Renewable Energy Portfolio Standard

A REC has a three-year life during which it may be transferred, sold, or otherwise redeemed. In other words, a REC may be used for compliance during the year of generation and the following two calendar years. Formerly, RECs generated within the PJM region, in states adjacent to the PJM, or delivered into the PJM were eligible to be counted towards RPS compliance. However, this provision was amended in 2008 by H.B. 375 to remove PJM-adjacent states from the geographic eligibility list, effective beginning in 2011.

 

Each electricity supplier must submit a report to the Public Service Commission annually that demonstrates compliance with the RPS. An electricity supplier that fails to meet the standard must pay into the Maryland Strategic Energy Investment Fund (SEIF). The alternative compliance fee schedule, as amended by H.B. 1158  in February 2019, is as follows:

• 4.0¢/kWh for non-solar Tier 1 shortfalls until 2016, and 3.75 c/kWh in 2017 and 2018; 3.00 c/kWh in 2019 through 2023; 2.75 c/kWh in 2024; 2.5 c/kWh in 2025; 2.475 c/kWh in 2026; 2.45 c/kWh in 2027; 2.25 c/kWh in 2028 and 2029; and 2.235 c/kWh in 2030 and later 
• 1.5¢/kWh for Tier 2 shortfalls;
• 45¢/kWh for solar shortfalls in 2008, 40¢/kWh in 2009 through 2014, 35¢/kWh in 2015 and 2016, 19.5 ¢/kWh in 2017, 17.5 c/kWh in 2018, 10 c/kwh in 2019 and 2020, 8 c/kWh in 2021, 6 c/kWh in 2022, 4.5 c/kWh in 2023 and 4 c/kWh in 2024, 3.5 c/kWh in 2025, 3 c/kWh in 2026, 2.5 c/kWh in 2027 and 2028, 2.25 c/kWh in 2029, 2.235 c/kWh in 2030 and later  

Compliance fees paid into the SEIF, which is administered by the Maryland Energy Administration, will be used to fund grant and loan programs for Tier 1 renewable energy resources. Compliance fees for the solar obligation may only be used to support new solar resources in the state. The SEIF replaces the Maryland Renewable Energy Fund, which was repealed by H.B. 368 in 2008. The PSC is required to submit annual reports (see RPS Report)  to the General Assembly detailing utility compliance with the standard. In 2018, S.B. 433 moved the report deadline from February 1 to December 1 of each year. 

The electric supplier can request the Maryland PSC to delay its portion of annual increase of Tier I RPS requirements if actual or projected cost incurred by the electricity supplier for the purchase of Tier I SRECs is greater than 2.5% of the electricity supplier’s total annual electricity sales revenue in Maryland. 

Credit Multipliers: 

 

Initially, the RPS included credit multipliers for wind, solar, and methane. The multiplier for solar was replaced by the 2% solar requirement in 2007. Multipliers for wind and methane remained for facilities placed in service on or after January 1, 2004, although both have subsequently expired.

 

History

Maryland’s RPS was originally enacted in 2004, but has been revised on numerous occasions since that time. The 2004 enactment established a standard of 7.5% Tier 1 renewables by 2019 and 2.5% Tier 2 renewables by 2018 (sunsetting in 2019). Legislation enacted in April 2007 (S.B. 595) added a provision requiring electricity suppliers to derive 2% of electricity sales from solar energy in addition to the 7.5% renewables derived from other Tier 1 resources as outlined in the initial RPS law. The solar set-aside began at 0.005% of retail sales in 2008 and increases incrementally each year to reach 2% by 2020. The set-aside is projected to result in the development of more than 1,250 MW of solar capacity by 2020. In April 2008 H.B. 375 more than doubled the overall Tier 1 requirement and accelerated the compliance schedule. The Tier 2 and solar requirements were left unchanged at this time, but in May 2010 S.B. 277 accelerated the solar compliance schedule and increased solar alternative compliance payment levels for 2011 through 2016. Finally, Maryland enacted S.B. 717 allowing solar water heating systems commissioned on or after June 1, 2011 to qualify as eligible resources for the solar carve-out, effective January 1, 2012. In order to qualify for the standard solar water heating systems must: be commissioned on or after June 1, 2011; not be used soley to heat a pool or a hot tub; and use SRCC OG-100 certified equipment.

Also in May 2011, Maryland enacted S.B. 690 reclassifying waste-to-energy facilities connected to the Maryland distribution grid as Tier 1 resources. Formerly, all waste-to-energy facilities were considered Tier 2 facilities. The legislation also classifies facilities connected to the Maryland distribution grid that use refuse-derived fuel (formerly not specifically addressed) as Tier 1 resources, effective October 1, 2011.In May 2012 Maryland enacted a suite of bills affecting the RPS. The most significant bill, S.B. 791/H.B. 1187, accelerates the solar carve-out compliance requirements by varying degrees beginning in 2013; pushes up the date for the ultimate 2% target from 2022 to 2020; and allows solar water heating energy production measurements for some systems to be estimated under a certification system other than SRCC OG-300 (subject to Public Service Commission approval). The changes also have the effect of reducing the minimum Tier I resource requirements from 2013 – 2021.

Apart from solar-related changes, in 2012 Maryland also enacted S.B. 652/H.B. 1186 allowing geothermal heating and cooling systems commissioned on or after January 1, 2013 that meet certain standards to qualify as a Tier I resource. Finally, in May 2012 the legislature also enacted S.B. 1004/H.B. 1339 allowing thermal energy associated with biomass systems that primarily use animal waste (possibly supplemented by other biomass resources) to qualify as Tier I resources, effective January 1, 2013.