Vermont Law Implements Use of Feed-in Tariffs

Reader Contribution by Sean Rosner

Vermont took a big step forward in promoting renewable energy last week by passing a feed-in tariff (FIT) policy. This type of renewable energy incentive guarantees that utility companies will pay owners of renewable energy systems a good price for the energy they produce. Vermont’s FIT policy is one of the first to be passed in the United States.

The law is part of Vermont’s Sustainably Priced Energy Enterprise Development Program, and closely resembles Ontario’s Green Energy Act.

Made popular by Germany, who began using them in the 1990s, feed-in tariffs work by setting prices that utility companies must pay for the energy they receive from private producers such as households and businesses. By doing this, they alleviate the financial burdens of installing renewable energy systems. For more information on feed-in tariffs, go here.

In Vermont’s case, the tariff rates are set not only to pay back the system costs, but to allow producers to generate a small profit. The tariff rates also vary by energy type, with more expensive energy systems bringing in more money. Here are some of the details of the law, as reported in this Paul Gipe article:

  • Program cap of 50 mW
  • Project size cap of 2.2 mW
  • Contract time: 20 years
  • Wind energy tariffs:
    • 15 kW: 20 cents/kWh
    • 15 kW: 14 cents/kWh
  • Solar tariff: 30 cents/kWh
  • Regulatory examination of tariffs by Sept. 15, 2009 and new rates set in January 2010
  • Future tariffs based on cost of generation plus profit less applicable tax credits and other incentives

According to the Energy Information Administration, the average price of residential energy in Vermont is about 14.3 cents/kWh. For information on what other states are implementing feed-in tariffs, see this report (PDF).