State Tax Credit
Vermont offers a 6.4% investment tax credit for installations of renewable energy systems on business properties placed in service on or before 12/31/2019. This credit steps down to 6.24% for systems placed in service by 12/31/2020 and 5.28% for systems in service by 12/31/2021. After that, solar technologies are eligible for a 2.4% credit. Any unused tax credit may be carried forward for five years.
Businesses can also take advantage of Vermont’s net metering laws, which allow customers to generate and use their own power. If a net metered customer uses more electricity than is generated, the customer pays the utility only for the difference.
If the system generates more electricity than the customer used in a month, the utility records a credit for the excess kilowatt-hours towards the customer’s next bill. Unused credits revert to the utility after 12 months.
Any electrical utility customer or group of customers of the same utility in Vermont can net meter once they have obtained a Certificate of Public Good (CPG) from the Public Service Board. CPGs are expedited for Photovoltaic systems (PV) 15kW or less (10 days) and rooftop PV systems larger than 15kW (30 days).
Additional Renewable Energy Generation Credits
For net metering customers using solar energy, they receive an additional credit, or “solar adder.”
Beginning January 1, 2017, the utility owns the Renewable Energy Credits (RECs) generated by a customer’s net-metered system, unless the customer elects not to transfer ownership of these RECs at the time of application. Customers transferring RECs to the utility will receive an additional monthly bill credit for 10 years equal to $0.02/kWh multiplied by all kWh produced by the system during the billing period. Beginning July 1, 2019, this rate decreased to $0.01/kWh. Customers electing to retain REC ownership will be charged each month in perpetuity $0.03/kWh multiplied by all kWh produced during the billing period.
Prior to 2017, net-metered customers retained default ownership of RECs unless the customer elected to transfer ownership to the utility.
Check with your local utility on their Solar Adder programs. Vermont’s net metering law caps the size of net metering generators at 500 kilowatts of generation, except for Schools which are capped at 1 Megawatt.
Commercial Energy Loan Program
The Commercial Energy Loan Program (CELP) provides low-interest loans to businesses for larger renewable energy and energy efficiency projects. (The current interest rate is 3%.)
The maximum loan amount is $2,000,000, and may fund up to 60% of the project. Loans are provided at variable rates, adjusted on a quarterly basis; current rates can be found here. Loan terms determined on a case-by-case basis, with a maximum loan term of 20 years.
Fees include (1) a 1% commitment fee ($1,000 minimum and $3,500 maximum), (2) an Independent Engineer Review fee, (3) a $50 credit report fee, (4) an $18 flood insurance certification (if required), (5) an appraisal reimbursement (if applicable), and (6) document recording and discharge fees. There is no application fee.
Sales Tax Exemptions
All equipment purchased to construct and install a net metered renewable energy system is exempt from Vermont’s 6% sales tax (Sec. 27. 32 V.S.A. § 9741(46)). Your Municipality may offer additional tax credits or incentives.
Please consult your financial advisor before making any decisions regarding renewable energy adoption. This is not an offer or guarantee of financing, which is dependent on bank acceptance and other factors. Click here for a full list of Renewable Energy Programs in Vermont.