New Jersey solar incentives for home solar energy systems
The federal government provides a 30-percent renewable energy tax credit to individuals who install solar photovoltaic (PV) panels or a solar water heating (solar thermal) system. This solar tax credit, on its own, will cut your out-of-pocket costs by about a third. Beyond this, many state governments offer incentives, like rebates and tax credits, to individuals and businesses who go solar. New Jersey is no exception.
New Jersey legislators have made the promotion of renewable energy -- and solar power, in particular -- a statewide priority. As a result, NJ is a leader in providing cash incentives for homeowners and businesses to get solar. For starters, lawmakers have recently revised their Renewable Portfolio Standard (RPS) to require that utilities produce around 1500 MW of renewable energy by 2021. Under New Jersey's Clean Energy Program, the state offers a per-watt rebate for individuals who install solar photovoltaic (PV) panels. Plus, the state's solar renewable energy certificate (SREC) program ensures that solar panel owners receive compensation for the electricity generated by their system. In most cases, the combination of NJ incentives and the 30-percent federal tax credit can significantly reduce the installed costs of a particular solar project. Below, you'll find info on the programs available in New Jersey. The Garden State has never looked so green.
When you're ready to move forward with your project, you may want to consider filling out our solar energy information form. It's free and requires just a few minutes to complete. After learning about your household electricity needs, we'll coordinate with our solar panel installation partners serving serving New Jersey to get you a free site visit and competitive quotes. In the end, we're here to make sure that you quality service and a great price on your solar energy system.
Are you a New Jersey business owner? See our NJ commercial solar energy incentive page.
New Jersey solar energy rebate program
Beginning in September 2010, the New Jersey solar energy rebate program will provide the following rebates:
- 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.
Read more about the changes to NJ solar rebates here.
NJ solar renewable energy certificates (SRECs)
Over the past several years, New Jersey has developed one of the country's most robust markets for the trading of solar renewable energy certificates (SRECs). State regulators have paid special attention to solar energy technologies, with statewide renewable energy standards stipulating that by 2021 at least 2.12% of all NJ electricity come from solar resources.
The concept behind renewable energy certificates -- or RECs -- is fairly simple. The state mandates that a certain percentage of electricity statewide must come from renewable sources, like solar power technologies. To meet these requirements, utilities in New Jersey are obligated to buy a corresponding amount of solar renewable energy certificates (SRECs). Who supplies SRECs? Any resident, business, school, or government entity that produces solar energy and has registered with the NJ Board of Public Utilities. What this means is that you can be paid for the energy produced by your PV installation.
In practice, utilities purchase the electricity generated by their residential (and commercial) customers who have installed solar PV panels. Customers enter into SREC purchasing contracts, whereby they are guaranteed a per-kWh payment (for the output from their system) that is higher than the going retail rate -- hence the incentive to install solar panels.
State authorities expect SREC prices to be about $100 per megawatt-hour (mWh) cheaper than the Solar Alternative Compliance Payment (SACP), which is essentially a state-mandated price ceiling. As of May 2009, NJ Board of Public Utilities offered the followed guidance on future SACP prices (per mWh):
What does all this mean? Judging by the SACP price schedule, NJ homeowners could reasonably expect to sell the electricity generated by their solar PV system at a rate that's about $100 less per megawatt than the SACP price levels indicated above. In other words, in the 2009-10 reporting year, an estimated SREC price would be about $593/mWh ($693 - $100). This translates to $0.53/kWh -- a rate that's well above the retail price of conventionally generated electricity.
For more information about trading SRECs, and for instructions for applying to the program, see the NJ Solar Renewable Energy Certificate Program website.
NJ tax-based solar incentives
The biggest financial incentives for getting solar in New Jersey are provided through the SREC program and the solar energy rebate program described above. There are a couple modest tax-related incentives that are worth mentioning, however:
Since 2008, New Jersey law has provided a property tax exemption for solar PV panels, solar water heating (solar thermal) and a number of other types of renewable energy systems -- like wind technologies. In short, 100% of the value added by these systems is exempted from local property taxes. To claim the exemption, the system owner has to apply for a certificate from their local assessor that reduces the tax basis of the property to what it would be without the renewable energy system. Exemptions take effect the year after the certificate is granted.
All solar energy equipment is exempted from New Jersey state sales tax. On the books since 1980, the exemption is available to all taxpayers, including corporate entities.
NJ: Utility-sponsored solar loans
Public Service Electric and Gas (PSE&G) offers solar loans for "behind the meter" PV system to all its customers. Loans may be used to cover 40% to 60% of project costs, with the remainder to be financed by the customer. The innovative, and really cool, aspect of the program is that customers may repay the loan either in cash or by signing over their Solar Renewable Energy Certificates (SRECs). See the PSE&G website for more information.
Energy efficiency rebates
Improving the energy efficiency of your home -- by replacing inefficient water heaters, for example, or installing efficient lighting -- will help boost the performance of your solar panels. There are a number of NJ programs that provide rebates to individuals that invest in energy-saving technologies. To see what's available, visit the Database of State Incentives for Renewables and Efficiency.
GetSolar blog: "NJ Governor signs new solar bills"
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GetSolar blog: "New Jersey SRECs starting the year right"
[Last updated: 6/29/10]
New Jersey: Residential Solar Incentives