Maryland Solar Incentives (Rebates, Tax Credits & More in 2023)
By Kristina Zagame /
In this guide to determining solar system costs in Maryland, you’ll learn:
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Most Maryland homeowners pay an average of $19,390 to install a solar panel system. This is after the federal solar investment tax credit (ITC), and the typical cost before any credits in Maryland is $27,700.
These numbers are based on the average per-watt price in the area of $2.77. They also assume you’ll need a 10 kilowatt (kW) system, which is what most residents in Maryland need to offset their energy bills.
The size of the system you require to cover your energy usage in kilowatt-hours (kWh) will play a major role in your system total. The chart below includes average pricing for different common system sizes in Maryland.
|Size of Solar Panel System||Total Solar System Price Before Any Credits||Cost After Federal Tax Credit||Average Suitable Home Size|
|7 kW||$19,390||$13,573||1,300 sq ft|
|8 kW||$22,160||$15,512||1,500 sq ft|
|9 kW||$24,930||$17,451||1,700 sq ft|
|10 kW||$27,700||$19,390||1,900 sq ft|
|11 kW||$30,470||$21,329||2,100 sq ft|
|12 kW||$33,240||$23,268||2,300 sq ft|
|13 kW||$36,010||$25,207||2,500 sq ft|
Marylanders can expect to pay approximately $27,700 before the ITC, as compared to the U.S. average of $23,940. After the credit, that’s $19,390 in Maryland and $16,758 in the U.S. As you can see, your money doesn’t go quite as far in Maryland as it would in other states.
The average cost per watt for photovoltaic (PV) equipment in Maryland is around $2.77. This is about 4% higher than the U.S. average of $2.66 per watt. Since most Americans need around a 10 kW system and pay less than property owners in Maryland for equipment, the cost to convert to solar in the U.S. is lower than in the Free State.
Watch Below: Learn Which Solar Incentives to Claim in Maryland To Maximize Savings
Solar equipment prices in Maryland have dropped by 53% over the last decade, according to the Solar Energy Industries Association (SEIA).1 As advancements in solar technology and solar panel manufacturing processes are made, the costs year over year are expected to continue to decline.
While converting to solar has been getting less expensive, sticking with fossil fuels like natural gas and oil is costing property owners in Maryland more and more. Increases in electricity rates in the U.S. as a whole are outpacing the price hikes in Maryland alone.
From 2018 through 2022, the U.S. Bureau of Labor Statistics reported that the price of electricity across the nation increased by around 21%.2 In that same time, electricity costs in Maryland have increased by over 17%. Regardless, the writing on the wall is clear: electricity prices are increasing, and they show no signs of slowing.
News reports about unfair and unexpected price hikes have abounded in recent years.3 Installing solar is expensive, but as it gets cheaper and paying for traditional electricity gets more expensive, more and more Marylanders will likely realize that converting to solar energy is a great way to save money in the long run.
Converting to solar in Maryland is expected to save you around $21,395 in energy costs over the lifespan of your panels. Compared to the energy burden you could expect in Maryland if you don’t switch — around $49,095 — the financial benefit of going solar becomes obvious.
Keep in mind that this expected $21,000+ in energy savings is a conservative estimate. Your savings will very likely be higher for two reasons:
Your savings can and will vary based on a number of factors, like system size and your current energy bills. One of the most crucial factors to consider when estimating your initial costs and long-term savings is the payment method you choose to acquire your panels.
There are three primary solar financing options — cash purchase, loan and solar lease — which we’ll explain in detail in the chart below and in the following sections.
|Solar Financing Option||Initial Cost||Payback Timeline||Est 25 Year Savings|
|Cash||$19,390 (after the ITC is considered)||12 years*||$21,395*|
|Loan||Often $0, although choosing to put money down will lower your costs in the long run||15 years*||$16,000*|
*These are conservative estimates intended to represent base-level averages. In most cases, customers can see an even higher ROI and shorter payback periods.
Buying your solar system in cash is the best way to keep your long-term system total to a minimum. You won’t have any finance charges or interest, and you’ll own your system right away, unlike with a lease. That means the energy savings you’ll see will go toward paying off your system – Maryland homeowners can expect a solar payback period of around 12 years if they pay in cash
The major downside to purchasing solar with cash is the upfront cost. You’ll be on the hook for around $27,700, which is unrealistic for many people. While you may effectively lower this amount by taking the federal credit and other benefit programs, you’ll still have that initial outlay of money to consider.
Cash purchases do, however, save you the most money over time. The average system in Maryland will cost around $20,000 after the federal credit but will pay for itself and then save an additional $21,395 on your electric bills over the lifespan of the equipment. Compared to the energy burden of not going solar — over $49,000 — this is a great option financially.
Below, we’ll include some pros and cons of using cash to purchase your solar energy equipment.
Many financial institutions and solar installation companies offer solar financing to customers. Loans for solar PV equipment let you finance a large portion of your system installation price and sometimes the entire thing. That means your upfront payment is minimal and can be $0 in many cases. You then pay off the system loan over several years, which is far more accessible for most people.
As is the case with most loans, solar financing will add money to your system total in the form of interest payments. That added cost will prolong your payback period, so your panels will often take a few extra years to provide an actual return on investment than a cash purchase would.
PV equipment loans do lead to equipment ownership, so most property owners find them more appealing than lease options. Many financiers make it so that your monthly payments are equal to or below your current monthly utility bills. In the State of Maryland, that means you could pay around $125 per month.
Customers who finance their systems can still take advantage of the solar perks available to those who purchase systems in cash, including the federal credit.
Below, we’ll share some benefits and drawbacks of using a loan to acquire your solar PV system.
Leases for PV equipment are arrangements where you pay a monthly fee to lease your panels, and you get to keep the energy they produce to pay down your energy bills.
In an ideal situation, your panels will generate more energy than you use, so you’ll only have the lease payment. That would mean your all-in monthly outlay of cash would go down after signing up for a lease. Unfortunately, some disreputable solar companies will install smaller systems to save money, but they end up increasing your monthly payment.
Leases don’t lead to panel ownership, which is a major downside for most solar customers. Plus, lease termination fees can be exorbitant in some cases.
Leases do have their upsides, though. They almost always require no money down, which makes them accessible to most residents. They also let you support the renewable energy movement without having to invest in expensive equipment.
We generally don’t recommend leases because they don’t let you take advantage of several incentives — like the federal credit — and they provide the lowest energy savings of any payment option.
Below, we’ll include some upsides and downsides to consider before choosing a lease to acquire your panels.
There are a few things you can do to get the best prices for your solar energy equipment in Maryland. One of the best things to do is make sure you’re taking the solar incentives that provide the most significant savings for the time you invest into applying. Below are our top tips for reducing solar conversion costs in Maryland.
We’ll explain how and why these tips will save you money in the sections below.
The best way to reduce the effective cost of your solar array is to make sure you file for the federal solar investment tax credit (ITC). This is a credit offered by the federal government that reduces your tax liability by up to 30% of your total system price. In Maryland, that’s an average of $8,310. Any unused credit can be pushed forward for five years.
If you’re able to take the full credit, you can effectively bring your solar installation price down from $27,700 to $19,390. Keep in mind that this is only available for cash purchases and solar loan options.
Thankfully, taking advantage of the credit is simple, so you’ll have to spend minimal time applying for it. You just need to fill out IRS form 5695 with some basic information about your system and your installation company.
The form will need to be filed alongside your taxes, which you can do yourself, have your accountant do, or do digitally using a tax software like TurboTax or HR Block.
You can head over to the IRS’ website for more information or to print out the form.4
The next most beneficial way to bring your solar installation costs down is to consider the Maryland Energy Storage Income Tax Credit. This credit works just like the federal perk, but it’s offered by the state and only applies to solar batteries.
Solar storage solutions are relatively common in Maryland because power outages occur frequently.5 In most cases, blackouts happen because of the extreme weather that hits the area, including hurricanes and tropical storms. Equipping your home with solar batteries will allow you to maintain power even during outages, making it a great option in Maryland.
Maryland is also one of the few states that incentivize battery installations to meet its Renewable Portfolio Standard (RPS) goals.
If you plan to install solar batteries — like a Tesla Powerwall — you can file for the incentive and get an additional credit to your taxes for 30% of your battery’s value. This amount gets credited to your state income taxes owed for the year of installation.
Tesla Powerwall solar batteries cost around $10,000 each, which means each Powerwall you install could yield around a $3,330 credit to your tax burden.
The simple application should take less than a minute to fill out, so it’s definitely worthwhile. You can find the form and application instructions on the state’s website.6
The Free State is an outstanding place to convert to solar, in part because Maryland provides a number of financial solar programs to help make solar energy systems more affordable and accessible. Another solar rebate that can help you reduce your effective system costs is the Residential Clean Energy Rebate, which is a state incentive.
All property owners in the state can get up to a $1,000 rebate for installing a system that’s at least 1 kW — this will include the large majority of systems, since the average Maryland homeowner needs a 10 kW solar panel system. You can also take an additional $500 rebate if you install a solar water heater.
The application is simple to fill out and well worth your time, and you can reduce your system cost by an average of around 5%. You can check out the state’s website for more information and application guidelines.7
Finally, we strongly recommend getting multiple quotes for your home solar array. Maryland is home to around 100 installers, and each one charges different amounts for the solar equipment they offer and the labor they carry out for the installation.
We suggest requesting multiple free quotes from a few of the top installers in your area and comparing them based on the total cost and the value provided. Some of the installers we recommend include:
Keep in mind that companies that carry high-quality and high-efficiency PV equipment — like Maxeon panels — will naturally be more expensive. However, they can often help you save more in the long run by offsetting more of your energy bills from your utility company.
There are many things that will affect your solar installation costs, including the size of your system, the equipment you install and the installation company you choose. Below, we’ll explain some of the most important factors to consider when estimating the cost of your system.
The pieces of equipment you choose and the brand of panels you have installed both play a part in your total solar system price.
Maryland property owners experience around 202 sunny days per year, which is just under the U.S. average. This is still plenty of sun for most residents to offset their energy bills using solar, so there isn’t a need for high-efficiency solar panels — making the price of the equipment most popular in MD a bit lower than in areas that demand super-efficient panels.
As a coastal state, Maryland is prone to some severe weather, including hurricanes, tropical storms and cyclones. Although most of these weather events aren’t terribly severe, they do lead to an increased risk of power outages.
Many customers choose to add solar batteries to their systems to maintain power in these instances. Solar batteries are add-on products that can cause your price to jump by thousands or even tens of thousands of dollars. This causes prices to increase a bit for Maryland homeowners.
The solar installer you hire can also have an impact on your pricing. Some companies offer discounts or apply markups on equipment, and labor charges can also vary widely across the board.
Companies can vary based on the brands and types of equipment they carry as well. There are many different solar panel brands available, all of which come at different prices and bring varying warranties and levels of efficiency to the table.
For example, Lumina Solar, one of the best solar companies in Maryland, installs products from:
SunPower, one of the most established solar providers in Maryland, only offers panels from Maxeon.
Since Maxeon solar panels are top-of-the-line and come at a higher cost, SunPower will naturally be a more costly company to choose, but you’ll get higher quality for your money. Whether that higher quality will benefit you is something you’ll need to evaluate along with across-the-board relative costs of different providers.
How you choose to pay for your solar system can affect your total price as well. The two options that will result in you owning the system — cash purchase and loan — can be thousands of dollars apart in pricing, depending on your loan terms.
A cash purchase requires that you pay for your system all at once, which is prohibitive for many people. However, paying cash also means you avoid financing charges and interest, so you end up spending less on your system over time. Loans for PV equipment reduce or eliminate your up-front costs but raise your system price because of interest.
Unfortunately, Maryland doesn’t have many statewide solar financing programs.
The Montgomery County Green Bank has a program for affordable loans with low interest rates, but it’s only available to residents of Montgomery County. In 2022, the Maryland Energy Administration is also offering the Low Income Solar Grant Program, which can fund up to $25,000 for solar installations for low-income individuals, but this is a pilot program that may not continue into the future.8
There is no Property Assessed Clean Energy (PACE) financing available for homeowners, but the Commercial PACE program is an option for business owners looking to convert to solar.
Some homeowners in Maryland are, understandably, concerned about ongoing maintenance costs for their panels, especially since the initial cost is so high. Thankfully, solar energy systems remain mostly maintenance-free after installation, so you shouldn’t have any recurring costs.
One of the most common things some solar customers need to do is panel cleaning. This process helps remove dirt and dust that settles on the face of the panels and can limit panel efficiency and energy production. Thankfully, the above-average amount of rainfall in Maryland should keep your panels plenty clean.9
Another common maintenance request among solar customers is removing the solar panels for roof repair or replacement and then reinstalling them afterward. Provided you choose a reputable solar installer in Maryland, your company should let you know if your roof needs replacement before it puts panels on your home.
Still, roof repair is more common in Maryland than in many other states because of the extreme weather and the fact that the annual rainfall is nearly double the national average. You could be looking at between $500 and $1,000 to remove and reinstall your panels.
In general, though, your solar power system should be mostly maintenance-free.
As we mentioned above, the solar installer you choose will have a significant effect on your total cost of converting to renewable energy. In the chart below, you can get some quick information on the best solar companies in the Free State, along with relative pricing to help you figure out which will fit into your budget.
|Solar Installer||Average Installation Cost Per Watt ($-$$$$$)|
|Solar Energy World||$$$|
|Celestial Solar Innovations||$$$|
Read More About Going Solar in Maryland
Below, we’ll answer some of the questions we see most often from Maryland residents about the costs and process of converting to solar in your area.
The typical cost of solar panels in Maryland is $2.77 per watt. You can expect to pay $9,707 for a 5kW system installation after subtracting the federal credit, and keep in mind you can also qualify for a $1,000 rebate through the state. You can use a solar calculator to estimate what your specific installation price will be.
In Maryland, you can earn Solar Renewable Energy Credits (SREC) that represent additional cash flow beyond the savings you’ll see from your electric company, and the state also has a favorable net metering policy. In addition to net metering, there is a local rebate that offers $1,000 back when installing solar. The state also provides property and sales tax exemptions.
These incentives certainly help solar make sense in Maryland, but whether a solar panel installation is worth it for your home will depend on a number of factors, including your home’s energy needs.
Currently, there are no programs that offer free solar panels in Maryland, but your initial cost is reduced thanks to the local rebate option and several tax deductions. If you are offered “free solar panels” by an installation company, it’s likely a marketing tactic to get you to sign a lease agreement or power purchase agreement (PPA).
Solar installations in Maryland are expensive, but there are a few things you can do to bring down your effective solar power system price. First off, you can take advantage of the federal tax credit. This provides a credit to your tax liability for 30% of your total system value — including panels, inverters and batteries — which averages over $8,000 in your area.
Next, you can file for the state tax credit for battery storage if you plan to install batteries. This is an additional credit to your income tax liability for 30% of your storage unit value. For a Powerwall, this comes out to around $3,330.
Finally, you can shop around for the best value-to-price ratio. There are around 100 installers in Maryland, so getting free quotes from a handful of them can help you determine which provides the most bang for your buck in terms of efficiency, price and warranty coverage.
Yes! Solar panels are expected to boost your property value by around 4.1%.10 In Maryland, that’s an average of around $16,644, based on the average home value of $405,957.11 The state also provides a property tax exemption, so this value bump will not cause your taxes to go up as a result.
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