Solar Panels in Maryland: Unique Incentives, Rebates and Tax Breaks Available

If you live in Maryland, chances are you are paying more for your electricity compared to the rest of the US. Solar panels could help offset the cost. 

With the price for electricity on the rise and average monthly consumption above the US average, it's no wonder Maryland residents have higher electric bills, according to CNET's sister publication SaveOnEnergy. 

Investing in solar panels could be a great solution to help offset costly energy bills. Federal, state and local incentives, rebates and tax credits are making solar panels most affordable. When compared to the rest of the US, what's unique about Maryland is the Maryland Energy Administration offers solar grant programs for low income households.  

"MEA is thrilled to help all Marylanders benefit from solar energy," said Mary Beth Tung, director of the MEA, in a press release. "Adding these solar energy systems to homes across the state will help lower energy costs to some of the most economically vulnerable Marylanders," she added.

Here's what you'll need to know about going solar in Maryland. 

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Maryland solar panel costs

The cost of a solar panel system will depend on a few factors, including the number of modules, installation costs and additional components like solar batteries. According to the Lawrence Berkeley National Laboratory's Tracking the Sun report and consulting firm Wood Mackenzie, the average Maryland solar panel system is around 10.56 kilowatts, which is larger than the 8kW national average.

Following is a breakdown of the average size and cost of solar panels in Maryland compared to the rest of the US based on data from LBNL.

Solar costs in Maryland vs. the US average

The price per watt in Maryland is higher than the national average and the average system size tends to be larger to account for fewer sunny days per year. The larger system size contributes to a higher total cost for solar panels compared to the national average cost. However, there are several financing options available to make the large upfront investment more manageable. Some residents buy their system upfront or finance it with a solar loan. In Maryland, residents can also sign a solar lease or power purchase agreement. 

Solar incentives and rebates in Maryland

While the cost of a solar panel system in Maryland is substantial, there are various solar incentives and credits that make the system more affordable. Keep in mind that most solar incentives only apply if you own your system. Residents who lease their solar panels will not qualify for these incentives.

The residential clean energy credit is a federal solar tax incentive offering 30% of the cost of a solar system in a tax credit to consumers who install solar panels in 2022 and after. Based on 30% of the average cost of solar panels in Maryland, this incentive comes out to $10,612 in the form of a tax credit. Previously known as the investment tax credit, this incentive was increased from 26% to 30% and extended in August 2022 when the Inflation Reduction Act passed. 

There is no cap on how much you can claim with the residential clean energy credit, so you can receive 30% of the cost of your system no matter its size or price. You can apply by filling out IRS form 5695 (PDF). The IRS has provided instructions on how to fill out the form and submit the application. After the application is approved, you receive the 30% in credit when you file your tax return.

In addition to the federal solar tax credit, there are also state and local solar incentives in Maryland. The Database of Solar Incentives for Renewables and Efficiency provides a longer list of Maryland solar incentives. Here are a few that stand out.

Maryland solar panel companies 

There are nearly 200 solar panel companies operating in Maryland, according to the SEIA. As residential solar continues to grow in popularity, the number of solar installers should increase to meet demand. More choices mean you have plenty of options when choosing a solar installer, but it can also mean sorting through a large number of options.

To help you narrow it all down, we've compiled a list of solar panel company standouts you can consider in Maryland.

Palmetto Solar 

Palmetto is one of the country's largest solar installers, offering home solar systems you can buy or lease in Maryland. To maximize your savings long term, you would need to buy your system outright or finance it. If you lease your system or sign a power purchase agreement, you won't own your system, qualify for incentives and your savings will be lower in the long run.

Palmetto was founded in 2010 and installs Q Cells and REC Alpha Pure Black solar panels. It also offers Enphase microinverters and solar battery options. Solar panels from Palmetto have an efficiency rating above 19.8%, a 25-year performance guarantee and a minimum 12-year product warranty. This installer also offers a subscription service called Palmetto Protect, which monitors your solar system's performance and provides tiered levels of support if your system is underperforming or damaged.

Solar Energy World

Solar Energy World has a smaller service area than some of the other installers on this list, but it has become a leading installer in Maryland and also services Delaware, Florida, North Carolina and a few other states. With this installer, you can buy your solar system upfront, finance it with a solar loan or sign a solar lease or PPA.

Solar Energy World offers products from manufacturers including SolarEdge, Enphase, Q Cells and Tesla. In terms of warranties, Solar Energy World excels with a 30-year manufacturer's warranty on all panels and inverters. If the manufacturer goes out of business during this timeframe, Solar Energy World says it'll honor the warranty. This installer also guarantees a minimum 90% production within the first year. It's important to note that this warranty program only applies to purchased systems, so people who lease their panels won't have the same coverage.

Sunnova

Sunnova is a solar installer operating in 40 states and territories across the US, including Maryland. Through Sunnova, you can buy your solar panels, finance them or sign a solar lease or PPA. This installer offers a service monitoring system, which allows you to track how much energy your system generates.

Sunnova offers solar panels and batteries from well-known brands such as Generac, Tesla and Enphase. You can also purchase home EV chargers and standby generators through Sunnova. The warranty terms from this installer are competitive. The Sunnova Protect warranty covers maintenance, monitoring and repairs for 25 years, and this installer also offers a 10-year roofing warranty.

SunPower Solar

Serving all 50 states, SunPower Solar stands out in the market because it offers some of the most efficient solar panels available. The SunPower Equinox solar panel has an efficiency rating of up to 22.8%. The SunPower Equinox package includes solar panels from Maxeon, Enphase microinverters and mounting equipment. Maxeon and Enphase products are widely used in the industry and have a history of being high quality.

SunPower provides competitive warranty terms. Unlike most competitors, SunPower  guarantees its panels will produce at 92% or more of their original capacity after 25 years. It also offers a battery warranty, which guarantees batteries will retain 70% charge after 10 years, a 12-year roofing warranty and 10-year warranty on its monitoring equipment. 

Tesla

Tesla has become a household name in the solar industry since it broke in the market in 2016. The Tesla solar branch offers traditional solar panels and the Tesla Solar Roof. The specifications, warranty terms and price will depend on which option you choose. 

The Tesla Solar Roof is the more expensive option and comes with a 25-year product warranty and a performance warranty at 95% capacity after five years and 85% after 25 years. Tesla's solar panels, however, have a lower price point than the Solar Roof. The panels are warrantied at 85% capacity after 25 years and have an efficiency rating of between 19.3% and 20.6%. Tesla also offers its Powerwall battery, which is one of the most popular solar batteries available.

Installation factors to consider

Choosing to invest in solar panels is a big investment, whether you purchase your system or lease it. It's important to consider whether solar is the right choice for your home. Some questions to ask yourself beforehand include:

• Is my roof right for solar? The size, shape and slope of your roof will have an impact on your solar system's efficiency. According to the Department of Energy, solar panels will produce more electricity when installed on a roof with a slope between 15 and 40 degrees. You should also consider the age and condition of your roof before installing solar panels. If your roof is older or in need of repairs, it will need to be maintained or replaced before installation.

• Will my insurance cover solar panels? Most standard homeowner's policies cover rooftop solar panels, but you should contact your homeowner's insurance company to check the details of your policy. After installing solar panels, contact your agency to add the panels to your policy.

• Does my neighborhood allow solar panels? Maryland has a solar rights law, meaning homeowner's associations and neighborhoods cannot ban solar panels installations. There may be requirements or regulations in place, however, regarding the visibility, aesthetics or wiring of a solar panel system. Be sure to research the requirements in your area before installing solar panels.

• Is my location right for solar? Maryland normally has about 202 sunny days per year, just under the US average of 205. Maryland receives more rainfall every year compared to the rest of the country, too. While solar panels can still generate electricity in indirect sunlight, they're much more efficient when they get at least 4 hours of direct sunlight per day. Homes in Maryland that receive a lot of rain may not be able to produce as much solar power as a home in Florida, where sunshine is abundant. You should also consider your home's shade coverage when thinking about solar. 

• What if I rent my home? If you rent your home or live in an apartment, you may not be allowed to install solar panels. Check with your rental management company or landlord to confirm if solar is allowed. If not, community solar may be a good alternative. Maryland offers a community solar pilot program, which allows residents who rent their home to benefit from solar power. With community solar, you pay a monthly fee to subscribe to solar energy produced at another location and receive a credit on your energy bills. The subscription fee is set at a lower rate than the value of the credits, meaning you typically come out ahead financially. Maryland's community solar program is geared towards helping low and moderate income residents benefit from solar energy savings, opening up solar to a wider range of households.

• Do you plan to move? If you anticipate moving to a new home in the future, consider whether it makes financial sense to invest in solar panels in your current home. If you move to a new home, you'll likely need to leave your solar panels behind because it can be very difficult and expensive to remove and reinstall them. Solar panels can increase your home's value by up to $15,000, according to the Department of Energy, so your investment can pay off if you plan to sell. If you move to a new home before recouping your investment, however, the increased home value might not be enough to cover the upfront cost.