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Maryland’s Governor Signs the Renewable Energy Portfolio Standard for Solar Energy and Solar Water Heating Systems Bill

On April 4, 2012, the Maryland General Assembly passed the “Renewable Energy Portfolio Standard for Solar Energy and Solar Water Heating Systems Bill” (House Bill 1187 and Senate Bill 791), with the intent to encourage solar energy development by accelerating the target date for achieving the state’s renewable portfolio standard 2% solar carve-out by two years. On May 22, 2012, Maryland Governor Martin O’Malley signed the new bill into law. Maryland’s recent enactment of House Bill 1187 and Senate Bill 791 will change the landscape of Maryland’s current Renewable Energy Portfolio Standard (“RPS”) by: (1) altering the solar energy carve-out requirements by various percentages over the next ten years (as described below); (2) shortening the overall deadline for Maryland’s 2% solar energy target; and (3) allowing energy from solar water heating systems to be measured via a new certification system. The legislation’s changes are scheduled to take effect on October 1, 2012.

The new legislation accelerates the rate at which energy suppliers must increase the portion of solar energy that they use for their retail energy sales. For example, under Maryland’s existing RPS standard, energy suppliers only have to ensure that .2% of their retail energy sales are generated from solar power in 2013. House Bill 1187 and Senate Bill 791 require that .25% of all retail energy sales in the state must be derived from solar energy in 2013. Likewise, from 2014 to 2020, the new legislation sequentially accelerates the minimum solar energy requirements imputed on energy retailers at a faster rate than the current regime’s RPS. The specific changes to Maryland’s RPS standard over the next decade are illustrated by the graph below.

Additionally, the new legislation shortens Maryland’s overall solar energy deadline by two years. Maryland’s current law provides that at least 2% of all retail energy sales in the state must be derived from solar energy by 2022. The new legislation alters Maryland’s current goal by requiring the 2% mark to be achieved by 2020. Thereafter, the minimum solar energy percentages imposed on energy suppliers flatten out at 2%. Furthermore, the legislation clarifies that the solar energy requirements used to reach Maryland’s goal will only apply prospectively. The legislation states that the law may not be applied or interpreted to have any effect on any energy contracts that exist before the law takes effect on October 1, 2012.

In addition to changing Maryland’s solar energy carve-outs, the new legislation provides more flexibility for energy production measurements. Currently, the energy generated and utilized by residential solar water heating systems can only be measured by meters that adhere to the standards of the International Organization of Legal Metrology or measurement systems that are certified to the OG-300 standard of the Solar Ratings and Certification Corporation. The new law is broader in this regard because it allows measurements to be taken by systems that are approved by the Public Service Commission (“PSC”) or an equivalent body that the commission approves.

A copy of Senate Bill 791 is available here.

A copy of House Bill 1187 is available here.

         Graphical Depiction of Maryland’s Legislative Changes