Vermont, home of Howard Dean, Jim Jeffords and many a progressive leader, is starting to live up to that progressive tradition in solar policy. We’re not there quite yet, but recent discussions about turning the states renewable energy goals into firm mandates, and a performance incentive program from the state’s largest utility are a strong sign for the future. That said, for a state known for its small farms, fall foliage, maple syrup, and world class skiing, Vermont can still do more to protect its environment.
Vermont’s Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of rebates and performance payments when you switch to solar power.
If you keep up with renewable energy policy, you already know that a great many states have passed such Standards. Many of the RPS’ mandate goals as high as 30%, even 40% production in the not-that-distant future. The story here is a little bit less straightforward. The heart of Vermont’s promotion of renewable energy is the Sustainably Priced Energy Enterprise Development (“SPEED”) Program, first enacted in 2005. SPEED is not a true RPS. SPEED sets goals — currently 20% renewable energy by 2017– for renewable energy production levels, but those goals are not currently binding minimums on the utilities. SPEED’s renewable energy goals can, however, become mandatory if utilities do not show sufficient voluntary compliance. The amount of renewable energy that comes into service between January 1, 2005 and July 1, 2012 must meet or exceed the total statewide growth in retail electric sales and at least 5% of total 2005 retail electric sales must be provided by SPEED resources. If the utilities fail to meet either of those goals, then at least 10% of 2005 sales figures must come from SPEED resources. If the utilities cannot meet the 10% minimum either, the SPEED programs 20% by 2017 goal becomes mandatory.
In addition to the SPEED goal of 20% by 2017, legislation passed in 2012 established the “Total Renewables Targets.” According to those targets, renewable energy should make up 55% of each retail electricity provider’s annual electric sales in 2017 and 75% in 2032, with a 4% increase every third year in between.
That’s a heck of a target. It would be even better, however, if the targets were mandatory rather than just something to strive for. The legislature seems to agree mandates are at least worth considering; a report is due January 15, 2013 to discuss whether and how to turn SPEED and the Total Renewables Targets into a true RPS. We’ll keep you posted!
Solar Performance Payments in Vermont
Vermont does not have a uniform statewide performance payment plan. Fortunately the states largest electric utility, Green Mountain Power, offers an incentive of its own. Green Mountain will pay you 6 cents for every kilowatt-hour (“kwh”) of solar power you produce. The 6 cents/kwh payment is in addition to net metering savings. That means the 6 cents amounts to a straight-up premium on top of all the other savings you get from producing your own power! If that weren’t enough, you also get to keep the renewable energy credits (RECs) associated with the electricity your solar power system produces. Generally when you get a performance payment, you have to give up the REC, but Green Mountain allows you to keep your RECs and sell them on the open market in other states for additional savings and profits!
Vermont Solar Utility Rebates
Vermont’s statewide rebate program will pay you $650/kw up to 10 kw when you install a new solar power system. The legislature also just added an efficiency bonus here as well; if you meet the goals of certain energy efficiency programs like Energy Star Homes, you qualify for another $100/kw, up to $350. Don’t worry, the installers on the ground that we work with can guide you through qualifying for the largest possible rebate.
Solar Tax Exemptions in Vermont
You also save on the up-front cost of your solar power system here via an exemption on 100% of all applicable sales taxes on the purchase of that shiny new money-saving system.
Localities also have the option of exempting you from some or all of 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 will!) fill you in on all the details of your town and whether it has an exemption. State property taxes, unfortunately, will still apply.
Utility Prices in Vermont
Vermont pays an average of 16.9 cents per kilowatt-hour of electricity. That’s well above the national average of 11.43 cents/kwh, and it’s a major reason why the core of Vermont’s current renewable energy goals –the SPEED program– is promoting sustainably priced energy in its name. Solar power is indeed sustainably priced, especially compared to what you’re paying for energy right now. As we’ll cover in a minute, we estimate your first year savings from conversion to solar power to be nearly a thousand bucks.
Of course, renewable energy is more than sustainably priced, it’s sustainable for the earth as well. Especially in comparison to fossil fuels. Tons and tons (literally) of greenhouse gas producing, ozone-killing fossil fuels that we don’t need to be burning. Not to mention the fact that the growing scarcity and eventual consequences of all those fossil fuels is only going to drive energy prices ever higher. The earlier you switch, the more you save!
Vermont Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus. Net metering is strong for residential customers here. All surplus production will be credited to your next bill at the retail rate. Simple, straightforward, and saving you money. That’s how we like our renewable energy laws. The only thing that we’d like to see improved is the policy for long-term surpluses. All credits not used within 12 months currently revert back to the utility. We think those savings should stay with you.
Interconnection in Vermont is not quite as strong. The good news is that a utility may not charge additional standby, capacity or interconnection fees, or fees or charges other than the customary minimum monthly fee. The bad news is that you are required to have a redundant external disconnect switch, unless your utility is willing to waive the requirement (again, our expert partners on the ground will walk you through that possibility). Residential systems are also required to carry a minimum of $100,000 in general liability insurance.
5kW Example Return on Investment in Vermont
What do all the numbers add up to for you? Let’s have a look:
Installing a typical 5kW solar system should start at about $25,000. Don’t worry, that’s gonna drop fast!
- Let’s start with the state rebate. You’re getting $3,250 back, for a new price of $21,750
- Next we’ll subtract the Green Mountain performance payments. At our estimate of your electricity production, you’ll get a check for about $351 (don’t forget that you can still sell those RECs in other markets as well!). That’s a new starting price of $21,399.
- Next let’s take off the federal tax credit. You get a whopping 30% off of your out of pocket costs (after the state rebate). Subtract $6,525, for a new price of $14,874.
- Finally we subtract your first year’s energy savings, which we estimate to be about $995. That brings your final cost after the first year to 13,879, a discount of more than $11,000 already!
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 10 years. After that you’ll start turning a profit, about $35,000 worth over the life of your system!
- In addition to all the extra money in your pocket every month, you also increased your home value by nearly 20 grand!
- Last but not least, on top from all that green in your pocket, and all that value on your home you’ve created a bunch of green for the planet; 103 trees worth, every year your solar power system is humming, and you’re not buying fossil-fuel based electricity.
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Vermont Solar Consensus
Things are starting to look up for solar power in Vermont. If you’re lucky enough to cash in on Green Mountain’s performance payments, the extra money can really add up over time and help reduce payback timeframes to a pretty strong 10 years. As we said at the top, however, there is still room for improvement. Too much of the state does not have access to a standard performance incentive offer; the property tax exemption needs to be substantially improved, and the SPEED and Renewables Targets programs should be transitioned into a true RPS. That said, Vermont has come a long way. With a strong rebate program, performance incentives for many, if not all of us, and discussions of a true RPS on the horizon, solar policy here earns a very solid “B” grade.