Green Mountain Power’s new energy storage lease explained
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Green Mountain Power (GMP), Vermont’s largest electric utility, recently announced its newest energy storage initiative, the Enphase IQ Energy Storage Lease pilot program. It operates similarly to another program GMP previously found success with, which included the leasing of Tesla Powerwalls.
This new energy storage lease program makes installing backup batteries more accessible by giving homeowners the option to install Enphase IQ batteries without any upfront costs for the equipment, allowing them to pay a lower overall price had they purchased the same equipment without the program.
It seems fitting that the biggest utility in one of the country’s most environmentally-friendly states would be offering innovative green energy programs, however, it does come with several caveats.
So, while encouraging battery deployment through this program is great for the environment, is it just as good of a deal for the green in your wallet?
Aside from providing homeowners with an alternative to gas generators for backup power (and potentially increasing solar adoption), the program is a way to provide GMP access to a network of home storage systems that it can utilize - in order to ease stress on the grid and potentially lower costs for all of its customers.
In just last year alone, GMP’s battery storage programs helped the utility save roughly $3 million in costs that otherwise would have been passed onto GMP customers.
The basic premise of the energy storage lease pilot program is pretty simple - you pay Green Mountain Power to lease two batteries for 10 years, and in exchange, you have two batteries in your home to use during power outages.
You can choose between two payment options: monthly installments of $65 per month, or one upfront payment of $6,500.
Since you are leasing them, GMP is the actual owner of the batteries (it works similarly to a solar lease, in which you make payments to have the solar system on your roof, but don’t actually own it). This also means that at any time, GMP can use the energy stored within the batteries to relieve stress on the grid (like when electricity demand is high) and help keep the utility’s costs low.
The batteries can be charged using a solar panel system or directly from the grid, meaning you do not have to have solar panels installed to participate in this program.
Those are the basics of GMP’s battery storage lease in a nutshell. But there are a few other key things to note that you might miss at first glance on GMP’s website, and they have to do with the batteries’ installation cost, term length and cancellation, battery use, and program openings.
Like we said, GMP gives homeowners two options when it comes to paying for the lease: monthly installments of $65 over its 10-year duration, or through a single upfront payment of $6,500.
While no one wants to shell out $6,500 at once, it’s actually cheaper paying this way than it is if you do so through monthly payments. If you go the monthly route, you would pay a total of $7,800 by the end of the lease - an additional $1,300 - which isn’t pocket change.
But beware, there is another cost you have to consider if your application for the program is accepted - the installation costs. That’s right, in addition to paying for the batteries themselves, you have to pay for the installer to come and actually put them in your home. The installation could cost somewhere between $1,000 and $2,000.
Installation costs are completely separate from your lease payments, so you have to shell out that money upfront.
That means your total cost to participate in the lease program actually sits somewhere in the range of $7,500 to $10,000, give or take a little, when you include installation. For almost the same amount of money, you could just purchase the batteries yourself.
The term of the battery lease is 10 years, with no option to buy out the batteries at any point.
If at the end of 10 years you want to continue participating in the program, you can submit a form to GMP to extend the lease for five more years.
We reached out to GMP and Enphase for clarification and additional information, but have not received a response to this question at the time of this writing.
You can end the lease early if you want to, but you’ll have to pay an $800 fee.
If you decide to terminate the lease after paying the $6,500 upfront, GMP will provide you a prorated refund that is based on how much time you had left on the contract. For example, if you had 50 months left of the 120-month lease, you would receive a refund of about $2,710.
(50/120) x $6,500 = $2,710
If you participate in the energy storage lease program and decide to sell your home, the lease can be transferred to the new homeowner, and you will need to alert GMP. If the new homeowner does not want to take over the lease, you will need to pay the early termination fee.
This is probably the most important thing to know about the GMP battery storage program - you can only use the battery in the event of a power outage.
That means if you have a solar system hooked up to the battery, you can’t use that stored energy to run your appliances at night, which many solar-plus-storage owners do. Instead, you have to wait until the grid is down in order to use it.
GMP, on the other hand, can use the energy stored in the batteries anytime it wants. Plus, it can use all of the energy stored in it. After all, the batteries do belong to it.
The downside to this, besides the fact that you can’t use the battery the way you want, is if you are storing energy your solar panels produce in those batteries, GMP gets to use it without paying you. Had your solar system produced excess energy without the batteries, that electricity would instead be sent to the grid, and you would get credits on your electricity bill through net metering.
Why does my utility need my stored energy? The reason GMP wants to access the batteries is to tap into the stored energy during peak usage hours. This is when people are using the most electricity, and it puts a lot of stress on the grid. So, in order to ease that stress and prevent having to pay high fees to the transmission operator, GMP can use the energy stored within batteries in customers’ homes that were charged during off-peak hours, or with solar energy.
Green Mountain Power only has spots for 100 homes in the battery lease program. If you want to participate, you should consider applying sooner rather than later.
You may see the batteries referred to by their old name, Enphase Encharge, in some of GMP’s documentation, but we confirmed with Enphase that the program uses its IQ models. There are two models of the IQ 10 batteries - the IQ 10 and the IQT - either of which can be used to participate in the program.
When you join Green Mountain Power’s lease program, you will have two Enphase IQ 10 batteries installed at your home, for a combined usable storage capacity of 20.16 kilowatt-hours (kWh).
These two batteries will be able to run the majority of your major appliances for several hours in the event of a power outage. You can read our complete review of the Enphase IQ for more information.
When you look at it from a cost perspective, the lease program is technically a little bit cheaper than if you wanted to purchase and install the same exact energy storage system, but it’s not by much. Let’s break it down.
|Energy storage lease||Purchase|
|2 Enphase IQ batteries||+ $7,800||+ $20,000|
|Installation cost||+ $1,000||+ $1,000|
|Federal tax credit||$0||- $5,460|
|Bring Your Own Device incentive||$0||- $7,125|
With the lease program, it’ll likely end up costing you around $8,000 over the 10-year term, including installation, for two Enphase IQ batteries.
To purchase those same two Enphase IQ 10 batteries, the initial cost would be in the ballpark of $20,000 for the physical batteries, and an additional $1,000 for installation. When you factor in the federal solar tax credit, it drops the price by $5,460.
Then, assuming the batteries are installed with solar panels and you opt for the maximum Bring Your Own Device Program (BYOD) incentive (which limits the use of the batteries to backup power only and allows GMP access to the stored energy during certain times) the total purchase cost would be about $8,500.
So yes, the lease is going to cost you less money if you want to install the same exact system. And the lease costs you substantially less if you don’t want to give GMP access to your battery through the BYOD program, as the BYOD incentive would only be $850, not over $7,000.
Perks of purchasing: Despite the cost being higher, you get a lot more freedom when purchasing a battery system. You can pick how you want to use the battery (though that does impact your BYOD rebate value), what brand and size of battery you want, plus you get to take advantage of the federal tax credit when it is paired with solar panels.
The above example assumes that you will be purchasing the same size battery system that you would get with the lease. But to be honest, you probably don’t need that much storage, especially in Vermont. Why? Because Vermont homeowners use less electricity than the majority of Americans, so you likely won’t need more than 20 kWh of storage.
Instead, based on average electricity usage and typical solar system size in Vermont, you’d probably go with a battery closer to 10 or 15 kWh in size, like one Enphase IQ 10. In that scenario, purchasing one battery is cheaper than leasing two, even if you take a lower value BYOD incentive.
The bottom line is, it’s very important to keep in mind whether you really need to have two batteries for backup power, or if having one will cut it (spoiler alert - it probably will).
No, Green Mountain Power’s energy storage lease will not save you any additional money on your electricity bill. In fact, it’s going to increase what you pay to the utility.
Whether you choose to pay upfront or through monthly installments, you’re handing over thousands of extra dollars to the utility that you otherwise wouldn’t be. The good news is that it won’t add additional electricity costs to your bill, the only thing additional you’ll have to pay is your lease payment.
So although you do pay for electricity to charge the battery, GMP releases that energy to be used by your home during a time of peak demand down the road.
The same goes for charging the battery with solar panels. You won’t have bill credits from net metering because your excess energy will instead go to charging the battery. However, your home will use that stored energy during a time of peak demand, which means you won’t be taking electricity from the grid at that time.
The bottom line is, your overall bill is still going to be higher simply because you have to make monthly lease payments.
We’re going to be totally honest - most GMP homeowners don’t need battery storage, purchased or leased, especially from a financial perspective. Since GMP offers full-retail net metering to its solar customers, a battery provides no additional savings.
However, if money isn't an issue and you just want to maximize the amount of solar energy your home uses, plus have access to backup power, then purchasing a solar battery is a great option for you. For homeowners who want backup power and are concerned about their budget, we’re sad to say that a gas generator is probably the most worthwhile option, even if it is bad for the environment.
Homeowners who want to have backup power for grid outages, don’t have solar, and don’t want to deal with a gas-powered generator are probably the people who will benefit the most from the lease program. Otherwise, you’re paying for a battery you can barely use and you’ll wind up losing money for excess solar you could have been sending to the grid instead.
So while the lease program and batteries in general don’t make a whole lot of financial sense in Vermont, going solar definitely does.
In fact, GMP’s net metering program makes it so easy for homeowners to eliminate all of their electricity costs, going solar here is a no-brainer. You can see just how much solar panels will save you (while powering your home with clean, renewable energy) by using our free solar cost and savings calculator. You can even see how adding battery storage would impact your investment.