Vermont is known for its tree-hugging, Ben & Jerry's binge-eating, environmental hippies. But the state's power supply has historically been nailed to nuclear -- until now. Here's why.
Vermont's dirty little secret
Vermont's natural beauty is only skin-deep. Its 626,000 citizens rely on traditional fuels to keep their cabins warm and their soft lights lit. Nuclear power accounts for a whopping 75% of the state's power -- more than any other state. Depending on your own energy opinion, nuclear power can be a clean and green option -- or Vermont's worst environmental nightmare.
Regardless of your opinion, the Northern state made significant headway in its rush toward renewables last week – and solar power companies everywhere are celebrating.
The Vermont House approved a bill last week that paves the way for more residential solar panel systems across its state. Net metering essentially allows homeowners with solar panel systems to sell excess capacity back to the grid when they're not using it. The new approval nearly quadruples the amount of electricity utilities are required to buy back -- up to 15% of peak capacity.
The practice exists in 43 states across the nation, and Exelon Corporation's (NYSE: EXC ) CommonWealth Edison subsidiary put together a video explaining net metering basics to its Illinois power-producing customers:
Exelon Corporation has embraced net metering -- because it's been able to. Like Vermont, Illinois has legislation in place that allows utilities to buy capacity from each individual customer -- up to 40 kilowatts. That means Exelon Corporation can buy double the amount of electricity from each of its rooftop solar customers that Vermont utilities can purchase. Regulation varies dramatically by state, with some staying entirely silent on net metering policy altogether.
Arizona: The Anti-Vermont
When it comes to rooftop solar, Arizona is the anti-Vermont. Exelon Corporation, Illinois, and Vermont are embracing net metering, but Pinnacle West Capital Corporation's (NYSE: PNW ) Arizona Public Service Utility has been lobbying to add extra charges to solar homeowners. Its reasoning is somewhat sound: Since solar panel kit owners don't pull as much power from the grid, they're paying less than their part to maintain power lines, substations, and power plants themselves.
Pinnacle West Capital Corporation got a bit of what it wanted in November, when state regulators voted to tack on a $0.70 fee per kilowatt of installed solar -- equivalent to around $5 per month for the average household. Pinnacle West Capital Corporation was pushing for around 10 times that amount, but the approval still stands in stark contrast to Vermont's new solar standards.
Who's right: Vermont or Arizona?
The National Renewable Energy Laboratory ranks states on their solar stats, and comparing Arizona to Vermont is like comparing apples to oranges.
Arizona has 20,930 installed solar panel kits, with over 18,000 included in Pinnacle West Corporation's net metering policy. That makes Arizona the second-most solar state behind California. Vermont has just 1,637 solar panel kit systems installed, and its capacity clocks in at just 4% of Arizona's.
Residential solar installer SolarCity Corporation (NASDAQ: SCTY ) has 31 operations centers across 14 states, but Burlington, Vermont doesn't make the cut. Type in Phoenix, Arizona, however, and SolarCity Corporation immediately directs you to its "Energy Advisors" for a free quote. SolarCity Corporation's in-house installers have put up over 2,000 solar panel kits in the state, and it has partnered with Home Depot to renovate more residents' rooftops than ever before.
The debate on net metering will continue to play out across every state. Arizona is feeling growing pains from its soaring solar use, while Vermont is attempting to stretch its solar potential. Falling prices are increasing solar power's feasibility across the United States, and Vermont's new policy has made it greener than ever.
The energy revolution is bigger than Vermont
The United States' energy position is undergoing a revolution -- and it's bigger than a single state. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.