Vermont Solar Incentive Programs
Vermont Solar: What You're Working With
Vermont has no statewide cash rebate or income tax credit for solar, but high electricity rates and meaningful tax exemptions keep solar viable after the federal ITC expired.
High Retail Rates
GMP's January 2026 residential rate is among the highest in New England, making every kWh you self-consume worth more. A 7.5% rate increase is proposed for October 2026.
Sales Tax-Free
Vermont exempts solar panels, inverters, installation labor, and battery storage from its 6% sales tax under 32 V.S.A. § 9741. A typical 7 kW system saves ~$1,200 to $1,500 upfront.
Net Metering: about 69% of Retail
VPUC Category I credit for systems ≤15 kW that transfer RECs to the utility. The 2026 biennial update raised this credit to 15.71¢/kWh for systems applying on or after August 1, 2026.
No Federal ITC Expired
Section 25D expired December 31, 2025. Homeowners who commissioned in 2025 received 30%, those commissioning in 2026 get nothing. This dramatically extends payback periods.
Property Tax: Partial
Systems under 50 kW are exempt from Vermont's $4/kW annual capacity tax. Towns may also adopt an optional property tax exemption under 32 V.S.A. § 3845, check with your municipality.
No No State Income Credit
Vermont does not offer a state income tax credit for solar. Unlike Massachusetts (which offers a $1,000 credit), Vermont has no equivalent state-level benefit for residential solar.
Vermont Net Metering 2026: Category Rates Explained
Vermont's net metering program is set statewide by the Public Utility Commission (VPUC) under 30 V.S.A. § 8010. All utilities, GMP, VEC, Burlington Electric, must follow VPUC-established credit rates. The PUC updates these rates every two years; the August 2026 update increased them.
VPUC Net Metering Credit Framework (Case 26-0291-INV)
The VPUC sets net metering credits based on the "blended residential rate" ($0.2071/kWh as of August 2026) minus siting adjustors and REC adjustors. Positive or zero adjustors stay fixed for 10 years; the blended rate itself is updated every two years.
| Category | System Size | REC Transfer to Utility | REC Retention by Owner | Notes |
|---|---|---|---|---|
| Category I | ≤15 kW | $0.1571/kWh Best | $0.1171/kWh | Residential; streamlined CPG process |
| Category II | 15 to 150 kW, preferred site | $0.1571/kWh | $0.1171/kWh | Commercial/agricultural on preferred sites |
| Category III | 150 to 500 kW, preferred site | $0.1371/kWh | $0.0971/kWh | Larger systems; full CPG required |
| Category IV | 15 to 150 kW, non-preferred site | $0.1271/kWh | $0.0871/kWh | Lower credit for disturbing natural land |
Virtual Net Metering (Community Solar), CLOSED to New Customers
- H.289 (enacted 2024) eliminated new virtual net metering arrangements effective January 1, 2025
- Existing community solar subscribers retain their credits; new subscriptions are no longer available
- Vermont's community solar pipeline effectively closed at end of 2024
- Consider on-site solar as the remaining option for most homeowners
Credit Banking & Annual True-Up
- Excess generation credits roll forward monthly and expire if not used within 12 months
- GMP performs an annual true-up in April; unused credits expire at that point
- Vermont Electric Co-op (VEC) may have different banking rules, confirm with VEC
- Burlington Electric Department (BED) is a municipal utility; confirm rules directly
- Credits are valued at the category rate, not retail, when applied to bills
Vermont Utilities: Rates & Solar Details
Green Mountain Power serves approximately 72% of Vermont customers. Vermont Electric Co-op serves the Northeast Kingdom and several other rural areas. Burlington Electric is a municipal utility serving Burlington.
Green Mountain Power (GMP)
GMP is Vermont's largest investor-owned utility. It is also unusual nationally for its aggressive battery storage program, offering customers a Tesla Powerwall lease at nominal cost in exchange for grid services. GMP solar rates follow the VPUC framework above.
- $37 per kW AC capacity (systems ≤15 kW, billed on first post-interconnection bill)
- Additional production meter: $110 (customer cost, owned by GMP)
- Example: 7 kW AC system = $259 interconnection + $110 meter = $369 total
Vermont Electric Co-op (VEC)
VEC serves about 32,000 members in northern Vermont, including Orleans, Essex, Caledonia, Lamoille, and parts of Washington counties. VEC follows VPUC net metering rules but has its own retail rate structure.
Contact VEC directly at 802-635-2331 or veclibrary.coop for current rates and solar interconnection procedures. As a cooperative, members may have slightly different billing structures.
Burlington Electric Department (BED)
BED serves Burlington, Vermont's largest city (~45,000 residents). As a municipal utility, BED has somewhat different rate structures but still operates under VPUC net metering rules for systems connected to its grid.
Contact BED at 802-865-7300 or burlingtonelectric.com for exact solar interconnection requirements and current rates. BED historically sources a high share of renewables (Hydro-Quebec), which may affect REC value calculations.
Vermont Solar Tax Benefits
Vermont's tax picture is meaningful: a 6% sales tax exemption saves real money upfront, and the capacity tax exemption removes an ongoing cost for systems under 50 kW.
Sales Tax Exemption, Statewide, Automatic
Statute: 32 V.S.A. § 9741 (scope defined in § 9706(cc))
- Solar panels, inverters, racking, wiring, monitoring systems
- Installation labor
- Battery storage systems
- Solar hot water heating equipment
- Applies to net metering systems and off-grid systems
- No application required, exemption is applied at point of sale
Savings example: 7 kW system at $20,000 installed = $1,200 in sales tax saved. Automatic and statewide, applies regardless of your town.
Capacity Tax Exemption (Systems Under 50 kW)
Statute: 32 V.S.A. Chapter 215 (Uniform Capacity Tax)
- Vermont assesses a $4.00/kW annual capacity tax on solar plants
- Systems under 50 kW are EXEMPT from this tax
- Nearly all residential installations (5 to 15 kW) qualify
- No application required; exemption is automatic by system size
Savings: A 10 kW system would otherwise owe $40/year. Exemption saves $1,000 over 25 years, modest but automatic.
Property Tax Exemption, Municipal Option Only
Statute: 32 V.S.A. § 3845 (town-by-town vote required)
- Unlike some states, Vermont has NO statewide mandatory property tax exemption for solar added value
- Individual towns may vote to exempt renewable energy systems under § 3845
- Exemption "continues until voted otherwise" once adopted
- Does NOT apply to commercial sale of electricity (must be for private/domestic use)
- Check with your town assessor or municipal office to find out if your town has adopted the exemption
Solar typically adds $20,000 to $40,000 to Vermont home values. Without the exemption, you'd owe property tax on that added value. Contact your town listers office to confirm.
No State Income Tax Credit
Status: No program exists
- Vermont offers no state income tax credit for residential solar installations
- Vermont does have an income tax (unlike SD, WY), but solar doesn't generate a credit
- No state rebate program for residential solar in Vermont
- Federal ITC (Section 25D) also expired December 31, 2025, no credit at either level
The absence of both federal and state credits significantly extends payback periods compared to 2025 customers who captured the 30% federal credit.
Certificate of Public Good (CPG): Vermont's Solar Permit
Vermont requires a Certificate of Public Good from the VPUC for all net metering systems. For residential systems under 15 kW, this is a streamlined process your installer handles.
CPG Process for Residential Solar (≤15 kW)
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1Installer files CPG application Your installer submits the registration to the VPUC's ePUC system. You don't file directly. Application includes system specs, site plan, utility interconnection info.
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2VPUC review (2 to 4 weeks) VPUC reviews the streamlined registration. If complete, CPG is issued without a hearing. If VPUC has questions or neighbors object, timeline extends.
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3Utility interconnection agreement GMP (or your utility) issues interconnection approval. For ≤15 kW, GMP charges $37/kW AC at first bill. Additional production meter ($110) installed.
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4Energize & net metering begins Once CPG issued and utility connects, net metering starts. Your 10-year rate lock begins on commissioning date. First annual true-up in April following first full year.
Vermont Solar Payback: Real Numbers for 2026
Vermont's high electricity rates partially offset the loss of the federal ITC. Here's a realistic scenario for a GMP customer in Montpelier or Burlington.
Sample System: 7 kW, GMP customer, central Vermont
Strategy: Maximize Self-Consumption to Shorten Payback
The spread between retail (21.46¢) and export credit (14.4¢) is about 7¢/kWh, meaningful but not extreme. If you can shift usage to daytime hours (EV charging, laundry, dishwasher) and hit 70% self-consumption, savings jump to ~$1,685/yr and payback shortens to ~11.7 years. A battery adds cost but can push self-consumption near 90%.
October 2026 Rate Increase: 7.5% Proposed
GMP has filed for a 7.5% base rate increase effective October 1, 2026 (Case 26-____-TF), pending VPUC approval. If approved, GMP retail rates rise to approximately 23.1¢/kWh, which improves solar economics for self-consumed power. However, the NM export credit (set by VPUC on an annual basis) may or may not increase proportionally. Net metering rates for new customers commissioned after the next VPUC biennial update will reflect any new base rate adjustments.
Vermont Solar Incentive Scorecard
How Vermont's 2026 solar landscape stacks up at a glance.
| Incentive | Status | Value | Source |
|---|---|---|---|
| Net Metering (Category I, ≤15 kW) | Active | 15.71¢/kWh (REC transfer); 11.71¢/kWh (REC retention) | VPUC Case 26-0291-INV, eff. Aug 1, 2026 |
| 10-Year NM Rate Lock | Active | Rate locked from commissioning date | VPUC Docket 22-0334 |
| Sales Tax Exemption | Active, Statewide | 6% saved on panels, inverters, labor, batteries | 32 V.S.A. § 9741 |
| Capacity Tax Exemption (≤50 kW) | Active | $4/kW/yr capacity tax waived | 32 V.S.A. Chapter 215 |
| Property Tax Exemption | Municipal Option Only | Varies, town must adopt by vote | 32 V.S.A. § 3845 |
| State Income Tax Credit | None | $0 | No VT program |
| State Cash Rebate | None | $0 | No residential program |
| Community Solar (new subscriptions) | Closed Jan 1, 2025 | H.289 eliminated new virtual NM | Vermont H.289 (2024) |
| Federal ITC (Section 25D) | Expired 12/31/2025 | $0 | Section 25D sunset |
Is Solar Right for You in Vermont?
Vermont solar economics depend heavily on your utility, your daily usage timing, and whether your town has adopted the property tax exemption.
Solar Makes Strong Sense If:
- You're a GMP or VEC customer (21¢+/kWh retail)
- You can shift usage to daytime hours (EV, laundry) to maximize self-consumption
- Your home faces south-southeast to southwest with good sun exposure
- You're planning to stay in the home 12 to 20 years (aligns with payback period)
- Your town has adopted the § 3845 property tax exemption
- You lock in today's NM rate before the next annual VPUC reduction
- The October 2026 rate increase is approved (improves self-consumption economics)
Be Cautious If:
- You were counting on the 30% federal tax credit, it expired at year-end 2025
- Your roof has significant shading from trees or neighboring structures
- You export most of your production (rate is 67% of retail, less than full value)
- You rent or plan to sell in the near term (payback is 11 to 14 years)
- Your town has NOT adopted the § 3845 property tax exemption (solar adds value taxed at full rate)
- You're considering a system over 15 kW (NM Category II/III rates are comparable; full CPG process required)
Compare Vermont Solar Installers
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