Brighter Tomorrow Act Paves Way For More Solar Investment in Maryland

Maryland Gov. Wes Moore in May of this year signed the Brighter Tomorrow Act into law. The measure expands the solar facilities that qualify for subsidy, and improve the level of subsidy, and contains certain miscellaneous provisions applicable generally expanding access to subsidies—as well as benefits to workers and persons of low to moderate income.

This law—coupled with ever-more-aggressive renewable portfolio standards—reflects the Maryland legislature’s aggressive efforts to combat climate change by offering deep subsidies to renewable energy generation facilities.

COMMENTARY

The Act expands subsidy created by the Maryland Solar Renewable Energy Credit (SREC) Program. In Maryland, load-serving entities supplying electricity to retail customers (including non-utility retail providers and utilities providing standard offer service) must purchase renewable energy credits to meet the state renewable portfolio standards (RPS), which is the threshold set by the legislature governing the mix of renewable versus traditional energy.

This article is included in “Coming Together for Clean Energy,” POWER’s publication that is aligned with RE+, the largest renewable energy trade show in North America. RE+ is happening Sept. 9-12, 2024, in Anaheim, California. To continue the conversation around clean energy, plan to attend POWER’s EP Week event in Orlando, Florida, Oct. 9-11, 2024.

Solar facilities generating renewable energy also generate SRECs, which can then be sold to load-serving entities for additional revenue to the renewable generating project. The Brighter Tomorrow Act provides that for certain solar electric generation facilities, SRECs will be credited at 3 SRECS for every 2 MWh of renewable energy (150%) generated, instead of the traditional 1:1 ratio, and will be available for the 15-year duration of the enhanced subsidy. While the Act provides the above enhancements, it does not impair the existing net-metering and SREC program in Maryland. The program is capped at 300 MW for systems under 20 KW, and 270 MW for systems between 20 KW and 5 MW.

Projects wishing to take advantage of this 150% SREC subsidy program must have their project and SRECs “certified” by the Maryland Public Service Commission (PSC) after July 1, 2024, by demonstrating compliance with the following qualifications and criteria: (1) Be located in Maryland; (2) Be eligible for inclusion in Maryland’s RPS; (3) Be placed in service between July 1, 2024 and January 1, 2028; (4) Be less than 5 MW total capacity, and (a) 20 KW or less of total capacity; (b) 20 KW-2 MW of total capacity if the system is used for aggregate net metering; or (c) 20 KW-5 MW of total capacity if the system is located on a rooftop, a parking lot canopy or a brownfield site.

Act Expands Real Estate and Property Tax Abatement Subsidy

In addition to inflating the amount of SRECs that can be sold, the Act also abates taxes for solar projects through the following mechanisms:

1. The Act makes non-residential solar energy generating systems approved for a CPCN by the PSC, or approved as a certified SREC (after July 1, 2024), that are constructed on the rooftops of buildings or on parking facility canopies not subject to Maryland state real estate valuation or corporate property taxes.

2. The Act extends the deadline for Community Solar Energy Generating Systems to obtain eligibility for property tax exemption to December 31, 2030, and expands the size of community solar projects that can qualify for property tax exemption (community solar provides a vehicle for electric customers that cannot install solar on their own premises to subscribe to purchase credits at a discounted rate from a solar facility developed in the same utility service territory that the customer can then apply against its electric bill).

3. The Act permits local governing bodies to further reduce assessment of any real property for purposes of property tax if the real property includes a parking facility with a solar energy generating system on its canopy.

Beyond expanding total SREC and providing for tax abatement, the Act contains certain miscellaneous provisions that also impact, and in some instances will increase the cost, of Maryland solar projects:
First, the Act mandates that all solar facilities with a generation capacity of greater than 1 MW must pay workers in excess of Maryland’s prevailing wage threshold.

Second, the Act allows projects up to 5 MW to qualify for net meter aggregation, although this subsidy remains limited to farms, state and local governments, and nonprofits. (Net meter aggregation means paying “behind the meter” for energy produced and consumed at non-contiguous properties owned or operated by the same person.)

Third, the Act provides grants for solar being developed by, or for low- to moderate-income households, or in low- to moderate-income neighborhoods. The Act requires the PSC to create a program and develop low to moderate income criteria to facilitate low to moderate income persons to receive $750 per KW of nameplate capacity for solar, up to $7,500 per system. A third party may apply on behalf of the customer by presenting the contract with the customer and agreeing to undertake various consumer protection and reporting requirements.

Fourth, the Act mandates that local governments adopt automated solar permitting software with wed-based platforms to reduce confusion and increase the tracking of residential permits for residential solar energy systems, residential energy storage systems, and panel upgrades.

Fifth, the Act expands the usable life of an SREC from three years to five years.

Sixth, the Act provides for rights to install barriers on the roof of a house to protect against animal damage to solar panels or the roof of the house.

Seventh, the Act Act expands projects eligible for certain subsidies to 5 MW, projects greater than 2 MW must consider whether they will also need a Certificate for Public Convenience and Necessity from the Maryland PSC, and we can assist with this nuanced analysis.

Although the Act provides far more subsidy than new costs, all new solar developers must be aware of the prevailing wage provision. Developers must closely evaluate their projects against the eligibility criteria for these new subsidies. The Maryland PSC has indicated that it will promulgate rules for the SREC registration program in the near future, but this has not occurred yet. Although this program will be tricky to navigate at first, the level of subsidy likely makes going through the process worth it, particularly for smaller projects.

—Tom Prevas is partner with Saul Ewing in the firm’s Baltimore, Maryland, office.