(a)    (1)    Energy from a Tier 1 renewable source:

(i)    is eligible for inclusion in meeting the renewable energy portfolio standard regardless of when the generating system or facility was placed in service; and

(ii)    may be applied to the percentage requirements of the standard for either Tier 1 renewable sources or Tier 2 renewable sources.

(2)    (i)    Energy from a Tier 1 renewable source under § 7–701(r)(1), (5), (9), (10), or (11) of this subtitle is eligible for inclusion in meeting the renewable energy portfolio standard only if the source is connected with the electric distribution grid serving Maryland.

(ii)    If the owner of a solar generating system in this State chooses to sell solar renewable energy credits from that system, the owner must first offer the credits for sale to an electricity supplier or electric company that shall apply them toward compliance with the renewable energy portfolio standard under § 7–703 of this subtitle.

(3)    Energy from a Tier 1 renewable source under § 7–701(r)(8) of this subtitle is eligible for inclusion in meeting the renewable energy portfolio standard if it is generated at a dam that existed as of January 1, 2004, even if a system or facility that is capable of generating electricity did not exist on that date.

(4)    Energy from a Tier 2 renewable source under § 7–701(s) of this subtitle is eligible for inclusion in meeting the renewable energy portfolio standard through 2020 if it is generated at a system or facility that existed and was operational as of January 1, 2004, even if the facility or system was not capable of generating electricity on that date.

(b)    On or after January 1, 2004, an electricity supplier may:

(1)    receive renewable energy credits; and

(2)    accumulate renewable energy credits under this subtitle.

(c)    (1)    This subsection applies only to a generating facility that is placed in service on or after January 1, 2004.

(2)    (i)    On or before December 31, 2005, an electricity supplier shall receive 120% credit toward meeting the renewable energy portfolio standard for energy derived from wind.

(ii)    After December 31, 2005, and on or before December 31, 2008, an electricity supplier shall receive 110% credit toward meeting the renewable energy portfolio standard for energy derived from wind.

(3)    On or before December 31, 2008, an electricity supplier shall receive 110% credit toward meeting the renewable energy portfolio standard for energy derived from methane under § 7–701(r)(4) of this subtitle.

(d)    An electricity supplier shall receive credit toward meeting the renewable energy portfolio standard for electricity derived from the biomass fraction of biomass co–fired with other fuels.

(e)    (1)    In this subsection, “customer” means:

(i)    an industrial electric customer that is not on standard offer service; or

(ii)    a renewable on–site generator.

(2)    This subsection does not apply to offshore wind renewable energy credits.

(3)    (i)    A customer may independently acquire renewable energy credits to satisfy the standards applicable to the customer’s load, including credits created by a renewable on–site generator.

(ii)    Credits that a customer transfers to its electricity supplier to meet the standard and that the electricity supplier relies on in submitting its compliance report may not be resold or retransferred by the customer or by the electricity supplier.

(4)    A renewable on–site generator may retain or transfer at its sole option any credits created by the renewable on–site generator, including credits for the portion of its on–site generation from a Tier 1 renewable source or a Tier 2 renewable source that displaces the purchase of electricity by the renewable on–site generator from the grid.

(5)    A customer that satisfies the standard applicable to the customer’s load under this subsection may not be required to contribute to a compliance fee recovered under § 7–706 of this subtitle.

(6)    The Commission shall adopt regulations governing the application and transfer of credits under this subsection consistent with federal law.

(f)    (1)    In order to create a renewable energy credit, a Tier 1 renewable source or Tier 2 renewable source must substantially comply with all applicable environmental and administrative requirements, including air quality, water quality, solid waste, and right–to–know provisions, permit conditions, and administrative orders.

(2)    (i)    This paragraph applies to Tier 1 renewable sources that incinerate solid waste.

(ii)    At least 80% of the solid waste incinerated at a Tier 1 renewable source facility shall be collected from:

1.    for areas in Maryland, jurisdictions that achieve the recycling rates required under § 9–505 of the Environment Article; and

2.    for other states, jurisdictions for which the electricity supplier demonstrates recycling substantially comparable to that required under § 9–505 of the Environment Article, in accordance with regulations of the Commission.

(iii)    An electricity supplier may report credits received under this paragraph based on compliance by the facility with the percentage requirement of subparagraph (ii) of this paragraph during the year immediately preceding the year in which the electricity supplier receives the credit to apply to the standard.

(g)    (1)    Energy from a solar water heating system is eligible for inclusion in meeting the renewable energy portfolio standard.

(2)    A person that owns and operates a solar water heating system shall receive a renewable energy credit equal to the amount of energy, converted from BTUs to kilowatt–hours, that is generated by the system that is used by the person for water heating.

(3)    The total amount of energy generated and consumed for a nonresidential or commercial solar water heating system shall be measured by an on–site meter that meets the required performance standards of the International Organization of Legal Metrology.

(4)    The total amount of energy generated and consumed by a residential solar water heating system shall be:

(i)    measured by a meter that meets the required standards of the International Organization of Legal Metrology; or

(ii)    1.    measured by the Solar Ratings and Certification Corporation’s OG–300 thermal performance rating for the system or an equivalent certification that the Commission approves in consultation with the Administration; and

2.    certified to the OG–300 standard of the Solar Ratings and Certification Corporation or an equivalent certification body that the Commission approves in consultation with the Administration.

(5)    A residential solar water heating system shall be installed in accordance with applicable State and local plumbing codes.

(6)    A residential solar water heating system may not produce more than five solar renewable energy credits in any 1 year.

(h)    (1)    Energy from a geothermal heating and cooling system is eligible for inclusion in meeting the renewable energy portfolio standard.

(2)    A person shall receive a renewable energy credit equal to the amount of energy, converted from BTUs to kilowatt–hours, that is generated by a geothermal heating and cooling system for space heating and cooling or water heating if the person:

(i)    owns and operates the system;

(ii)    leases and operates the system; or

(iii)    contracts with a third party who owns and operates the system.

(3)    To determine the energy savings of a geothermal heating and cooling system for a residence, the Commission shall:

(i)    identify available Internet–based energy consumption calculators developed by the geothermal heating and cooling industry;

(ii)    collect the following data provided in the renewable energy credit application that:

1.    describes the name of the applicant and the address at which the geothermal heating and cooling system is installed; and

2.    provides the annual BTU energy savings attributable to home heating, cooling, and water heating; and

(iii)    in determining the annual amount of renewable energy credits awarded for the geothermal heating and cooling system, convert the annual BTUs into annual megawatt hours.

(4)    To determine the energy savings of a nonresidential geothermal heating and cooling system, the Commission shall:

(i)    use the geothermal heating and cooling engineering technical system designs provided with the renewable energy credit application; and

(ii)    in determining the annual amount of renewable energy credits awarded for the geothermal heating and cooling system, convert the annual BTUs into annual megawatt hours.

(5)    A geothermal heating and cooling system shall be installed in accordance with applicable State well construction and local building code standards.

(i)    (1)    Energy from a thermal biomass system is eligible for inclusion in meeting the renewable energy portfolio standard.

(2)    (i)    A person that owns and operates a thermal biomass system that uses anaerobic digestion is eligible to receive a renewable energy credit.

(ii)    A person that owns and operates a thermal biomass system that uses a thermochemical process is eligible to receive a renewable energy credit if the person demonstrates to the Maryland Department of the Environment that the operation of the thermal biomass system:

1.    is not significantly contributing to local or regional air quality impairments; and

2.    will substantially decrease emissions of oxides of nitrogen beyond that achieved by a direct burn combustion unit through the use of precombustion techniques, combustion techniques, or postcombustion techniques.

(3)    A person that is eligible to receive a renewable energy credit under paragraph (2) of this subsection shall receive a renewable energy credit equal to the amount of energy, converted from BTUs to kilowatt–hours, that is generated by the thermal biomass system and used on site.

(4)    The total amount of energy generated and consumed for a residential, nonresidential, or commercial thermal biomass system shall be measured by an on–site meter that meets the required performance standards established by the Commission.

(5)    The Commission shall adopt regulations for the metering, verification, and reporting of the output of thermal biomass systems.