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Living Green: It’s easy to electrify, Part ll

A Williston home with rooftop solar. OBSERVER COURTESY PHOTO

By Maria Gingras

Williston Energy Committee

Here in Vermont, the combination of solar-friendly utilities, progressive policies and state and federal tax incentives currently available for many residents means we have an ideal policy and business climate for using solar power to generate electricity. However, some of the most advantageous incentives are changing later this year, impacting how easy and affordable it will be to go solar. 

In light of these changes, the Williston Energy Committee partnered with a few of our stellar local solar companies for this second installment of our “it’s easy to electrify” series to get their expert input on how the current incentives work and what’s at stake for our residents and businesses who want to go solar when these incentives change in the coming months.

The first major change will affect the net-metering rate. What is net metering? When a home or business produces energy using their solar panels, some energy may not be used by the owner. That energy is sent back to the grid for others to use. A credit for the amount produced minus the amount consumed, the net energy, is applied to the owner’s electric bill. On days of low solar output, such as during the winter months, the owner can use these credits to pay for the electricity they use from the grid. If the solar system is sized properly, the owner won’t see a single electric bill. (Note: State and federal taxes and fees will still apply).

The amount per kilowatt hour credited to the owner is called the net metering rate. Starting this September, the net metering rate in Vermont will decrease by one cent per kilowatt hour, which means, according to Lilly Baron, communications director at Green Mountain Solar, solar owners “… will be credited roughly 3-4 percent less for their solar credits and in turn need to upsize their systems” in order to cover the cost of the electricity they use from the grid.

The good news is that you don’t need to install a solar system before the deadline to lock in the higher net-metering rate for 10 years. You have to complete a solar assessment and apply for the permit, which any of our solar companies can do for you. The other good news is, even if you miss the deadline to lock in the higher net metering rate, you’ll still save money over time as you will be buying less electricity from the grid, insulating your energy costs from electric rate increases over time.

The second major change involves the federal tax credit for solar. Starting in 2023, the tax credit for installed solar will decrease from 26 percent of the installed cost to 22 percent. In 2024, that credit will decrease to 0 percent for residential installation and 10 percent for commercial installation. 

What is the tax credit? As Tim Patterson, a SunCommon solar home advisor based in Richmond, explains: “The federal tax credit is not a rebate — it’s a credit that can be applied to tax liability.” In other words, if your solar system costs $30,000, it’s currently eligible for up to $7,800 (26 percent) of that cost to go back to the owner in cash, provided the owner paid at least that much in taxes. If the owner paid less in taxes, they would only receive up to the total tax they paid back in cash. 

Lower tax incentives mean higher out-of-pocket costs for solar, whether you pay in cash or finance the project. According to Patterson, this is why the tax credit is an important benefit for homeowners. But, he adds that the “… tax savings for businesses that go solar can be even better, because qualified businesses can also take advantage of a state tax credit and accelerated depreciation,” further lowering the out-of-pocket cost of solar. 

There are several options for paying for a home solar system. The most common option is financing. David Mullett, general counsel for All Earth Renewables, says: “… a well-built and installed solar project can offset a good portion of monthly electricity costs from day one, thereby providing funds from which to make payments on the loans. And that project will continue to operate for many, many years after the loan is paid off.” This means many people can swap an electric bill for a similar solar loan payment.

This doesn’t work for everyone but there are other options too. 

“For those whose financial or living situations are such that going solar may not be feasible at present, entry into ‘purchase power agreements’ or other community solar arrangements with the owners of larger net metering projects is another way to both gain electric bill savings and make a meaningful contribution to combating climate change,” Mullett said.

If you’ve ever thought of going solar, whether a business or a private resident, now is the time to act to capture what equates to roughly 8 percent cheaper costs compared to systems installed after the incentive change. Give one of our local solar companies a call to get an assessment of your solar potential and have a permit filed on your behalf before Sept. 1. Once you are ready to move forward, they will work with you to find a combination of solar technology, system size and financing that works with your budget and solar-related goals.

We invite you to reach out to your Williston Energy Committee at MScott@Willistonvt.org or attend one of our public meetings, held on the second and fourth Wednesdays of each month.

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