Geothermal REC Frequently Asked Questions
Non-Residential Geothermal Renewable Energy Certification Q&A
House Bill 1007, passed in 2021, created a carve-out in Maryland’s Renewable Portfolio Standard (RPS) Tier 1 for post-2022 residential and commercial geothermal heating and cooling systems. These carve-outs are 0.05% in 2023, 0.15% in 2024, 0.25% in 2025, 0.5% in 2026, 0.75% in 2027 and 1.0% in 2028 and later. The bill also set Alternative Compliance Payment (ACP) payment amounts, among other things. At least 25% of the post–2022 geothermal carve out must come from systems installed on “low income” facilities. These statute requirements are available in §7–701 Annotated Code of Maryland, Public Utilities Article. The following is a list of frequently asked questions.
Q1. What is the difference between a residential and non-residential geothermal heating and cooling system?
A. To qualify for residential renewable energy credits (RECs) only, the geothermal heating and cooling system must be installed in a residential home that is not owned by a business. The system must meet ENERGY STAR standards (see Energy Efficiency Requirements for Geothermal Heat Pumps) and not feed electricity back into the grid. A single residential home qualified as low or moderate income housing is also eligible for RECs under the new carve-out if the system was installed on the property on or after January 1, 2023.
To qualify for non-residential RECs, the geothermal heating and cooling system must be installed in a non-residential facility. Non-residential facilities include commercial buildings and multi-family housing units. Supporting documentation must be provided to prove that the system is not for a single residential home. For more information on non-residential system eligibility, please go to Q3.
Q2. Where do I go to fill out an application for a residential geothermal heating and cooling system?
A. To register for residential RECs, fill out the Geothermal Renewable Energy Facility Application posted on the PSC website as an Excel spreadsheet (download).
Q3. Who is eligible to receive renewable energy credits for non-residential geothermal heating and cooling system?
A. Starting January 1, 2023, a person can receive renewable energy credits based on the amount of thermal energy saved by a geothermal heating and cooling system if the person: 1) Owns and operates the systems; 2) Leases and operates the systems; or 3) Contracts with a third party who owns and operates the systems.
Q4. What can I do if I installed my non-residential geothermal heating and cooling system prior to January 1, 2023?
A. According to Public Utilities Article § 7-704(h)(1), a non-residential geothermal heating and cooling system that was placed in service on or before December 31, 2022 is still eligible for RECs. In 2023, Maryland’s Renewable Portfolio Standard requires 31.9% from Tier 1 renewable generation, including residential and non-residential geothermal systems; at least 0.05% of that portion must be derived from post-2022 geothermal systems.
Q5. What are the criteria for determining whether a non-residential geothermal heating and cooling system was installed after to January 1, 2023?
A. The system must be installed at the property on or after January 1, 2023. Documentation of passed final inspection must be provided to prove the date of installation.
Q6. What are the eligibility criteria for the non-residential geothermal heating and cooling systems?
A. The non-residential geothermal energy facility must be installed:
1) At a commercial building; or
2) At multi-family housing units that qualified as low or moderate income housing on the date the system was installed on the property; or
3) At institutions that primarily serve low or moderate income individuals and families, including i) schools with a majority of students who are eligible for free and reduced prices meals; ii) hospitals with a majority of patients eligible for financial assistance or who are enrolled in Medicaid; and iii) other facilities that serve individuals and families where a majority of those is enrolled in Federal or State Safety Net Programs.
4) A system with a 360,000 BTU capacity is eligible for geothermal renewable energy credits only if the Company installing the system provides for its employees:
• Family-sustaining wages;
• Employer-provided health care with affordable deductibles and co-pays;
• Career advancement training;
• Fair scheduling;
• Employer-paid workers’ compensation and unemployment insurance;
• A retirement plan;
• Paid time off; and
• The right to bargain collectively for wages and benefits
The applicant is required to submit an affidavit that describes the eligibility and provides all supporting documentation (e.g. paystubs) to prove the eligibility. Incomplete applications or missing documentations will cause delay in the processing of applications.
Q7. How do I know if a geothermal heating and cooling system is considered “low or moderate income”, and how do I provide the information in my renewable energy credit application and why is it important to include this information in my renewable energy credit application?
A. Low or Moderate Income (LMI) Housing is affordable housing for a household with an aggregate annual income that is below 120% of the area median income.
To qualify for residential LMI single housing carve-out, your two most recent consecutive pay stubs must be provided to prove the LMI eligibility. To qualify for non-residential LMI carve-out (e.g., multi-family housing units and institutions that serve LMI families), two most recent consecutive pay stubs from each household must be provided to prove the LMI eligibility. Incomplete applications or missing documentations will be rejected and cause delay in the processing of applications.
Q8. How do I apply for certification as a non-residential Geothermal Renewable Energy Facility?
A. Complete the geothermal REC application for non-residential systems on the PSC website (download). Detailed instructions for registering your geothermal heating and cooling system will be located on the first tab of the geothermal application. Submit the completed application, signed affidavit of completeness and accuracy and other required documentation to email@example.com
Q9. What is the deadline for submitting non-residential applications?
A. A deadline for submitting non-residential applications for each calendar year is Dec 31. If a system wishes to receive credit for energy saving in a particular year, it must submit a complete application by the deadline for that calendar year. If the applicant misses a deadline, the system will deem ineligible for credits. No back dated credits will be issued. The applicant will have to re-apply the following year.
Q10. What is the next step after submitting the application?
A. PSC Staff will review the information for the geothermal facility. If due to the complexity of the installation the calculator cannot be used or if the data is determined to be inaccurate or incomplete, an engineering study may be required. All engineering studies accepted must be approved and stamped by a Maryland licensed professional engineer. Approved applicants will be awarded the RECs and issued a Maryland renewable energy facility certification number. Upon certification the applicant must establish a REC account with PJM GATS within 30 days.
Q11. What is PJM GATS?
A. PJM GATS means the Generation Attribute Tracking System (GATS). A Renewable Energy Certificate (REC) is created for every megawatt-hour of electricity generated. GATS enables resource owners to convert power into a tradable RECs.