Two bills in the General Assembly this session aim to keep expanding renewable energy in Maryland, and the change could benefit solar installers that have struggled for the past year to sign contracts with homeowners uncertain about how an impending tariff on imported solar panels could change prices.
President Donald Trump and U.S. Trade Representative Robert Lighthizer announced in January a 30 percent tariff on foreign solar cells and modules, which went into effect this month. The threat alone, however, has affected the sale of solar panels in the state during the last year, said Ryan Nicholson, sales manager for the Frederick-based solar company Sustainable Energy Systems.
Since 2016, there has been a 41 percent decline in solar installations in Maryland, a trade group reported.
The tariff is intended to provide relief to U.S. manufacturers from foreign competition for four years, but locally the added cost of imported panels is already cutting into the number of people signing contracts for solar arrays. In addition, since the tariff began, the price per watt of solar energy has increased between 6 and 10 cents — which means the addition of $1,000 or more to the total cost of installing a solar array, Nicholson said.
“Maryland has the potential as a state to step in and soften the blow,” Nicholson said.
State legislators are trying to give the renewable energy industry a boost by increasing the Maryland Renewable Portfolio Standard.
Sen. Brian Feldman (D-Montgomery) submitted the Renewable Energy and Job Development Act to the Senate with 23 co-sponsors, which was cross-filed in the House by Delegate William Frick (D-Montgomery).
The bills would increase the number of Renewable Energy Credits — equal to 1 megawatt-hour of electricity — that utilities operating in the state would be required to purchase so that 50 percent of energy was represented by renewable energy sources by 2030. The bill also includes a 14.5 percent allotment specifically for solar energy.
A separate bill introduced by Delegate Shane Robinson (D-Montgomery) with 47 co-sponsors sets an even more ambitious goal of transitioning the state to 100 percent clean energy by 2035. The bill would require electricity suppliers to meet the standards by purchasing actual renewable energy from solar, wind, ocean energy or small hydroelectric power rather than an equivalent number of credits.
Delegates Karen Lewis Young and Carol L. Krimm, both of Frederick, have signed on to both House bills. Sen. Ron Young has also signed on to the Senate bill.
Lewis Young said she supported both bills because the cost of installing solar has fallen in the past decade and it is still cheaper than wind in most cases. The industry also offers good-paying jobs, she said.
What has been criticized about the legislators’ approach to increasing renewable energy through the Renewable Energy Portfolio is that it also raises the price of electricity.
“I don’t want to see someone who can’t pay for their power now pay more,” Nicholson said.
When electricity rates go up, however, it has historically spurred more people to install solar panels.
When electricity rates are high, the return on investment for a solar array can be achieved in fewer years, he said. And if the current Renewable Energy Credit market stays in place, then the demand for and price of credits increases.
Another difficulty that has been pointed out is that while the goal of the Renewable Portfolio Standard is to increase the amount of renewable energy in the state, that has also not always been the outcome, according to the Maryland Energy Administration.
An analysis of Renewable Energy Credit purchase data by one of the administration’s policy managers in 2017 showed that a significant portion of the cost to comply with the state’s Renewable Portfolio Standard went to out-of-state generation sites. The agency implored the state to take a measured approach to implementing the Renewable Portfolio Standard.
Robinson’s bill would get rid of the credit system, and the Sierra Club has thrown its support behind the bill.
“Our motivation was to support a policy that would be the most aggressive and most effective,” said Josh Tulkin, the director of the Maryland chapter of the Sierra Club.
Rather than take a “baby step” toward increasing the amount of renewable energy in Maryland, the bill would make utilities enter long-term contracts for renewable energy, he said. As written, some renewable energy could still come from out-of-state sources, but an emphasis on offshore wind in Maryland is strongly supported in the bill, Tulkin said.
“It taps into Maryland’s natural assets like solar and offshore wind,” Tulkin said.
Nicholson agreed that the bill was “ambitious and bold,” but he also worried it wouldn’t pass. There is the potential that even if both chambers pass one of the bills, Gov. Larry Hogan could sit on it and veto it at the end of the session. Then, the state would have to wait another year to override the veto, as it did in 2017.
“I’m a pragmatist,” Nicholson said. “I want that bill to get through.”
Since rumor of the tariff reached installers, solar panel distributors have stockpiled panels. This stock has helped smooth the transition into the tariff, but it is possible that the industry has not felt the full impact of the tariff yet, Nicholson said.
Just a few weeks ago, a shipping container destined for the U.S. was crossing the Atlantic Ocean when the tariff was announced. Sustainable Energy Systems had agreed to purchase the panels from the Italian company Peimar, but the shipment wasn’t scheduled to arrive until after the tariff came into effect — raising the cost of the order by $11,000.
Contracts with about 10 local customers had to be changed when the company realized the change was cost-prohibitive and canceled the order, Nicholson said. Then the company was faced with the even more difficult task of finding comparably efficient panels near their quoted prices that were already in the country.
It’s not that consumers are opposed to using American-made panels either.
Solar United Neighbors, an organization that organizes co-ops to help residents go solar, has routinely received bids with U.S.-made panels, said Corey Ramsden, who oversaw Frederick County’s solar co-op last year.
Bids to Solar United Neighbors co-ops typically offered multiple equipment options for the homeowners, including a low-cost panel produced in a foreign country; a U.S.-made panel; and a more expensive, high-efficiency panel.
The cost of the U.S.-made panels typically fell between the lower-efficiency foreign-made panel and high-efficiency models, while the low-cost solar panels generally came from China or another Asian country, Ramsden said from his experience in the industry.
“The prices could certainly change,” Ramsden said.