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Clean Energy Production Tax Credit (Personal)

Eligibility 
Agricultural
Commercial
Multi-Family Residential
Residential
Savings Category 
Photovoltaics
Maximum Rebate 

$2.5 million (total credits allowed during five-year period)

Program Info
Start Date 

01/01/2006

State 
Maryland
Program Type 
Personal Tax Credit
Rebate Amount 

$0.0085/kWh ($0.005/kWh for co-fired electricity)

Provider 
Maryland Energy Administration

Maryland offers a production tax credit for electricity generated by wind, geothermal energy, solar energy, hydropower, hydrokinetic, municipal solid waste and biomass resources. Eligible biomass resources include anaerobic digestion, landfill gas, wastewater-treatment gas, and non-hazardous segregated waste material derived from forest-related resources (excluding old-growth timber and mill residues consisting of sawdust or wood shavings)*, from waste pallets and crates, or from agricultural sources. The list of eligible resources is generally the same as those eligible for the federal [http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US13F&re... renewable electricity production tax credit (PTC)], except the Maryland law contains added provisions related to biomass and biogas technologies.

The tax credit has been in place since 2000, but has been amended several times since the initial enactment. The most recent substantive amendments were made in May 2010 by [http://mlis.state.md.us/2010rs/chapters_noln/Ch_493_hb0464E.pdf H.B. 494] (effective July 1, 2010), which extended the facility in service deadline from 2010 to 2015; set a minimum tax credit limit of $1,000; and made excess tax credits refundable. In May 2011, the definition of eligible waste materials was amended slightly by [http://mlis.state.md.us/2011rs/chapters_noln/Ch_565_sb0958T.pdf S.B. 958] to remove language requiring that such materials be "solid" and "cellulosic".

To qualify, a facility that "primarily uses" eligible resources to generate electricity must (1) be placed in service on or after January 1, 2006, but before January 1, 2016, or (2) generate electricity from an eligible resource that is co-fired with coal and initially begins co-firing an eligible resource on or after January 1, 2006, but before January 1, 2016, regardless of when the original facility was placed in service.

An individual or corporation that applies for and receives certification from the Maryland Energy Administration (MEA) may claim a credit equal to 0.85 cents per kilowatt-hour ($0.0085/kWh) against the state income tax, for a five-year period, for electricity generated by eligible resources. The credit for electricity generated by co-firing is 0.5 cents per kilowatt-hour ($0.005/kWh). As a result of H.B. 494, effective July 1, 2010 the MEA is no longer permitted to issue initial credit certificates for amounts of less than $1,000. At the general renewable energy credit rate of $0.0085/kWh, a facility would need to produce 23,530 kWh annually to meet this minimum. The electricity generated must be sold to an unrelated person during the taxable year. The MEA indicates that a net metering or interconnection agreement is sufficient documentation for this requirement.

Certificates issued by the Maryland Energy Administration will state the maximum amount of credit over a five-year period; the earliest tax year for which the credit may be claimed; and the five-year period during which qualifying electricity generation qualifies for the tax credit. The maximum amount of credit is based on estimated annual energy production during a five-year period, or $2.5 million. The sum of all credits statewide may not exceed $25 million. Formerly, credits exceeding a taxpayer's state income tax for a taxable year could be carried forward to succeeding taxable years for up to 10 years. However, as a result of H.B. 494 credits in excess of income tax for a taxable year are now refundable.

Applications for credit certificates will be approved on a first-come, first-served basis. Certificates may not be issued after December 31, 2015. If, over a three-year period, a taxpayer does not claim on average at least 10% of the maximum credit amount stated in the certificate, the Maryland Energy Administration may cancel part of the certificate. Through March 2010 initial credit certificates totaling roughly $5.1 million had been issued to 10 qualifying facilities. Certificates for three landfill gas facilities and one commercial wind facility made up the vast majority of approvals, with the balance coming from several small scale wind and solar facilities. Further information on certificate applications and other program rules is available from the program website link at the top of this page.

*Eligible mill residues include bark, chips, slabs, and edging, although slabs and edging are usually made into chips.