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Vermont solar incentives, tax credits and rebates

Resources for going solar in 2023

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Vermont’s solar infrastructure makes it easier to shift away from fossil fuels, creating more energy independence and security than many other states.

The state has a property tax exemption for the value solar photovoltaic systems add to your home, and there’s also a 100% exemption on all applicable sales taxes when you purchase a solar power system.

Key insights

  • You can take advantage of solar tax breaks, rebates and loan programs.
  • The average federal tax credit value is $5,148 in Vermont.
  • Estimated lifetime savings are $26,468 with solar panels.

Solar incentives in Vermont

The federal solar investment tax credit (ITC) is the biggest factor in reducing the cost of going solar in Vermont. If you install a residential solar panel system by the end of 2032, you can deduct 30% of the system's total cost — including equipment, labor and permits — from your federal taxes. The credit drops to 26% in 2033 and 22% in 2034.

For example, for a $20,000 system, you can get a $6,000 tax credit. The solar tax credit is not a rebate or refund — you must claim it when you file federal taxes in the year that your solar panel system becomes operational. To do this, you have to complete Form 5695.

In addition to ITC, residents can take advantage of local financial incentives, including grants, rebates and loan programs.

Vermont solar incentive details

Incentive typeIncentive amountApplicable sectorsAdministrator
Renewable Energy System Property Tax Exemption Sales tax incentive 100% of sales tax for purchase Residential, commercial, agricultural Vermont Department of Taxes
Uniform Capacity Tax and Exemption for Solar Property tax incentive Varies Residential, commercial, industrial, agricultural Vermont Department of Taxes
Investment Tax Credit Personal tax credit 5.28% to 7.2% Commercial, agricultural, industrial Vermont Department of Taxes
Commercial Energy Loan Program Solar loan Up to $2,000,000 Commercial, local government, nonprofit Vermont Economic Development Authority (VEDA)
Agricultural Energy Loan Program Solar loan Up to $5,000,000e Agricultural Vermont Agricultural Credit Corporation (VACC)
Standard Offer Program Feed-in tariff Up to $0.0982/kWh Residential, commercial, industrial, agricultural Vermont Electric Power Producers (VEPP) Inc.
Green Mountain Power BYOD Rebate Up to $10,500 Residential Green Mountain Power

Renewable energy systems sales tax exemption

Vermont’s renewable energy system sales tax exemption originally applied only to net-metered systems, but it now applies to any renewable energy systems of up to 500 kilowatts (kW), small combined heat and power systems of up to 20 kW and all solar water-heating systems. It applies to both grid-tied and off-grid systems.

  • Value: 100% of sales tax for purchase
  • Frequency: One time
  • Applicable sectors: Residential, commercial, agricultural

Uniform capacity tax and exemption for solar

Vermont has three taxes that apply to renewable energy systems.

  • Uniform Capacity Tax: Solar PV systems larger than 50 kW have a tax rate of $4.00/kW. Systems that are 50 kW or less and energy storage facilities under 600 kilowatt-hours (kWh) are tax-exempt.
  • Statewide Education Property Tax: Solar PV systems over 50 kW are exempt from education property taxes. Systems that are 50 kW or less are exempt if they are net-metered or off-grid. All energy storage facilities, regardless of size, are exempt.
  • Municipal Property Tax: Systems larger than 50 kW are taxed unless locally exempt. Net-metered or off-grid systems that are 50 kW or less and energy storage facilities less than 600 kWh are exempt. Larger energy storage facilities are valued at $0.25/kWh unless locally exempt.

» MUST-KNOW: The tax benefits of owning a home: must-know deductions and secrets

Investment tax credit

Since 2002, Vermont businesses that qualify for and receive the federal solar energy tax credit can also receive a state tax credit. The state credit is calculated as a percentage of the federal business energy tax credit — currently, it's 24%.

A 7.2% state-level credit is available for renewable energy projects installed before the end of 2032. This will gradually decrease, dropping to 6.24% by the end of 2033 and 5.28% by the end of 2034.

Green Mountain Power BYOD

Green Mountain Power (GMP), one of Vermont’s 17 power utility companies, has a "Bring Your Own Device" (BYOD) program that incentivizes residents to connect their home energy storage systems to GMP's grid.

You also get up to $10,500 toward a home battery purchase when you enroll. This program benefits you by providing additional income, and it benefits GMP by letting it draw on your battery's stored energy during peak usage times, reducing the strain on the grid.

Eligible battery systems

  • Emporia
  • Enphase IQ Battery
  • Generac PWRcell
  • SolarEdge StorEdge compatible systems
  • Sonnen Battery
  • Tesla Powerwall 2.0

Commercial and agricultural energy loan programs

The Vermont Economic Development Authority (VEDA) offers two distinct energy loan programs, the Agricultural Energy Loan Program and the Commercial Energy Loan Program.

  • The Agricultural Energy Loan Program provides financing options for energy efficiency and renewable energy improvements (including solar installations) for farms and agricultural businesses. Borrowers can obtain up to $2 million with a maximum term of 10 years. The interest rate is variable, and the project must cost at least $5,000.
  • The Commercial Energy Loan Program is designed for any Vermont business that plans to invest in energy-efficient or renewable energy projects, including solar energy systems. A business can take out a loan of up to $2 million under this program; interest rates are determined on a case-by-case basis. The maximum loan term is 15 years.

Both loan programs aim to facilitate the growth of renewable energy and energy efficiency in Vermont by making it financially accessible to businesses and farms. The loans cover costs such as equipment, installation, energy audits and necessary infrastructure.

What to know about net metering in Vermont

Installing renewable energy systems and selling excess power back to the grid is simple and beneficial in Vermont. This process, called net metering, is regulated by the Public Utility Commission.

It's a streamlined, efficient process that expedites applications for systems that are 15 kW or smaller. Simply secure the certificate, meet the utility company's connection rules and — as long as no issues arise within 10 days — you're good to go. The process is similar for larger solar installations, but the utility company's review period extends to 30 days.

  • Applicable utilities: All
  • Applicable sectors: Residential, commercial, government, nonprofit, schools, agricultural, institutional
  • System capacity limit: 500 kW; 1 MW for schools and school districts; 2.2 MW for military systems; 20 kW for micro-CHP

Helpful solar resources in Vermont

Here are some additional resources that can guide you through transitioning to solar in Vermont.

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    How many solar panels do I need for my house?

    The number of solar panels you need depends on how much electricity your household uses. In Vermont, the average monthly energy consumption is 567 kWh. Assuming you're using 300-watt panels, which are a common size, you would need about 16 panels to generate all your electricity with solar.

    If your energy usage increases (for example, if you purchase more appliances, an electric car, or your household grows), you will need more panels to meet your increased energy needs.

    How much can I save with solar panels in Vermont?

    The average lifetime savings is $26,468 in Vermont. “My overall electric utility bill has gone down by 100 bucks,” Cody in Burlington told us.

    Are there any disadvantages to going solar?

    While going solar has many benefits, such as reducing your carbon footprint and lowering your energy bill, there are also some disadvantages:

    • Initial cost: Solar panel systems can be expensive to install. Even though the cost of solar panels has significantly decreased over the years, it still represents a significant upfront investment.
    • Weather and solar irradiance: Vermont has long, cold winters and receives less sun than states located farther south. While solar panels can still function in cloudy conditions and actually perform more efficiently in cooler temperatures, the overall energy production might be lower than in sunnier climates.
    • Aesthetics and property values: Some people don’t like the way solar panels look on their house. A Zillow study suggests that solar panels increase property value, but potential buyers might not always be attracted to homes with solar panels, particularly if the panels are aging or if they'd have to take over a solar lease.

    » MORE: Solar energy pros and cons

    Is my HOA allowed to restrict solar panels?

    No. Vermont solar rights laws protect the use of renewable energy devices like solar panels and forbid any agreements that would prevent their use. There may be some rules about where on a roof solar collectors can be placed, but these can't interfere with the device's effectiveness. Municipal laws also can’t regulate the installation or operation of solar devices on flat roofs.

    What is the history of net metering in Vermont?

    In 2001, Vermont launched net metering, which lets owners of small renewable energy projects sell excess energy to utility companies. The program was later expanded to include energy cooperatives, encouraging more people to invest in renewable energy.

    In 2008, a local utility company Green Mountain Power started paying a premium for energy produced by these projects. The Vermont government liked this program so much that, in 2011, they made all utilities in the state do something similar, requiring they pay an extra amount on top of their regular rates for net metering energy.

    However, in 2017, it changed to paying out a blended rate based on a weighted average of residential rates of all utilities in Vermont. This meant lower returns for some residents, which has overall reduced the benefits of net metering in Vermont.

    What is the tax credit for solar panels in Vermont?

    Business properties can qualify for an investment tax credit when they go solar, but the State of Vermont doesn’t offer a state income tax credit for residential solar panels. However, homeowners can take advantage of the 30% federal credit and other state-level tax breaks, like the Renewable Energy Systems Sales Tax Exemption.

    Bottom line: How much are solar panels in Vermont?

    Despite its small size, Vermont is a national leader in renewable energy adoption, especially in the area of solar power. Solar installations have increased quickly across the state, bolstered by supportive state policies.

    Lower prices for solar panels also help — the cost to go solar in Vermont has fallen 54% over the last 10 years, according to the Solar Energy Industries Association.

    According to recent data from EcoWatch and the Energy Information Administration, the average solar panel system costs $12,054 in Vermont, which is just slightly higher than the national average.

    The ConsumerAffairs research team also conducted an in-depth analysis to determine how much it costs to go solar in Vermont and solar costs in other states.

    Average cost for a 6-kW solar panel system in Vermont

    Total cost before tax creditsTotal cost after tax creditsCost per watt2022-2032 federal tax credit value (30%)
    $18,840 $13,188 $3.14 $5,652

    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. EcoWatch, “Solar Panel Cost in Vermont.” Accessed July 17, 2023.
    2. Database of State Incentives for Renewables & Efficiency (DSIRE), “Vermont Programs.” Accessed July 17, 2023.
    3. Environmental Protection Agency, “Summary of Inflation Reduction Act provisions related to renewable energy.” Accessed July 17, 2023.
    4. State of Vermont Public Utilities Commission, “Net-Metering.” Accessed July 17, 2023.
    5. Vermont Department of Taxes, “Solar Plants Subject to the Uniform Capacity Tax.” Accessed July 17, 2023.
    6. Vermont Economic Development Authority, “Commercial Energy Loan Program.” Accessed July 20, 2023.
    7. Vermont Economic Development Authority, “Agricultural Energy Loan Program.” Accessed July 20, 2023.
    8. Vermont General Assembly, “Title 30: Public Service, Chapter 089: Renewable Energy Programs.” Accessed July 17, 2023.
    9. Zillow, “Homes With Solar Panels Sell for 4.1% More.” Accessed July 17, 2023.
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