Maryland Solar in 2026: The Honest Picture

Maryland homeowners face a significant shift in 2026: the federal Residential Clean Energy Credit expired at the end of 2025. For most owner-financed systems, this means no federal tax credit. However, Maryland’s state incentives remain robust, and the economics of solar still work for many homeowners, especially those in BGE and Pepco service areas with net metering access.

The state has installed over 175,000 residential solar systems to date, and Maryland’s combination of moderate solar irradiance (4.2 kWh/m2/day), strong state rebates, property tax exemption, and sales tax exemption on equipment keeps solar competitive. The payback period averages 10 years, with 25-year lifetime savings around $32,000 per system.

This guide covers what’s changed, what remains, and how to evaluate whether solar makes financial sense for your Maryland home in 2026.

Average Solar System Cost in Maryland (2026)

A typical residential solar system in Maryland ranges from 6 to 8 kilowatts and costs $24,000 to $29,000 before incentives. This translates to roughly $3.25 to $3.50 per watt after accounting for labor, equipment, permitting, and installation overhead.

Cost breakdown for a 7 kW system:

  • Equipment (panels, inverter, racking): $11,000 to $13,000
  • Labor and installation: $8,000 to $10,000
  • Permitting, inspection, and soft costs: $2,500 to $3,500
  • Total pre-incentive: $21,500 to $26,500

After Maryland’s state rebate (up to $3,000) and BGE/Pepco utility rebates (up to $2,000), net cost drops to approximately $16,500 to $21,500. The property tax exemption and sales tax exemption add another $2,000 to $4,000 in value over the system’s lifetime.

For current regional pricing, see EnergySage’s Maryland solar cost benchmarks.

Real Maryland Homeowner Savings (Sample Scenarios)

Savings depend heavily on your electricity rate, roof orientation, and local incentives. Here are five realistic scenarios:

Baltimore (BGE service area, $0.135/kWh): A 7 kW system generates approximately 8,400 kWh annually. At BGE rates, this saves $1,134 per year. Over 25 years, total savings reach $35,000 (accounting for 2% annual rate increases). Payback: 9 years.

Annapolis (BGE service area, $0.138/kWh): Same 7 kW system saves $1,159 annually. 25-year savings: $36,200. Payback: 9 years.

Columbia (BGE service area, $0.135/kWh): A 6.5 kW system (smaller roof) generates 7,800 kWh annually, saving $1,053 per year. 25-year savings: $32,500. Payback: 10 years.

Frederick (Pepco service area, $0.142/kWh): A 7 kW system saves $1,194 annually. 25-year savings: $37,100. Payback: 9 years.

Southern Maryland (Delmarva Power, $0.128/kWh): A 7 kW system saves $1,075 annually. 25-year savings: $33,400. Payback: 10 years.

These scenarios assume system ownership, state rebates applied, and no major roof repairs during the 25-year period.

Maryland Solar Incentives Still Available in 2026

Federal Tax Credit (Section 25D) - Expired

The Residential Clean Energy Credit under IRS Section 25D expired on December 31, 2025. Homeowners who purchased and had systems placed in service by that date could claim 30% of costs. New owner-financed systems installed in 2026 do not qualify.

The only federal pathway remaining is a third-party-owned lease or power purchase agreement (Section 48E), where the solar company retains ownership and passes tax benefits to itself. Construction must have begun before July 4, 2026. Leases typically offer 10-20% lower electricity rates than grid power, but you do not own the system or claim depreciation benefits.

Maryland Energy Administration Solar Rebate

Maryland’s state rebate program offers up to $3,000 per residential system. Eligibility requires:

  • System size between 2 and 25 kW
  • Installation by a certified Maryland solar contractor
  • Completion of a pre-installation energy audit (or waiver)

This rebate is non-taxable and applies directly to reduce your out-of-pocket cost. Processing typically takes 4-8 weeks after system completion.

Property Tax Exemption

Maryland exempts 100% of the assessed value of solar equipment from property taxes. This exemption applies indefinitely and does not expire when you sell the home. For a $25,000 system in a county with a 1.1% property tax rate, this saves approximately $275 per year, or $6,875 over 25 years.

Sales Tax Exemption

Maryland exempts solar panels, inverters, racking, and related equipment from the 6% state sales tax. For a $25,000 system, this saves $1,500 upfront. This exemption applies only to equipment, not labor.

Utility-Specific Rebates

BGE (Baltimore Gas and Electric): Offers up to $2,000 per residential system through its solar rebate program. Rebates are available on a first-come, first-served basis and may have annual caps.

Pepco (Potomac Electric Power Company): Offers rebates up to $2,000 per system in its service area. Check current availability with your installer.

Delmarva Power: Limited rebate programs; check directly with the utility for current offerings.

Net Metering

BGE and Pepco offer net metering at a 1:1 rate. Excess electricity generated during the day is credited to your account at the full retail rate, offsetting consumption at night or during cloudy periods. This is one of the most valuable incentives for solar economics in Maryland.

Other utilities in Maryland may not offer net metering; some offer “net billing” at a lower rate. Confirm your utility’s policy before installation.

For a comprehensive list of state and local incentives, consult the DSIRE database.

Is Solar Worth It in Maryland Without the Federal Credit?

Without the federal tax credit, solar economics hinge on state incentives, electricity rates, and your time horizon.

For homeowners staying 10+ years: Solar is worth it. The 10-year payback period means you break even before year 11, and the remaining 15 years deliver pure savings. A $25,000 net-cost system (after state rebates) saves $32,000 over 25 years, a 28% return on investment.

For homeowners staying 7-10 years: Solar is borderline. You may break even or achieve modest positive returns, but the margin is thin. Ensure your roof is in good condition and will not need replacement during your ownership.

For homeowners staying fewer than 7 years: Solar is harder to justify. Selling a home with a solar system can add resale value, but the benefit is not guaranteed and varies by market. Leases transfer to new owners more easily than owned systems.

Lease vs. ownership: Leases eliminate upfront cost and shift maintenance risk to the solar company. You typically save 10-20% on electricity costs. However, you forgo the property tax exemption, sales tax exemption, and long-term appreciation. For Maryland homeowners, ownership usually delivers higher 25-year returns if you can afford the upfront cost.

Top Cities for Solar in Maryland

  • Baltimore: Strong solar irradiance (4.1 kWh/m2/day), BGE net metering, high electricity rates ($0.135/kWh). Payback: 9 years.
  • Annapolis: Similar to Baltimore; also serves as a regional hub with good installer availability. Payback: 9 years.
  • Columbia: Central Maryland location with moderate rates and strong solar resources. Payback: 10 years.
  • Frederick: Northern Maryland city with Pepco service and competitive electricity rates. Payback: 9 years.
  • Silver Spring: Suburban Washington, D.C. area; Pepco service, good solar access. Payback: 9 years.
  • Bethesda: High electricity rates and strong solar potential offset higher installation costs. Payback: 8-9 years.

What to Look for in a Maryland Solar Installer

  1. Maryland Certification: Verify the installer holds a current Maryland solar contractor license and is registered with the Maryland Energy Administration. Check the state’s licensing database.

  2. Net Metering Expertise: Confirm the installer understands your utility’s net metering policy (BGE, Pepco, or other) and can optimize system size to maximize credits.

  3. Rebate Processing: Ask whether the installer handles Maryland state rebate paperwork and utility rebate applications. This reduces your administrative burden.

  4. Roof Assessment: Request a detailed roof inspection and condition report. Solar systems last 25+ years; your roof should too. If replacement is needed, address it before solar installation.

  5. Warranty Coverage: Verify equipment warranties (panels typically 25 years, inverters 10-15 years) and workmanship warranties (minimum 10 years). Understand what is covered and what is not.

  6. References and Reviews: Ask for at least three local references from systems installed in the past two years. Check independent reviews on Google, Yelp, and the Better Business Bureau.

  7. Transparent Pricing: Request a detailed quote breaking down equipment, labor, permitting, and incentives. Avoid vague “per-watt” pricing without itemization. Compare quotes from at least three installers.

Get Free Quotes From Vetted Maryland Installers

Solar costs and incentives change frequently. The best way to understand your specific savings is to request quotes from multiple Maryland installers. Most provide free site assessments and custom quotes based on your roof, electricity usage, and local incentives.

When you request quotes, ask installers to:

  • Calculate your expected annual generation using NREL solar resource data
  • Apply all available state and utility rebates
  • Explain the property tax and sales tax exemptions
  • Clarify your utility’s net metering or net billing policy
  • Provide a 25-year savings projection

Compare at least three quotes before deciding. The lowest price is not always the best value; installer reputation, warranty terms, and customer service matter.

Sources for 2026 data: IRS Section 25D guidance, DSIRE state incentive database, Maryland Energy Administration, BGE and Pepco utility programs, SEIA state market data, NREL solar resource maps, EnergySage regional cost benchmarks.