Solar credit may be broader

Electricity-generating system could qualify for $2,500 tax break

December 14, 2008|By Susan Gvozdas | Susan Gvozdas,Special to The Baltimore Sun

Homeowners in Anne Arundel County could receive another push to go green next year if the County Council approves a tax credit for solar panels.

County Councilman Joshua J. Cohen has sponsored a bill that would broaden the current tax credit for solar energy equipment, including panels that heat water and equipment that generates electricity for a household.

The tax credit would be for 50 percent of the cost of a system or $2,500, whichever is less, said Cohen, a Democrat who represents Annapolis. He said he had hoped for a $5,000 tax credit - which is available in Howard, Montgomery and Prince George's counties - but he does not believe that is affordable during an economic downturn.

"We are looking at a modest tax credit," he said.

Because Cohen wanted to change the wording of the bill to limit the amount that could be applied for, County Council members postponed a vote on the bill at their Dec. 1 meeting. Cohen and county officials are working on the language of amendments to the current bill.

Those amendments could come up for a vote at 7 p.m. Monday at the County Council meeting at the Arundel Center, 44 Calvert St. in Annapolis. If the amendments are approved, a vote on the amended bill would have to wait until the next council meeting. Council members Jamie Benoit of Crownsville, a Democrat, and Ronald C. Dillon Jr. of Pasadena, a Republican, are co-sponsors.

Even though the cost of a solar system can be more than $30,000, the county tax credit could be combined with state and federal tax credits, Cohen said.

Keeping a tax credit at all might seem impractical when county revenue is falling, but Cohen and county officials say the credit is too small to make much of a difference. As of Dec. 1, the county was facing a revenue shortfall of $35.8 million, said Alan Friedman, the director of government relations for County Executive John R. Leopold.

The current solar panel tax credit cost the county a little more than $11,000 in the past 18 months. Eliminating the current tax credit would not change much in the overall economic picture, he said.

"To be good environmental partners, we'll leave the environmental credit," Friedman said.

How much to expand it is being hammered out. The county has a property tax revenue cap, so the tax break would be made up by adjusting the property tax rate. With an assessable tax base of hundreds of millions of dollars, the increase would be so small that "it wouldn't even show up" Friedman said.

Howard, Montgomery and Prince George's counties have capped their tax credits to $250,000 a year. Harford County, which will fund up to $2,500 per household, has a $150,000 cap.

So many Marylanders signed up for state solar energy grants that the Maryland Energy Administration closed the waiting list Nov. 30. The grants applied to systems for thermal heating and electricity generation.

The MEA was able to pay for 80 projects with the roughly $600,000 it received from the Regional Greenhouse Gas Initiative, said Joe Cohen, the program manager for the solar and wind grant program at the MEA. The multistate initiative, which will dole out the money quarterly, is funded by selling emission allowances to utilities.

The MEA was offering up to $3,000 in grants for a solar water heating system, which typically costs $6,000 to $8,000. For a solar electricity system, the state was offering up to $10,000. A typical home would need a system that costs $30,000 to $40,000.

The sharp upturn in demand for the grants was probably because of rising electricity costs and the increase in funding available, Joe Cohen said. Last year, the state had offered a maximum of $3,000 for a solar electricity system.

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