Renewable Energy Standard

Summary

Note: In June 2024, Vermont's state legislature enacted significant changes to its RES via H.B. 289, taking effect July 1, 2024.

In June 2015, H.B. 40 was enacted, establishing a mandatory renewable portfolio standard - called the Renewable Energy Standard (RES) - for the first time in Vermont's history. The state previously had a renewable energy goal, as part of the Sustainably Priced Energy Enterprise Development (SPEED) program. 

Eligible Technologies

Eligible renewable technologies are defined as those that use "a technology that relies on a resource that is being consumed at a harvest rate at or below its natural regeneration rate." The Public Utilities Commission determined that methane and flammable gases from food waste, agricultural waste, or other organic materials, or from decay of sewage or landfill wastes; geothermal; hydroelectric; marine thermal or hydrokinetic; photovoltaic solar; concentrated solar power; and wind are eligible resources. Other technologies utilizing solid waste, besides silvicultural waste, are explicitly ineligible.

Requirements

The Vermont RES requires all retail electricity suppliers in the state to obtain 63% of their annual retail electricity sales from eligible renewable sources by January 1, 2025. This requirement increases by at least 4% every three years until reaching 100% on either January 1, 2030 (for all other retail electricity suppliers) or January 1, 2035 (for retail electricity suppliers that serve a single customer taking service at 115 kV and each municipality formed under local charter).

Carve-Outs

Distributed Renewable Generation

Retail electricity providers must obtain 5.8% of their annual load from distributed renewable generation by January 1, 2025. 

This requirement increases by at least 1 ½ of a percent each year on January 1, until reaching 20% on January 1, 2035, for retail electricity providers that serve a single customer taking service at 115 kV and each municipality formed under local charter. While for all other retail electricity suppliers it increases by 2% annually until reaching 20% on January 1, 2032.

Distributed renewable generation is defined as an eligible renewable generator with a capacity of 5 megawatts or less that is (1) new renewable energy; a hydroelectric plant that, on or before 2024, was owned and operated by a municipality formed as of 2020 or other retail electricity providers, unless future plant modifications increase plant capacity by 5 MW; and (2) is directly connected to the sub-transmission or distribution system of a Vermont retail electricity provider or connected to the transmission system as part of an approved plan to defer a transmission system improvement, or is a new net-metered renewable generator whose renewable energy credits (RECs) are owned and retired by the interconnecting retail electricity supplier. 

Energy Transformation Projects

While generation used to meet the distributed renewable generation requirement can also count toward meeting the overall standard, energy transformation projects used to meet this requirement do not count toward the overall standard.

Retail electricity providers must support energy transformation projects equal to 7.33% of their annual load by January 1, 2025. This requirement increases by at least 2/3rds of a percent each year on January 1, until reaching 12% on January 1, 2032. 

For municipal utilities serving 7,000 or fewer customers, the requirement is 6% of annual load by January 1, 2025, increasing by 2/3rds of a percent each year until reaching 10% and 2/3rds of a percent on January 1, 2032.

Energy transformation projects are defined as undertakings that produce energy-related goods and services and result in a net reduction in fossil fuel consumption and greenhouse gas (GHG) emissions but do not generate electricity. These reductions in fossil fuel consumption and GHG emissions must be attributable to the customers of the retail electricity provider supporting the project. Examples of energy transformation projects include home weatherization or other thermal energy efficiency measures, air source or geothermal heat pumps, high-efficiency heating systems, increased use of biofuels, biomass heating systems, support for transportation demand management strategies, support for electric vehicles or related infrastructure, and infrastructure for the storage of electricity generated by renewable sources.

Retail electricity providers may also satisfy the energy transformation requirement with distributed renewable generation that is in addition to that used to comply with the distributed renewable generation category.

New Renewable Energy

Established in 2024, this category encourages the use of new renewable generation to support the reliability of ISO-New England. A provider must use new renewable energy with environmental attributes generated by any eligible plant that came into service after 2009 whose energy can be delivered in the New England region. 

Retail electricity providers with at least 75,000 customers are required to achieve specific percentages of their annual load with new renewable energy, including 4% on January 1, 2027, 10% on January 1, 2030, 15% on January 1, 2032, and 20% on January 1, 2035. Providers with less than 75,000 customers must achieve 5% on January 1, 2030, and 10% on January 1, 2035, of their annual load with new renewable energy. 

Distributed renewable generation resources and energy transformation projects are not allowed to count towards the new renewable energy requirements. However, if a retail provider with one customer served at 115 kV has not achieved the distributed renewable generation requirements as of January 1, 2024, and the cost of this additional generation would be equal to or greater than the alternative compliance payment rate for such generation, or that meeting the requirements with new renewable energy would economically infeasible, that provider is allowed to satisfy the requirements with an equal amount of increased new renewable energy. 

Load Growth

For retail electricity providers that have achieved 100% renewable energy, such providers must meet their load growth above their 2024 calendar year load with 50% on January 1, 2025, 75% on January 1, 2026, 90% on January 1, 2027, and 100% on January 1, 2028, with new renewable energy or any distributed renewable generation. Until the annual load surpasses 135% of the providers’ 2022 annual load, after which the provider must meet its added load growth with at least 50% new renewable energy until 2035, and 75% on January 1, 2035.

For providers with at least 75,000 customers, and for each municipal and electric cooperative (not including those that have achieved 100% renewable energy) that is a Vermont Public Power Supply Authority member or a future successor of the authority, the electricity provider must meet load growth above its 2035 calendar year load with 100% new renewable energy, which must include the required amounts of distributed renewable generation stipulated above. 

Compliance

Compliance is demonstrated through the generation of electricity from eligible renewable sources with environmental attributes attached, the purchase of RECs from plants whose energy is capable of delivery within New England, or a combination of the two. 

H.B. 40 directs the Public Utilities Commission to develop a system to recognize, approve, and monitor the environmental attributes attached to renewable energy systems owned by retail electricity providers in the state and used to comply with the RES. This system will also recognize RECs traded on the New England Generation Information System (GIS).

An alternative compliance payment can also be paid to comply with the standard rather than retiring RECs. Alternative compliance rates were set in 2018 to $0.01/kilowatt-hour (kWh) for the general requirement and $0.06/kWh for the distributed renewable generation and energy transformation requirements. The rates are annually adjusted for inflation, meaning that rates for 2024 are $0.01228/kilowatt-hour (kWh) for the general requirement and $0.07370/kWh for the distributed renewable generation and energy transformation requirements. For the new renewable energy and load growth requirements, the compliance payments are $0.04/kWh starting in 2025 and adjusted for inflation. Alternative compliance payments will go into the Clean Energy Development Fund and be put toward energy transformation projects within the paying provider's service territory.