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Maryland Leading the Charge with Energy Storage Tax Credits

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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Joseph Tirone Energy Lawyer For WOmble
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Joe Tirone’s practice focuses on energy project and infrastructure development, mergers and acquisitions and project finance. Joe is the co-leader of Womble Bond Dickinson’s Energy & Natural Resources Sector.

Joe’s client work comprises structuring, negotiating and drafting a range of contracts and agreements for companies in the energy sector, including complex power purchase agreements, tolling agreements, engineering, procurement and construction contracts, long-term service agreements and energy-related hedging arrangements.

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Mike concentrates his practice on public and project finance. He represents lenders, investors, underwriters, issuers, borrowers, and other participants in taxable and tax-exempt transactions for infrastructure projects, including renewable energy, energy efficiency, manufacturing, transportation, and health and higher education facilities, among others. His experience includes public offerings and private placements of transactions that utilize state and local incentives, federal tax credits and other enhancements.

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Brian practices in the area of corporate law with a focus on mergers and acquisitions, private equity and venture capital financing, and general corporate governance. He has experience representing private equity groups, venture capital groups, investors and investment firms, and public and private companies. Clients benefit from his calm and level-headed approach to transactional and general corporate representation.

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