The Vermont Public Utility Commission has released its biennial update to the state’s net-metering program, introducing minor adjustments that will affect compensation rates for new systems applying for permits from August 1, 2024. While existing net-metering systems will benefit from a 7.33% increase in compensation due to rising statewide electric rates, new systems will see a small net decrease of less than three-fourths of a cent per kWh.
Recalibrating Compensation Rates
Every two years, the commission reassesses the value of the bill credit that net-metering customers receive for energy produced. This recalibration, known as the “statewide blended residential rate,” has risen by $0.01257 per kWh since 2022. Concurrently, the commission evaluates the incentives and overall compensation for new net-metering systems to align with Vermont’s policy objectives, considering installation costs, deployment pace, and impacts on all ratepayers. This year’s assessment led to a 2-cent decrease in compensation for new systems, but due to the increase in retail electric rates, the net effect is a reduction of only three-fourths of a cent.
Sustaining Solar and Renewable Energy Growth
Vermont’s net-metering program, established in 1999, is a key initiative for promoting solar and other renewable energy sources. It allows customers with net-metering systems, like solar panels and small wind turbines, to offset their electric bills through financial incentives based on electricity generation. The biennial review ensures the program continues to benefit all Vermonters, including non-participants, by providing updated financial incentives. Data from the latest review shows robust participation, with 2,351 new net-metering systems adding approximately 25 MW of renewable energy capacity in 2023 alone.
Balancing Costs and Renewable Energy Goals
Despite the success, net-metering remains Vermont’s costliest renewable energy program, with installation rates surpassing other less expensive projects. For instance, 2023 saw 28 MW of net-metered projects compared to just 4.4 MW of standard-offer projects and 5 MW of utility-sourced solar power at lower prices. To moderate new net-metering development, the Commission decided to reduce compensation for new systems by 2 cents per kWh. This adjustment aims to balance the pace of deployment with cost-efficiency, ensuring fair rates for all Vermonters.
Future Outlook
“Vermont’s efforts to address climate change will require a significant transition to electric vehicles and heat pumps powered by carbon-free electric generation,” said Commission Chair Ed McNamara. “Even with the $0.00743 per kWh reduction in net-metering compensation for new systems, Vermonters continue to pay significantly more for net-metering compared to equivalent new renewable generation sources. Going forward, Vermont should be prioritizing least-cost renewable generation to meet our climate and renewable requirements.”
These adjustments, set to take effect on August 1, 2024, reflect Vermont’s commitment to maintaining a balanced and sustainable approach to renewable energy deployment, ensuring the net-metering program continues to provide value to all residents while supporting the state’s broader environmental goals