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New Jersey’s high electricity prices, coupled with strong net metering and SREC programs, make solar panels a worthwhile investment for nearly everyone in the Garden State.
When you include the federal solar tax credit, New Jersey residents can reduce their solar costs by thousands of dollars, shortening payback periods and enhancing the overall value of their investment.
Here’s what you need to know about going solar in New Jersey.
Key Solar Rebates and Incentives in New Jersey
As a New Jersey homeowner, you have access to valuable incentives that can significantly enhance your return on investing in solar panels. The ITC and SREC programs are among the most effective ways to lower your solar costs.
Residential Clean Energy Credit
The Residential Clean Energy Credit, formerly known as the federal Investment Tax Credit (ITC), allows you to reduce your solar panel system’s cost by 30%. This incentive covers the entire system, including equipment, installation, permitting, and sales tax.
When you file your federal income taxes, you can apply this credit to reduce your tax bill. To qualify for the ITC, you must purchase your system outright or finance it with a solar loan; leasing is not eligible.
You must have a sufficient tax liability to benefit fully, but any unused credit can be carried over to future years until the ITC expires at the end of 2034. Tax-exempt entities, such as nonprofits, may be eligible for a direct payment instead.
Successor Solar Incentive (SuSI) Program
The Successor Solar Incentive (SuSI) Program, New Jersey’s updated SREC program, allows you to earn Solar Renewable Energy Credits (SRECs) for the clean electricity your panels produce. Under the state’s renewable portfolio standards, utilities must generate a certain amount of solar energy, and your SRECs help meet this requirement.
For residential systems, you can earn $85 per SREC. To start selling SRECs in New Jersey:
1. Register your solar panel system through the SuSI Program portal before construction begins.
2. After installation, submit a post-construction packet to receive a NJ Certification Number.
3. Use your certification number to open a GATS account to track your generation.
4. Register on InClime (the SREC-II Administrator) to receive payments.
Solar Tax Exemptions
In addition to these incentives, New Jersey offers tax exemptions for solar panel systems. The solar sales tax exemption eliminates sales tax on your system, while the solar property tax exemption ensures that installing solar panels will not increase your property taxes.
Net Metering In New Jersey
If you connect your solar panel system to the grid, you can take advantage of net metering, one of New Jersey’s top solar incentives. Net metering allows you to earn credits for any excess electricity your panels generate and send to the grid. When your system isn’t producing power, such as at night, these credits are used to offset your electricity bill, potentially reducing it to very little or nothing.
In New Jersey’s net metering program, you earn credits at the retail rate for each kilowatt-hour (kWh) of electricity your system produces, up to 100% of your annual electricity usage. If your system produces more electricity than you use over the year, the excess is credited at the wholesale rate. For example, if you send 100 kWh of solar power to the grid and use 80 kWh of utility-generated electricity, you’ll earn credits at the retail rate for the 80 kWh, while the remaining 20 kWh of excess generation will be credited at the wholesale rate.
Options for Financing Your Solar Panel System
Here are a few ways to finance your solar panel system so you don’t have to provide all the money upfront:
Cash Purchase
You’ll own the system outright and pay for it upfront, offering the best long-term savings.
Solar Loan
Allows you to retain ownership of your system with little to no money down. Look for subsidized clean energy loans through local incentive programs for the best rates. Home equity loans or personal loans are alternatives, though private solar loans may come with higher interest rates or upfront fees.
Solar Lease or Power Purchase Agreement (PPA)
A third-party company owns the system and either leases you the panels (solar lease) or sells you the electricity they generate (PPA). These options typically offer lower savings and can involve lengthy contracts. Be sure to carefully review the terms before committing to avoid potential drawbacks.
Navigating the Solar Interconnection Process
Navigating the solar interconnection process in New Jersey involves several steps to ensure your solar panel system is properly connected to the grid and complies with local regulations.
- Start by researching New Jersey’s solar interconnection requirements and regulations. Consult with a local solar installer to understand the specific needs and process for your installation.
- Obtain necessary permits from your local municipality, which typically include building and electrical permits. Your solar installer can help with these requirements.
- Submit an interconnection application to your utility company. This application includes details about your solar panel system and its expected impact on the grid. You may need to provide system specifications and technical documentation.
- The utility will review your application to ensure your system meets safety and operational standards. This may include a technical assessment or a study to determine if upgrades are necessary to support your system.
- After the utility approves your application, you’ll receive an interconnection agreement. This agreement outlines the terms and conditions for connecting your system to the grid. Review and sign the agreement.
- With the approvals in place, your solar installer will proceed with the installation of your system. Ensure that the installation complies with all utility guidelines and local codes.
- Once installation is complete, your system will need to pass a final inspection by local authorities or the utility to confirm it meets all regulatory requirements.
- After passing inspection, the utility will finalize the connection of your system to the grid. This may involve coordination with the utility for the actual connection and activation.
- If you’re participating in net metering, ensure your meter is configured to track your solar generation and usage. The utility will handle this setup.
- After your system is connected, monitor its performance regularly to ensure it operates efficiently. Address any issues promptly with your installer or utility.
Following these steps helps ensure a smooth interconnection process and maximizes the benefits of your solar panel system in New Jersey.
Are Solar Panels Worth It?
Yes, solar panels are generally a valuable investment, both financially and ethically. Although the initial cost of a home solar power system can be high, tax credits and other incentives can significantly lower these upfront expenses. Over time, many users experience substantial savings on their electric bills, which helps offset the overall cost. Additionally, solar panels provide the satisfaction of contributing to environmental sustainability. In most cases, the benefits of going solar far exceed the drawbacks.
