New Jersey’s solar energy rebate program is somewhat fickle, to say the least. In recent months, the state’s Renewable Energy Incentive Program (REIP) has been switched off, then on, then back off again. Last we heard, the solar rebate was tentatively slated to return at the beginning of September — but no one knew at what level, and uncertainty abounded.

The New Jersey Board of Public Utilities last week moved to provide a bit of clarity. The NJ solar rebate, it seems, will return on September 1, 2010, at the following levels:

• Residential solar installations: $0.75 per watt of installed solar capacity, up to 7.5 kilowatts (kW); notably, home solar systems larger than 10 kW are not eligible for the rebate.
• Public and non-profit solar installations: $0.75 per watt up to 30 kW.
• Commercial solar installations are not eligible for solar rebates.

Previously, the residential rebate level was $1.35 per watt.

As many New Jersey residents know, solar renewable energy credits — or SRECs — provide strong incentive to install solar panels, irrespective of the solar rebate. Put simply, owners of renewable energy systems also own the SRECs associated with their systems’ electricity output. Sell your SRECs, either up front or over time, and you’re looking at a pretty decent return on investment — arguably the best in the entire country. The SREC market is so promising, in fact, that New Jersey homeowners have been proceeding with their solar projects using only SRECs and the federal 30-percent renewable energy tax credit, a combination that, by many measures, provides incentive aplenty.

Back to the REIP rebate news: if you’re considering solar power for your New Jersey home, you may be wondering how to proceed. Do you try for the rebate? Or do you proceed with the installation solely on the basis of SRECs?

As with most things, we try to counsel a conservative approach. The last time the New Jersey Clean Energy Program opened, it received over 1,000 new applications — literally in a matter of hours. As a result, the REIP was shuttered shortly thereafter. One can only assume, then, that when the rebate program reopens on September 1, the office will again be hit by a deluge of applications. There’s no guarantee, in other words, that you’ll be able to secure solar rebate funds for your project.

So, if you’re interested in installing solar panels for your New Jersey home, we’d suggest that you start by looking at SREC-only proposals (i.e., proposals that don’t take into account solar rebates). If that looks good to you, proceed. If the proposal doesn’t meet your financial or budgetary criteria, but you’re still interested in pursuing solar, go ahead and factor in the newly announced $0.75/watt rebate. But do so with a grain of salt. As stated before, there’s no guarantee yours will be among the applications accepted under the next cycle of funding. If it’s not accepted, your application would likely be rolled into the next funding cycle — which will be even further out and, doubtless, at a lower per-watt rate. All the while, you’d be missing out on generating SRECs, which (as noted above) deliver real value to owners of renewable energy systems.