Financial Incentives for Renewable Energy in Maryland

Residents of Maryland who are considering the installation of a renewable energy system can take advantage of various financial incentives to offset part of the cost. You can claim a clean energy production tax credit on your Maryland state income tax return. There are grants from the Maryland Energy Administration for solar, wind and geothermal systems. And several counties offer credits against local property taxes for renewable energy systems.

Clean energy production tax credit

Maryland residents who install a renewable energy system at home, at their business, in a multi-family residential property, or on a farm can claim a production credit on their Maryland state income taxes. Qualifying renewable energy systems include solar, wind, hydroelectric, geothermal, open and closed-loop biomass, municipal solid waste, and small irrigation. The credit is 0.85 cents per kilowatt hour and 0.50 cents per kilo-watt hour for electricity generated from co-firing a qualified resource with coal. The credit can be claimed for a five-year period.

To qualify for the credit, you must first apply for an Initial Credit Certificate with the Maryland Energy Administration. The certificates are issued on a first-come, first-served basis until December 31, 2010. You can download the application from the Maryland Energy Administration website at http://energy.maryland.gov under Clean Energy Production Tax Credit.

When the credit is approved, the Initial Credit Certificate will show the maximum amount of the credit you can claim over five years, according to estimated annual energy production based on the information you provide in your application. You cannot claim more than 20% of that total amount in any one year. If the credit exceeds your tax liability for the year, you can carry forward the excess credit for up to ten years.