A resplendent Victorian, Cape May
Welcome to the New Jersey solar incentive and rebate information page!
If you have any questions, our network of solar experts are on call to assist you! Simply sign up for personalized help. You can get discounted pricing as low as $5,000/kW! This is paired with the very strong New Jersey solar incentives below.
New Jersey Solar Update
We’ve been singing the praises of New Jersey and solar power for some time now. Go ahead, search for “New Jersey” in our little search box on the right hand side of this page midway down. You’ll see plenty of our writings all about how states from all over the union could learn from what the legislature here has been able to accomplish.
Over the past several years, it’s become so popular to get residential solar panels in NJ that some of the performance-based solar incentives have become a little less juicy. How much less? Well, even though your solar power system will still pay for itself quickly and return you handsome profits, it isn’t quite at the fire-setting pace as it was before. Keep reading to find out how fast, and how much.
New Jersey’s Renewable Portfolio Standard
New Jersey certainly does rock when it comes to solar power, and that starts with the Renewables Portfolio Standard (“RPS”). An RPS is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar panels.
NJ strengthened its RPS again in July 2012. The basic standard –now measured as a percentage of total sales rather than a fixed megawatt requirement– of 22.5% renewable energy by May 2021 –already one of the strongest RPS mandates in the nation– now includes a solar specific carve-out of 4.1% by May 2028. The result of setting the bar so high is NJ’s solar panel rebate and SREC (Solar Renewable Energy Certificate) programs, which offer home owners and businesses terrific incentives to get solar panels.
NJ Solar Panel Performance Payments
The heart of NJ’s solar panel push can be summed up in four words: “Solar Renewable Energy Certificates” (“SRECs”). Let’s talk a little more about SRECs, from the top.
So what are SRECs?
Think of SRECs as proof for the New Jersey’s utilities that they are complying with the law to produce their share of clean power. If they’re not producing that power through their own solar farms or wind farms, then they have to “buy” that power from someone else—you, Mr and Mrs. Homeowner. That means extra moula for you!
How do you get SRECs?
Each time your panels generate 1000kWh of electricity, you get an SREC which you can sell for cash! For NJ solar panels, the ratio of SRECs produced per year to system size (in kilowatts) is about 1 to 1. So if you’ve got a 5kW solar system (a solid average for a single-family home), you will generate about 5 SRECs a year.
How much are SRECs worth, and how do you get money for them?
SRECs are traded on an open exchange, so their value will vary from year to year. However, in New Jersey, their value is strongly correlated to the alternative compliance fee the utility would incur for not meeting their requirement to source some of their electricity from the sun. That fee has has been riding sky high -at $693, keeping SREC prices around $650. The alternative compliance fee is currently about $650, and will remain there through May 2014. However, because so many people have already taken advantage of those amazing SREC prices, the July amendments to the RPS have scheduled future reductions to the alternative compliance fees, signaling an imminent drop in SREC prices. In 2014 the alternative compliance fee will drop to $339, slowly decreasing to $239 by 2028.
That’s a big price decrease. On the other hand, it’s still a whole lot of money, paid straight to you every year! SREC prices should continue to track the alternative compliance fees, meaning you figure to bank about $1500 a year, even after the price decrease kicks in.
To get money for your SRECs, you can sign up with an SREC broker, such as SRECtrade. These guys handle the paper work, aggregate a lot of homeowner SRECs together, handle the trading with the utility companies and take a commission for their trouble. Their efforts are worth the hassle, since it isn’t cost effective for the utilities to connect with thousands of homeowners to negotiate a small number of SREC purchases each month from each homeowner.
NJ Solar Panel Rebates
New Jersey’s larger renewable energy program does offer rebates for some clean energy types. Unfortunately legislators made the decision to back solar power exclusively with the strong SREC market. That means the cost of solar panels in NJ may be a bit higher at the outset, but those tremendous long-term payments still more than make up for it.
New Jersey Solar Tax Credits
New Jersey also lacks any personal tax credits for solar panels. NJ’s pending reduction in SREC prices means a statewide solar power rebate or tax credit (with rollover, if necessary) would be an excellent way to keep solar growth humming here. With SREC prices still providing substantial payments, even a small rebate or tax credit would be a significant boon to homeowners like you, without costing the state all that much.
Solar Tax Exemptions in New Jersey
Contrary to other home improvements like a new kitchen or bathroom, with solar panels in NJ, you will not have to pay any sales taxes on your system. That’s 7% you’re saving right upfront, even without any statewide solar power rebates.
Also, when the property tax assessor comes a knockin’ at your front door, by law, they are not allowed to charge you any more property taxes because you’ve got a new valuable solar system on your roof. At the same time, your home WILL be worth significantly more when you sell, because, hey, what home buyer doesn’t like free electricity?
Utility Prices in New Jersey
New Jersey pays an average of 15.94 cents per kilowatt-hour of electricity. That’s solidly above the national average of 11.43 cents/kwh. We know you hate paying that extra (almost) 30% on your electric bill. But where you’re currently seeing larger bills, you could be seeing bigger savings! Higher electricity prices means greater opportunity to save money by producing your own clean, earth-friendly power with solar panels.
NJ Net Metering and Interconnection
New Jersey is good to go with Net Metering. With net metering, excess power generation is credited to your next bill at the full retail rate. If you run a surplus for an entire year, the utility will cut you a check for the surplus at the company’s avoided-cost (wholesale) rate. All investor owned utilities and certain competitive municipal utilities and electric cooperatives are required to provide net metering.
Interconnection standards are strong here as well. Regulations have created a three-tiered system for interconnection procedures, depending on the size of the energy system. Your residential system of less than 10 kw qualifies for simplified procedures with no application fees. The law actually prevents the utilities from charging small systems like yours any additional fees whatsoever to get hooked up to the grid. Nor may the utility require you to install a redundant external disconnect switch, or to purchase any additional liability insurance. There is a bit of room for improvement on standard procedures for larger generators (hence the “B” grade), but everything should be smooth sailing for your residential solar power systems.
5kW Example Return on Investment for Solar Panels in NJ
What do all the numbers add up to for you? Let’s check:
Installing a typical 5kW of solar panels in NJ should start at about $25,000. Don’t worry – that’s going to drop fast!
- Since the feds calculate the federal solar tax credit based on actual out of pocket costs, no state solar power rebate means a bigger federal tax credit. Subtract $7,500 (30% of $25,000) for a new price of $17,500.
- Next let’s account for your NJ SREC payments. With prices still high for another 18 months or so, we estimate that in the first year your solar power system will generate $3,510. Subtract that for a new price of $13,990
- Finally we subtract your first year’s energy savings, which we estimate to be about $932. That brings your cost after the first year to $13,058, cutting your costs nearly in half already!
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in 5 lightning-fast years. After that you’ll be turning a profit for the rest of the life of your solar panels, which is typically about 25 years total. Lots and lots of profit in fact. We estimate your total profit to be nearly $45,000 over the lifespan of your system.
- In addition to those direct wallet-fattening savings, you also increased your home value by $18,650, all of it tax free.
- Maybe best of all, you’ve created a whole lot of green for the planet, on top of all that extra green in your wallet. All that the fossil-fuel energy you’re not using is the carbon-saving equivalent of planting 103 trees a year, every year your solar power system is humming.
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
New Jersey’s Office of Clean Energy is charged with the success of the state’s aggressive Renewable Portfolio Standard, which depends in part on installing “sufficient solar capacity to meet the RPS requirements, at the lowest cost to ratepayers, taking into account other policy goals – fairness and equity to all ratepayer classes, job growth, improved reliability/security and improved environmental quality.”
They have a big job facing them, but we applaud the New Jersey government and business leadership for putting their shoulders to the task. We’d like to see a statewide rebate back in place to bring down the initial out of pocket investment, but even without that initial discount, the cost after year 1 remains low, and the expected payback time frame is one of the fastest in the nation. That’s enough to earn highest marks with us.