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Welcome to the Ultimate Guide to Solar Panels in Vermont

This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your Vermont home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!

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** What's new for 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 policy. 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 the Vermont's renewable energy goals into firm mandates, and a performance incentive program from the state’s largest utility are 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.

Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Vermont solar incentives you see below.

What you'll find on this page:

The Solar Strategy section is focused on the 3 ways of paying for solar in Vermont, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.

The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in Vermont. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.

Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in Vermont.

Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.

Generate an accurate online solar estimate for your home

Your Solar Strategy in Vermont

Figuring out the best way to go solar in Vermont can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.

We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:

How should you pay for solar?

Use our decision tool to find out!

How to pay for solar panels in Vermont

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, Vermont has the potential for very high returns. The purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a loan (the orange bars) and paying for the system over time means you'll never actually put down any of your own money.

That's what makes the solar loan option better. If you take a HELOC, you'll pay the system cost down monthly, but you still get a huge tax credit after the first year, and SREC sales for the first 10 years, too. Your payments over 15 years will actually be less than the savings and income your system will generate, and it'll mean that you're never putting any of your own money into the purchase. All you need is great credit—or the equity for a HELOC.

The option with the smallest savings is for a solar PPA, which means you sign a contract to have panels put on your roof and pay for the electricity they generate at a lower rate than you would have paid the utility. PPAs are an excellent option if you don't have any equity or cash to put down, and they still save you thousands.

Read more below about each of three very good options for solar in Vermont!

How much can solar panels on roof save you?

Option 1: Paying cash for solar

An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true—with lower equipment costs and that big Federal tax credit, solar costs less than ever before, and a solar installation pays itself off in 11 years. But if you're interested in solar as an investment, taking a loan to pay for the system is a better option.

With a loan, you can make monthly payments instead of putting thousands down on a solar system, which means you save money on electricity as you pay down the cost of your panels. If you have equity in your home or can get a large loan with an interest rate of 4.5% or less, a loan is the option to go with. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.

If you've got cash and you prefer to pay up front, you'll have to plunk down $18,750, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced almost $20,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you $1,053 in year 1—and it just goes up from there. As the electric company raises rates, you save more and more, and more...

Here’s how the numbers work for a 5-kW rooftop solar system in Vermont:

  • Installing a typical 5-kW solar system should start at about $18,750. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
  • The Federal government offers a great income tax credit of 30% of system costs. That's $5,625 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $13,125.
  • After that tax credit, we subtract your first year’s energy savings, which we estimate to be $995. That reduces your cost after the first year to only $12,130—a savings of about 35% off the cost of your system. That's a huge cost reduction!
  • Those electricity savings will quickly pile up, and your system will pay for itself in year 10. But your panels carry 25-year warranties, and they'll likely keep on kicking out kilowatts for a few decades or more. You'll see a total net profit of $19,950 by the end of that warranty. The internal rate of return for this investment is an amazing 10.1%. That's well above the return of an investment in stock market index funds, and it's more reliable, too!
  • And here's a nice bonus to consider: your home's value just increased by about $12,000, too—the NPV of your expected electricity savings over 20 years—and thanks to Vermont's property tax exemption for solar, none of that is subject to taxation!.
  • In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 97 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Vermont. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 2: Using a loan to pay for solar

You don't need $19,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.

That’s because, in Vermont, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a federal tax break. Your tax savings will be huge in the first year—more than enough to offset the small difference between the loan payments and electric bill savings. All this means you'll never have to spend a cent on solar, and you'll still come out way ahead over 25 years.

A solar purchase like this will make sense for you if the following is true about you and your current situation:

  • You can qualify for a solar loan or home-equity line of credit (HELOC) for $18,750, with a fixed rate of 4.5% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
  • You love making money without much risk.

Here’s how the numbers pencil out for a Vermont solar purchase with a loan:

  • Installing a typical 5-kW solar system should start at about $18,750. That's how big your loan will need to be to cover it.
  • The electricity you'll save in the first year of operation would have cost $995, but your annual loan payments will be $665, meaning you would spend $330 on solar this year, but...
  • You'll also see a huge tax break. The Feds give you 30% of the cost of your system back as a tax credit, which in this case is $5,625. You'll be paying over time but getting all the benefits up front!
  • The final bit of savings comes from Green Mountain Power's performance payment program. That will mean an additional $310 in income from solar this year. All these incentives mean you'll come out $5,265 ahead after year 1.
  • The electricity savings and SREC sales will always be more than the cost of your loan. You won't ever spend a penny on solar, and you'll come out $13,735 ahead after 25 years. Home solar in Vermont is an incredible opportunity.
  • On top of the green that will stay in your pocket, your system will mean green for the environment, too. 97 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Vermont. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)

Vermont residents have long enjoyed the ability to get solar from a third-party company and pay monthly, and a Power-Purchase Agreement (PPA) is still a great way to go, especially if you haven't got piles of cash or equity in your home. The state legislature and public utilities commission are really into solar, so there isn't much reason to worry that utility companies will start trying to impose monthly fees on solar homeowners like they have in other states.

For now, a 5-kW solar system can save you about $27 per month with a PPA, which might not sound like a lot, but add that up over 20 years and consider how much electric companies raise rates on that electricity you won't be paying for, and you have a end up with a small mountain of cash with very little risk or work. You can put $0 down and start saving right away, while the installation company takes care of all the maintenance and repairs.

By the time the end of your PPA rolls around, you'll have an extra $9,473 in your pocket. Must be nice to have such big pockets!

Here's more about how a solar PPA works:

Keep in mind, the numbers above are based on an average home in Vermont. If you're ready for a custom quote for a solar PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Calculate solar panel cost and savings for your specific home

Vermont Solar Policy Information

Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.

State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.

Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Vermont:

Vermont's Renewable Portfolio Standard

75% by 2032

Grade: A

Vermont's Renewable Portfolio Standard grade

A Renewables Portfolio Standard (RPS) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels. The story here is a little bit less straightforward, as Vermont’s RPS is not a true RPS.

2015 was the year Vermont kicked its renewable energy goal into high gear, replacing it's old voluntary standard with a shiny new mandatory renewable energy program that requires 55% of all Vermont electricity come from renewable sources by 2017.

And they don't stop there. Once the 2107 goals have been met, the requirement increases by 4% every three years until reaching 75% by 2032. That's one of the most ambitious renewable standards in the country, eclipsed only by the 100% standard in Hawaii

Vermont’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.

Learn more about Renewable Portfolio Standards

Vermont's Solar carve-out and SRECs


Grade: F

Vermont's Solar Carve-out grade

If the RPS contained specific carve-outs for clean and efficient technologies like solar panels, or mandates for the environmentally necessary increases in distributed generation, you’d see even stronger incentives for residential solar power.

Learn more about Solar Carve-outs

Vermont Electricity Prices


Grade: A

Vermont's Electricity cost grade

As of this writing, the 70% of Vermont residents served by Green Mountain Power pay an average of 16 cents per kWh of electricity (check current GMP electricity rates to be sure). That’s well above the national average of 13.6 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. And for almost all Vermont homeowners, solar power can earn you extra credit on top of those retail rates.

Of course, renewable energy is more than just sustainably priced, it’s sustainable for the earth as well. Especially in comparison to the 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!

Find out why electricity prices matter

Vermont Net Metering

Statewide with caveats

Grade: B

Vermont's Net Metering grade

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 electiricty you send to the grid (known as "net excess generation", but how much you get paid varies based on your utility company.

Per DSIRE 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. But 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 is 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!

Finally, there's the issue of Renewable Energy Certificates (RECs), which your system earns you for each MWh of electiricty it generates. Under the new net billing arrangement, you can elect for the utility to keep all RECs generated by your system and get another $.03/kWh payment for the first 10 years of operation. But this is more like a performance payment, so we'll cover it in the Vermont solar performance payment section below.

Learn more about net metering

Vermont Interconnection Rules

Statewide with caveats

Grade: B

Vermont's Interconnection Standards grade

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. For more details and applications, check out Vermont’s requirements for systems up to 150kW.

Learn more about solar interconnection rules

Vermont Solar Incentives

Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.

These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 26% of your total system costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.

Let's see how Vermont measures up:

The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.

Vermont Solar Power Rebates


Grade: F

Vermont's Solar Rebates grade

Vermont used to have a good statewide rebate program that would pay you $250/kW up to 10 kW when you install a new solar power system. Sadly, 2015 saw the end of this successful program.

Rebates work to bring the costs of solar down for ordinary folks, and the corresponding increase the volume of new solar installations helps bring labor and equipment costs down for everyone who comes after. This rebate program was successful in doing both those things, but we'll still shed a tear that it's no longer available,.

Learn more about solar rebates

Vermont Solar Tax Credits


Grade: F

Vermont's Solar Tax Credits grade

While Vermont does not have any policies currently to provide renewable energy tax credits, you will benefit from the Federal Solar Tax Credit nonetheless!

Learn more about state solar tax credits

Property Tax Exemption


Grade: A

Vermont's Solar Property Tax Exemptions grade

As of 2013, Vermont has enacted a blanket 100% property tax exemption for solar photovoltaic systems up to and including 10kW. 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.

Sales Tax Exemption


Grade: A

Vermont's Solar Sales Tax Exemption grade

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.

Learn more about tax exemptions for solar

Low-income Solar Programs


Grade: F

Vermont's Solar Sales Tax Exemption grade Learn more about low-income solar programs available in the U.S.

The consensus on Vermont solar power rebates and incentives

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 time frames 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 SPEED and Renewables Targets programs should be transitioned into a true RPS; and speaking of which, we would love to see a solar carve out. That said, Vermont has come a long way. With a strong rebate program, performance incentives for many and discussions of a true RPS in the works, solar policy here earns a very solid “B+” grade.

Again, if you are confused about how these numbers work and would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!

9 thoughts on “2020 Guide to Vermont Solar Incentives, Rebates, and Tax Credits

  1. Avatar for Marielle Ross Marielle Ross says:

    I own a big victorian, four apts. in the building. Four hot water heaters that are very expensive to heat water. About $50 per mo. per apt. Would solar panels heat the water for less? Would the savings be worth it? The tenants pay for their own.

  2. Avatar for Tor Tor says:

    Good news, Vermonters. Vermont finally passed its Feed-in Tariff legislation. For some basic details, See:

    Solar Fred

  3. Avatar for Charlie Morgan Charlie Morgan says:

    Right now, you don’t go solar to save money, you do it to save the planet. (Same with wind power, thermal energy, etc.). Eventually, you may be able to think in terms of 10 year returns on investment, but for now it isn’t that cheap. So indeed, it is only for people who have some disposable income or who can afford home equity load.

    BUT, it is worth the cost even now, for the superb conservation benefits it provides. And a good system installed by a reputable installer is relatively trouble free. Just make sure your installer lives close enough to do any repair work.

    Solar and thermal are sure things; wind is more problematic since even the best residential turbines are difficult to site, difficult to install (they need to be way up high), and not particularly reliable. We have one, and when it is working it provides maybe 20% of our energy in the winter, which is great.

    We are totally off-grid, powered by sun and wind, with refrigerator, dishwasher, microwave, coffee grinder, etc. etc. It is not primitive in any way, though we have become much more attuned to simple conservation measures (like turning out lights, etc.). We do have a propane generator back-up, and sometimes it goes on to charge the batteries when days have been gray or excessive energy used. But mostly we live by the sun.

    We paid with a home equity line, and rebates and tax incentives knocked about 25% off the price. But it still cost us around 25,000 dollars for a top-quality but relatively small single-home system.

    Bottom line: do it if you can!

  4. Avatar for Melody Houle Melody Houle says:

    They say save the planet, go renewable,get state/goverenment incentives.
    My Husband and Son have talked about doing this for several years but does it make sense?
    Some of what I’ve been reading broken down in to everyday lingo says that you won’t save more than $10 a month over a 25 year stretch!!!!!
    Now what is the price of wind mills, solar panels, and how does it off set anything.
    One can’t afford paying a regular bill, how will one afford to pay for units like this large enough to be self-sufficient?
    Lost and obviously without a clue!!

    1. Avatar for Frank Frank says:

      Well I’d say the scenario above is a bit pessimistic, but even if you “only saved $10 per month” that’s $3000 in total savings and you erased your home’s carbon footprint. That’s pretty good, no?

  5. Avatar for Scott Beck Scott Beck says:

    Solar electricity in VT is BS. Here is what anyone thinking about alternative energy should ask themselves. Will my investment save money tomorrow. If not, forget it. Of course, if you want to ignore economics, and do it so that you can brag to your tree-hugging friends, go right ahead. p.s. I did geo-thermal heating, 100% and it makes a heck of a lot of economics sense, and I can still brag to the tree-huggers.

  6. Avatar for gabriel and cecille kissell gabriel and cecille kissell says:

    WE had solar panel hot water system installed back in June of 2008 and we have not received our rebate yet. We were told it would be not until August before we got it. We live in Ruland City and Brad Rousseau did the installation who is licensed and registered with the state to do this work. Can you refer this to the proper people who handle the rebates. We don’t know who to contact. Telephone 802-773-8782

  7. Avatar for Brian Steele Brian Steele says:

    I’m intrested in getting a job with an electrical contractor who specializes in solar. I there a list of aproved contracts?

  8. Avatar for george george says:

    i live in vt. and the state can do better in programs than what they have. i bought a hot water system to offset our heat and hot water, i had to install it myself – why? the solar store raised their price from 1200.00 to 2000.00 to install the unit. with that, i got online found a company in new york to buy the unit from. found out how install, pipe, soder, insulate. So the fed rebate of 1300.00 no state rebate because you have to have an installer certified (by the state) of 2000.00 (min) to install and get state rebate 276.00 the numbers don’t add up .

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