A community solar project, also known as a community solar farm, is a large solar electric power generation system that feeds solar power directly into the grid. Members of the community own shares in the system. Taking advantage of Vermont’s net metering and group net metering laws, the revenue from the ‘sale’ of solar electricity into the grid is distributed into the utility accounts of the owners of the shares, in proportion to their share of ownership. Since solar is now cheaper than the grid, buying these shares would ensure that you would save money in the long run, once your shares are paid off with the savings in your electric bills.
What incentives are available for doing solar?
The biggest and most well-known incentive is the federal income tax credit of 26% for solar PV systems. If say, your share costs $10,000, your tax credit is $2,200. If the system were installed and operational in 2021, when you file your federal taxes for the 2021 tax year, you would offset your federal taxes by $2,200, so effectively the share is costing you $7,800. What if you don’t have a tax burden of $2,200? The law allows you to ‘carryover’ the excess tax credit into the next year. If you’re uncertain about your tax situation, talk to your tax accountant, a CPA or a trusted financial adviser.
In Vermont, in addition to offsetting your electricity cost at the rate you are currently paying for energy, solar PV owners get paid $0.03/kWh for every kWh of electricity produced by your solar PV system, for the next 10 years of operation. This incentive is called a ‘solar credit’, and in practice, this benefit is used to offset your energy charges. You may not offset service charges or energy efficiency charges with solar.
If you are a commercial or industrial owner of a solar photovoltaic installation, you may be eligible for a 6.2% uncapped corporate state tax credit. You may also be eligible for accelerated depreciation benefits. Net of all such benefits, your payback may be in the range of 6 years! Please consult your tax adviser for details and eligibility.
All solar photovoltaic installations are sales tax exempt, in the state of Vermont.
What is the cost of my share to eliminate my electric bill?
Your share size and cost are dependent on your electric bill. Send us your electric bill and we will figure out how many kW you would need and how much it would cost. Here’s an example. If your annual bill for energy is, say $1,000, you would need a 3.6kW share to zero it out. At $3.75/watt, which is the cost of the community solar inclusive of all property taxes and insurance over 25 years, it would cost you around $13,500 to buy this share, before the 26% federal tax credit. Accounting for the tax credit, your net cost is about $10,000.
Payback = Cost/Savings, or 10 years. After paying off the system you will enjoy savings for the next 15 years worth $17,000. Of course you can buy as many or as few shares as you want to.
Are you a business owner? The numbers get even better with state tax credits and accelerated depreciation. Your share pays off in under 6 years!
What are my costs as a shareholder?
Shareholder cost is $3.75/watt no matter how large your share is! This includes all annual costs incurred in operating the community solar farm, such as property taxes, insurance, maintenance, etc.
What is net metering?
Net metering is the practice of installing and connecting a solar photovoltaic (PV) system to the grid electric lines coming into your house in such a way that it spins your meter backwards. (These days, of course, with smart digital meters, the energy generation is captured and recorded on a separate channel on the meter but the net effect is the same.) When the sun is shining and you’re using power at home for your appliances, the energy output of the solar electric system directly offsets some or all of your usage. In the night, you would continue to consume electricity from the grid. During the day, any excess solar energy production ends up on the grid. The utility maintains a balance of your production and consumption in your account. At the end of the month, you may get a positive or a negative bill depending on whether you consumed more or produced more electricity.
This rolling account is carried forward for one year from any month. There will usually be months, especially in the summer when you produce more than you consume while in the winter, the equation is reversed. A well designed solar PV system would produce as much in a year as you consume since, in general, utilities do not pay you back for excess production on an annual basis. In most net metered systems, the cost savings accrue at the rate at which you buy electricity. In Vermont, your residential electricity rate is around $0.17/kWh. With net metering, every kWh of solar energy that is fed back into the grid or offsets your usage, is also at this rate.
What is group net metering?
Group net metering is a convenient mechanism to combine a bunch of utility accounts which could be a mix of residential, commercial, industrial, etc, into a group and split the output of a single large solar PV system among the members of the group in a preset fashion. The main advantages of group net metering are that larger solar PV systems are more economical (lower $/watt costs) than multiple smaller ones, and group net metered solar PV systems could be optimally located to deliver maximum benefit to members of the group who may not all have good sites for solar PV.
What if the laws change regarding net metering?
The state of Vermont has committed to reach 90% renewable by 2050 and solar is a very large component of that. GMP is an active partner in transitioning to a distributed generation grid and are shaping their business model with this in mind. In fact GMP’s goal is to achieve 100% renewables by 2025! So it’s highly unlikely that net metering would go away.
What are the advantages of community solar?
Since the State permits group net metering, with community solar you can take your shares with you if you move anywhere in the GMP service territory. In addition, if your home energy consumption decreases, you can sell excess shares to other members in the LLC. If your home energy consumption increases, you can buy shares from others who may be selling them. The sale price may be set in a negotiation between the buyer and the seller and is generally dependent on years left of solar energy production. The system is warranted for 25 years.
What are the next steps?
Send us your electric bill. We will figure out your share size and cost and email you a nonbinding Letter of Intent. Sign the letter and get it back to us and we will reserve your shares in our community solar farms.
As we fill out the subscription, we will move on to designing the system and send you a contract to sign. Your share payments are 60% upfront and 40% upon completion.
You will also have to join the LLC created for the membership of all the share-owners. The owner members will sign an Operating Agreement. In our current model, members do not have to collect annual dues towards property taxes, insurance, etc. All that is taken care of in the escrowed portion of the upfront payment.
Once we complete design and obtain building and electrical permits, we will proceed to construction. We anticipate completion of construction of Vermont Mill Solar by 6/2020. The one hitch we anticipate is that GMP has to upgrade the distribution system (independent of our projects) before we interconnect. We are subject to their timeframe.
After construction is completed, power is fed to the grid and GMP allocates output among your accounts.
Can our share purchase be financed – is financing via loans available?
Yes! Our partner is Vermont State Employees Credit Union (VSECU). Apply here for your loan: www.vsecu.com/powerguru
Information about the Southshire Community Solar LLC and other links can be found here.
Intrigued? Email Hogan Sennett for the next steps, or you can reach out to any of the local community members listed on our contacts page whom you may already know: all will be more than happy to assist you.