Maryland Relaunches its 2020 Battery Tax Credit
If you’re a Maryland business or resident, we understand that you want to save money on your energy bill. Solar energy storage systems can provide incredible savings for you. According to the U.S. Department of Energy, solar power is more affordable than ever before. U.S. installations have grown 35-fold to power the equivalent of 12 million American homes. The agency claims the cost of solar energy has dropped nearly 50 percent since 2014.
Are you a Maryland state resident who’s interested in buying a greener, cleaner solar system for your home? A new state tax incentive program can make these systems even more affordable.
The Maryland Energy Administration (MEA) recently announced the launch of its Tax Year 2020 Maryland Energy Storage Income Tax Credit Program. State regulators started this innovative program to encourage residents and businesses to use energy storage systems.
The Energy Storage Income Tax Credit is open to Maryland residential and commercial taxpayers who have installed energy storage systems, such as solar solutions, on their properties during the Tax Year 2020 (January 1- December 31, 2020). Learn how you can claim this tax credit for yourself or your business when you purchase a Mountain View Solar energy storage system.
Background of the Energy Storage Tax Credit Program
The mission of the Maryland Energy Administration is to promote a cleaner, greener, and affordable energy that benefits the state’s residents. Their agency has created programs that lower energy bills and support business energy upgrades.
Maryland authorized the Energy Storage Tax Credit Program in 2017. Officials claim the initiative is the first of its kind in the nation. The legislation promotes interest in the area’s growing energy storage market. It establishes rules for several energy-related technologies, and distributing credits to eligible applicants. The state’s officially launched the program in 2018.
In a released statement, Maryland Energy Administration Director Mary Beth Tung explained why the state began the program.
“Maryland is making our mark in the energy sector with this first-in-the-nation, energy storage tax credit,” Tung said. “This tax credit empowers all Marylanders to support grid resiliency and serves as a model for all other 49 states.”
The revolutionary program covers several storage technologies. It also spurs innovation in the energy storage area. In Tax Year 2019, MEA issued 175 residential and commercial tax credit certificates for energy storage systems totaling more than two megawatts. This stored energy generated was enough to power 3,000 microwave ovens.
How Does the State Award Energy Storage Tax Credit Application Process Work?
The MEA will award a total of $750,000 in tax credits through this legislation. The agency will award certificates on a first-come, first-served basis while funding is available. It has reserved $300,000 for residential taxpayers and $450,000 for commercial taxpayers for this initiative during Tax Year 2020.
To comply with the enabling statute, the MEA will never award more than $750,000 in energy storage income tax credits for a single Tax Year. Current laws authorize the MEA to offer these certificates during Tax Years 2018, 2019, 2020, 2021, and 2022.
The application deadline is January 15, 2021, at 11:59 p.m. EST. The MEA will not accept any missing documentation from Tax Year, 2020 applicants, after January 20, 2021, at 11:59 p.m. EST. Visit the Maryland Energy Storage Income Tax Credit website for details about the process.
Maryland will put eligible applicants on a waitlist when funding allocations become oversubscribed. The state will remove reserves on allocations on July 1, 2020. After this date, eligible residential and commercial applicants on the MEA Wait List will receive funding in the order the state received their information. This agency will not carry over waitlist applications into Tax Year 2021 or future years.
The Maryland Energy Administration is not a tax office, nor does it provide any tax-related advice. If you have any questions, contact the state comptroller or a licensed tax professional.
How Does Maryland Calculate these Incentives?
The state calculates energy storage tax credits differently for systems installed on commercial and residential properties. This incentive reimburses the total installation costs for an energy storage system as follows:
- 30 percent of the total installation costs; or,
- $5,000 for a residential project; or,
- $75,000 for a commercial project.
The agency has compiled a fact sheet containing example calculations. You can find them on MEA’s website about the Energy Storage Tax Credit. Maryland has limited the total amount of tax credits. It has structured and outlined this incentive in compliance with the Annotated Code of Maryland Article – Tax – General 10-719 and Code of Maryland Regulations (COMAR) 14.26.07.
Who is Eligible for this Program?
The program is available for eligible commercial taxpayers who have purchased and installed an energy storage system at a commercial property they own. The state defines a commercial property as a nonresidential property with commercial, industrial, or governmental uses as outlined in their “Commercial Clean Energy Grant” in COMAR 14.26.04.02 (5). These also include multifamily properties.
Residential taxpayers who have purchased and installed an energy storage system at a residential property can also claim the tax credit. Legislators define a residential property as a place that serves as a primary residence, as defined in COMAR 14.26.04.02(18). These include single-family homes, individual units of multifamily properties, and mixed-use facilities.
Residents and businesses can take advantage of this tax credit by purchasing a Mountain View Solar system. Our standard grid-tied solar works by offsetting a portion of customers’ utility bills, which result in monthly savings. Our systems allow you to deposit and withdraw energy into a stored system. You only get billed for what you use over your solar production.
It’s worthwhile to install one of our solar systems on your property. The energy will directly offset your electricity bill by a certain percentage. Eventually, the energy savings help every solar storage system to pay for itself. It typically takes 10-12 years to get a return on your investment. The energy storage tax credit will help you realize the ROI even earlier.
Eligible System Technology and Use
An eligible energy storage system must be installed and completed in Maryland during Tax Year 2020 (January 1 – December 31, 2020). For an energy storage system to be “complete,” it must be fully installed and pass all necessary permit inspections.
Did your business or residence install their energy storage system in Tax Year 2019 (January 1 – December 31, 2019), but final inspection approval was not received until Tax Year 2020? The state will consider the storage system completed in Tax Year 2020. It is still eligible for a tax credit in 2020.
The MEA allows businesses and residences to claim the energy storage tax credit for the following qualifying systems that store the following types of energy:
- Thermal Energy
- Electrical energy
- Chemical Energy
- Mechanical Energy
All energy systems must store energy for at least one of the following purposes:
- To use as electrical energy at a later date; or,
- In a process that offsets electricity use at peak times.
Energy storage systems must meet all federal, state, and local laws. Additionally, it should satisfy all regulations, ordinance, and legally binding requirements. Systems should adhere to all applicable building codes and interconnection with a local electric utility and PJM, if possible.
Additionally, equipment must be certified by a nationally recognized testing laboratory (NRTL) on the U.S. Department of Labor’s, Occupational Safety and Health Administration’s NRTL Program list. A licensed professional should install these systems. They must comply with all applicable building and fire codes. Visit this page for a full list of general conditions.
What Documents Do I Need to Claim the Tax Credit?
Taxpayers must provide the following documents along with their application to the Maryland Energy Storage Income Tax Credit Program.
- Owners must provide proof of real property ownership, if applicable. MEA will review the records on the State Department of Assessment and Taxation’s (SDAT) online Real Property Data Search tool to validate ownership. They will check the primary residence of all residential applicants only.
- Applicants must provide additional documents if a Trust owns their properties. They must provide information that proves the applicant controls the Trust.
- Applicants with agricultural-zoned properties should provide additional documentation, which includes a photograph of the building/structure and the location of the energy storage system. Owners will need to describe how they use the property (either for personal or commercial purposes).
- Individuals should provide itemized invoices showing they have paid for the energy storage system in full. These invoices should outline costs for the energy storage system equipment (i.e. battery system), electrical work, installation, labor, permitting, and Maryland state tax, if applicable. Make sure that the costs associated with the energy storage system, listed above, are separated from those of a renewable energy system (i.e. solar photovoltaic), if possible.
- Persons should provide all required permit numbers (building, electrical, and occupancy) issued by the Authority Having Jurisdiction (AHJ) for your county or municipality and proof of final inspection approval. These inspection reports must include online permit records or a photograph of the final inspection approval sticker issued by the inspection professional representing the AHJ. Owners can find this sticker on the electrical panel.
- Individuals must provide equipment cut-sheets, specification sheets, or system brochures.
- Applicants must provide equipment certifications from a Nationally Recognized Testing Laboratory (NRTL) listed on the U.S. Department of Labor’s Occupational Safety and Health Administration’s NRTL Program.
- Individuals should provide photographs of the fully installed and commissioned energy storage system.
- All application documents verifying the owner had the energy system installed, and it is operational.
Claiming the Tax Credit Certificate
Maryland is only providing a limited amount of available tax credits. Businesses and residents must file their state income tax return electronically for taxable years after December 31, 2012, to claim a Business Income Tax Credit.
- Form 500 for Corporations
- Form 510 and Form 510 Schedule K-1 for Pass-Through Entities
- Form 502 or 505 for Individuals
Additionally, applicants must complete the Business Tax Credit Form 500CR section of the electronic return and include a binary attachment or PDF of the certification received from the Maryland Energy Administration. Please see the Comptroller’s website for additional information regarding filing procedures.
Where Can I Apply for the Program?
The program uses an online application that can be found on the Maryland Energy Storage Income Tax Credit Program web site.
Mountain View Solar (mtvSolar) is one of the most-respected battery storage and solar installation companies in West Virginia. Our company also provides services to several states, including Maryland, Virginia, and Pennsylvania. We install systems in residential, commercial, and municipal areas. Additionally we are a Tesla PowerWall certified installer and have powerwalls in stock now. For a zero-pressure estimate, contact us today!