Pepco Solar: Two Territories, Different Incentives
Pepco (Potomac Electric Power Company) serves approximately 900,000 customers across Washington DC and suburban Maryland, including Montgomery County and Prince George's County. While the utility is the same, solar incentives differ significantly based on whether you're in DC or Maryland.
Net metering: Full retail rate (both DC and MD)
Electricity rates: $0.12-$0.15/kWh (moderate)
Solar production: 1,250-1,350 kWh per kW annually
Best incentive: DC SREC-II ($300-$400/SREC)
Payback period: 5-7 years (DC), 8-10 years (MD)
The honest truth: Pepco's rates are moderate compared to utilities in California, Massachusetts, or the Northeast. What makes solar work here—especially in DC—are the incentives. Without DC SRECs, the math is decent but not amazing. With them, DC is one of the best places in the country to go solar.
Washington DC: The SREC-II Advantage
Why DC Solar Is Special
Washington DC has aggressive renewable energy goals: 100% renewable by 2032. To hit these targets, DC created one of the most valuable SREC (Solar Renewable Energy Credit) markets in the country. For homeowners, this means extra income on top of net metering savings.
Value: $300-$400 per SREC (1 SREC = 1,000 kWh produced)
Typical system: 7kW produces 8-9 SRECs/year = $2,400-$3,600 annually
Duration: SRECs available for 15 years from system installation
How to sell: Through aggregators like SRECTrade, Sol Systems, or direct contracts
DC Solar Savings Breakdown
| Income Source | Annual Value (7kW system) | Notes |
|---|---|---|
| Net metering savings | $1,100-$1,400 | Full retail credit (~$0.13/kWh) |
| SREC-II income | $2,400-$3,600 | 8-9 SRECs at $300-$400 each |
| Total annual value | $3,500-$5,000 | Excellent economics |
With $3,500-$5,000 in annual value from a system costing $18,000-$22,000 (after any applicable incentives), DC homeowners can see payback in 5-7 years. That's better than most states, including some with higher electricity rates.
DC Additional Incentives
- Property tax exemption: Solar systems exempt from DC property tax assessment
- Solar For All: Low-income program providing free or reduced-cost solar
- No sales tax on solar: DC doesn't charge sales tax on solar equipment
Maryland Side: State Incentives
Maryland Solar Programs
Maryland doesn't have DC's lucrative SREC market, but it offers solid incentives that improve solar economics:
Property tax exemption: 100% exemption for residential solar
Sales tax exemption: Solar equipment exempt from 6% sales tax
Net metering: Full retail rate with annual rollover
Maryland vs. DC Comparison
| Factor | Washington DC | Maryland (Pepco area) |
|---|---|---|
| Net metering | Full retail | Full retail |
| SREC program | SREC-II ($300-$400/SREC) | No state SREC market |
| State grant | None (SRECs instead) | Up to $1,000 |
| Property tax exemption | Yes | Yes |
| Sales tax exemption | Yes | Yes |
| Annual value (7kW) | $3,500-$5,000 | $1,100-$1,400 |
| Typical payback | 5-7 years | 8-10 years |
Net Metering: How Credits Work
Pepco Net Metering Rules
Both DC and Maryland offer favorable net metering through Pepco:
| Feature | DC | Maryland |
|---|---|---|
| Credit rate | Full retail (~$0.13/kWh) | Full retail (~$0.12-$0.14/kWh) |
| Monthly rollover | Yes, indefinitely | Yes, indefinitely |
| Annual true-up | Excess paid out at avoided cost | Credits typically roll over |
| System size limit | 100% of annual usage | 200% of annual usage |
| Aggregate cap | 10% of peak demand | 1,500 MW statewide |
Understanding Your Pepco Bill
Your Pepco bill includes several components:
- Generation charge: Electricity supply (~50-60% of bill)
- Distribution charge: Pepco's delivery infrastructure (~30-35%)
- Customer charge: Fixed monthly fee (~$7-$12)
- Taxes and fees: Various local/state charges (~5-10%)
Solar credits offset the generation and most distribution charges. You'll still pay the customer charge even with 100% solar offset.
Realistic Savings for Pepco Customers
DC Homeowner Example
Assumptions: $150/month bill, 7kW system, SREC-II participation
| Financial Factor | Cash Purchase | PPA/Lease |
|---|---|---|
| System cost | $21,000 | $0 down |
| Net metering savings/year | $1,300 | ~$650 (split with provider) |
| SREC income/year | $2,800 | Goes to PPA provider |
| Total annual value | $4,100 | ~$650 |
| Payback period | 5-6 years | Immediate (no investment) |
| 25-year value | $80,000+ | $15,000-$20,000 |
Maryland Homeowner Example
Assumptions: $150/month bill, 7kW system, Maryland state grant
| Financial Factor | Cash Purchase | PPA/Lease |
|---|---|---|
| System cost | $21,000 | $0 down |
| Maryland grant | -$1,000 | Goes to provider |
| Net cost | $20,000 | $0 |
| Annual savings | $1,300 | ~$400-$600 |
| Payback period | 9-10 years | Immediate |
| 25-year value | $30,000-$35,000 | $10,000-$15,000 |
Note: PPA/lease options still have the 30% federal credit (48E) through 2027, which providers pass along as lower rates. This can make PPA attractive for Maryland customers who can't or don't want to pay cash upfront.
Best Strategy for Pepco Customers
For DC Customers
- Prioritize cash purchase if possible: Keeping SREC income makes a huge difference
- Size for 100% offset: DC's full retail net metering means no penalty for overproduction
- Set up SREC sales early: Register with an aggregator before installation completes
- Consider SREC contract vs. spot: Contracts lock in price; spot market can be higher but volatile
- Skip the battery (for now): With full retail net metering, batteries don't add much financial value
For Maryland Customers
- Apply for the Maryland grant early: Funding is limited and first-come, first-served
- Compare PPA vs. cash carefully: Without SRECs, the PPA value gap is smaller
- Size appropriately: Maryland allows up to 200% of usage, but oversizing wastes money
- Consider your timeline: 9-10 year payback means solar works best if you're staying long-term
- Get multiple quotes: Price variation is significant in the MD market
For Both Territories
- Summer storms matter: The DC/MD area gets significant storms. Consider battery for backup even if financial ROI is limited
- Check roof condition first: Older homes in established neighborhoods may need roof work before solar
- Historic district rules: Parts of DC and older MD communities have appearance restrictions
- HOA approval: Get written approval before signing contracts
Frequently Asked Questions
How long do DC SRECs last?
DC SREC-II credits are generated for 15 years from your system's installation date. After that, you still benefit from net metering savings, but the SREC income stops. Plan your financial projections accordingly.
Can I sell SRECs myself or do I need an aggregator?
Technically you can sell directly, but most homeowners use aggregators like SRECTrade, Sol Systems, or their installer's program. Aggregators handle paperwork, find buyers, and typically charge 3-5% of SREC value. It's usually worth it for the simplicity.
What happens if I move?
Solar systems transfer with the home. In DC, you can often transfer SREC contracts to the new owner or negotiate them as part of the sale. Solar generally adds 3-4% to home value, which more than covers system cost in most cases.
Does Pepco have time-of-use rates?
Pepco offers optional time-of-use rates, but most residential customers are on standard rates. Unlike California, there's no TOU requirement for solar customers. The standard rate works fine for most solar systems.
Are batteries worth it with Pepco?
Financially, batteries are harder to justify with Pepco's full retail net metering. You're not losing value on exports like in California. However, the DC/MD area experiences summer storms and occasional extended outages. If backup power matters to you, batteries provide peace of mind that's hard to quantify in dollars.
What's the permit process like?
DC permits typically take 2-4 weeks through DCRA. Montgomery County and Prince George's County each have their own processes, usually 2-6 weeks. Your installer handles permitting, but factor this into your timeline. Pepco interconnection adds another 2-4 weeks after installation.
Questions About Pepco Solar?
DC SRECs, Maryland incentives, or net metering details—ask our AI about your specific Pepco situation.
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