Vermont solar rebates and tax credits calculator

Summary of Vermont solar incentives 2020

Vermont, home of Howard Dean, Jim Jeffords and many a progressive leader *ahem* Bernie *ahem*, is starting to live up to that progressive tradition in solar energy policy and incentives. 

Net metering rules here now provide a blended compensation rate which nearly meet retail prices you'd pay for the same electricity you're now sending back into the grid when you aren't using the power your panels are producing. 

There are solid discussions here in the statehouse about turning Vermont's renewable energy goals into firm mandates. A new solar performance incentive program from the state’s largest utility is also a strong sign for the future. Read on to learn all you need to know about how much you can save with solar, and the incentives and policy which make it happen.

Federal solar investment tax credit

The federal solar investment tax credit will have the biggest impact on the cost you will face to go solar in Vermont

This perk is commonly known as the ITC, short for “Investment Tax Credit”. If you install your photovoltaic system in 2020, the federal tax credit is 26% of the cost of your solar panel system. This is 26% off the entire cost of the system including equipment, labor and permitting.

Example: If your solar energy system costs $20,000, your federal solar tax credit would be $20,000 x 26% = $5,200.

The federal tax credit falls to 22% in 2021. Unless new legislation is introduced in Washington D.C., this program will be gone in 2022.

Net energy metering in Vermont

With net metering in some states, you get full retail rate credit for the amount of electricity you send back into the grid with your solar panels.

Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume to make sure you get credit for the surplus.

In 2017, Vermont moved from a pretty simple, straightforward net metering policy to one that's quite a bit more complicated. Now, if you install a solar system on your home, you can expect to earn credit for each kWh of electricity you send to the grid (known as "net excess generation", but how much you get paid varies based on your utility company.

Any customer net excess generation (NEG) is credited at the blended residential rate and carried over to the customer’s next bill. The blended residential rate is the lowest of the following:

• For electric companies whose general residential service tariff does not include inclining block rates, the per-kWh charge in the company's general residential service tariff;
• For electric companies whose general residential service tariff does include inclining block rates, a blend of those rates determined by adding together all of the revenues to the company during the most recent calendar year from kWh sold under those block rates and dividing the sum by the total kWh sold by the company at those rates during the same year; or
• The weighted average of the blended residential rates for all Vermont electric companies (weighted by the annual retail sales of the electric companies.)

All that is a complicated way to say "you get credit for the retail rate for electricity." But Vermont goes a step further, because they add a tiny bit of value to the energy that comes from small solar suppliers, like you and me. 

Each kWh sent to the grid from a home solar system smaller than 15-kW (i.e. almost all of them) earns an additional $.01/kWh on top of the retail rate credit. That means your electricity production can actually earn you money, not just save you the cost of the retail payment. 

Here's one final complication: if, after 12 months you've sent more energy to the grid that you've used, you lose the credit for that energy. This rolls on a month-to-month basis, so it actually isn't that big of a deal; but it is a reason to make sure you size your system to meet, not exceed, your annual usage estimate.

Vermont's group net metering

A unique and cool thing Vermont does is called “group net metering," which is basically what it sounds. A group of home or business owners can join together and benefit from one or more net metered solar systems. 

For example, a group can pay for a large solar installation (the maximum size for a group on 500kW) on the land of one person with a lot of open space, and ask the utility company to assign the credits earned by that system to each of the participants based on a percentage they elect. One person is named as the "designated person," who signs all the necessary documents and sets the credit amounts, and the credit allocations can be changed up to 4 times a year.

As another example, a church might install a solar system on their roof that produces more energy than the building uses in a year, and then designates the pastor's house as part of the group, offsetting some of the usage at that address, as well. There are a lot of possibilities in the group design!

It's a little more complicated than that, but that's why we have knowledgeable friends who can help. Simply connect with our solar experts in Vermont today, and tell them you're interested in setting up a solar installation and net metering group!

Vermont solar rebates

While Vermont does not have a dedicated state rebate for solar panel installation, some manufacturers like LG offer their own solar rebates. These programs are usually time sensitive. For example, LG offers a $600 solar rebate on their equipment, which your installer can help you redeem over the next year. 

Tax exemptions

Vermont enacted a blanket 100% property tax exemption for solar photovoltaic systems up to and including 10kW back in 2013. Thanks, Vermont! 

Since this exemption may not include municipal property taxes, Vermont gives localities the option of exempting you from some or all of the property taxes associated with the increase in home value you’ll see from the installation of a solar power system. 

Those experts we partner with can (and certainly will) fill you in on all the details of your town and whether or not it has an exemption.

You also save on the up-front cost of your solar power system in Vermont via an exemption on 100% of all applicable sales taxes on the purchase of that shiny new money-saving machine.

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