Maryland Community Solar: The Opportunity for Commercial Property Owners

by | Jun 12, 2024

How Maryland Commercial Property Owners can Increase NOI with community Solar

For Marylanders, especially those that own or manage commercial and industrial properties, solar is the next frontier. Through careful investment and government policy, the state’s making sure that renewable energy is more accessible, and rewarding, than ever.

The Old Line state has long been a leader in renewable energy, pioneering community solar programs that provide clean power to residents and incentives to businesses. Starting with its Community Solar Pilot Program in 2015, Maryland has developed a healthy public market for solar power and proved that development can be beneficial at scale.

Since implementation, Maryland has completed 119 MW of community solar, with 309 MW of projects planned in the pipeline. The state ranks 10th in the nation for growth in small-scale solar power generation, generating 1,283+ GWh of electricity from commercial, industrial, and other sources.

And, with the recent passage of the state’s Brighter Tomorrow Act, Maryland seeks to accelerate solar development by introducing additional incentives to its already-robust program. By making the permitting process easier, offering assistance to underserved adopters, and adding a Solar Renewable Energy Credit (SREC) multiplier for system owners, the state is poised to progress towards its ambitious green goals and set up property owners for positive growth.

Using Community Solar to Increase Property Returns

Energy rate structures and government incentives in Maryland have evolved to a point where community solar programs can be predictably implemented as long-term, cash flow positive investments.

This creates two forms of financial opportunities for property owners:

  1. Owners can invest their own capital (typically a six or seven figure amount) to purchase a solar program that will generate cash flow over the coming 25 years.
  2. Owners can engage a solar partner, who will lease open roof space and pay rent, increasing the net operating income of the property.

Both approaches will increase the cash flow of a commercial property. The simplest, and most capital efficient, is the second option, which essentially functions like adding a new tenant and results in a long-term increase to the property rent roll.

These agreements, otherwise known as solar leases, allow property owners to monetize unused Commercial and Industrial roof space. In addition to generating a new source of rent, solar programs can also be structured to provide discounted energy to on-site tenants, creating an additional financial benefit.

Because the solar system supports a community solar program, its production capacity can exceed the amount that would typically be used on the property. Both tenants and the surrounding community solar subscribers would use the solar energy, meaning more panels, more roof space, and more monthly income for the property’s bottom line.

The SREC Advantages of Community Solar in Maryland

A key part of recent legislation around solar in Maryland has been the expansion of the state’s Solar Renewable Energy Credit (SREC) program, which provides additional financial value to solar programs. Utilities and companies purchase these credits to offset their energy from fossil fuels.

With the passage of the Brighter Tomorrow Act, Maryland increased the value of SRECs by an additional 50%. This adjustment directly impacts the return of solar, which will be seen by property owners in the form of higher rent that can be offered on solar leases.

There are some stipulations to qualify for the SREC program expansion, and systems must be certified by the Maryland Public Service Commission to qualify. A solar partner can handle all the details of satisfying the requirements for a commercial or industrial property.

Maryland Utilities and Community Solar

While community solar is great for Maryland as a whole, the profitability by site depends on the energy rates of the local utility. Generally, properties located in PEPCO, Delmarva Power and Baltimore Gas & Electric will see the strongest financial return on solar programs.

Benefits of commercial solar in Maryland extend beyond increase in property ROI, and have benefits for sustainability as well.

Improving Sustainability Data with a Community Solar Program

In addition to the financial benefit that comes from implementing solar, there is also a direct, positive impact on a property’s sustainability footprint. A solar partner can help with this, providing sustainability reporting and data that can be incorporated into marketing and investor communication efforts.

A solar partner typically can provide:

  • Production reporting: You have detailed views into the solar system’s generation by kWh. Either sent manually or pulled from an API into a sustainability reporting system, this number can inform performance against ESG benchmarks.
  • Energy allocation metrics: The system provides a detailed breakdown of solar energy used by tenants, common areas, and community solar subscribers. This gives unique insights into your property’s Scope 3 emissions, as well as other useful usage info.
  • Sustainability examples: Your solar partner can offer material examples of the climate impact of your system and community solar participation, like pounds of coal not consumed or equivalent tree seedlings planted.
  • Property-wide impact statistics: Participating in community solar can also show side-by-side comparison of your commercial building’s cumulative solar vs grid usage. This allows for an easier understanding of the overall impact on your climate footprint.

Custom data: With open APIs and easy flexibility, partners can adjust community solar programs to report on other unique, site-specific metrics. Sites can use this data to fulfill any reporting requirements to stakeholders.

Old Line State, New Renewable Energy

By passing the Brighter Tomorrow Act, Maryland is making a commitment to build a more sustainable and rewarding future for residents, property owners, and solar partners. By increasing accessibility, opening up new public markets, and increasing the value of SRECs, renewable energy in Maryland is both accessible and financially viable.

When working with a solar partner like King Energy, property owners can participate in community solar and convert unused roof space into revenue.

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