[co-author: Michael Murphy]
I. Background
On Monday, June 17, the Vermont legislature passed H.289 to significantly reform the Renewable Energy Standard (“RES”) (30 V.S.A. §§ 8001-8016), overriding Governor Phil Scott’s veto of the bill by a vote of 21-8 in the Senate, and 102-43 in the House. The passage of this RES bill sets Vermont on the path toward 100% renewable electricity by 2035, making it only the third state in the nation to require all in-state utility providers to meet such a timeline. H.289 also represents the first major update to the RES since its original passage in 2015. This landmark reform was made possible through the cooperative efforts of Renewable Energy Vermont, which serves as the state’s primary clean energy trade association; Vermont’s distribution utilities; VPIRG; key legislative leaders; and other stakeholders. DRM is proud to have played a role in the initial drafting of this bill, which will usher in a new era of sustainable energy generation and bolster Vermont’s climate resilience in coming years.
The original RES, passed in June of 2015, required Vermont’s retail electricity providers to acquire a percentage of all transmitted electricity from renewable sources, such as solar, wind, and hydropower. These percentages were to gradually increase over time, ultimately reaching 75% by 2032, with at least 10% of that renewable energy to be generated in-state. The updated RES in H.289 increases these targets to 100% and 20% respectively, and sets new target dates based on the size of the provider. In addition, the updated RES includes two new Tiers―New Renewable Energy and Load Growth Renewable Energy, which are summarized below.
H.289 is set to take effect on July 1, 2024. The revised generation requirements and new Tiers will apply to providers beginning on January 1, 2025, while portions of the bill eliminating offsite net metering will take effect on (i) January 1, 2026 for projects that serve multifamily, low-income residences, and (ii) January 1, 2025 for all other net metering systems.
Here are some highlights of the updated RES.
II. Elimination of Offsite Net Metering and Restriction of Hydroelectric and Biomass
H.289 introduces several impactful changes to Vermont’s overall energy policy, including:
A. The elimination of offsite net metering: H.289 phases out offsite or “virtual” net metering beginning on January 1, 2025. This cutoff is pushed out by a year for systems that will serve multifamily, low-income residential buildings, which must file applications for offsite systems by January 1, 2026. When these changes take effect, net-metering projects must be located on the same parcel as, or on a parcel adjacent to, where the generated energy will be utilized. The bill also requires an analysis of successor programs that might expand options for Vermonters relying on offsite net metering systems, such as residents who are unable to install solar on their property.
B. The near-elimination of new or expanded biomass plants: H.289 introduces new age, efficiency, and emissions standards for biomass plants. These standards are expected to effectively eliminate the use of new or expanded biomass plants to meet compliance requirements.
C. Limits utilization of large-scale hydroelectric: Like the new biomass standards, H.289 limits the addition of new hydroelectric energy plants by including stricter compliance standards.
III. Updated RES Tiers
The updated RES also bolsters existing renewable energy generation requirements for Vermont providers, now comprising five Tiers:
- Total Renewable Energy;
- Distributed Renewable Generation;
- Energy Transformation;
- New Renewable Energy; and
- Load Growth Renewable Energy.
Flexibility for Utilities: Like the original RES, H.289 allows providers to meet their compliance obligations in several ways, to ensure customers are not unduly burdened by the obligations. For example, the updated RES allows all providers (except for Green Mountain Power) to access Renewable Energy Credits (RECs) from pre-2017 net-metering projects, which were historically retained by the project owner. In addition, the updated RES tailors requirements to the individual needs and constraints of smaller providers, rather than taking a “one size fits all” approach.
Total Renewable Energy (Tier I):
Updated RES requirement: H.289 requires retail electricity providers to serve 63% of their annual load with renewable energy resources during the year beginning on January 1, 2025, increasing by at least 4% every three years until reaching 100% by 2030 or 2035, depending on the size of the provider.
Eligible Resources: Like the original RES, providers may meet their Tier I requirement with RECs generated by any renewable energy plant whose energy is capable of delivery in New England, which includes Hydro-Québec’s generating fleet. Tier II, IV, and V resources―distributed renewable generation, new renewable generation, and load growth renewable generation―also count toward this requirement, but Tier III energy transformation projects do not.
Distributed Renewable Generation (Tier II):
Updated RES requirement: H.289 requires retail electricity providers to serve 5.8% of their annual load with distributed renewable generation during the year beginning on January 1, 2025, increasing by at least an additional 1.5-2% each year until reaching 20% by 2032 or 2035, depending on the size of the provider.
Eligible Resources: These resources must (1) have a plant capacity of 5 MW or less; (2) meet the definition of “new renewable energy” or qualify as existing, small-scale hydroelectric renewable energy; and (3) meet specific interconnection requirements. If a provider is unable to meet this requirement with eligible resources, it may petition to temporarily meet this requirement with distributed generation plants that have a capacity in excess of 5 MW.
Energy Transformation (Tier III):
Updated RES requirement: H.289 requires retail electricity providers to serve 7.33% of their annual load with energy transformation projects during the year beginning on January 1, 2025, increasing by at least an additional 0.66% each year until reaching 12% on and after January 1, 2032. However, for municipal providers serving 7,000 customers or less, the required amount is 6% by January 1, 2025, increasing by 0.66% per year until reaching 10.66% on and after January 1, 2032.
Eligible Resources: Providers may meet this requirement with additional distributed renewable generation or through projects such as heat pumps that result in a net reduction in fossil fuel consumption by the provider’s customers.
New Renewable Energy (Tier IV):
Requirement: This newly created Tier is intended to spur development of new renewable energy plants to enhance regional system reliability. Providers already utilizing 100% renewable energy are exempt from requirements under this Tier IV. For providers serving 75,000 customers or more, this Tier requires them to supply 4% of their annual load with new renewable energy by January 1, 2027; increasing to 10% on and after January 1, 2030; 15% on and after January 1, 2032; and 20% on and after January 1, 2035. For providers serving less than 75,000 customers, this Tier requires them to supply 5% of their annual load with new renewable energy by January 1, 2030, and 10% on and after January 1, 2035.
Eligible Resources: RECs from renewable energy plants commissioned in 2010 or later—excluding large-scale hydroelectric generation plants (≥ 200 MW)—whose energy is capable of delivery in New England may be used to meet these requirements. Distributed renewable generation used to meet Tier II and energy transformation projects used to meet Tier III, however, may not also count toward Tier IV’s requirements.
Load Growth Renewable Energy (Tier V):
Requirement: Like Tier IV, Tier V is an entirely new addition to the RES. This Tier requires providers that already use 100% renewable energy to meet future load growth with at least the following percentages of new renewable energy: 50% beginning on January 1, 2025; 75% on and after January 1, 2026; 90% on and after January 1, 2027; and 100% on and after January 1, 2028.
Eligible Resources: The requirements under Tier IV can be met using new renewable energy or any renewable energy eligible under Tier II.
IV. Practical Implications of the Updated RES
Proponents of H.289 anticipate that it will have the following impacts, many of which represent steps toward greater sustainability and resilience for Vermont residents and businesses:
- Doubles the amount of new renewables Vermont utilities are required to build in-state;
- Drives development of new renewable energy resources throughout the region;
- Reduces Vermont’s reliance on fossil fuel sources both in and out of the state, resulting in less regional demand for fossil fuel based generation;
- Helps Vermont meet its greenhouse gas emission reduction goals under the Global Warming Solutions Act;
- Limits access to offsite net metering for Vermont residences and businesses, while encouraging development of a successor program that would serve low-income housing;
- Enhances grid reliability and resilience;
- Helps insulate Vermonters from future rate shocks associated with fossil fuel price volatility; and
- Increases state tax revenue from new generation.
Resources
Bill H.289 as Passed by the House and Senate, Vt. Gen. Assembly (May 7, 2024), https://legislature.vermont.gov/Documents/2024/Docs/BILLS/H-0289/H-0289%20As%20Passed%20by%20Both%20House%20and%20Senate%20Official.pdf
Elena Mihaly, With Climate Impacts Flooding the State, Vermont Needs an Updated Renewable Energy Standard, Conservation L. Found. (Feb. 9, 2024), https://www.clf.org/blog/reforming-vermont-renewable-energy-standard/.
H.289 Renewable Energy Standard Bill Highlights, Vt. Gen. Assembly, https://legislature.vermont.gov/Documents/2024/WorkGroups/House%20Environment/Bills/H.289/Witness%20Testimony/H.289~Peter%20Sterling~Renewable%20Energy%20Standard%20Bill%20Highlights%20and%20Summary~1-24-2024.pdf
Joyce Manchester, H.289 – An Act Relating to the Renewable Energy Standard, Vt. Legis. Joint Fiscal Off. (Feb. 20, 2024), https://ljfo.vermont.gov/assets/Subjects/Fiscal-Notes-on-Energy-Environment/a18358950e/H_289_Fiscal_Note_RES_Reform-v2.pdf.
Vermont Senate Passes Modernized Renewable Energy Standard, Vt. Nat. Res. Council (May 7, 2024), https://vnrc.org/29640-2/.
Vermont’s Renewable Energy Standard Fact Sheet, Renewable Energy Vt., https://www.revermont.org/wp-content/uploads/RES-Fact-Sheet.docx.pdf
Vermont Senate Passes Modernized Renewable Energy Standard, Sierra Club Vt. Chapter (May 7, 2024), https://www.sierraclub.org/vermont/blog/2024/05/vermont-senate-passes-modernized-renewable-energy-standard.
Vt. Stat. Ann. tit. 30 § 8005 (West 2015).
350VT Testimony to the Vermont House Environment and Energy Committee, Vt. Gen. Assembly (Jan. 17, 2024), https://legislature.vermont.gov/Documents/2024/WorkGroups/House%20Environment/Energy/Renewable%20Energy%20Standard/W~Vanessa%20Rule~350VT%20Testimony~1-17-2024.pdf (discussing the emissions of biomass and large-scale hydroelectric plants which informs the legislature’s rationale behind restricting the use of these resources).
