By Eva Kurilova and Kelsey Tollefson

This is the third of a three article series about how to make the most of home solar in New Jersey. This article covers the current state of solar power in New Jersey, and discusses why the Garden State has gone solar with such gusto. For information regarding ways to get started with solar in New Jersey, check out the first article in our series here. If you’re interested in learning more about ways to save money with solar panels, the second article in the series can be found here.


The state of New Jersey has been a huge proponent of solar energy since 2001, when it founded the New Jersey Clean Energy Program.1 Sixteen years later, New Jersey has emerged as one of the country’s most prolific users of solar power, and has one of the highest amounts of installed solar capacity in the nation. While California comes out on top with nearly 7.4 gigawatts (GW), New Jersey’s 2 GW of solar-generating capacity is a staggering accomplishment—especially considering that New Jersey is not nicknamed the “Sunshine State.”

The state’s emphasis on renewable energy has made it one of the best states in the nation for homeowners looking to switch to solar. Here are a few reasons why:

Households in Metuchen are saving an average of $780 per year on their electric bills.

Are you a homeowner?

New Jersey’s electricity rates and peak sun hours make it an ideal state for home solar installations.

Two major considerations that should drive any solar purchase are the local price of electricity and regional peak sun hours available. For New Jersey homeowners especially, these factors both point towards major solar savings.

The first part of the home solar equation concerns available peak sun hours. Home solar arrays that are exposed to a sufficient amount of peak sun hours produce more power, more consistently. It’s important to understand that peak sun hour isn’t just a fluffy term for “really sunny day”—it’s a real measurement describing the intensity of solar radiation.2 During a peak sun hour, the sun’s rays are equivalent to 1000 watts of energy per square meter of surface area.3

Obviously, the average number of peak sun hours available varies across the country. In New Jersey, there are usually about 4-4.5 peak sun hours per day.4 Note that this is an annual average—any New Jersey resident could tell you how sunny it can get during summer months. It’s the lower levels of light during mid-Atlantic winters that drag down the state’s average peak sun hours.

  • Average Peak Sun Hours
  • Nominal price per kW/h (cents)
Nationwide Average Electricity Prices

The other factor that determines the viability of home solar is the price of grid-supplied electricity. Households that pay high electricity prices usually see the greatest savings from a residential solar setup. The reasoning behind this is simple: in a region with high electricity prices, every kilowatt hour (kWh) of power generated by a solar array represents proportionally more money off of the monthly electrical bill. 

In New Jersey, the average cost of residential electricity is 15.56 cents/kWh.5 This is above the national average of 12.55 cents/kWH,6 and can lead to higher monthly electric bills. Across the state of New Jersey the average electricity bill is around $110 each month, whereas the average bill nationwide is just over $100.7

The cost of electricity in New Jersey, combined with the state’s average peak sun hours, make a solar setup an appealing solution to a family’s bottom line. Homes in New Jersey consume about 700 kWh of electricity each month8that averages out to around 23 kWh used every day. An average-sized 5kW residential solar system in New Jersey is capable of producing 18 kWh of electricity daily. Based on these figures, the solar-electric system would cover over 78% of the home’s monthly bill. Combine these immediate energy savings with financial incentives like Solar Renewable Energy Credits (SRECs), and solar becomes an appealing solution for a wide array of New Jersey homeowners.

New Jersey holds itself and its citizens to a high clean energy standard.

A major reason for New Jersey’s thriving home solar market is the state’s dedication to cultivating clean energy. Most states have regulations in place that outline that state’s plans for incorporating renewable energy into their energy landscape—these are called Renewable Portfolio Standards (RPS), and they are hugely important to the future of energy independence in America. New Jersey’s RPS goals are particularly ambitious. In order to meet their goals, the state has instituted a number of policies designed to promote the adoption of solar energy.

RPS goals for New Jersey

  • New Jersey’s first renewable portfolio standard was instituted in 1999. This requires that energy providers in New Jersey get 20% of the electricity they sell from renewable sources. The state must meet this mark by year-end 2021.9
  • In 2010, New Jersey added an extra goal exclusive to solar power. This addition to the renewable portfolio standard-called a “solar carve out,” specifies that an additional 4% of electricity must be sourced from solar power generators. This 4% threshold may not sound like a lot, but it’s actually one of the most aggressive clean energy goals in the nation.
  • Fossil Fuels
  • Class I & II Renewables
  • Solar Carve Out
New Jersey RPS goals have made home solar a real possibility for residents

New Jersey RPS goals paved the way for the state’s SREC market.

Since 2006, the New Jersey Board of Public Utilities has been working to transition state-funded New Jersey solar rebates to the market-based Solar Renewable Energy Certificates (SRECs) program.10 Electricity suppliers in New Jersey purchase SRECs in order to meet the requirements of the RPS. Suppliers who don’t manage to meet the requirements would otherwise have to pay a Solar Alternative Compliance Payment (SACP)—a sort of institutional fine for failing to cooperate with the RPS. SRECs are cheaper than compliance payments, thereby giving electricity suppliers incentive to buy. For New Jersey solar customers, this ensures that their SRECs will remain in demand as emphasis on renewable energy grows.

As with many things, there is a catch to the SREC market: As increasing numbers of homeowners install solar panels, SREC prices are likely to decrease. This is due to the economics of supply and demand. New Jersey residents who want to take advantage of selling SRECs would be wise to invest in solar panels soon, while there’s still money to be made.  

There are other ways to save with solar power in New Jersey.

It’s not just solar photovoltaics that are encouraged in New Jersey: The state’s clean energy program also incentivizes residential solar thermal systems. These small solar-powered water heaters can significantly reduce a home’s utility bill. Homeowners in New Jersey can take advantage of a $1200 incentive if they install a solar thermal water heater.11

New Jersey has set itself up for success by making home solar an appealing option for homeowners.

There’s no doubt that New Jersey is one of the best states in the country for home solar power. The truth about home solar is that a large portion of this success is due to state-level support of clean energy initiatives. Thanks in part to New Jersey RPS goals, home solar has become financially attainable for more residents than ever before. Savvy homeowners will recognize that investing in solar sooner rather than later is the most direct route to energy savings.

If you found this article to be helpful, please share! And be sure to enter your zip code at the bottom of the screen to see if going solar is right for you.


Bibliography

  1. Board of Public Utilities. “Solar Market FAQs.” New Jersey Clean Energy Program. New Jersey State Board of Public Utilities, n.d. Web. 01 Mar. 2017.
  2. Bhattacharjee, Aniruddha. “Understanding Peak Sun-Hours.” ABC of Solar. India Goes Solar, 03 July 2015. Web. 25 Jan. 2017.
  3. Owens, Larry. “ASK THE EXPERTS: Peak Sun-Hours.” Home Power. Home Power Inc., n.d. Web. 25 Jan. 2017.
  4. NREL. “Solar Maps.” NREL.gov. US Department of Energy, n.d. Web. 28 Feb. 2017.
  5. Based on average electricity prices by utility providers in New Jersey. Data from US Energy Information Administration. PDF available here.
  6. U.S. Energy Information Administration. “Table 5.3. Average Price of Electricity to Ultimate Customers.” EIA.gov. U.S. Department of Energy, Dec. 2016. Web. 06 Mar. 2017.
  7. Average of contiguous US states only. From “2015 Average Monthly Bill- Residential.” EIA. “2015 Average Monthly Bill- Residential.” EIA.gov. US Department of Energy, 2016. Web. 1 Mar. 2017.
  8. EIA. “2015 Average Monthly Bill- Residential.” www.EIA.gov. US Department of Energy, 2016. Web. 1 Mar. 2017.
  9. “Renewables Portfolio Standard: New Jersey.” Energy.gov. US Department of Energy, n.d. Web. 27 Feb. 2017.
  10. “SREC Registration Program.” New Jersey’s Clean Energy Program. State of New Jersey, n.d. Web. 21 Feb. 2017.
  11. Board of Public Utilities. “Solar Water Heaters.” NJ Clean Energy. State of New Jersey Board of Public Utilities, n.d. Web. 09 Mar. 2017.

Editor: Kelsey Tollefson

Executive Editor: John Lenker