By Eva Kurilova and Kelsey Tollefson

This is the second of a three article series about how to make the most of home solar in New Jersey. This article covers the many ways New Jersey homeowners can take advantage of solar cost savings. 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 New Jersey’s solar programs, the third article in the series can be found here.


When you think of “solar power,” you don’t always think of New Jersey. Many people might be surprised to learn that New Jersey is actually one of the most enthusiastic supporters of solar power in the country. Around the state, more than 60,000 homes are powered by residential solar arrays.1 A unique confluence of above-average electricity prices, state-level tax breaks, SREC markets, and generous Net Metering regulations makes New Jersey one of the best states in the nation for homeowners looking to install residential solar panels.

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

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SRECS: Solar Renewable Energy Certificates help recoup the cost of solar panels in New Jersey.

Solar Renewable Energy Credits, or SRECs, are a major perk for New Jersey solar adoptees. SRECs are essentially commodities that can be bought and sold at online marketplaces. Each credit represents one megawatt hour of electricity that a home solar system produces. For the average 5kW solar setup in New Jersey, a megawatt hour is generated about once every two months. That means solar customers in NJ can expect to receive six SRECs every year.

How it works: The New Jersey SREC program is fairly straightforward. One SREC is earned every time a solar power system has generated 1000 kilowatt hours of electricity. Once system output is reported to the SREC Tracking System,2 the SREC is added to the customer’s account. The credits can then be sold to buyers—usually third-party brokerage firms, who re-sell the SRECs en masse to utility companies. Every sale is recorded by the SREC tracking system.

Because the program is market-based, the price of a SREC can vary. From November 2015 to November 2016 SREC prices in New Jersey ranged between $200 and $230, for an average of $224.27 per credit.3 The market price of SRECs has begun to trend downwards in recent years—for any New Jersey homeowners wavering over whether to invest in solar panels, this is a real-life reminder that the best time to do so is now. It’s wise to take advantage of high SREC values while demand remains high.

  • NJ Weighted Avg. Price per SREC

Bear in Mind: All homeowners who want to have a solar array installed on their property must first register with New Jersey’s SREC program. Registration allows the array, once completed, to be given a certification number and to begin generating SRECs. Only a system which is authorized by the Electric Distribution Company can be accepted to the SREC program.

Tax breaks for New Jersey home solar customers

In addition to the financial perks provided by SRECs, there are attractive state-level tax exemptions for installing home solar panels in New Jersey.

Property Tax Breaks

Residential solar arrays in New Jersey are exempt from the state’s property tax.4 This is a major perk for New Jersey-based solar customers. Installing solar panels has been shown to markedly improve the property value of a home—in fact, prospective home buyers are willing to pay up to $15,000 more for a house with a modest solar panel array.5 New Jersey solar customers can enjoy the boost in property value without increasing their home’s property tax bills.

Home Solar New Jersey
Solar panels on a residential roof in NJ

Sales Tax Exemption

Additionally, any equipment related to the installation of a solar array can be exempted from New Jersey’s 7% sales tax.6 This exemption has the potential to save homeowners thousands of dollars on the installation costs of a home solar system: If the up-front costs of a 5kW solar setup is a little over $16,000,7 this represents nearly $1200 in savings.

Federal Solar Investment Tax Credit

Solar customers in New Jersey not only get the benefits of these state specific incentives, but also the federal Solar Investment Tax Credit: This incentive allows taxpayers to claim a 30% credit on any of the qualifying expenditures related to the installation of a home solar-electric system.8 Under the ITC, homeowners in New Jersey can save nearly $5,000 on the installation of home solar panels.

New Jersey solar panels NJ

New Jersey’s net metering regulations are some of the best in the country.

Solar customers in New Jersey save major money on their monthly utility bills by generating their own clean electricity. Net metering is a way for solar customers to lower their monthly bill even further. When a home solar system produces more electricity than the home uses, the surplus energy is sent back to the utility grid. Each kilowatt hour of electricity produced result in credits on the customer’s account. Net metering allows homeowners to essentially pay for their energy bills with these credits.9 If these credits exceed the amount of energy a home has used at year’s end, then the homeowner is compensated for their contribution to the electric grid.

New Jersey is one of the lucky few states that requires utility companies to buy back this extra energy at full retail value.10 This means that as the costs of grid-supplied electricity rises, solar customers in New Jersey will save increasing amounts of money over time. What’s more, New Jersey has expanded the cap on net metering statewide.11 Essentially, a net metering cap limits the number of home solar installations that can take advantage of net metering policies. As states across the country are deciding whether to enforce net metering caps, New Jersey is a great example of how states can foster real energy change by incentivizing the adoption of solar power.

  • Nominal price per kW/h (cents)

To take advantage of the greatest savings, New Jersey homeowners should switch to solar sooner, not later.

The truth about home solar is that as installations increase, there will likely be a reduction in available incentives. For example, the 30% federal tax credit will only apply to systems installed by the end of 2019, after which point it will begin to decrease.12 The going rate for SRECs is also expected to steadily decrease every year going forward.13

Even at reduced rates, these benefits will continue to incentivize home solar installations. It is undeniable, however, that New Jersey residents who install solar soon will recoup their costs considerably more quickly. There is no better time than right now to begin a New Jersey home solar installation.

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. Roselund, Christian. “New Jersey Reaches 2 GW of Installed Solar.” PV Magazine USA. PV Magazine, 19 Jan. 2017. Web. 06 Mar. 2017.
  2. “SREC Registration Program.” New Jersey Clean Energy Program. State of New Jersey, n.d. Web. 06 Mar. 2017.
  3. “Cumulative Weighted Average SREC Price EY16.” New Jersey Clean Energy Program. State of New Jersey, n.d. Web. 06 Mar. 2017.
  4. “Property Tax Exemption for Renewable Energy Systems.” DSIRE. U.S. Department of Energy, 01 Oct. 2014. Web. 20 Feb. 2017.
  5. Hoen, Ben, Ryan Wiser, et al. Selling Into the Sun: Price Premium Analysis of a Multi-state Dataset of Solar Homes. Rep. N.p.: U.S. Department of Energy, 2015. Print. Lawrence Berkeley National Laboratory.
  6. “Solar Energy Sales Tax Exemption.” Energy.gov. US Department of Energy, n.d. Web. 20 Feb. 2017.
  7. Data from Energy Sage Marketplace
  8. “Residential Renewable Energy Tax Credit.” Energy.gov. US Department of Energy, n.d. Web. 20 Feb. 2017.
  9. “Net Metering and Interconnection.” New Jersey’s Clean Energy Program. State of New Jersey, n.d. Web. 21 Feb. 2017.
  10. “Net Metering and Interconnection.” New Jersey’s Clean Energy Program. State of New Jersey, n.d. Web. 21 Feb. 2017.
  11. “New Jersey Expands Limit on Net Metered Solar While Nevada Keeps Cap.” PV Magazine. PV Magazine International, 13 Aug. 2015. Web. 06 Mar. 2017.
  12. “Residential Renewable Energy Tax Credit.” Energy.gov. US Department of Energy, n.d. Web. 20 Feb. 2017.
  13. “New Jersey SREC Update – December 2016.” SRECTrade Blog. SRECTrade, Inc., 23 Dec. 2016. Web. 06 Mar. 2017.

Editor: Kelsey Tollefson

Executive Editor: John Lenker