Relief Act of 2012 (H.R. 8, Sec. 407) in January 2013, the Tax Increase Prevention Act of 2014 (H.R. 5771, Sec. 155) in December 2014, the Consolidated Appropriations Act, 2016 (H.R. 2029, Sec. 301) in December 2015, and the Bipartisan Budget Act of 2018 (H.R. 1892 Sec. 40409).

Amount

The tax credit amount is $0.015 per kWh in 1993 dollars for some technologies and half of that amount for others. The amount is adjusted for inflation by multiplying the tax credit amount by the inflation adjustment factor for the calendar year in which the sale occurs, rounded to the nearest 0.1 cents. The Internal Revenue Service (IRS) publishes the inflation adjustment factor no later than April 1 each year in the Federal Register. For 2018, the inflation adjustment factor used by the IRS is 1.5792.

Applying the inflation-adjustment factor for the 2017 calendar year, and the 20% step-down required by H.R. 2029, the production tax credit amount is as follows:

  • $0.019/kWh for wind

The tax credit is phased down for wind facilities and expires for other technologies commencing construction after December 31, 2016. The phase-down for wind facilities is described as a percentage reduction in the tax credit amount described above:

  • For wind facilities commencing construction in 2017, the PTC amount is reduced by 20%
  • For wind facilities commencing construction in 2018, the PTC amount is reduced by 40%
  • For wind facilities commencing construction in 2019, the PTC amount is reduced by 60%

Note that the exact amount of the production tax credit for the tax years 2017-2019 will depend on the inflation-adjustment factor used by the IRS in the respective tax years. 

Duration

The duration of the credit is 10 years after the date the facility is placed in service. Two exceptions applied to facilities placed in service more than a decade ago:

  • open-loop biomass, geothermal, small irrigation hydro, landfill gas, and municipal solid waste combustion facilities placed into service after October 22, 2004, and before enactment of the Energy Policy Act of 2005, on August 8, 2005, were only eligible for the credit for a 5-year period, and
  • open-loop biomass facilities placed in service before October 22, 2004, were eligible for the 5-year period beginning January 1, 2005.

Investment Tax Credit in Lieu of Claiming the PTC

Renewable energy facilities placed in service after 2008 and commencing construction prior to 2018 (or 2020 for wind facilities) may elect to make an irrevocable election to claim the Investment Tax Credit (ITC) in lieu of the PTC. Wind facilities making such an election will have the ITC amount reduced by the same phase-down specified above for facilities commencing construction in 2017, 2018, or 2019. 

Process for Claiming

The credit is claimed by completing Form 8835, "Renewable Electricity Production Credit," and Form 3800, "General Business Credit." For more information, contact IRS Telephone Assistance for Businesses at 1-800-829-4933.

Recent Legislative Changes

The Consolidated Appropriations Act, 2016 (H.R. 2029, Sec. 301) extended both the PTC and permission for PTC-eligible facilities to claim the Investment Tax Credit in lieu of the PTC through the end of 2016 (and the end of 2019 for wind facilities). The Act also created a phase-down in the PTC amount for wind facilities commencing construction in 2017, 2018, or 2019. Prior to the legislation, enacted in December 2015, the PTC had expired December 31, 2014. The effective date is January 1, 2015, meaning any qualifying project that commenced construction at any point in 2015 is eligible to claim the PTC.

The Tax Increase Prevention Act of 2014 (H.R. 5771, Sec. 155) extended both the PTC and permission for PTC-eligible facilities to claim the Investment Tax Credit in lieu of the PTC through the end of 2014. Prior to the legislation, the PTC had expired December 31, 2013. Although not enacted until December 2014, the effective date was January 1, 2014, meaning any qualifying project that commenced construction at any point in 2014 was eligible to claim the PTC.

The American Taxpayer Relief Act of 2012 revised the PTC by removing "placed in service" deadlines and replacing them with deadlines that use the commencing of construction as a basis for determining facility eligibility. It also contained language revising the definition of the term "municipal solid waste" to exclude "paper that is commonly recycled and which has been segregated from other solid waste.” The definition change for municipal solid waste applies to electricity produced and sold after the enactment date of the legislation (January 2, 2013) in taxable years ending after that date.

Determination of Commencing Construction 

To claim the PTC, construction on an eligible project must have “commenced construction” prior to January 1, 2015. The IRS has issued guidance on how it will evaluate whether construction has commenced in IRS Notices 2013-292013-60, 2014-46, 2015-25, and 2016-31 (please see the full text of these notices for complete information on determining the commencing of construction). The guidelines establish two methods—a “physical work” test and a 5% safe harbor (see sections below for details)—to determine when construction has begun on a qualified facility. Meeting the criteria of either method is sufficient to demonstrate that construction has commenced. 

Both methods require that a taxpayer make continuous progress towards completion once construction has begun by meeting the Continuous Construction Test (to satisfy the Physical Work Test) or the Continuous Efforts Test (to satisfy Safe Harbor).  If a taxpayer places a facility in service during a calendar year that is no more than four calendar years after the calendar year during which construction of the facility began, the facility will be considered to satisfy the Continuity Safe Harbor

Physical Work Test

The physical work test provides that a taxpayer may establish the beginning of construction by beginning "physical work of a significant nature.” The physical work test is based on the nature of the work performed rather than the cost of the work; if the work performed is of a significant nature, then “there is no fixed minimum amount of work or monetary or percentage threshold required to satisfy the Physical Work Test” (Notice 2014-46).

Notice 2013-29 provides several examples of actions that constitute work of a significant nature, including:

  • for a facility that produces electricity from a wind turbine, the beginning of the excavation for the foundation, the setting of anchor bolts into the ground, or the pouring of the concrete pads of the foundation;
  • physical work on a custom-designed transformer that steps up the voltage of electricity produced at the facility to the voltage needed for transmission; and
  • beginning construction of roads integral to the activity performed by the facility including onsite roads used for moving materials to be processed (e.g., biomass) and roads for equipment to operate and maintain the facility. 

Safe Harbor

Safe Harbor with respect to a facility is demonstrated by showing that 5% or more of the total cost of the facility was paid or incurred.


Energy-Efficient Mortgages06/24/1511/13/19742

Homeowners can take advantage of energy efficient mortgages (EEM) to either finance energy efficiency improvements to existing homes, including renewable energy technologies, or to increase their home buying power with the purchase of a new energy efficient home. The U.S. federal government supports these loans by insuring them through Federal Housing Authority (FHA) or Veterans Affairs (VA) programs. This allows borrowers who might otherwise be denied loans to pursue energy efficiency, and it secures lenders against loan default.

FHA Energy Efficient Mortgages
The FHA allows lenders to add up to 100% of energy efficiency improvements to an existing mortgage loan with certain restrictions. FHA mortgage limits vary by county, state and the number of units in a dwelling. See website for more details. These mortgages were previously limited to $8,000. In June 2009, HUD issued Mortgage Letter 2009-18 which announced the removal of the dollar cap. The maximum amount of the portion of an energy efficient mortgage allowed for energy improvements is now the lesser of 5% of:

  • The value of the property,
  • 115% of the median area price of a single-family dwelling, or
  • 150% of the Freddie Mac conforming loan limit

Loan amounts may not exceed the projected savings of the energy efficiency improvements. These loans may be combined with FHA 203 (h) mortgages available to victims of presidentially-declared disasters and with financing offered through the FHA 203 (k) rehabilitation program. FHA loan limits do not apply to the EEM. Homebuyers must submit a Home Energy Rating (HER), contractor bids, and a FHA B Worksheet. This process may become streamlined in 2009 as a result of the Housing and Economic Recovery Act of 2008, which requires HUD to report to congress with ways to remove the administrative barriers and increase consumer participation and awareness of these financing options.

Borrowers may include closing costs and the up-front mortgage insurance premium in the total cost of the loan. The loan is available to anyone who meets the income requirements for FHA’s Section 203 (b), provided the applicant can meet the monthly mortgage payments. New and existing owner-occupied homes of up to two units qualify for this loan. Cooperative units are not eligible. Homebuyers should submit applications to their local HUD Field Office through an FHA-approved lending institution.

Department of Veterans Affairs (VA) Energy Efficient Mortgages
The VA insures EEMs to be used in conjunction with VA loans either for the purchase of existing homes or for refinancing loans secured by the dwelling. Homebuyers may borrow up to $3,000 if only documentation of improvement costs or contractor bids is submitted, or up to $6,000 if the projected energy savings are greater than the increase in mortgage payments. Loans may exceed this amount at the discretion of the VA. Applicants may not include the cost of their own labor in the total amount. No additional home appraisal is needed, but applicants must submit a HER, contractor bids and certain other documentation. The VA insures 50% of the loan if taken by itself, but it may insure less if the total value of the mortgage exceeds a certain amount.

This mortgage is available to qualified military personnel, reservists and veterans. Applicants should secure a certificate of eligibility from their local lending office and submit it to a VA-approved private lender. If the loan is approved, the VA guarantees the loan when it is closed.

Conventional EEMs
Conventional mortgages are not backed by a federal agency. Private lenders sell loans to Fannie Mae and Freddie Mac, which in turn allows homebuyers to borrow up to 15% of an existing home’s appraised value for improvements documented by a HER.

Fannie Mae also lends up to 5% for Energy Star new homes. Fannie Mae EEMs are available to single-family, owner-occupied units, and Fannie Mae provides EEMs to those whose income might otherwise disqualify them from receiving the loans by allowing approved lenders to adjust borrowers’ debt-to-income ratio by 2%. The value of the improvements is immediately added to the total appraised value of the home.

Freddie Mac offers EEMs for one- to four-unit dwellings and also helps raise the effective income of the borrower to qualifying levels by allowing lenders to increase the borrower’s income by a dollar amount equal to the estimated energy savings. Any energy efficiency improvements can qualify, and these mortgages can be combined with both fixed-rate and adjustable-rate mortgages. Borrowers should apply directly to the lender. Click here for more details.

ENERGY STAR Partnership for Lenders
To promote EEMs and lenders who offer them, the federal ENERGY STAR program offers a partnership program for lenders who provide EEMs to borrowers. Becoming a partner allows lenders to utilize the Energy Star brand to promote themselves as Energy Star partners offering EEMs. To become a lender, partner lenders must first provide proof that they know how to write EEMs. To maintain their partnership benefits, lenders must write a certain number of EEMs per year. Energy Star does not have a lender certification program or process. Click here for more information about ENERGY STAR's lender partnership program, and here to access the partner locator tool. As of August 2011, the federal ENERGY STAR program lists 25 lenders who offer EEMs and/or ENERGY STAR mortgages to applicants buying homes that have earned the ENERGY STAR label. ENERGY STAR requires that its lender partners provide EEMs to qualified borrowers regardless of whether it is an FHA EEM, Fannie Mae EEM, or VA EEM.

USDA - Rural Energy for America Program (REAP) GrantsU.S. Department of Agriculture$600 million for FY 201808/21/1811/13/19917

Note: The U.S. Department of Agriculture's Rural Development issues periodic Notices of Solicitation of Applications for the Rural Energy for America Program (REAP) in the Federal Register. The FY 2018 solicitation for the REAP program includes a total budget of approximately $800 million. 

The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses in America to purchase, install, and construct renewable energy systems, make energy efficiency improvements to non-residential buildings and facilities, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance.

Renewable energy projects for the Renewable Energy Systems and Energy Efficiency Improvement Guaranteed Loan and Grant Program include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar, or geothermal energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated to grants of $20,000 or less. For more information on grant, loan guarantees, loan financing, and opportunities for combinations thereof, visit the USDA website. 

Application due dates are published annually in the Notice of Funding Availability. 

Eligibility

Grants and Guaranteed Loans are generally available to small businesses and agricultural producers and other entities as determined by USDA. To be eligible for REAP grants and guaranteed loans, applicants must demonstrate sufficient revenue to cover any operations and maintenance expense as well as any applicable debt service of the project for the duration of the guaranteed loan or grant. Rural small businesses must be located in rural areas, but agricultural producers may be located in non-rural areas.

Eligible project costs include purchasing energy efficiency improvements or a renewable energy system, energy audits or assessments, permitting and licensing fees, and business plans and retrofitting. For new construction the replacement of older equipment with more efficient equipment may be eligible as a project cost only when a new facility is planned to be more efficient and similarly sized than the older facility. Working capital and land acquisition are only eligible for loan guarantees.

For more information regarding applicant and project eligibility for loans and grants, visit the USDA REAP eligibility webpage, read the eligibility requirements in the most recent Solicitation of Applications for REAP funding in the Federal Registry, and/or contact your state rural energy coordinator.

Regional rural energy coordinators provide loan and grant applications upon request.

History

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), enacted by Congress in May 2008, converted the federal Renewable Energy Systems and Energy Efficiency Improvements Program,* into the Rural Energy for America Program (REAP). Similar to its predecessor, the REAP promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. Congress has allocated funding for the new program in the following amounts: $55 million for FY 2009, $60 million for FY 2010, $70 million for FY 2011, and $70 million for FY 2012. REAP is administered by the U.S. Department of Agriculture (USDA). In addition to these mandatory funding levels, up to $25 million in discretionary funding may be issued each year. The American Taxpayer Relief Act of 2012 (H.R. 8) extended discretionary funding for FY 2013. The 2014 Farm Bill reauthorized the USDA to offer these programs and removed the mandate to offer grants for feasibility studies.

* The Renewable Energy Systems and Energy Efficiency Improvements Program was created by the USDA pursuant to Section 9006 of the 2002 federal Farm Security and Rural Investment Act of 2002. Funding in the amount of $23 million per year was appropriated for each fiscal year from FY 2003-2007. In March 2008, the USDA announced that it would accept $220.9 million in applications for grants, loan guarantees, and loan/grant combination packages under the Renewable Energy Systems and Energy Efficiency Improvements Program. The application deadline was June 16, 2008.

Land grant colleges and universities are referred to in the summary table as "schools" and "institutional" eligible sectors. K-12 schools are not eligible for this grant.

Tribal Energy Program GrantU.S. Department of Energy03/03/1711/13/19918

The U.S. Department of Energy's (DOE) Tribal Energy Program promotes tribal energy sufficiency, economic growth, and employment on tribal lands through the development of renewable energy and energy efficiency technologies. The program provides financial assistance, technical assistance, and education and training to tribes for the evaluation and development of renewable energy resources and energy efficiency measures.

DOE's Tribal Energy Program consists of program management through DOE headquarters, program implementation and project management through DOE's field offices, and technical support through DOE laboratories. Program management for the Tribal Energy Program is carried out by DOE's Weatherization and Intergovernmental Program, which provides programmatic direction and funding to DOE field offices for program implementation. DOE's Golden Field Office solicits, awards, administers, and manages financial assistance agreements.

Program funding is awarded through a competitive process. Click here to view current program funding opportunities, and here to apply for technical assistance.

Residential Clean Energy Grant ProgramMaryland Energy Administration06/05/1811/13/191084

Maryland's Residential Clean Energy Grant Program, administered by the Maryland Energy Administration (MEA), provides financial incentives to homeowners that install solar water-heating, solar-electric (PV), geothermal heating and cooling systems, and burning stoves. In order to be eligible, the property must be the applicant's primary residence.


The current Clean Energy Grant Program provides incentives as follows:

Resource Conversion Technology

Installed Capacity Range

Flat Award

Solar Photovoltaic (PV)

1-20 kW

$1,000/project

Solar Water Heating

10-100 sq. ft.

$500/project

New Geothermal Heating & Cooling (GHC)

1-10 tons

$3,000/project


Note: As of October 14, 2014, geothermal installations that are replacing an existing geothermal unit will no longer be eligible for the $3,000 grant. In order to receive this grant, homeowners must install an entirely new geothermal system with the accompanying loops or wells. Starting on this date, geothermal heat pump replacements will be eligible for a $500 grant.

Various amount of grant is also available to stick/pellet burning stoves satisfying certain emission requirements. Starting from November 14, 2013, only purchased solar photovoltaic systems are eligible to apply for the Residential CEGP Program. MEA no longer awards grants to third-party owned solar PV systems. 

Grants are awarded on a first-come, first-serve basis across technologies and are subject to change in amount based on funding. Grants are awarded after the completion of the project, and applications must be submitted to MEA within 12 months of completed installation​. Multiple projects on contiguous parcels of property will be considered one project. An eligible property may receive one grant per technology. MEA cannot offer grants to a property held in an irrevocable trust. Program's one-step application process requires participants to submit application form, final invoice, copies of inspection documents, photograph of installed system, and historical screening document. 

Participants must apply for certification as a qualifying solar facility from Maryland Public Service Commission (PSC) to obtain Solar Renewable Energy Credits (SRECs) produced by the system. SREC represent environmental attribute per 1 MWh of generated solar power. These SRECs can be traded as financial instruments to meet the RPS goals of the State. These SRECs can be sold in the market, which could help generate additional revenue to fund the solar PV system. Please visit the SREC DSIRE post for information about SREC market in Maryland. 

Note that these grants may be subtracted from adjusted gross income for state income tax purposes. In other words, program recipients do not have to pay state taxes on the amount of the grant received. See H.B. 590, enacted in May 2007. For applications and more information on the program, including a Q&A section, please see the program web site.

 

Residential Renewable Energy Tax CreditU.S. Internal Revenue Service03/23/1812/31/211235

Note: The Bipartisan Budget Act of 2018, signed in February 2018, reinstated the tax credit for fuel cells, small wind, and geothermal heat pumps. The tax credit for all technologies now features a gradual step down in the credit value. 

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

Solar-electric property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Solar water-heating property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
  • Equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.
  • At least half the energy used to heat the dwelling's water must be from solar in order for the solar water-heating property expenditures to be eligible.
  • The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Fuel cell property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • The maximum credit is $500 per half kilowatt (kW).
  • Systems must be placed in service on or after January 1, 2006, on or before December 31, 2021.
  • The fuel cell must have a nameplate capacity of at least 0.5 kW of electricity using an electrochemical process and an electricity-only generation efficiency greater than 30%.
  • In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $1,667 per 0.5 kW. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he or she paid.
  • The home served by the system must be the taxpayer’s principal residence.

Small wind-energy property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2008, on or before December 31, 2021.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Geothermal heat pumps

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2008, and on or before December 31, 2021.
  • The geothermal heat pump must meet federal Energy Star criteria.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Significantly, The American Recovery and Reinvestment Act of 2009 repealed a previous limitation on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies.

Energy Storage

The federal tax code does not explicitly reference energy storage, so stand-alone energy storage systems do not qualify for the tax credit. However, the IRS issued Private Letter Rulings in 2013 and 2018, which address energy storage paired with PV systems. In both cases, the IRS ruled that the energy storage equipment when paired with PV met the statutory definition of a "qualified solar electric property expenditure," as was eligible for the tax credit. It is important to note that Private Letter Rulings only apply to the taxpayer who requested it, and do not establish precedent. Any taxpayer considering the purchase of an energy storage system should consult their accountant or other tax professional before claiming a tax credit.  


History

Established by The Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016; the ability to take the credit against the alternative minimum tax; and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009, which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

Local Option - Property Tax Credit for High Performance BuildingsPrograms locally administered07/28/1511/13/192363

Similar to Maryland's Local Option Property Tax Credit for Renewable Energy, Title 9 of Maryland's property tax code creates an optional property tax credit for high performance buildings. This statute allows counties and municipalities to provide a credit against the property tax for buildings which achieve at least a silver rating according to the U.S. Green Building Council's LEED standards, residential structures that achieve a silver rating under the International Code Council's National Green Building Standard (NGBS), or structures which meet other comparable green building ratings or guidelines approved by the State. The provision specifically adding the NGBS (as opposed to the general language regarding "comparable" systems) was adopted by H.B. 158 in 2012, effective for tax years beginning after June 30, 2012.

The counties or municipalities which elect to provide this property tax credit may determine the amount of the property tax credit under this section, the duration of the property tax credit, the criteria and qualifications necessary to receive the credit, and any other necessary provisions. As of July 2015 at least four counties -- Montgomery County, Howard County, Baltimore County, and Anne Arundel County -- had adopted a tax credit under this statute. Carroll County has also adopted a green building property tax credit under a separate, county specific provision (Md Code: Property Tax § 9-308(e)) of Maryland law.  Please visit the links above for tax credit information on the incentives available in each county.

Clean Renewable Energy Bonds (CREBs)U.S. Internal Revenue Service08/15/1811/13/192510

Note: The Tax Cuts and Jobs Act of 2017 repealed section 54C of the Internal Revenue Code, which authorized the use of New CREBs. IRS Notice 2018-15  announced that the IRS will no longer process applications for or issue allocations of New CREBs. The summary below describes CREBs before they were repealed, and is here for historical purposes only. 

Clean renewable energy bonds (CREBs) may be used by certain entities -- primarily in the public sector -- to finance renewable energy projects. The list of qualifying technologies is generally the same as that used for the federal renewable energy production tax credit (PTC). CREBs may be issued by electric cooperatives, government entities (states, cities, counties, territories, Indian tribal governments or any political subdivision thereof), and by certain lenders.  The bondholder receives federal tax credits in lieu of a portion of the traditional bond interest, resulting in a lower effective interest rate for the borrower.* The issuer remains responsible for repaying the principal on the bond.

The Energy Improvement and Extension Act of 2008 (Div. A, Sec. 107) allocated $800 million for new Clean Renewable Energy Bonds (CREBs). In February 2009, the American Recovery and Reinvestment Act of 2009 (Div. B, Sec. 1111) allocated an additional $1.6 billion for New CREBs, for a total New CREB allocation of $2.4 billion. The Energy Improvement and Extension Act of 2008 also extended the deadline for previously reserved allocations ("Old CREBs") until December 31, 2009, and addressed several provisions in the existing law that previously limited the usefulness of the program for some projects. A separate section of the law extended CREBs eligibility to marine energy and hydrokinetic power projects.

Participation in the program is limited by the volume of bonds allocated by Congress for the program. Participants must first apply to the Internal Revenue Service (IRS) for a CREBs allocation, and then issue the bonds within a specified time period. The New CREBs allocation totaling $2.4 billion does not have a defined expiration date under the law; however, recent IRS solicitations for new applications require the bonds to be issued within 3 years after the applicant receives notification of an approved allocation (see History section below for information on previous allocations). Public power providers, governmental bodies, and electric cooperatives are each reserved an equal share (33.3%) of the New CREBs allocation. IRS Notice 2015-12, however, divided the remaining volume cap differently: $516,565,691.35 for public power providers, $597,134,963.60 for governmental bodies, and $280,778,469.00 for cooperative utilities.

The tax credit rate is set daily by the U.S. Treasury Department. Under past allocations, the credit could be taken quarterly on a dollar-for-dollar basis to offset the tax liability of the bondholder. However, under the new CREBs allocation, the credit has been reduced to 70% of what it would have been otherwise. Other important changes are described in IRS Notice 2009-33.

CREBs differ from traditional tax-exempt bonds in that the tax credits issued through CREBs are treated as taxable income for the bondholder. The tax credit may be taken each year the bondholder has a tax liability as long as the credit amount does not exceed the limits established by the federal Energy Policy Act of 2005. Treasury rates for prior CREB allocations, or "Old" CREBs are available here, while rates for New CREBs and other qualified tax credit bonds are available here.

In April 2009, the IRS issued Notice 2009-33, which solicited applications for the New CREB allocation and provided interim guidance on certain program rules and changes from prior CREB allocations. The expiration date for New CREB applications under this solicitation was August 4, 2009. Further guidance on CREBs is available in IRS Notices 2006-7 and 2007-26 to the extent that the program rules were not modified by 2008 and 2009 legislation. In October 2009, the Department of Treasury announced the allocation of $2.2 billion in new CREBs for 805 projects across the country. A new solicitation (IRS Announcement 2010-54) was issued in September 2010 for roughly $191 million in unallocated New CREB bond volume available only to electric cooperatives. The award announcement for this allocation was made in March 2011. It remains to be seen if or when the IRS will issue new funding announcements for Old CREB allocations which were not issued by the December 31, 2009 deadline, or New CREB allocations which miss the three-year issuance period.

History
The federal Energy Policy Act of 2005 (EPAct 2005) established Clean Energy Renewable Bonds (CREBs) as a financing mechanism for public sector renewable energy projects. This legislation originally allocated $800 million of tax credit bonds to be issued between January 1, 2006, and December 31, 2007. Following the enactment of the federal Tax Relief and Health Care Act of 2006, the IRS made an additional $400 million in CREBs financing available for 2008 through Notice 2007-26.

In November 2006, the IRS announced that the original $800 million allocation had been reserved for a total of 610 projects. The additional $400 million (plus surrendered volume from the previous allocation) was allocated to 312 projects in February 2008. Of the $1.2 billion total of tax-credit bond volume cap allocated to fund renewable-energy projects, state and local government borrowers were limited to $750 million of the volume cap, with the rest reserved for qualified municipal or cooperative electric companies.

For further information on CREBs, contact Zoran Stojanovic or Timothy Jones of the IRS Office of Associate Chief Counsel at (202) 622-3980. Questions on recent IRS Notice 2009-33 can be directed to Janae Lemley at (636) 255-1202.


*In March 2010 Congress enacted H.R. 2847 (Sec. 301) permitting New CREB issuers to make an irrevocable election to receive a direct payment -- a refundable tax credit -- from the Department of Treasury equivalent to and in lieu of the amount of the non-refundable tax credit which would otherwise be provided to the bondholder. This option only applies to New CREBs issued after the March 18, 2010 enactment of the law. In April 2010 the IRS issued Notice 2010-35 providing guidance on the direct payment option.

USDA - Rural Energy for America Program (REAP) Loan GuaranteesU.S. Department of Agriculture08/21/1811/13/192511

The Rural Energy for America Program (REAP) provides financial assistance to agricultural producers and rural small businesses in rural America to purchase, install, and construct renewable energy systems, make energy efficiency improvements to non-residential buildings and facilities, use renewable technologies that reduce energy consumption, and participate in energy audits and renewable energy development assistance.

Renewable energy projects for the Renewable Energy Systems and Energy Efficiency Improvement Guaranteed Loan and Grant Program include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar, or geothermal energy sources. These grants are limited to 25% of a proposed project's cost, and a loan guarantee may not exceed $25 million. The combined amount of a grant and loan guarantee must be at least $5,000 (with the grant portion at least $1,500) and may not exceed 75% of the project’s cost. In general, a minimum of 20% of the funds available for these incentives will be dedicated to grants of $20,000 or less. For more information on grant, loan guarantees, loan financing, and opportunities for combinations thereof, visit the USDA website.

Application due dates are published annually in the Notice of Funding Availability.

Eligibility

Grants and Guaranteed Loans are generally available to small businesses and agricultural producers and other entities as determined by USDA. To be eligible for REAP grants and guaranteed loans, applicants must demonstrate sufficient revenue to cover any operations and maintenance expense as well as any applicable debt service of the project for the duration of the guaranteed loan or grant. Rural small businesses must be located in rural areas, but agricultural producers may be located in non-rural areas.

Eligible project costs include purchasing energy efficiency improvements or a renewable energy system, energy audits or assessments, permitting and licensing fees, and business plans and retrofitting. For new construction the replacement of older equipment with more efficient equipment may be eligible as a project cost only when a new facility is planned to be more efficient and similarly sized than the older facility. Working capital and land acquisition are only eligible for loan guarantees.

For more information regarding applicant and project eligibility for loans and grants, visit the USDA REAP eligibility webpage, read the eligibility requirements in the most recent Solicitation of Applications for REAP funding in the Federal Registry, and/or contact your state rural energy coordinator.

Regional rural energy coordinators provide loan and grant applications upon request.

History

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), enacted by Congress in May 2008, converted the federal Renewable Energy Systems and Energy Efficiency Improvements Program,* into the Rural Energy for America Program (REAP). Similar to its predecessor, the REAP promotes energy efficiency and renewable energy for agricultural producers and rural small businesses through the use of (1) grants and loan guarantees for energy efficiency improvements and renewable energy systems, and (2) grants for energy audits and renewable energy development assistance. Congress has allocated funding for the new program in the following amounts: $55 million for FY 2009, $60 million for FY 2010, $70 million for FY 2011, and $70 million for FY 2012. REAP is administered by the U.S. Department of Agriculture (USDA). In addition to these mandatory funding levels, up to $25 million in discretionary funding may be issued each year. The American Taxpayer Relief Act of 2012 (H.R. 8) extended discretionary funding for FY 2013. The 2014 Farm Bill reauthorized the USDA to offer these programs and removed the mandate to offer grants for feasibility studies.

* The Renewable Energy Systems and Energy Efficiency Improvements Program was created by the USDA pursuant to Section 9006 of the 2002 federal Farm Security and Rural Investment Act of 2002Funding in the amount of $23 million per year was appropriated for each fiscal year from FY 2003-2007. In March 2008, the USDA announced that it would accept $220.9 million in applications for grants, loan guarantees, and loan/grant combination packages under the Renewable Energy Systems and Energy Efficiency Improvements Program. The application deadline was June 16, 2008.

Land grant colleges and universities are referred to in the summary as "schools" and "institutional" eligible sectors. K-12 schools are not eligible for this grant.

Property Tax Exemption for Solar and Wind Energy SystemsMaryland Department of Assessments and Taxation10/15/1411/13/192542

In May 2007, Maryland established a property tax exemption for residential solar energy systems. Under this law solar energy devices “installed to heat or cool a dwelling, generate electricity to be used in the dwelling, or provide hot water for use in the dwelling” were exempt from state -- but not local -- property taxes. However, in April 2008 H.B. 377 was enacted, repealing this exemption beginning July 1, 2008. In place of the rescinded exemption, H.B. 377 inserted another provision exempting solar photovoltaic (PV) and solar hot water systems from real property taxes. The exemption now applies equally to state and local real property taxes. In addition, by removing the term "dwelling" and replacing it with "structure", the revised exemption appears to no longer be limited to residential systems.

In May 2009 the exemption was amended yet again by H.B. 1171 to add "residential wind energy equipment" as an eligible technology. In order to qualify, equipment must be sited on residential property and produce electricity to be used in a structure on that property. The new law also revised the definition of eligible solar property to include devices that use "solar thermal electric energy" to generate electricity for use in a structure. A separate piece of legislation, S.B. 621, subsequently amended the definition of solar energy property to include property that generates electricity which is put on the electrical grid (e.g., as in a net metering arrangement). These new provisions took effect July 1, 2009.

A separate provision of Maryland property tax law offers a special assessment for geothermal and solar heating and cooling systems. Thus, solar hot water, PV, and wind energy systems are granted an exemption from real property taxes while solar and geothermal heating and cooling systems are granted a special assessment that makes their assessed value equivalent to a conventional system.

Harford County - Property Tax Credit for Solar and Geothermal DevicesHarford County Department of the Treasury05/13/1511/13/192832

Harford County offers a tax credit from real property taxes imposed on residential buildings, nonresidential buildings, or other structures that use solar or geothermal devices for heating, cooling, water heating or generating electricity for on-site consumption. The credit amount is equal to one year of total real property taxes or $2,500 per device, whichever is less. In September 2010 the county added a provision limiting total credits to $5,000 per property per fiscal year. Total real property taxes include all real property taxes that would have been paid by the taxpayer for that year for the host building or structure, but not on the land. The original 2006 credit applied only to solar heating and cooling devices and had a limit of $1,000. Subsequent 2007 amendments added geothermal devices as an eligible technology, electricity generation as an eligible end-use, and increased the maximum credit to $2,500.

In order to qualify for a tax credit, devices must meet national safety and performance standards as set by a nationally recognized testing laboratory for that type of device. A one-time application must be submitted to the Harford County Director of Administration on or before October 1 prior to the taxable year for which the credit is sought. The total volume of tax credits allowed for any one year was formerly limited to $150,000, but this limit was been raised to $250,000 effective July 1, 2010. Credits will be issued on a first-come, first-served basis with applications that exceed the annual limit carried over to succeeding years. Unused credits may be carried forward for up to two years. The application is available at the web site above.

Anne Arundel County - Solar and Geothermal Equipment Property Tax CreditsAnne Arundel County Office of Finance05/13/1511/13/192908

Anne Arundel County offers a one-time credit from county property taxes on residential dwellings that use solar and geothermal energy equipment for heating and cooling, and solar energy equipment for water heating and electricity generation. Photovoltaic (PV) systems and geothermal systems were initially not eligible for the tax credit, but PV systems were added by legislation enacted in January 2009 (County Bill 81-08) and geothermal heating and cooling systems were added in April 2010 (County Bill 17-10). Solar energy devices must be installed on or after January 1, 2007 in order to be eligible for the tax credit. Geothermal equipment must be installed on or after January 1, 2009 in order to be eligible for the tax credit. Expenditures for solar pool heating are not eligible for the tax credit.

The one-time tax credit is calculated as the lesser of the following:

  • 50% of the cost of materials and installation of the solar energy equipment, less the amount of federal and state grants and state solar energy tax credits; or
  • $2,500

It is important to note that the tax credit is credited from the taxes on the dwelling itself and not those levied on the land. Applications must be filed on or before June 1 of the year immediately preceding the year for which the credit is sought. In 2012 new legislation (Council Bill 84-12) removed the former June, 1 2012 application deadline for PV systems. Please contact the Anne Arundel County Office of Finance for tax credit applications and further information.

Sales and Use Tax Exemption for Renewable Energy EquipmentComptroller of Maryland10/15/1411/13/192928

In April 2008, the Maryland enacted legislation exempting geothermal and solar energy equipment from the state sales and use tax. Geothermal equipment is defined as "equipment that uses ground loop technology to heat and cool a structure". Solar energy equipment is defined as "equipment that uses solar energy to heat or cool a structure, generate electricity to be used in a structure, or provide hot water for use in a structure". Solar energy equipment does not include "equipment that is part of a non-solar energy system or that uses any type of recreational facility or equipment as a storage medium". These distinctions appear to indicate that solar pool heating equipment, and possibly passive solar materials, are not eligible for the exemption.

Two pieces of legislation expanding the sales tax exemption were enacted in May 2009. H.B. 1171 added residential wind energy equipment as eligible for this incentive. Residential wind energy equipment is equipment installed on a residential property that uses wind energy to generate electricity for use in a residential structure on that property. S.B. 621 revised the definition of solar energy equipment to include systems that supply electricity to the grid (e.g., through a net metering agreement). The amendments contained in both laws took effect July 1, 2009.

U.S. Department of Energy - Loan Guarantee ProgramU.S. Department of Energy08/18/1611/13/193071
Note: President Obama and DOE issued new supplemental guidance for Renewable Energy and Efficient Energy (REEE) Projects that adds $500 million of loan guarantee authority, making the total available approximately $4.5 billion. It also released guidance to clarify the types of Distributed Energy Projects it can support under the Title XVII program. The additional loan guarantee authority was officially available as of October 2015.

Section 1703 of Title XVII of the Energy Policy Act (EPAct) of 2005 created the Department of Energy's (DOE's) Loan Guarantee Program. The program was reauthorized and revised by the American Recovery and Reinvestment Act (ARRA) of 2009 by adding Section 1705 to EPAct. The 1705 Program was retired in September 2011, and Loan Guarantees are no longer available under that authority. DOE, however, still has authority to issue Loan Guarantees under the old Section 1703 Program.  

Under Section 1703, DOE is authorized to issue loan guarantees for projects with high technology risks that "avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases; and employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued." Loan guarantees are intended to encourage early commercial use of new or significantly improved technologies in energy projects. The loan guarantee program generally does not support research and development projects.

Loan guarantees are provided in response to open solicitations. The application is a two part process; applicants that meet the specified requirements laid out in Part I receive an invitation to submit a Part II application. The updated supplemental guidance for Renewable Energy Projects and Energy Efficiency Projects includes an application solicitation schedule, with final Part I and Part II application due dates to November 30, 2016 (extended in a Fifth Supplement released June 2016). Up to $3 billion is available in loan guarantees for projects in renewable energy, efficient end-use, and efficient generation, transmission, and distribution technologies (plus an additional amount that may be imputed based on the credit subsidy cost of the loan guarantee authority). See the program website for more details on eligibility and the application process. 

Section 1703 requires either an appropriation to cover the Credit Subsidy Cost (the expected long term liability to the Federal Government for providing the loan guarantee), or payment of the Credit Subsidy Cost by the borrower. A credit-based interest rate spread will be added to certain loans receiving a 100% loan guarantee from DOE and financing from the Federal Financing Bank. Rates and more information are available here.


 

Qualified Energy Conservation Bonds (QECBs)U.S. Internal Revenue Service08/22/1811/13/193098

Note: The Tax Cuts and Jobs Act (HR 1) of 2017 repealed the use of tax credit bonds effective January 1, 2018.  Issuers of QECBs that elected to receive direct payments from the Treasury issued on or before December 31, 2017, consistent with the Internal Revenue Code (Section 54D), will continue to receive direct payments. The summary presented below is for historical purposes. 

The Energy Improvement and Extension Act of 2008, enacted in October 2008, authorized the issuance of Qualified Energy Conservation Bonds (QECBs) that may be used by state, local and tribal governments to finance certain types of energy projects. QECBs are qualified tax credit bonds, and in this respect are similar to new Clean Renewable Energy Bonds or CREBs. The October 2008 enabling legislation set a limit of $800 million on the volume of energy conservation tax credit bonds that may be issued by state and local governments. The American Recovery and Reinvestment Act of 2009, enacted in February 2009, expanded the allowable bond volume to $3.2 billion. In April 2009, the IRS issued Notice 2009-29 providing interim guidance on how the program will operate and how the bond volume will be allocated. Subsequently, H.R. 2847 enacted in March 2010 introduced an option allowing issuers of QECBs and New CREBs to recoup part of the interest they pay on a qualified bond through a direct subsidy from the Department of Treasury. Guidance from the IRS on this option was issued in April 2010 under Notice 2010-35.

With tax credit bonds, generally the borrower who issues the bond pays back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest. The tax credit may be taken quarterly to offset the tax liability of the bondholder. The tax credit rate is set daily by the U.S. Treasury Department; however, energy conservation bondholders will receive only 70% of the full rate set by the Treasury Department under 26 USC § 54A. QECB rates are available here. Credits exceeding a bondholder's tax liability may be carried forward to the succeeding tax year, but cannot be refunded. Energy conservation bonds differ from traditional tax-exempt bonds in that the tax credits issued through the program are treated as taxable income for the bondholder.

For QECBs issued after March 18, 2010, the bond issuer may make an irrevocable election to receive a direct payment from the Department of Treasury equivalent to the amount of the non-refundable tax credit described above, which would otherwise accrue to the bondholder. The direct payment comes in the form of a refundable tax credit to the issuer in lieu of a tax credit to the bondholder. This option was formerly limited to Build America Bonds (see 26 USC § 6431, H.R. 2847 and IRS Notice 2010-35 for details). The advantage of either option is that it creates a lower effective interest rate for the issuer because the federal government subsidizes a portion of the interest costs.

In contrast to CREBs, QECBs are not subject to a U.S. Department of Treasury application and approval process. Bond volume is instead allocated to each state based on the state's percentage of the U.S. population as of July 1, 2008. Each state is then required to allocate a portion of its allocation to "large local governments" within the state based on the local government's percentage of the state's population. Large local governments are defined as municipalities and counties with populations of 100,000 or more. Large local governments may reallocate their designated portion back to the state if they choose to do so. IRS Notice 2009-29 contains a list of the QECB allocations for each state and U.S. territory. Implementing allocations and reallocations most often, but not always, takes place through State Energy Offices. As of this writing some states have yet to assign implementation responsibilities to a specific state agency.

The definition of "qualified energy conservation projects" is fairly broad and contains elements relating to energy efficiency capital expenditures in public buildings that reduce energy consumption by at least 20%; green community programs (including loans and grants to implement such programs); renewable energy production; various research and development applications; mass commuting facilities that reduce energy consumption; several types of energy related demonstration projects; and public energy efficiency education campaigns. In July 2012 the IRS issued Notice 2012-44 clarifying the meaning of "capital expenditures" and "green community program", and providing guidance on meeting the 20% energy consumption reduction requirement for energy -efficiency related capital expenditures in publicly-owned buildings (see 26 USC § 54D and IRS Notice 2012-44 for additional details). Renewable energy facilities that are eligible for CREBs are also eligible for QECBs.

Prince George's County - Solar and Geothermal Residential Property Tax CreditPrince George's County Office of Finance05/13/1511/13/193106

NOTE: The total tax credit granted by a county is capped at $250,000 per fiscal year. As of May 2015, the tax credit has been fully subscribed till 2020. 

In 2008 Prince George's County enacted legislation offering a property tax credit on residential structures equipped with solar and geothermal systems. As originally devised, the credit could only be taken for systems used to heat and cool a structure or provide hot water for a structure. However, in April 2009 the county enacted additional legislation (Council Bill 05-2009) extending the property tax credit to solar-electric (PV) systems, effective May 22, 2009.

The tax credit is equal to 50% of the cost of the system, up to $5,000 for heating and cooling systems and $1,500 for water heating systems. The 2009 legislation that expanded the tax credit to include PV is silent on monetary limits for electricity generating systems. Eligible costs include parts, components and accessories necessary to operate the device as well as reasonable installation costs. Only costs incurred during the 12 months preceding a credit application are eligible for a tax credit. All systems must meet performance and safety standards set by a nationally recognized testing laboratory.

The amount of the tax credit may not exceed the taxes imposed on the property during a fiscal year. Excess credits accrued during a year may be carried forward for up to two additional years. The total value of credits granted by the county during a fiscal year may not exceed $250,000. In the event that applications during a fiscal year exceed this limit, a credit may be granted the following year or years in the order applications are received. Applications for the tax credit are handled by the Prince George's County Office of Finance.

Montgomery County - High Performance Building Property Tax CreditDepartment of Finance07/28/1511/13/193246

The state of Maryland permits local governments (Md Code: Property Tax § 9-242) to offer property tax credits for high performance buildings if they choose to do so. Montgomery County has exercised this option by offering property tax credits on new or extensively modified multi-family residential and commercial buildings that meet certain high performance building standards. An "extensive modification" is defined as a structural modification that alters 50% or more of the building's square footage.

The tax credit generally uses the U.S. Green Building Council's LEED rating system as a metric for determining how "green"' a building is, although buildings that achieve comparable ratings under other green building standards are also eligible for the tax credit. Tax credits are available for buildings that achieve minimum ratings under the LEED New Construction (NC); Core and Shell (CS); and Existing Building (EB).

The amount (10-75%) and term (3-5 years) of the tax credit varies based on the type project and the rating it achieves. See the table below for details. The term "covered" refers to new or substantially reconstructed non-residential and multi-family residential buildings over 10,000 square feet, which are already required by county law to meet the basic LEED certification standard or its equivalent. Thus the minimum standard for property tax credits on buildings of this type is correspondingly higher.

Building Type Certification Type Exemption Amount Term
Covered LEED-NC or LEED-CS Platinum 75% 5 years
Covered LEED-NC or LEED-CS Gold 25% 5 years
Covered LEED-EB Platinum 50% 3 years
Covered LEED-EB Gold 10% 3 years
Not Covered LEED-NC or LEED-CS Platinum 75% 5 years
Not Covered LEED-NC or LEED-CS Gold 50% 5 years
Not Covered LEED-NC or LEED-CS Silver 25% 5 years
Not Covered LEED-EB Platinum 50% 3 years
Not Covered LEED-EB Gold 25% 3 years
Not Covered LEED-EB Silver 10% 3 years


Property taxpayers must apply for the tax credit within one year after a building is certified as a high performance building. There is a limit of $5 million per fiscal year (July 1 - June 30) on the total volume of tax credits granted, and limits of $1.5 million and $2.5 million for buildings rated LEED Silver and LEED Gold respectively. Credits in excess of these limits will be issued for the subsequent fiscal year or years.

Howard County - High Performance and Green Building Property Tax CreditHoward County Government08/10/1506/30/173559

The state of Maryland permits local governments (Md Code: Property Tax § 9-242) to offer property tax credits for high performance buildings and energy conservation devices (Md Code: Property Tax § 9-203) if they choose to do so. Howard County has exercised this option by offering property tax credits for new and existing multi-family residential and commercial buildings that meet certain high performance building standards, and for the installation of energy conservation devices in LEED-certified structures. The property tax credit for energy conservation devices in green buildings (the Green Building Tax Credit) was initially enacted in 2002, while the High Performance Building Tax Credit was enacted in 2007 (effective beginning in July 2008). Minor amendments were made in 2009 to update the High Performance Buildings Tax Credit to reflect current green building standards. More substantive amendments were made in December 2011 to extend the property tax credit to residential structures classified as R-2 or R-3 under the Howard County Building Code, effective for tax years beginning after June 30, 2012 and extending through June 30, 2017.

High Performance Buildings Tax Credit
This tax credit generally uses the U.S. Green Building Council's LEED rating system as a metric for determining how "green"' a building is, although buildings that achieve comparable ratings under other green building standards are also eligible for the tax credit. Tax credits are available for buildings that achieve minimum ratings under the 2009 LEED Core and Shell (CS), Existing Building (EB) or LEED for Homes categories (R-2 and R-3 buildings), or that meet a comparable standard adopted by the director of inspections, licenses and permits. The amount and term of the tax credit varies based on the type project, the rating it achieves, and in the case of R-2 and R-3 buildings declines in successive years, as detailed in the table below.

Certification Type Amount Term
2009 LEED-CS Platinum 75% 5 years
2009 LEED-CS Gold 50% 5 years
2009 LEED-CS Silver 25% 5 years
2009 LEED-EB Platinum 50% 3 years
2009 LEED-EB-Gold 25% 3 years
2009 LEED-EB Silver 10% 3 years
LEED for Homes Platinum Y1: 100%; Y2: 75%; Y3: 50%; Y4: 25% 4 years
LEED for Homes Gold Y1: 90%; Y2: 68%; Y3: 45%; Y4: 23% 4 years
LEED for Homes Silver Y1: 75%; Y2: 56%; Y3: 38%; Y4: 19% 4 years

Tax credits claimed under this program remain attached to the property and are not affected by any change in building ownership. The program is administered by the Howard County Department of Finance. Credits for R-2 and R-3 buildings are limited to $5,000 per building or owner-occupied unit per fiscal year. No maximum credit limits are specified for other types of buildings. The Department of Finance is permitted adopt guidelines, regulations, or procedures to administer the program.

Green Buildings Tax Credit
A separate property tax credit is available for the installation of energy conservation devices that receive LEED credit and provide heating, cooling, or hot water in LEED-certified buildings. This credit, which may be claimed for three consecutive years, is only available to property owners that are not eligible for the high performance building property tax credit described above. The definition of energy conservation device includes but is not limited to solar and geothermal energy systems. The amount of the tax credit is determined as a percentage of the cost of a qualifying energy conservation device which varies based on the LEED certification level of the structure, as shown in the table below.

Certification Type
Credit Amount Term
LEED Certified 14% 3 years
LEED Silver 16% 3 years
LEED Gold 18% 3 years
LEED Platinum 20% 3 years

 

Commercial Clean Energy Grant ProgramMaryland Energy Administration09/26/1811/13/193753

The Maryland Energy Administration (MEA) offeres grants for mid-sized photovoltaic (PV) systems, solar water heating systems (SWH) and Geothermal Heating & Cooling (GHC) installed by businesses, non-profits, and local governments.  Funding is available on first-come, first-serve basis and is subject to change based on funding availability.

Program Description

The incentive amounts for each technology depends on the capacity of system. The program are classified into either Small or Large Commercial grants, with incentives amounts below

Small Commercial Clean Energy Grant Incentives

Resource Conversion Technology

Installed Capacity Range

Award/Capacity Unit

Solar Photovoltaics (PV)

1-99.99 kW

$60/kW

Solar Water Heating (SWH)

50-249.99 sq. ft.

$20/sq. ft.

Geothermal Heating & Cooling (GHC)

1-24.99 tons

$180/ton

 

Large Commercial Clean Energy Grant Incentives

Resource Conversion Technology

Installed Capacity Range

Award/Capacity Unit

Solar Photovoltaics (PV)

100-200 kW

$30/kW

Solar Water Heating (SWH)

250-1,200 sq. ft.

$10/sq. ft. (with total award capped at $5,000/project)

Geothermal Heating & Cooling (GHC)

25-50 tons

$90/ton

It is important to note that these system size/capacity ranges are exclusive, not additive in nature. For example, a 150 kW PV system would be eligible for an incentive of $4,500 (150 kW X $30/kW), not $60/kW for the first 100 kW plus $30/kW for the additional 50 kW. Multiple projects on contiguous properties are considered a single project and projects may not receive more than one grant.

All systems and components must be new and comply with standard equipment, installation, and warranty requirements intended to make sure that installations operate safely and effectively.  The MEA notes that the Maryland Office of the Comptroller has determined that the solar incentives offered under this program are taxable for federal income tax purposes and state income tax purposes (a 2012 change). Please visit the program web site for further information on applications, qualification requirements, and more detailed information on the terms and conditions. Incentives for small wind projects are available under Windswept Grant Program.

Baltimore County - Property Tax Credit for High Performance Buildings and HomesBaltimore County Office of Budget and Finance07/28/1511/13/194341

The state of Maryland permits local governments (Md Code: Property Tax § 9-242) to offer property tax credits for high performance buildings if they choose to do so. Baltimore County exercised this option in 2006 by creating property tax credits for new and existing multi-family residential (50+ units) and commercial buildings that meet certain high performance building standards. In 2008, the county also adopted a similar provision creating property tax credits for newly constructed high performance homes, and in 2010 added provisions for energy efficiency improvements in existing homes.

The credit is formulated as a percentage (%) reduction in total county real property taxes assessed on the property over the course of several years. The level and duration of the allowable credit varies according to building type and level of performance. The non-residential property tax credits are based wholly on achieving a specified rating and certification under the United States Green Building Council (USGBC) LEED green building rating system. The property tax credit for homes also uses green building rating systems as a qualification standard, but includes an additional track that allows a home to qualify for a credit based on its level of efficiency as compared to an energy use baseline. The credit for high performance homes originally required a minimum LEED for Homes rating, but the law was amended during 2012 to allow homes rated under the the International Code Council (ICC) NGBS to qualify. Both standards include not only single-family homes, but also attached housing, and low-rise (up to 6 stories), multi-family condominiums and rental housing. The table below summarizes the different tax credit levels and durations for different building types.

Commercial and Multi-family Residential (income producing, 50+ units)

Performance Level Credit Amount Term
LEED-NC Platinum 80% 5 years
LEED-NC Gold 60% 5 years
LEED-NC Silver 50% 5 years
LEED-CS Platinum 70% 5 years
LEED-CS Gold 50% 5 years
LEED-CS Silver 40% 5 years
LEED-EB Platinum 50% 3 years
LEED-EB Gold 25% 3 years
LEED-EB Silver 10% 3 years


Residential Homes

Performance Level Credit Amount Term
LEED for Homes Platinum or NGBS Emerald 100% 3 years
LEED for Homes or NGBS Gold 60% 3 years
LEED for Homes or NGBS Silver 40% 3 years
30%+ Energy Efficiency Improvement Varies by % Improvement, 30% Minimum 3 years
All Performance Levels, Carbon Neutral Varies by Performance 5 years


For residential home, new construction projects that take the energy performance track, the baseline for determining a 30% energy improvement is the county building code. For existing homes the baseline is determined by the existing energy efficiency of the structure prior to the improvements.

Under either the commercial credit or the residential credit, only one credit is permitted per building. In order to claim a credit, the property owner must submit an application or before the June 1 immediately preceding the property tax year for which the credit is sought. Changes in property ownership do not affect the credit, which runs with the property. The credit may be terminated if it is determined that alterations which do not comply with the law have been made to the structure. Property tax credits for commercial structures are limited to $5 million in total while property tax credits for residential homes are limited to $1 million in any fiscal year. There are no limits for individual buildings.

USDA - High Energy Cost Grant ProgramUSDA Rural Utilities Service$10 million (2015 solicitation)06/09/1611/13/194359

NOTE: The most recent solicitation for this program closed December 14, 2015. Please check the program website for information on future solicitations.

The U.S. Department of Agriculture (USDA) offers an ongoing grant program for the improvement of energy generation, transmission, and distribution facilities in rural communities. This program began in 2000. Eligibility is limited to projects in communities that have average home energy costs at least 275% above the national average. Retail power suppliers serving rural areas are eligible to apply for grant funding, including non-profits (cooperatives and limited dividend or mutual associations), commercial entities, state and local governments entities, and tribal governments. Under the most recent solicitation for projects, a total of $7 million was available for qualifying projects. Under this solicitation grants ranging from $50,000 to $3 million were available for a variety of activities, including:

  • Electric generation, transmission, and distribution facilities;
  • Natural gas or petroleum storage or distribution facilities;
  • Renewable energy facilities used for on-grid or off-grid electric power generation, water or space heating, or process heating and power;
  • Backup up or emergency power generation or energy storage equipment; and
  • Weatherization of residential and community property, or other energy efficiency or conservation programs.

This grant program is not limited to renewable energy or energy conservation and efficiency measures, but these measures are eligible for this grant program.

Anne Arundel County - High Performance Dwelling Property Tax CreditAnne Arundel County Office of Finance07/28/1511/13/194577

The state of Maryland permits local governments (Md Code: Property Tax § 9-242) to offer property tax credits for high performance buildings if they choose to do so. In October 2010 Anne Arundel exercised this option by enacting legislation (County Bill 78-10) providing a property tax credit for high performance dwellings built on or after July 1, 2010 that meet or exceed USGBC LEED Silver standards. The credit was amended in 2012 (County Bill 03-12) to add the National Green Building Standard (NGBS) as an eligible green building certification system for the tax credit. The tax credit is available for five years and is calculated as a percentage of the county property taxes owed on the dwelling (but not the land). The incentive amount and maximum incentive vary according to the performance level of the building as determined under the applicable rating system, as follows:

  • LEED or NGBS Silver: 40% of taxes owned up to $1,000
  • LEED or NGBS Gold: 60% of taxes owed up to $2,000
  • LEED Platinum or NGBS Emerald: 80% of taxes owed up to $3,000

Those wishing to claim the tax credit must provide documentation proving that the dwelling meets the standard, which must be reviewed and approved by a professional certified in the applicable building standard that is employed or engaged by the county. The applicant must also certify that the dwelling and systems will be regularly maintained to comply with the applicable standard. Properties may be inspected to verify compliance with the tax credit rules.

Sales and Use Tax Exemption for Residential Solar and Wind Electricity SalesComptroller of Maryland10/15/1411/13/194853

In May 2011 Maryland enacted legislation providing a sales and use tax exemption for sales of electricity from qualifying solar energy and residential wind energy equipment to residential customers. In order to qualify for the exemption, the sale of electricity must be for residential use on a property owned by a net metering eligible customer-generator. Maryland already exempted energy sales under residential or domestic rate schedules on file with the Maryland Public Service Commission (PSC) from the sales and use tax. The law therefore places sales/purchases of electricity under residential solar or wind retail power purchase agreements (PPAs) on a level playing field with customer purchases of electricity from the grid. The exemption took effect July 1, 2011.

Baltimore County - Property Tax Credit for Solar and Geothermal DevicesBaltimore County Office of Budget and Finance05/13/1511/13/195042

The total volume of credits awarded through this program has exceeded the annual budget of $250,000. There is a wait list for new applicants seeking credits that extends until at least July 2024.

The state of Maryland permits local governments (Md Code: Property Tax § 9-203) to offer property tax credits for energy conservation devices if they choose to do so. In November 2010 Baltimore County enacted legislation offering property tax credits for solar and geothermal energy conservation devices installed in residential buildings. Eligible solar devices include that those heat or cool a structure, generate electricity for use in a structure, or provide hot water for use in a structure. Eligible geothermal devices may be used to heat or cool a structure or provide hot water for use in a structure.

The amount of the property tax credit is set at the lesser of 50% of the cost of the system or $5,000 for heating devices and $1,500 for devices which supply hot water. The authorizing legislation does not specify the maximum credit for devices which generate electricity (i.e., photovoltaic systems) or which provide energy for cooling needs. The credit claimed during any year may not exceed the amount of county property taxes owed during that year, and excess credits may be carried forward for up to 2 additional years. Costs must have been incurred during the 12 months prior to the initial application for the credit. The total volume of credits granted during any fiscal year may not exceed $250,000. If successful applications exceed this aggregate limit during a given fiscal year, they will be granted during the next fiscal year or years in the order received. Applications must be filed on or before June 1 of the year immediately preceding the first taxable year for which the property tax credit is sought.

 

Game Changer Competitive Grant ProgramMaryland Energy Administration$1 million11/20/1511/13/195559

NOTE: Applications for the program for FY2016 ended on October 30, 2015. 

Game Changer Competitive Grant Program is designed to support innovative renewable energy systems and strategies that advance the renewable energy market in the state. The program aims to mitigate costs and risks of developing new technologies and systems. MEA is interested in funding initiatives in its two Areas of Interest (AOI): i) technologies that reduce the cost or increase efficiency of Tier I renewable energy systems,  and ii) commercial, customer sited electric storage systems that are integrated with renewable energy resources.  

Eligibility

The program is open to any businesses in Maryland, including for-profit businesses, non-profits, and governmental entities. Projects must use commercially available technology and must be physically located in Maryland. 

Program Description

A total of $1 million is available for the program, with typical awards ranging from $50,000 to $250,000. The grant is limited to 30% of the project costs. Awards are intended to support cutting edge renewable technology projects that are “game changing” and are in their early stages of commercialization. Funding is not limited to renewable energy systems but also towards innovative project design ideas targeted towards increasing renewable energy systems, financing ideas, and overcoming barriers for renewable energy deployment.  Potential projects may include, but are not limited to:

  • Hybrid solar photovoltaic/ thermal energy systems that cool the PV system while generating hot water
  • Solar thermal heating and absorption cooling systems
  • Low-maintenance solar photovoltaic array tracking systems
  • Renewable energy generation and storage systems that could be aggregated for efficient transactions with independent operating systems for ancillary services
  • Renewable energy generation and storage systems that could be aggregated for efficient transactions with independent operating systems for ancillary services
  • District energy geothermal heating and cooling systems
  • Biofueled distributed generation and/or combined heat and power systems
  • Cost-competitive fuel cells that can add backup, peak-shaving and/or baseload
  • Crowd funding platforms for renewable projects
  • Innovative employer electric vehicle programs
  • project to expand access to financing for renewable energy systems to underserved populations
  • Projects that lower barriers to entry to new renewable energy financing partners in Maryland
Parking Lot Solar PV with EV Charger Grant ProgramMaryland Energy Administration$1 million (FY2016), $2 million (FY 2015)11/20/1511/13/195630

NOTE: The program has been renewed for FY2016. Applications for funding are due by January 12, 2016. 

Maryland Energy Administration (MEA) offers grants for installing solar photovoltaic (PV) over parking lots with electric vehicle (EV) chargers.  The system must install a minimum of 75 kW of solar mounted on a canopy structure over the parking lot with a minimum of four qualified Level II or Level III EV chargers. The program offers grant up to $500 per kW of PV installed with a maximum cap of $250,000 per project. Total fund of $2 million is available for FY 2015 for the program. Applications for the grant must be submitted to MEA by March 02, 2015.

The program is open to two categories of applicants- Area of Interest I (AOI I) and Area of Interest II (AOI II). AOI I include Business, Non-Profits, and Local Governments while AOI II include State agencies.  Applications by AOI I and II are evaluated separately with different qualifying criteria.

The project must be located in a parking lot in Maryland which is accessible for use at least five days a week. Systems must be net-metered. Please visit the program website for more information.

FHA PowerSaver Loan Program03/07/1611/13/195631

Federal Housing Administration (FHA) through its PowerSaver loan program offers three financing options for homeowners to make energy efficiency and renewable energy upgrades in their residences. For all three PowerSaver products, borrowers must select from a list of approved PowerSaver lenders. Please check the HUD website to find a list of participating FHA approved lender for the program. PowerSaver products are not currently offered in all states, so all potential applicants are encouraged to first check the program website to ensure product availability in their location. 

Eligibility

Homeowners must have following requirements to be eligible for the program:

  •  Minimum credit score of 660
  •  Maximum total debt to income ratio of 45% (monthly income divided by monthly debt payments)
  • Maximum combined loan-to-value: 100%
  • Property type: One-unit, owner-occupied, principal residence properties only
  • Appraisal requirement: exterior-only inspection appraisal or other FHA method of valuation
  • PowerSaver insures lien position in the first place, or second place, and also insures loans without lien, as long as the loan amount is less than $7,500. 

Eligible Measures

Eligible home energy upgrades include, but are not necessarily limited to, the following:

  • A whole home upgrade through Home Performance with ENERGY STAR
  • Insulation and air sealing
  • Replacing doors and windows
  • Upgrading heating, ventilation, and air-conditioning systems and hot water systems
  • Home automations systems and controls (e.g., smart thermostats)
  • Installing solar photovoltaic (PV) systems, solar thermal hot water systems, small wind power, or geothermal heat pumps

PowerSaver Home Energy Upgrade—Up to $7,500

This unsecured consumer loan is intended for smaller projects (e.g., insulation, air and duct sealing, water heating, replacing heating and cooling equipment, etc.). It does not require a home appraisal or lien on the property. Single-family homeowners may qualify for the loan if they have manageable debt and a credit score of 660 or higher. Interest rates vary, but typically range from 4.99% to 7.75%. PowerSaver participating lenders, markets, and contact information is available here.

PowerSaver Second Mortgage (Title I)—Up to $25,000

This Title I loan is intended for financing larger retrofit projects, including energy efficiency, PV, solar hot water, geothermal, or other renewable energy projects. A home appraisal or equity is generally not required, but PowerSaver lenders may request it if required by their investor. Borrowers cannot currently have an existing home equity loan, a second lien, or second mortgage to qualify for this product. Interest rates vary but typically range from 4.99% to 9.99%, and the maximum loan term is 20 years. PowerSaver Title I participating lenders, markets, and contact information is available here.

PowerSaver Energy Rehab (203(k))—First mortgage up to FHA loan limits

This 203(k) loan is for home purchase or refinance, targeting either home buyers wishing to combine home improvements with a home purchases or to homeowners wishing to include home improvements when refinancing an existing mortgage. It is FHA-insured up to 100% for a home purchase or refinance, plus the cost of a home improvement project. Current loan limits for a single-unit property vary by area from $217,500 to $625,000 (higher amounts are permitted for two-, three- and four-unit properties); specific loan limits for an area can be found at this website. In order to qualify as a 203(k) PowerSaver loan, at least $3,500 of the home improvements must consist of eligible PowerSaver measures. PowerSaver 203(k) participating lenders, markets, and contact information is available here.

The two types of PowerSaver 203(k) loans are Standard and Streamlined. Standard 203(k) loans are for major improvements, where a home improvement project costs at least $5,000 and includes $3,500 in energy upgrades. The Streamlined 203(k) loans are for minor home improvements, where the home improvement project cost must not exceed $35,000. A HUD consultant is only required for oversight of home improvements for Standard 203(k) loans. 



Mathias Agricultural Energy Efficiency Grant programMaryland Energy Administration$650,000 for energy efficiency, $250,000 for renewable energy10/31/1612/15/165651

NOTE: Applications for grants for FY2017 program are due by December 15, 2016. 

Mathias Agriculture Energy Efficiency program offered by the Maryland Energy Administration (MEA) provides grants to farms and businesses in agricultural sector to offset 50% of the cost of energy efficiency and renewable energy upgrades. Grant application must be submitted to the MEA by December 15, 2016. The MEA anticipates announcing grant winners in March or April of 2017. 

Eligibility

Program is open to farms and businesses in agricultural sector for energy efficiency and renewable energy projects that have total cost of at least $20,000.  Examples may include, but not limited to dairy, orchard, poultry, greenhouse, processor, sawmill, aquaculture and others. Projects must save energy through installation of energy efficiency measures, or implement renewable energy in conjunction with energy efficiency measures. Projects that include only renewable energy measures are not eligible for funding. MEA has subcontracted EnSave to provide basic technical support to help identify potential projects and its energy savings. Contact information for EnSave is provided below.

Program Description

The program has a total budget of $900,000 for the fiscal year 2017, of which $650,000 is allocated for energy efficiency measures and $250,000 for renewable energy measures. The program offers grants up to 50% of the cost of energy efficiency projects and 25% of renewable energy projects, capped at $150,000. The project cost should be at least $20,000 to be considered for the program.  Examples of projects that would qualify under the program include whole building weatherization, efficient lighting, motor efficiency upgrades, wind, biomass, solar PV, methane digester and others.

Applications for the grants will be evaluated on various grounds including project feasibility, cost effectiveness, energy benefits, simple payback, best practices approach and others.

Please visit the program website for more information. 

Solar Renewable Energy Certificates (SRECs)04/27/1511/13/195688

Under Maryland law, an SREC represents the generation attributes of 1 megawatt-hour (MWh) of electricity generation (or equivalent) from a qualifying solar facility. Electricity suppliers must purchase and retire solar renewable energy credits (SRECs) in order to meet their compliance obligations under the law, or pay a Solar Alternative Compliance Payment (SACP) for any shortfalls in SREC purchases. The SACP operates as a theoretical ceiling on the price that a supplier would pay for SRECs to fulfill obligations under the Maryland RPS.* In Maryland the SACP is set at $400 per MWh for 2009 - 2014, but will decline in future years, ultimately reaching $50 per MWh in 2023 and thereafter. Under this system, SRECs represent a significant source of revenue for owners of qualifying solar facilities, with a value determined by demand in the trading market. 

All net-metered customers and renewable on-site generators in Maryland own all RECs or SRECs produced by their systems unless or until a customer or generator chooses to sell or otherwise transfer the RECs or SRECs to another party. A Maryland SREC has a three-year lifetime during which it is valid for compliance (i.e., the calendar year during which it was generated plus the next two calendar years). Once a facility qualifies as an eligible solar generator, it is eligible to produce SRECs for as long as it remains in service as an eligible generator. Residential solar water heating systems are not permitted to generate more than 5 SRECs annually.

Program Description

In order to begin producing SRECs for the Maryland RPS*, a solar generator must apply for certification as a qualifying generator from the Maryland Public Service Commission (PSC). In general, a PV facility must be connected to the distribution grid serving Maryland** in order to qualify as a source of SRECs for meeting an electricity supplier's compliance obligation under the state RPS. However, through 2011 SRECs from solar facilities not connected to the distribution grid serving Maryland were eligible to be counted under the state RPS to the extent that SREC offers from Maryland facilities were not sufficient to meet the standard. In February 2012 the PSC determined that sufficient Maryland-sourced solar resources existed during 2011 to meet the standard, rendering out-of-state resources ineligible. Solar water heating facilities must be commissioned on or after June 1, 2011; not be used for the sole purpose of heating a pool or a hot tub; and use SRCC OG-100 certified equipment. Residential solar hot water systems are limited to producing maximum of 5 SRECs in a given year. SRECs produced by solar thermal systems are calculated by the conversion rate 1 SREC = 3,412 BTU. 

  
After a facility is certified by the PSC, it must establish SREC account with the PJM-EIS Generation Attribute Tracking System (GATS). In general, the system owner or their representative must enter energy generation data from a revenue-quality meter into the PJM-GATS system at least once annually in order to be issued an SREC. Owners of PV systems of 10 kilowatts (kW) or smaller (referred to as Level 1 solar facilities) that are used for on-site generation may use an engineering estimate based on an energy production schedule established by the PSC in lieu of providing actual generation data. Owners of systems that are not certified as Level 1 solar facilities are also required to submit an on-site generation form to the PSC within one week of entering their generation data into the PJM-GATs system. Non-residential solar water heating systems must be equipped with a meter that meets the standards of the International Organization of Legal Metrology (IOLM). Residential solar water heating systems may be equipped with an IOLM-compliant meter, or may use an SRCC OG-300 thermal performance rating for the purposes of SREC creation.

In a characteristic unique to Maryland, solar generators in Maryland are required to offer SRECs for sale to Maryland electricity suppliers prior to offering them for sale to any other buyer. In order to help generators comply with this requirement, the PSC operates a web site where generators can post SREC offers. Currently, SREC purchase contracts directly between a solar generator and an energy supplier must have a term of at least 15 years. However, as a result of H.B. 258, beginning October 1, 2012 the minimum term requirements will not apply to Level 1 facilities. For Level 1 solar facilities only, the purchase must take the form of a single, up-front payment arrived at by calculating the net present value of SRECs over the life of the contract using a standard SREC value of 80% of the SACP and federal secondary credit interest rate in effect as of January 1 of that year as the discount rate. If after 10 days the SREC(s) have not been sold to a Maryland electricity supplier, the facility owner is free to sell their SREC(s) to any buyer. 

The PJM-GATS Public Reports web site contains a variety useful pieces of information, including monthly weighted average SREC trading prices for Maryland and other states. Note that the SREC trading prices reported here for each state refer to facilities located in that state. In some cases, the SRECs may have been sold into the SREC market in another state rather than the state of origin. 
 

History

Maryland's Renewable Energy Portfolio Standard, enacted in May 2004 and revised in 2007 and 2008, requires electricity suppliers (all utilities and competitive retail suppliers) to use renewable energy sources to generate a minimum portion of their retail sales. The renewables requirement increases gradually, ultimately reaching a level of 20% from Tier 1 resources in 2022 and beyond, and 2.5% from Tier 2 resources from 2006 through 2018. The Tier 2 requirement sunsets at the end of 2018, dropping to 0% in 2019 and beyond. The law was amended in April 2007 to include a solar-photovoltaic (PV) requirement of 2% by 2022, which is included within the 20% by 2022 Tier I renewables requirement.

In May 2010 S.B. 277 accelerated the solar compliance schedule and made several other related changes to the law, but did not change the ultimate 2% by 2022 requirement. In May 2011 the law was amended yet again to allow solar water heating systems to qualify under the standard. In May 2012 the solar compliance requirements were accelerated again for the period from 2013 - 2020 and the ultimate target of 2% was solar moved up from 2022 to 2020 by S.B. 791. As with the other resource tiers, the requirement ramps up progressively over time in annual increments from an initial requirement of 0.005% in 2008, to 0.025% in 2010, and so forth towards the ultimate 2% by 2020 requirement.

*Solar facilities located in Maryland may also be eligible to participate in other states' SREC markets. In some cases this may allow SRECs sourced from facilities located in Maryland to trade above the theoretical price ceiling set by the SACP.

**Beginning in 2012, this criterion should in most cases limit qualification to solar facilities physically located in Maryland. In addition, it could also impose size limitations on facilities by requiring that facilities be connected to the grid at the distribution-level voltages, as opposed to transmission-level voltages.

 

Maryland Smart Energy Communities Grant$3 million (FY2016)11/20/1511/13/195838

The Maryland Energy Administration (MEA) offers financial incentives for local governments to join its Maryland Smart Energy Communities (MSEC) initiative. The goal of the MSCE program is to have local governments adopt and implement policies that promote energy efficiency and renewable energy in their jurisdictions. As of 2015, there are 34 communities, including 26 municipalities and 7 counties plus Baltimore City that are part of the MSEC program. 

Eligibility

Any incorporated towns, cities, and counties in Maryland can apply to join the MSEC program. Communities that apply for the program and meet the requirements receive funding based on population size and funding availability. 

Program Description

The funding for the program will be divided between new and existing participants to the MSEC program. New participants will receive initial funding to help establish energy goals in the local community. 

To participate in the program the local government must adopt two of the three policies provided below:

  1.  Energy Efficiency Policy: Establish an energy consumption baseline and develop a plan with the goal of reducing energy consumption of the city/town or county owned buildings by 15% by 5 years of the baseline year. 
  2.  Renewable Energy Policy: Reduce conventional centralized energy generation serving a local government buildings by meeting 20% of the buildings electricity demand with distributed, renewable energy generation by 2022. 
  3.  Transportation Petroleum Reduction Policy: Establish a baseline petroleum consumption for all local government vehicles and put in place a comprehensive program designed to reduce the baseline by 20% within 5 years. 

The program website contains guidance documents and model policies for establishing such policies which can be supplemented according to local needs. 


City of Baltimore- BEI Loan ProgramBaltimore City Energy Office08/30/1611/13/195887

The City of Baltimore provides low interest loans to non-profits and for-profit small businesses located in the City of Baltimore. The City has partnered with two non-profit organizations- Healthly Neighborhoods and Reinvestment Fund- to administer the loans. The loans can be used to finance a wide range of energy measures including insulation, windows, HVAC systems, lighting, and distributed generation systems such as solar PV systems and combined heat and power systems.

Eligibility

The building for the energy efficiency project must be located within the New Markets Tax Credit eligible census tract or a Baltimore Main Streets District. The mapping tool (link) provides information if the building is within the eligible zone.  The buildings must be owned by non-profit organizations, or small for-profit businesses. Individual homeowners are not eligible for the loan program. 

Program description

The eligible borrows are divided into two Tiers. Tier 1 include non-profit organizations that provide at least 50% of their services to low-income* persons, and for-profit organizations that own or have a long term lease on their space. Tier 2 borrowers include real estate project developers that are located in eligible zone and provide new neighborhood amenities, remove blight, or provide 50% of their housing to low income residents. 

The loans are available for four different categories of energy upgrades- i) limited energy retrofit, ii) extensive whole building energy retrofits, iii) gut rehabilitation projects, and iv) new construction projects. These categories have different requirements in terms of energy saving goals and compliance with building/energy codes.  

Interested participants can visit the program website, review guidelines, and submit initial financing request form to get started with the loan application process. 

*low income is defined as family income 80% or less of the median family income for the Baltimore metropolitan area. In 2-14 that income level was $53,576 or less.