Solar tax credit leaves out electricity

The state gave a $6,750 grant, the federal government gave a $2,000 income tax credit, and although Anne Arundel County has a credit on the books that could have cut about $500 from their property taxes, the local government gave nothing.

"Five hundred dollars wasn't going to make or break the deal, but it certainly helps," Ms. Czarnowski said yesterday. "We're not in the income bracket of people who would normally put solar panels on their house. And without every federal, state and local incentive or tax dollars to help, regular folks just aren't going to do it."

On Monday, the County Council will consider rewording the county's solar tax credit to explicitly include photovoltaic systems like the Cznarowski's, which uses solar panels to generate electricity. County officials have interpreted Anne Arundel's existing solar tax credit to only apply to systems that used solar panels to generate heat to warm water.

"Frankly, it was annoying that they didn't have a photovoltaic credit, and I didn't understand why not," Ms. Czarnowski said.

The exemption has been on the books since 1979, but today the solar energy systems that generate electricity are as common as those used to heat hot water, industry experts said. Yet, the county only approved nine credits in the past six years, saving residents a total of $11,200 in property taxes.

Councilman Josh Cohen, an Annapolis Democrat who brought the bill forward, said some solar panel contractors pointed out that Anne Arundel residents were applying for the credit but being denied. He has referred to his bill a technical one to ensure the tax credit is applied the way it was intended – to encourage people to use renewable energy.

If granted the credit, residents get a one-time exemption on the property taxes levied on buildings up to the cost of the solar energy project. In the Cznarowski's case, it would cut $500 off their bill.

"Every little bit helps, and even though solar electric installations pay for themselves in the long run, not a lot of households have the cash up front to pay for the installation," Mr. Cohen said.

The demand for public assistance has jumped recently. This year, the Maryland Energy Administration ran out of grant money to help defray the cost in a matter of weeks.

Isaac Opalinsky works for Aurora Energy and has helped Central Maryland residents install solar-energy systems for six years.

He said that while the local market has experienced close to 100 percent growth over the past year, it remains small because of finances.

"The number one reason that we get for people not wanting to move forward is that the up front cost is too high," Mr. Opalinsky said.

A typical solar-thermal system costs $7,000 to $9,000 and currently qualifies for the county's tax credit. A typical solar-electric system costs $20,000-$50,000.

Anne Arundel, one of five Maryland counties to offer any form of a solar energy tax credit, does not promote the credit and many in the industry were unaware of it until recently.

"I didn't know that this existed until a few years ago and a customer told me," Mr. Opalinsky said. "He was in the county library researching some other bills and came across it."

While the thermal systems cut down on buying electricity from BGE, a solar-electric system generates enough power to send excess back into the grid.

"Part of the argument for the tax credit is there is a public benefit for having private solar electric systems," Mr. Cohen said. "It puts less stress on the electricity system." He later added: "Even though it's a grain of sand in the big picture, every little bit helps, and to the extent that this tax credit can incentivize more solar in the county, it's well worth doing."

Because Anne Arundel County has a property tax cap, any tax credit has the effect of slightly increasing the tax burden on all the other taxpayers. So far, the bill sponsored by Mr. Cohen and Councilman Jamie Benoit, D-Crownsville, has not met public opposition.

Alan Friedman, director of government relations for County Executive John R. Leopold, said increasing the credit appears to have a "minimal" impact on the county budget.

For Robin and Bill Hembree of Severna Park, the much larger incentives offered by the federal and state governments were more of a lure to install solar panels on their home than the possibility of a credit from Anne Arundel County.

On average, they've seen their electric bill cut in half because they can rely on the sun for the many of their energy needs. And while friends seem interested in following their footsteps, Mr. Hembree said the costs appear to have held them back.

"If you're on the fence, I think the credits push people toward solar," Mr. Hembree said.

The council is scheduled to vote on whether to expand the credit during their 7 p.m. meeting Monday at the Arundel Center, 44 Calvert Street in Annapolis.