Vermont solar rebates and incentives: 2024 guide

Solar panel systems in Vermont are expensive, but incentives from the state and federal governments can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here's how you can lower the cost of solar if you live in Vermont.

Vermont doesn't have any state-specific tax credits or rebates for solar, but as a Vermont homeowner, you have access to the federal Residential Clean Energy Tax Credit, which can substantially improve your return on investing in solar panels. The state also offers some great incentives for batteries, which we get into more below.

Residential Clean Energy Credit

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization. 

In addition to the great rebates and incentives above, Vermont also offers tax exemptions for solar panel systems. The solar sales tax exemption ensures that you won't have to pay a sales tax on your system, while the solar property tax exemption means you don't need to pay a higher property tax for adding solar panels to your house.

If you connect your solar panel system to the grid, you can benefit from net metering, one of the best solar panel incentives available in Vermont. With net metering, you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. Net metering makes it so you will owe very little, or even nothing, on your electric bills with solar panels. 

All Vermont utilities have to offer net metering to customers. If your system exports more electricity to the grid than you import within a month, you'll receive credits at the blended residential rate, which is pretty close to the retail rate (what you pay for electricity). The blended residential rate is currently set at $0.17141/kWh. 

Any credits that are older than one year will expire, but it's unlikely they'll last that long since you'll always use the oldest ones first. If you installed a solar panel system that's a bit too big for your annual electricity use and are worried that you won't use credits within one year, you can create a group. This means you can allocate a percentage of your bill credits to group members.

Learn more about Vermont's largest utility's net metering program:

In addition to solar incentives, Green Mountain Power (GMP) also offers some battery incentive programs to bring down the price of energy storage. 

BYOD program 

The first is called the Bring Your Own Device, or BYOD program, which provides a one-time incentive for a battery. You can participate in BYOD in two ways. 

In the Backup Only Option, you agree to give GMP control of your battery when the grid is stressed (called Peak Events). Your incentive value depends on the power rating of your battery (the cap is 10 kW) and how long you give GMP access to your battery during an event. If you give them access for three hours, you'll earn $850/kW, up to $8,500. By providing four hours of access, you'll get $950/kW, up to $9,500. If you install a standalone battery or add a battery to an existing solar panel system in a constrained area of the grid, GMP will give you an additional $100/kW, up to $1,000.

In the Self Consumption Option, you agree to pull electricity from your battery instead of from the grid during Peak Events. You'll receive a one-time incentive worth $850. You can also earn an additional $100 if you install a standalone battery or add a battery to an existing solar panel system in a constrained area of the grid.

Tesla Powerwall program

GMP also offers a special program to lease two Tesla Powerwalls for 10 years if you give them control of your battery during Peak Events. To participate, you'll pay GMP either $55 per month or $5,500 upfront. For reference, Tesla Powerwalls typically come with a 10-year warranty and two cost $14,731 after the federal tax credit, according to Tesla. 

The biggest thing to keep in mind with the BYOD Backup Only Option and the Tesla Powerwall program is that you're allowing GMP access to your battery when electricity costs the most. If you don't have solar or your solar panels aren't producing enough electricity to meet your consumption during Peak Events, you'll pay more for electricity.

 All batteries above 3 kWh are also eligible for the 30% federal tax credit.