Maryland’s Renewable Energy Program: More Smoke and Mirrors Than Wind and Solar, New Report Alleges

Maryland’s clean energy ambitions are crumbling under the weight of its policy missteps, environmental advocates suggest in a new report. 

Established 19 years ago, the state’s premium renewable energy program, known as the Renewable Portfolio Standard (RPS), was supposed to remake Maryland’s energy system by replacing fossil fuel sources with renewable electricity.

Instead, it has stalled the growth of Maryland’s renewable energy sector, undermined the transition to fossil-free electricity and funneled billions in public subsidies to out-of-state energy producers with significant consequences for the environment and ratepayers, according to the report from Public Employees for Environmental Responsibility (PEER), a national nonprofit. 

Timothy Whitehouse, PEER’s executive director, said the RPS program is a “well-known problem in the state that people don’t want to talk about.” 

The RPS law required Maryland’s renewable electricity supply to be at 32.6 percent in 2024 and 52.5 percent by 2030. But about 7 percent of the state’s electricity needs were met by noncombustible renewable sources in 2022, the report stated, citing data from the U.S. Energy Information Administration (EIA). 

In its latest update on Jan 16, EIA reported that renewable energy generation “provided 13 percent of Maryland’s total in-state electricity in 2023,” with small- and utility-scale solar power making up for almost half of the state’s renewable electricity generation.

But despite this uptick, “the state will remain far from achieving its goal of getting over 50 percent of its electricity from renewable sources as defined in its RPS,” the PEER analysis concluded. 

The Maryland Energy Administration, tasked with overseeing renewable energy policies in the state, did not respond to repeated requests for comment on whether it concurs with the report’s conclusions. 

The grim findings come as Maryland is grappling with spiking energy costs, a growing budget shortfall and federal policy rollbacks—all posing risks to the state’s climate targets. Gov. Wes Moore’s administration and the legislature, currently in session, are under pressure to chart a path forward that avoids backsliding on climate commitments while managing limited resources and high expectations.

At the heart of Maryland’s renewable energy woes, according to PEER’s analysis, lies a poorly defined Renewable Energy Certificate (REC) system. The incentive program is designed to spur investments and grow the clean energy sector. 

Maryland law requires that all energy providers in the state supply a certain percentage of their electricity in the form of renewable energy. But rather than requiring electricity providers to purchase actual renewable energy for consumers, the state allows them to do so by instead purchasing RECs.

A single REC equates to one megawatt-hour of energy generated from renewable sources and delivered to the grid. When these certificates are sold independent of the actual electricity, they are called “unbundled RECs.” An out-of-state wind farm, for example, can produce electricity used by locals while selling RECs to a Maryland utility, which passes the costs onto ratepayers through electricity bills and can continue to produce power with fossil fuels.

Owning these unbundled RECs allows energy suppliers to market their electricity as “green” or “renewable,” even if it comes from non-renewable sources. Alternatively, energy companies can pay a fee called an alternative compliance payment to Maryland’s Strategic Energy Investment Fund instead of buying RECs. 

The idea that this buying and selling of credits will contribute to expanding renewable energy sources while creating a diverse energy market offering clean, fossil-free electricity did not produce the anticipated results in Maryland, PEER’s analysis said. 

And it has come at a hefty price. Between 2008 and 2023, Maryland ratepayers paid more than $1 billion in subsidies baked into their electricity bills and will likely spend a projected $4 billion by 2030.

Much of the subsidy money went to out-of-state energy producers, with little to show for it back home. “Between 2008 and 2023, we estimate that just under 11 percent of non-solar subsidies went to facilities in Maryland,” PEER said in its report.

The biggest winners? Illinois, Virginia and Pennsylvania, which collectively received almost 60 percent of these subsidies. For instance, one wind farm complex in Illinois raked in $55 million in REC subsidies over nine years—almost four times what Maryland’s own wind facilities received in total.

Another flaw in Maryland’s RPS is its lack of restrictions on which facilities can sell RECs or qualify for subsidies. Unlike some states that require RECs to come from newer renewable energy projects, Maryland has no such requirement. 

Consequently, two thirds of RECs in 2023 came from facilities built before 2008. Only a little over 7 percent were derived from generation units built between 2016 and 2023. This shows that Maryland ratepayers are mostly subsidizing older, already profitable facilities instead of incentivizing new clean energy development, the report stated.

To the dismay of environmental advocates, polluting energy sources like municipal waste incineration, landfill gas and biomass are included in Maryland’s RPS. Trash incinerators, often sited next to overburdened communities, emit more greenhouse gases per unit of electricity than coal. Yet, Maryland counts trash incineration among Tier 1 renewable sources, on par with wind and solar, and has poured hundreds of millions of dollars into these facilities. 

A 2024 analysis by PEER, Clean Water Action and Progressive Maryland revealed that Maryland is set to allocate over $300 million in credits to trash incinerators between 2012 and 2030. These incinerators emit more CO2 per megawatt-hour than any other energy source in the RPS. 

The latest analysis argues that not only is the current RPS unable to meet the goals of increased clean energy generation, it saddles Maryland consumers with exorbitant costs as electricity prices spike and climate change accelerates. 

PEER recommended that the General Assembly overhaul Maryland’s RPS. Mandating power purchase agreements for renewable energy would ensure that ratepayer money directly supports new clean energy, the group said. 

“I think most Maryland residents will pay more for clean energy, but they want to make sure that the program is benefiting Maryland ratepayers and the state’s economy.”

— Timothy Whitehouse, Public Employees for Environmental Responsibility

Also, PEER said, setting stricter rules for REC eligibility—such as subsidy limits and “placed-in-service” requirements to ensure newer projects are the ones receiving credits—could redirect funds toward projects that benefit Maryland communities.

Regional collaboration is another potential solution, the report said. Aligning Maryland’s RPS with neighboring states within the regional grid could address inefficiencies and foster strategic investments in shared renewable infrastructure. Such coordination could maximize both climate and economic gains, PEER said.

Continuing with the status quo isn’t a good option, PEER’s Whitehouse said. “I think the political challenges will grow for Democrats when people realize they’re not getting what they’re paying for,” he said.  

Other states have rules to address the types of problems Maryland is seeing, he added. In New York, most facilities must be built after 2015 to be eligible to sell RECs, he said, whereas California requires actual purchase of renewable energy rather than unbundled RECs. 

“Right now, ratepayers in Maryland are getting clobbered. And I think most Maryland residents will pay more for clean energy, but they want to make sure that the program is benefiting Maryland ratepayers and the state’s economy,” Whitehouse said. “And right now, it’s not happening.”

Michael Gillenwater of the nonprofit Greenhouse Gas Management Institute said the report’s recommendation that any public subsidy should go to generators in Maryland is a legitimate demand but such a policy requirement will likely raise the cost for the local energy suppliers and consumers.  

In his written comments on the PEER report, Gillenwater said that bringing subsidies to local providers “could ​​increase the impact in terms of more renewable energy investment. But it would also have other effects on the grid potentially by distorting new capacity expansion.” All these factors would need to be analyzed before charting a suitable future course of action that takes into consideration regional market dynamics as well as the need for in-state generation, he added.

Matthew Brander, chair of carbon accounting at the University of Edinburgh, said the analysis rightly teased out the issues with Maryland’s current RPS and broadly agreed with the recommendations to make the renewable energy law more receptive to the state’s needs. 

“Another solution that has worked very effectively and efficiently, especially in the U.K., is auctions of ‘contracts for difference’ to project developers—which could be used as an alternative to an RPS,” Brander said, referring to an alternative policy mechanism for incentivizing renewable energy development. Contracts for difference or CfDs refer to a market-based approach where generators are guaranteed a stable revenue stream for the electricity they provide, reducing risk and encouraging investment in renewables.