Maryland General Assembly Accelerates Solar Energy Requirements in Renewable Portfolio Standard

Maryland General Assembly Accelerates Solar Energy Requirements in Renewable Portfolio Standard

By J. Joseph "Max" Curran, III and Tyler C. Pepple

Summary

On April 4, 2012, the Maryland General Assembly passed legislation intended to accelerate the development of solar power over the course of the next decade.

In an effort to support Maryland's nascent solar industry, the Maryland General Assembly, on April 4, 2012, passed legislation to accelerate increases in the solar energy carve-out in Maryland's Renewable Portfolio Standard ("RPS"). Senate Bill 791 and its companion, House Bill 1187, passed both chambers and the legislation is expected to be signed quickly by Governor Martin O'Malley.1 Senate Bill 791 may be viewed here.

The legislation, which received little attention during the 2012 General Assembly session, modifies the minimum required percentage of retail electricity sold by electricity suppliers in Maryland that must be derived from solar energy. Beginning in 2013, solar energy must comprise 0.25 percent of all retail energy sales in the state, an increase of 0.05 percent from the current law. These percentages steadily accelerate over the percentages in the current law until, in 2020, solar energy must comprise 2 percent of the total retail energy sales in the state, up from the current 1.5 percent. The new law retains the current law's 2 percent cap for the solar carve-out, which the current law reaches in 2022. Thus, under the new law, minimum solar energy sales remain at 2 percent from 2020 through 2022. These changes are prospective only and do not apply to contracts signed before the legislation takes effect, on October 1, 2012.

Through the accelerated solar RPS percentages, the legislation aims to provide additional incentives for the continued development of solar generation in the state over the next decade. New solar developments – including a 20-MW facility owned by First Solar, a 16-MW facility owned by Constellation Energy (now Exelon), and continued construction of smaller solar projects – are already sufficient to meet the current law's requirements until 2018, according to Maryland's Long-Term Electricity Report, though that report also projects that current build-out is only sufficient to meet 50 percent of the ultimate 2 percent standard. It has been in part due to this increased construction that prices for solar renewable energy credits ("SRECs") in Maryland have plummeted to 50 percent of the Alternative Compliance Payment, down from an average of between 76 percent and 86 percent. The legislation's increased solar requirement is intended to positively impact Maryland’s SREC market in future years.

1. SB 791 was sponsored by Senator Garagiola; HB 1187 was sponsored by Delegates Jameson, Barkley, Barnes, Barve, Feldman, Hershey, Hucker, Kramer, Love, Minnick, Schuh, and Vaughn.

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