Maryland leading the charge with energy storage tax credits

by Womble Bond Dickinson
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On January 1, 2018, the Maryland Energy Administration (MEA) kicked off a program designed to encourage installation of energy storage systems in the state of Maryland. This program comes on the heels of supporting legislation enacted last year.

The program is accessible to residential and commercial taxpayers who install a qualifying energy storage system on their property during the 2018 tax year. A qualifying system is a project that can store electrical energy, mechanical energy, chemical energy (including electrochemical energy), and thermal energy that was once electrical energy. Such systems must store energy for use as electrical energy at a later date, or in a process that offsets electrical use at peak times.

The tax credit is calculated to be the lesser of US$5,000 for a residential project, US$75,000 for a commercial project, or 30% of the total installation cost. The unused amount of the credit for any taxable year may not be carried over to any other taxable year.

Under the program, the MEA can award up to US$750,000 in total energy storage tax credits for the 2018 tax year. Credits are awarded on a first come, first served basis, and are divided into two buckets. Residential taxpayers apply toward a US$225,000 reserve, and commercial taxpayers apply toward a US$525,000 reserve.

If one of the reserve buckets runs out of available tax credits, the MEA will institute a waitlist so long as the other reserve bucket has unawarded credits available. Credit assignments to waitlisted applicants will commence on October 1, when the reserve designations are removed. The waitlist will not carry over into the 2019 tax year, and the reserve bucket limits will not be increased for any single tax year.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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