SB706 rewrites Maryland’s statutory Renewable Energy Portfolio Standard (RPS) for Tier 1 renewables by lowering the percentage obligations for 2027 through 2030 and later. The bill retains specific carve-outs for solar, offshore wind and post‑2022 geothermal but reduces the numeric targets and specifies minimum Round 2 offshore wind megawatts for certain years.
Tier 2 remains unchanged at 2.5%.
The change alters the amount of renewable energy suppliers must procure and therefore the demand for RECs and large-scale project procurement. That shift affects investor economics for planned solar, offshore wind and geothermal projects, alters utility compliance planning, and creates a narrower near‑term market for renewable developers while preserving long‑standing contract protections and an October 1, 2026 effective date for future compliance years.
At a Glance
What It Does
The bill replaces current statutory Tier 1 percentages with lower targets: 2027 (26%), 2028 (27.5%), 2029 (34%), and 2030 and later (34.5%). It keeps solar, offshore wind and post‑2022 geothermal carve-outs and keeps Tier 2 at 2.5%. The Commission retains authority to set offshore wind amounts under §7‑704.2(a) while the statute specifies minimum Round 2 MW thresholds.
Who It Affects
All retail electricity suppliers in Maryland must meet the new, lower Tier 1 percentages. Solar, offshore wind and geothermal developers face reduced statutory demand; utilities and competitive suppliers must update procurement and REC strategies; the Maryland Public Service Commission (PSC) must account for the amended statutory floors when implementing §7‑704.2(a).
Why It Matters
By lowering statutory obligations, the bill reduces near‑term mandatory demand for clean energy and RECs — changing financing assumptions for projects and the dynamics of the REC market. Regulators and market participants will need to translate the new statutory minima into procurement plans and adjust existing compliance forecasts and contract strategies.
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What This Bill Actually Does
SB706 substitutes lower, explicit Tier 1 percentages in the Maryland Public Utilities Article’s RPS schedule for the 2027, 2028, 2029, and 2030+ compliance years, while leaving the statutory framework and PSC authority in place. The statute still mandates specific minimum shares from solar, requires an amount of offshore wind determined by the PSC under the existing statutory authority, and preserves a post‑2022 geothermal minimum; the difference is that the overall Tier 1 ceiling those carve‑outs live within is reduced.
Practically, suppliers will have a smaller slice of electricity sales that must be matched with Tier 1 RECs from those technologies.
The bill specifies numeric solar minima for each year (rising toward 2030), and it also embeds fixed minimum megawatt thresholds tied to “Round 2” offshore wind projects (400 MW in 2027, 800 MW in 2028 and 2029, and 1,200 MW in 2030 and later). At the same time, it expressly preserves the PSC’s role under §7‑704.2(a) to set the statutory offshore wind amount — meaning the Commission must reconcile the statutory MW floors with whatever broader offshore wind quantity it adopts.
SB706 includes two administrative/operational provisions that matter for implementation. First, it protects existing contractual obligations from being impaired by the change, which limits claims that developers or buyers could void current deals.
Second, it takes effect October 1, 2026, and applies to RPS compliance years beginning after December 31, 2026, so changes affect planning and procurements that would otherwise target the 2027 compliance year and later. Collectively, the bill reduces mandatory near‑term procurement while keeping statute‑defined carve‑outs and leaving the PSC as the implementing authority to translate those numbers into compliance rules and procurement processes.
The Five Things You Need to Know
The bill sets new Tier 1 RPS percentages: 2027 at 26%, 2028 at 27.5%, 2029 at 34%, and 2030 and later at 34.5%.
Statutory solar minimums remain but are lower in absolute terms: at least 9.5% (2027), 11% (2028), 12.5% (2029), and 14.5% (2030+).
Offshore wind remains a defined carve‑out: the PSC sets the required amount under §7‑704.2(a), and the statute also mandates minimum Round 2 capacities of 400 MW (2027), 800 MW (2028 and 2029), and 1,200 MW (2030+).
Tier 2 obligations are unchanged: the bill keeps Tier 2 at 2.5% for the listed years and thereafter.
The act includes a non‑impairment clause for existing obligations and contracts, and it becomes effective October 1, 2026, applying to compliance years starting after December 31, 2026.
Section-by-Section Breakdown
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Carryforward of RPS framework
The bill repeats the existing top‑level RPS instruction for the PSC without substantive change. This preserves the statutory structure that requires the Commission to implement and enforce an RPS that applies to all retail electricity sales, leaving procedural and enforcement mechanics in place while the percentage targets change elsewhere in the statute.
New numeric Tier 1 and carve‑out schedule
This is the bill’s core: it replaces the statutory percentage schedule for Tier 1 and the associated technology carve‑outs for 2027–2030+. The new schedule reduces overall Tier 1 requirements while preserving technology‑specific minimums for solar and post‑2022 geothermal and retaining the statutory mechanism for offshore wind (PSC‑set amount) paired with explicit Round 2 MW minimums. Practically, suppliers’ compliance calculations, REC demand projections and published procurement plans will all be recalibrated to these lower figures.
Contract non‑impairment
The act forbids the law from being used to impair existing contractual rights or obligations. That clause narrows the scope for contractual challenges from project owners or buyers claiming that the statutory reduction invalidates pre‑existing deals, and it preserves the status quo for transactions executed before the act’s effective date.
Effective date and applicability
SB706 takes effect October 1, 2026, and applies to RPS compliance years beginning after December 31, 2026. The timing means procurement and finance decisions targeting the 2027 compliance year must account for the lowered statutory obligations, and the PSC will implement the updated schedule when it issues compliance regulations and guidance for the next applicable compliance year.
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Explore Energy in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Retail electricity suppliers and utilities: They face lower mandatory Tier 1 percentages, which reduces near‑term procurement requirements and eases pressure on short‑term REC purchases and long‑term PPAs.
- Large energy customers and ratepayers: Reduced supplier compliance costs can translate into lower procurement-related rate pressure in the near term, especially where utilities pass through REC or PPA costs.
- Buyers of RECs and corporate offtakers: A larger supply of banked RECs and lower statutory demand may depress REC prices, benefitting purchasers that need fewer or cheaper credits to comply or to meet voluntary targets.
Who Bears the Cost
- Renewable project developers (solar, offshore wind, geothermal): Lower statutory demand reduces the guaranteed market for new projects and can weaken project economics, increasing financing costs or delaying buildouts.
- Maryland clean energy workforce and local supply chain: Slower deployment reduces near‑term construction and manufacturing opportunities tied to projects that would have been supported by higher RPS obligations.
- State regulators and planners: The PSC must reconcile the statutory floors for offshore wind with the amounts it sets under §7‑704.2(a) and update compliance rules and forecasts, creating administrative workload and potential ambiguity for procurement timelines.
Key Issues
The Core Tension
The bill trades a reduced near‑term compliance burden (and likely lower short‑term costs) for a weaker statutory market signal that supports long‑term renewable project finance and state decarbonization goals; policymakers must choose between immediate cost relief and preserving stronger demand that drives clean energy investment.
The bill’s most consequential technical design choice is lowering the statutory demand signal while keeping technology‑specific floors and the PSC’s authority intact. That hybrid approach creates two implementation questions: how the Commission will exercise its §7‑704.2(a) authority in light of the new, lower overall Tier 1 percentages, and whether the statutory Round 2 MW minima will be treated as binding floors or as planning targets the PSC must fold into a broader procurement number.
Those answers matter for how developers and financiers underwrite future projects.
Another tension is timing versus contractual protection. The statute’s non‑impairment clause protects existing contracts, which limits immediate legal exposure for developers and purchasers.
But developers that have not yet signed contracts face reduced statutory demand and a different REC price trajectory; that creates project‑specific economic risk rather than clear legal remedies. Finally, lowering statutory targets can depress REC prices and shift projects toward seeking non‑statutory buyers or federal incentives, changing the geography and pace of build‑out in ways the statute does not address directly.
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