How Maryland's Aggressive Solar Targets Are Driving Up Commercial Supply Costs
Maryland enforces one of the most aggressive Renewable Portfolio Standards (RPS) in the country, targeting 50% total renewables by 2030, with a hyper-specific "solar carve-out" requiring 14.5% of energy to come from in-state solar by 2028. To comply, retail suppliers must purchase expensive Maryland Solar Renewable Energy Certificates (SRECs) on the open market, embedding an estimated 1.0¢ to 1.5¢ per kWh surcharge into the standard fixed-price electricity contracts of all commercial buyers within the state.
Executive Impact (Maryland Market)
- →Regulatory Squeeze: The RPS penalty (Alternative Compliance Payment) acts as a price floor. If suppliers can\'t find enough MD-specific solar, they pay the state penalty, passing that max cost directly to the commercial customer.
- →Pass-Through Risk: Many "Index" or "Block" supply contracts treat RPS compliance as a "pass-through" charge. Businesses on these products are fully exposed to SREC market volatility.
- →Price Structure: When comparing supplier bids in BGE or PEPCO, CFOs must verify if the quote is "RPS Fully Fixed" or if the supplier has carved out compliance costs to present an artificially low energy number.
The Clean Energy Jobs Act Mechanics
The Maryland legislature designed the Clean Energy Jobs Act (CEJA) to aggressively force renewable development inside the state. Unlike broad national standards where a supplier can buy cheap wind credits from the Texas panhandle, Maryland\'s RPS structure enforces strict geographic borders.
The 14.5% "solar carve-out" dictates that retail energy providers serving load in Maryland (BGE, PEPCO, Delmarva, Potomac Edison) must source an escalating percentage of their power from solar panels physically located in or adjacent to Maryland.
The SREC Supply vs. Demand Problem
Establishing utility-scale solar farms in a densely populated, highly regulated state like Maryland is difficult. Permitting, land costs, and PJM interconnection queue delays have throttled the new supply of solar generation.
Because the state mandated demand (14.5%) outpaces the physical supply of solar panels, the market value of Maryland SRECs (the paper certificate proving a megawatt of solar was generated) remains intensely high.
Commercial Contract Vulnerabilities
Suppliers must factor these SREC purchases into the commercial contracts they write. For a manufacturing plant drawing 10,000,000 kWh annually, the RPS compliance portion of the bill alone can exceed $120,000 a year.
Contract Trap: The "Regulatory Pass-Through"
Some aggressive retail suppliers strip RPS and SREC costs out of their initial "Fixed Price" bid to appear cheaper than competitors. Tucked into the fine print is a clause stating that RPS compliance will be "passed through at market rate." This leaves the buyer holding 100% of the risk associated with a dysfunctional, politically driven SREC market.
Strategic Mitigation
Commercial facility managers in Maryland must demand "Fully Fixed, Fully Bundled" contracts that legally push the SREC procurement risk onto the supplier\'s trading desk. Additionally, large-load facilities should evaluate on-site commercial solar arrays; by generating their own power behind the meter, they effectively bypass the state\'s RPS penalty surcharge entirely.
Source: Maryland Public Service Commission (PSC).
Audit Your Compliance Risk
Are you bearing the risk of Maryland\'s SREC market? Compare fully-bundled fixed-rate contracts across top suppliers.