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Getting Solar For Your Home In New Jersey
From the outset, New Jersey established itself as a leader in solar installations and has maintained its position over the past decade, continually ranking as a top 10 solar state. NJ was one of the first states to strongly incentivize its residents to go solar. Following California’s lead, in 2010 Jersey became the second state to install over 100MW in a single year. By 2011, New Jersey ranked #2 in solar installations, second only to sunny California1.
Solar power growth has been encouraged by New Jersey’s Renewable Portfolio Standard, which requires 22.5% of the state’s energy to come from renewable sources by 2021. In order to meet these goals, New Jersey has created a generous net metering policy and a number of local rebates and incentives to encourage its residents to go solar. Thanks to these programs, New Jersey now generates 4.17% of its energy from solar2.
In NJ, solar is an excellent investment that allows homeowners to lock in their energy rates for the next 25 years, promising substantial savings over time. With the lower cost of solar panels available today and the incentives currently available, the dream of owning a solar system is more achievable than ever. With the right plan, many homeowners in NJ are able to get solar panels installed on their property for $0 down!
How a Home Solar Panel System Works
You’ve probably seen a few solar panels installed on rooftops in your neighborhood. Perhaps you’re wondering how these panels convert the sun’s rays to clean, renewable solar energy. The process behind solar energy generation is remarkably simple.
When sunlight hits the photovoltaic (PV) panels, electrons become excited, creating a direct current (DC) of electricity. This current is fed into an inverter, which converts DC electricity into alternating current (AC) electricity so it can be used by appliances in your home.
A meter installed on the system keeps track of the amount of energy generated and consumed by your home. Since New Jersey supports net metering, any electricity that you do not use will be fed back into the grid and credits will be issued for your surplus.
How Much Will I Save with a Solar System in New Jersey?
New Jersey is one of the few states that can guarantee most homeowners will actually make money from their solar systems immediately. This is because New Jersey offers an incentive called the Transition Renewable Energy Credit (TREC).
For the first 15 years of owning solar panels, homeowners can earn 1 TREC for every MWh (or 1,000 kWh) of electricity generated. Once a TREC is generated by your system, it is sold to one of the utilities companies in New Jersey for roughly $90. On average, a NJ homeowner should expect to generate 8 TRECs per year, which equates to a little over $700 of extra income annually.
In addition to TRECs, solar homeowners will also be saving money on their electric bill each month – and once the system is paid for, it’s all savings from there. But let’s not get ahead of ourselves – let’s look at some numbers to demonstrate our point.
Cash Purchase For Solar
If you are able to purchase your system outright, you’ll benefit from the greatest amount of savings – approximately $37,000 over 25 years!
- The cost to install a typical 5-kW solar panel system in New Jersey is about $16,250. With the federal solar investment tax credit (ITC), you can reduce the cost of your system by 30%, bringing your initial installation cost to $11,375.
- You can expect your electricity savings to be around $950 during the first year of operation. With SRECs you’ll get around $1,200 in cash.
- Using these numbers, your system will quickly pay for itself in just 6 years. Over the lifetime of your system (approximately 25 years), you can expect to save at least $24,000 after your system is paid for! Since this doesn’t take into account the rising costs of electricity, we expect your savings to be even greater.
Using a Loan to Pay for your Solar System
Since most New Jersey residents don’t have $16,250 to plunk down on a solar panel system, many of them will use a home-equity line of credit (HELOC) to pay for their system. These loans typically have a fixed interest rate of about 4% and can be paid back over 15 years.
With the combination of electricity savings, SRECs, and the federal ITC, you can expect to come out roughly $5,000 ahead after your first year of installing solar panels – even taking your loan payments into account! Using a loan to invest in solar energy is one of the few examples of an investment that pays from day 1.
Over the lifetime of your system, you can expect to see a total savings of just under $30,000. With numbers like these, many savvy homeowners decide that a loan is the smartest way to pay for solar in New Jersey.
Power Purchase Agreement (Leasing) – Pay for Your Electricity, Not Your Panels
If you don’t have the money to purchase a system outright or sufficient equity in your home, a third option for benefiting from solar energy is through a Power Purchase Agreement (PPA). Also referred to as a “solar lease,” in this arrangement a third party will own, install, and maintain the solar panels on your roof. Through a PPA, you can get solar installed in your home for $0 down and benefit from cost savings from day 1.
You’ll pay a fixed rate for the energy produced by your panels, which should be around $800 per year. This amount will be lower than what you’d pay for energy from the grid. For the average household, the savings will equate to about $150 per year.
This might not sound like a lot of money right now, but your price her kWh will be fixed from day 1, so you won’t be subject to electricity price hikes in the future. Over a 20-year PPA, we estimate that you’ll save about $4,500 when taking the rising costs of electricity into consideration.
Solar Rebates & Incentives in New Jersey
New Jersey offers some of the most motivating incentives to its residents to go solar. These programs are part of the reason why solar has been adopted at such a high rate in the state. While some of the early rebates are no longer offered, other generous policies continue to encourage high numbers of homeowners to convert to solar.
Federal Solar Tax Credit (ITC)
New Jersey homeowners who wish to purchase solar panels qualify for the federal Investment Tax Credit (ITC), which essentially lowers the cost of the system by 30%. The refund is claimed as a tax credit, reducing the amount of income tax you owe by the equivalent of 30% of the cost of your system. If you don’t have a high enough tax liability in the purchasing year, you can roll it over to the next year. But you need to act soon to take advantage of this incentive – after this year, the program is being stepped down until it is eventually phased out in 2022.
Net Metering in New Jersey
Net metering allows you to sell any electricity that you don’t need back to the grid. In New Jersey, this surplus is sold at the retail rate, which is higher than the wholesale rate (many states only pay the wholesale rate). You are able to both buy and sell electricity to/from the grid, which allows you to balance your consumption and not let any excess electricity go to waste.
Transition Renewable Energy Certificates
As discussed above, TRECs are a major incentive for installing a home solar energy system in New Jersey. For every MWh (megawatt-hour) that your panels produce, you will receive one TREC. TRECs are then sold back to the utilities to help them meet the renewable energy standard required by New Jersey. The prices vary based on supply and demand, ranging anywhere from $170 to $260. This means that if you have a typical 5-kW solar system installed, you can expect to get a cash bonus of $850 – $1,300 each year!
New Jersey solar panel tax credits
In addition to these incentives, New Jersey also has some tax policies in place to help homeowners keep the overall cost of owning a solar panel system down.
- Solar sales tax exemption: Sales tax does not apply to home solar systems, so you won’t have the typical 7% sales tax added to the purchase of your system.
- Property tax exemption: While solar panels will increase the value of your property, you will not have to pay any additional property taxes as a result of the increased value of your home after having solar installed.
Go Solar in NJ with Momentum
At Momentum Solar, our mission is to make it easy for homeowners to go solar. From your first contact with our company, our aim is to provide valuable information to simplify the decision-making process for you. Our support extends to each step of your solar journey – from planning and pricing your system, to researching the best way to finance your investment, to providing seamless installation and five-star support after your solar system is up and running.
Our solar PV panels have been given a Tier 1 quality rating, which indicates they are in the top class of panels available in the US today. We are so confident in our product that we offer our customers a 25-year warranty on the panels and system. If you experience problems, we will be there to sort them out quickly.
With 10 years of experience installing solar in New Jersey, our solar installers knows the demands of the market. We understand the latest rebates and incentives and can help you navigate the process with ease. If you’re ready to learn more about solar, we invite you to contact us for a free, no-obligation consultation and quote today!