Introduction

So far in this series, we have explored Maryland’s renewable energy landscape and the costs of climate inaction. As we move forward, our focus is shifting to solutions. Expanding clean energy development in Maryland to maximize in-state clean energy generation is key to our path forward. In this post, I’ll outline a key piece of legislation being introduced in the 2025 legislative session that will help to build as much clean energy as possible in Maryland while prioritizing reliable, affordable electricity for all Marylanders.

This comprehensive energy legislation, called the Abundant, Affordable Clean Energy (AACE) Act, will increase clean energy generation within Maryland through solar, wind, and storage while also introducing  robust ratepayer protections to try to keep electricity rates affordable for Maryland residents. 

Addressing Maryland’s Energy Demands

The AACE Act is a crucial step in addressing Maryland’s growing energy concerns. The rise of new industries, including artificial intelligence, data centers, crypto mining, and cannabis cultivation, is expected to dramatically increase energy demand, placing a strain on the state’s existing energy infrastructure. Without action, Maryland’s grid capacity will struggle to meet these demands while keeping energy rates affordable and achieving our clean energy targets. In addition to increasing in-state clean energy generation and the capacity of our grid, it is equally important to do so in a way that protects and creates family-supporting local jobs, builds health and wealth across the state, and incorporates labor standards and supplier diversity into all projects. 

Abundant, Affordable, and Clean Energy

The abundant, affordable, and clean aspects of the bill work together to position Maryland to meet growing concerns about rising energy costs and increasing electricity demand as well as build an energy system to meet the climate crisis. 

For the “abundant” element, the AACE Act will generate more energy within the state of Maryland and increase the storage capacity of the energy grid, including strategies to “fast track” storage being built to help meet our state’s goal of 3000 MW of storage by 2033. Namely, the AACE Act will put emergency measures in place to begin building battery storage and utility-scale solar quickly, including procurement for 1600 MW of utility-scale storage projects to exit the PJM queue within the next 2 years. Expansion of storage is the quickest way to respond to resource adequacy challenges in the state and reduce capacity prices. These solutions will also help prevent power outages. Additionally, The AACE Act supports the relicensing of the Calvert Cliffs nuclear power facility, which supplies up to 40% of the electricity produced in Maryland. The AACE Act seeks to build reliability and resiliency in Maryland’s grid with the rapid deployment of battery storage.

The “affordability” aspect focuses on protecting ratepayers, making procurement of clean energy more competitive and efficient, and improving Maryland’s energy independence. One key strategy in the AACE Act is to create a structure for high-energy use industries, such as data centers, to support reduced ratepayer impact of their energy use. Another strategy the AACE Act introduces includes using the money utilities must pay when they cannot meet clean energy requirements, called alternative compliance payments (ACPs), and returning this money directly to ratepayers through an escrow account. In 2023, the total amount of ACPs was over $320 million.

Finally, the “clean” aspect of the AACE Act is about expanding clean energy generation, particularly through solar projects in Maryland. Building more clean energy in state will reduce the need to build more transmission lines which import energy from other states, and help meet the state’s clean and renewable energy goals. Specifically, the AACE Act improves how Maryland invests in solar energy and  sets up a new incentive model, based to some extent on New Jersey’s model, which amends the solar renewable energy credit (SREC 2) process. 

Under this revised process, utility-scale solar will participate in a competitive procurement, which is essentially where solar power systems connected to the state’s energy grid will compete for contracts. Any money earned from energy sales will then be returned to customers’ electricity bills. The main goals of doing this are to ensure there is enough energy to meet Maryland’s needs, improve the reliability of the power supply, and ensure that the electricity is affordable. Additionally, rooftop solar projects will be eligible for SREC 2s established through an administratively determined process, which the Public Service Commission will conduct at least once every 3 years. This whole SREC 2 process is likely to increase the solar energy developed in the state to 3 GW of utility-scale solar and 3 GW of rooftop solar by 2035.

To that end, the AACE Act also incentivizes and reorganizes the renewable portfolio standard (RPS) to prioritize in-state solar, wind, and storage. Separate and complementary legislative proposals in 2025 will alter the definition of renewable energy sources for the RPS, excluding trash incineration—an important step to help “clean up” the RPS so it includes only those energy sources that emit zero pollutants and limit harmful health and environmental impacts. By implementing these measures, Maryland will be on a better track to achieve its RPS goal of having renewable energy account for 50% of the state’s electricity sales by 2030. 

Challenges with the Current Grid and the Role of PJM Interconnection

Maryland is part of an electricity grid shared by 13 states, which is managed by an organization called PJM Interconnection. PJM is responsible for ensuring that there is a sufficient and affordable energy supply across this region. However, in times of high demand, when PJM is concerned about the grid’s ability to generate enough electricity, it increases capacity prices. This typically leads to higher costs for ratepayers on their utility bills.

PJM has struggled with managing new electricity generation effectively, particularly when it comes to integrating wind and solar energy into the grid. In fact, PJM has done worse than any other grid in the nation in this regard, with a massive backlog of clean energy projects waiting to connect to the grid. This backlog has become so severe that since 2020, PJM has stopped accepting new project proposals.

As a result of PJM’s inefficiencies and inability to deploy new energy generation, capacity prices are expected to increase by 800% this year, which will negatively impact every ratepayer in Maryland. The AACE Act, however, provides a solution by rapidly deploying more in-state solar, wind, and battery storage. This will help lower capacity prices and ensure a more reliable and affordable energy system for the state because it reduces reliance on external sources of energy, reduces the probability of costly capacity increases in the PJM region, and ensures that excess renewable energy generated during off-peak hours can be stored and utilized during peak demand times, mitigating the impact of capacity price increases. 

Conclusion

The AACE Act is a crucial piece of legislation that addresses Maryland’s pressing energy needs while ensuring an energy future that is abundant, affordable, and clean. By increasing the state’s clean energy generation, improving grid capacity, and protecting ratepayers, the AACE Act will help position Maryland as a leader in the clean energy transition, all while supporting local jobs and economic growth.

 

Sources and notes:

  • Competitive procurement forces all potential electricity suppliers to publicly and transparently bid against one another, forcing energy prices lower, https://dls.maryland.gov/pubs/prod/BusTech/2024_Maryland-State-Government-Energy-Procurement.pdf. 
  •  A Solar Renewable Energy Credit (SREC) is a certificate representing the environmental benefit of electricity generated from solar energy, where for every megawatt-hour of solar electricity produced, one SREC is created; homeowners or businesses with solar panels can then sell these SRECs separately from the electricity they generate, allowing them to earn additional income. 
  •  “Renewable portfolio standard”means the percentage of electricity sales at retail in the State that is to be derived from renewable sources like solar and wind. Md. Code, PUC § 7-701, https://codes.findlaw.com/md/public-utilities/md-code-public-util-sect-7-701/.