New Jersey Solar
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Let’s learn about some of those incentives, the utility policies associated with interconnection and setup, and special solar financing plans for solar panels and systems in New Jersey.
New Jersey Solar
New Jersey is a small but populous state in the United States and boasts over 126,000 solar system installations. New Jersey has a variety of climates and topography, and it experiences the four seasons. It is home to the cities of Newark and Trenton, and also comprises part of the New York City metropolitan area, where the majority of the population is centered, and Annapolis. New Jersey state government policies favor solar tax incentives. Its encouraging net metering program, good tax incentives, and strong Transition Renewable Energy Certificate (TREC) program make New Jersey a favorable place for businesses and residents to install solar panels and battery systems.
Let’s learn about some of those incentives, the utility policies associated with interconnection and setup, and special solar financing plans for solar panels and battery systems in New Jersey.
New Jersey Solar Incentives
New Jersey provides multiple solar energy rebates and incentives that help to reduce the overall cost of solar systems. Our EnergyPal Advisors can help you navigate all of the solar incentives available in New Jersey and also apply them to the available solar panel offerings.
- New Jersey has Transition Renewable Energy Certificates (TRECs) that vary in value depending on the type of solar installation.
- No sales tax on solar panels, systems and related equipment
- No property tax on any increase in property value from installing solar
New Jersey Rebates and Tax Breaks
Here are more details about the incentives available in New Jersey:
- New Jersey grants Transition Renewable Energy Certificates (TRECs) to those who purchase solar systems. You receive 0.6 to 1 TREC for every mWh your panels are expected to produce per year. Residential ground- or roof-mounted solar systems get 0.6 TRECs, while community solar projects get 0.85 TRECs. Each TREC is valued at $152 every year, for 15 years.
For example, let’s say you need a 10 kW system and it’s expected to produce 13,000 kWh (13 mWh) per year. You get 13 X 0.6 SRECs, or 7.8 SRECs. Your savings for the year would look like this:
7.8 X $152 = $1,185.60 savings
Assuming a similar value every year and a solar system life of 15 years, this program almost pays for the value of the entire system! Plus you get reduced electricity bills.
- The photovoltaic energy sales tax exemption is a tax break where you don’t pay any sales tax on solar panels, systems or related equipment in New Jersey.
- The Property Tax Exemption for Renewable Energy Systems is a tax break where you won’t pay additional property taxes if your property value increases when you add a solar system (and with solar, your property value does go up!).
Other Solar Energy Incentives
The US federal government helps residents and businesses pay for their solar systems. The federal investment tax credit (ITC) allows for a tax deduction of 26% of the cost of a solar system currently. Tax credits can be rolled over if you can’t use the whole credit this year. The ITC cannot be claimed for solar leases or power purchase agreements (PPAs) where the third party financier takes the credits themselves, but that is typically baked into a reduced lease/PPA monthly for you. For the actual US government bill, see 4908 of the HR 133 (It’s a giant file, so watch out!).
If you purchased a $20,000 system, your savings from the federal tax credit would look like this:
$20,000 X 0.26 = $5,200 savings
So if you spent $20,000 on that system, your cost would go down to $14,800. And you get yearly TRECs that can pay for the system over time.
Utility policy factors determine what your utility provider pays you for the excess power you produce and what you save on your power bill by reducing electricity usage. New Jersey gets a high score for utility policies.
Net Metering and Interconnection Policy
One important policy for solar customers is called Net Metering. Net Metering is a billing mechanism that allows solar customers to push electricity to the grid for credit that can be used later, like at night when your solar panels aren’t generating power. This incentivizes people to go solar, provides clean energy for others to use and prevents waste. Some states have poorer net metering policies than others, meaning that credits may not be able to be rolled over to the next month or year, or that you don’t earn full watt-for-watt credit for your excess energy.
New Jersey’s Net Metering program is favorable. You are paid the full retail amount for your excess energy in the form of a bill credit. Credits can be carried over into the next month but expire at the end of every year, when you are paid at the average wholesale rate. The exact details depend on your electricity provider’s policies.
Solar Setup Fees
In New Jersey, there are no application fees for systems less than 10 kW. Systems over 10 kW carry a $50 application fee, plus a $1 per kW charge.
Electricity prices in New Jersey are above average. Usually you don’t want high prices, but with solar, the higher the prices, the more you save, and the more economical a solar system becomes.
According to the US Energy Information Administration, the average total cost of electricity in New Jersey is $0.157 per kWh for residents. The national average for all states is $0.134 per kWh, ranging from $0.967 to $0.288 per kWh.
Rate designs are comprised of monthly fees and either a flat or tiered rate you pay for electricity. Good rate designs, which save you money when you conserve energy, are tiered and have low fixed monthly fees. Poor rate designs have flat rates and high fixed monthly fees.
New Jersey is above average when it comes to the quality of its electricity bill rate design. It has some tiered rate programs and low fixed fees (around $3–$9 per month).
You still pay fixed monthly fees when you go solar because you are still tied to the grid. Being tied to the grid is a good thing, because otherwise you might not have power at night or if your system stopped working suddenly. Even if you go off of the grid and rely on a battery source, the high cost of the battery would not outweigh the low monthly fee and the substantial savings obtained from a net metering program.
PACE stands for Property Assessed Clean Energy and is a financing program for solar projects that is tied to the home instead of the homeowner. The PACE program is not available for residents in New Jersey.
Other Energy Financing
Solar systems can be financed by bank loans, solar installer financing, new home mortgages, energy loans and home equity loans or lines of credit. Cash works too.
Talk to your EnergyPal Advisor about financing solar options in New Jersey. We regularly source the best deals and terms for our customers.