Renewable Energy in the States: Maryland Pt. I – Georgetown International Environmental Law Review

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Renewable Energy in the States: Maryland, Pt. I

By Sam Eckland, Staff Contributor

The following memo provides an overview of the solar carve-out of the state of Maryland’s renewable portfolio standard (RPS) and its impact on recent solar growth on the state. Part I outlines the growth of RPS, and explains the credits and incentives which ensure compliance with the standard. Part II provides a history of solar capacity in Maryland, gives an overview of the market, and concludes with a recommendation for potential investment in solar projects sited in Maryland.

The 2007 restructuring of the RPS to include a solar-specific requirement, supplemental incentives including cash grants and net metering, and a stable solar renewable energy credit (SREC) market have led to growing demand for distributed PV generation in Maryland. These strong policy signals and stable pricing make Maryland an attractive place for distributed solar investment over the next decade.

“The strong policy signals and stable pricing make Maryland an attractive place for distributed solar investment.”

Maryland’s Renewable Portfolio Standard (RPS) requires 20 percent of the state’s energy to come from “Tier 1 renewable sources”[1] by the year 2022. Included in this 20 percent requirement is a solar energy-specific requirement for 2 percent of total generation by 2020, estimated to amount to about 1,200 MW.[2] The State enforces the RPS through an SREC system whereby electricity suppliers purchase the requisite amount of credits from renewable energy producers.

Evolution of Solar in RPS

As originally designed in 2004, the RPS included credit multipliers for electricity generation from solar, wind, and methane sources.[3] But finding the multiplier to be an insufficient incentive to develop solar, the Maryland legislature amended the RPS in 2007 to mandate a solar specific carve-out: 0.005% of retail sales in 2008 with annual step increases to 2% by 2020.[4] Since the 2007 amendment, Maryland’s own solar energy capacity has increased 173,000 percent from .1 MW to 173 MW.[5]

Solar Renewable Energy Credits and Compliance

To comply with the annual solar mandate in the RPS, energy suppliers must develop their own projects or purchase SRECs on the open market. To create an SREC a solar energy producer must first apply to the Maryland Public Service Commission for certification.[6] Once certified by the State, the producer can bring its generation to market by directly or indirectly (via an aggregator/offtaker) registering their source with the PJM Generation Attribute Tracking System (GATS).[7] Accordingly for each MW produced, a SREC is created, which energy suppliers may then purchase either directly from the producer, or through auction and exchange platforms.[8] Under the Maryland RPS, a SREC lasts for three years and is fully assignable.[9]

Energy suppliers must submit annual reports to the Maryland Public Services Commission detailing compliance with the requisite purchase of SRECs.[10] In the event a supplier has not met its annual SREC requirement, it must pay an alternative compliance price (“ACP”) according to the kWh difference to the Maryland Strategic Energy Investment Fund.[11] To reinforce the solar carve-out, the Maryland legislature set a stricter ACP for SREC shortfalls than for general RECs; while non-solar shortfalls cost $.04/kWh, SREC shortfalls cost $.40/kWh in 2014, with successive $.05 decreases every two years until it stabilizes at $.05/kWh in 2023.[12] The effective $400/MW ACP far exceeds the current Maryland SREC price bid price of around $132/MW.[13] Accordingly the ACP strongly incentivizes near-term development and interconnection of solar resources, as utilities and other electric suppliers must otherwise pay three times the cost.

“The ACP strongly incentivizes near-term development and interconnection of solar resources…”

Additionally, since January 1, 2012, Maryland energy suppliers must purchase SRECs from in-state resources, and may only purchase RECs from other PJM-interconnected resources if no Maryland-based SRECs are available.[14] Correspondingly, in-state generators must first offer their SRECs for sale to Maryland energy suppliers, and only after ten days may generators sell to other buyers.[15] This policy drives demand by Maryland electric suppliers, effectively ensuring offtake for Maryland solar energy producers, while enhancing supplier compliance with a right of first refusal.

Parallel Incentives: Clean Energy Grants and Net Metering

In addition to creating demand and a marketplace for solar energy through the RPS, Maryland supports the program through grants to mitigate the upfront costs of solar system installation. Money collected from the shortfall penalty is entered into the Strategic Energy Investment Fund, which funds, among other projects, commercial and residential clean energy grants for solar installation.[16] Commercial solar PV projects may receive $60/kW for installed range capacities less than 100 kW, and $30/kW for installed range capacities above 100 kW.[17] Residential solar PV projects sized from 1-20kWs are eligible for a flat $1,000 grant, though as of November 2013, leased systems are ineligible for this grant.

“Maryland’s net metering law enables producers to offset their residential or commercial energy consumption, and promotes distributes solar generation…”

Once systems are interconnected to the grid, Maryland’s net metering law—enacted in 1997 and amended several times since to reflect changes in technology—enables producers to offset their residential or commercial energy consumption, up to 2 MW.[18] The law further promotes distributed solar generation through its authorization of flexible aggregate metering and virtual aggregate net metering provisions, enabling more meters and more customers to share in the benefits of a solar offset.[19]

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Part II will provide a history of solar capacity in Maryland, give an overview of the market, and conclude with a recommendation for potential investment in solar projects sited in Maryland.


[1] MD Public Util. § 7-705. Tier 1 renewable sources include, but are not limited to wind, solar, geothermal, waste-to-energy, tidal, and small-scale hydroelectric.
[2] Maryland Public Services Commission, “Solar Energy Progress,” http://energy.maryland.gov/solar.html.
[3] DSIRE, “Maryland Renewable Portfolio Standard.” http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=MD05R
[4] Id.
[5] StateStat, “Increase Maryland’s In-State Renewable Generation to 20% by 2022.” https://data.maryland.gov/goals/renewable-energy.
[6] Maryland Public Services Commission, “Solar PV Frequently Asked Questions.” http://webapp.psc.state.md.us/intranet/ElectricInfo/home_new.cfm.
[7] PJM Environmental Information Services, “About GATS,” http://www.pjm-eis.com/getting-started/about-GATS.aspx
[8] PJM Environmental Information Services, “How Do I Sell RECs?” http://www.pjm-eis.com/getting-started/how-do-I-sell-recs.aspx
[9] DOE, “Renewable Portfolio Standard: Maryland.” http://energy.gov/savings/renewable-energy-portfolio-standard.
[10] MD Public Util. § 7-705.
[11] Id.
[12] Id.
[13] SRECTrade, “Maryland SREC Market Analysis.” http://www.srectrade.com/ (tool embedded in homepage).
[14] Lori Bird, et al., National Renewable Energy Laboratory, “Solar Renewable Energy Certificate (SREC) Markets: Status and Trends.” http://apps3.eere.energy.gov/greenpower/pdfs/52868.pdf
[15] DSIRE, “Maryland Renewable Portfolio Standard.” http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=MD05R
[16] DOE, “Renewable Portfolio Standard: Maryland.” http://energy.gov/savings/renewable-energy-portfolio-standard.
[17] Maryland Public Services Commission, “Commercial Clean Energy Grant Program.” http://energy.maryland.gov/Business/cleanenergygrants/.
[18] Maryland Public Service Commission Working Group on Net Metering, “A Guidebook on Net Metering in Maryland.” http://www.universityparksolar.com/Meter/MD%20NM%20Guide%20DRAFT%206-7-2013.pdf.
[19] Id.

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