We try to keep consumers up to speed on trends and changes in the solar industry. But because solar markets vary so much by state, and sometimes even city, that information can be very broad. In this series of case studies, we’ll explore what going solar looks like in specific areas. Don’t see your state mentioned? Check back soon for new additions.
The Case for Going Solar In New Jersey
New Jersey is one of only 15 states with a deregulated energy market,1 giving New Jerseyans a bit more control over their electric bills. Still, average rates in the Garden State are higher than most - number 14 for highest priced power in the US.2 High electric rates, top-notch solar policies, and incentives make a rooftop solar system a stellar option for most Jersey homeowners.
Read on for the details on clean energy savings in New Jersey. We’ll start with the information for a solar system purchase - meaning you buy your system either outright or with a loan - and then we’ll cover solar system leases and PPAs.
New Jersey Solar Incentives
Just like solar customers nationwide, Garden State residents who install rooftop solar panels are eligible for the federal Renewable Energy Tax Credit. This tax credit is equal to 30 percent of the cost of a PV solar system (through 2019 with the credit decreasing through 2021.) That’s a good-sized savings! Some solar system companies will claim the credit. This will save you paperwork both on the application and IRS tax forms, passing the savings on to you. Others will leave it for you to claim.
If you’re building a new home in New Jersey, including rooftop solar panels can help you qualify for the state’s Clean Energy New Construction Program. This program offers significant rebates for energy efficiency. If you live in or plan to purchase an existing home, you won’t get any state tax credits or rebates. But your rooftop solar system is still exempt from property tax3 and sales tax4 in New Jersey. The main financial kickback for solar power in New Jersey for homeowners is through Solar Renewable Energy Certificates (SRECs) and net metering.
SRECs and Net Metering in New Jersey
If you’re new to the term, you can get a quick primer on SRECs from our Solar Incentives post. Renewable energy producers (like you!) get one SREC for every megawatt hour of electricity they generate. Utility companies purchase SRECs to offset fines they incur when they don’t meet renewable energy requirements. So you can sell your certificates in New Jersey’s SREC marketplace for good money. A 5 kW solar system will produce close to six SRECs every year and in 2017, the average marketplace value for one SREC in New Jersey hovered between $200 and $235.5 Pretty good when you consider you’ll continue to generate SRECs annually.
Net metering for solar customers in New Jersey is another financial benefit that makes solar panels desirable there. Essentially this agreement allows you to send any electricity you don’t use to the grid for a retail-rate credit from your utility. The credit offsets the cost of buying power from the utility when you need it (after dark, for example). With a well-designed solar system, this can cut your electricity payment significantly - or even completely. At the end of a 12-month period, you’ll be reimbursed at the wholesale rate for any credits you haven’t used.6
Return on Your New Jersey Solar Investment
New Jersey solar programs, SRECs, net metering... what does all of this add up to? Is going solar cost-effective for Jerseyites? Short answer: yes! Of course, how much you save will depend on the size of your solar system and your electricity use. The estimated savings over 20 years after purchasing solar panels is $14,000 for the average home in New Jersey.7 What will you do with that chunk of change?
We all love extra money in our wallets, and don’t forget to factor in the environmental benefits of going solar. You can’t put a price on knowing your power is made from the sun’s clean, renewable energy and that you’re doing your part to clean up the air in your city. It’s a win-win.
Loans, Leases and PPAs
The calculations and projections above are based on owning your own solar system, but solar plans in New Jersey come in other shapes and sizes too. We’ll take a look at each (for more details, visit our Solar Plans page):
- Solar Purchase - this is the most straightforward. You buy your solar system up front, plain and simple.
- Solar Loan - similar to a solar purchase but you finance your system with a loan. If you use a loan to purchase your system, the savings you see will vary a bit based on your particular loan terms. Some large solar installers offer solar loans. Other installers refer you to third-party financial institutions for a loan. Some homeowners choose to take out a home equity loan to finance their panels. Exploring more than one loan option can help you get the best rate for your system.
- Solar Lease - you lease the panels while your solar provider maintains ownership.
- Solar Power Purchase Agreement (PPA) - you buy the power your panels produce and your solar system provider maintains ownership of the panels.
Solar leases and PPAs are different - you won’t own your panels or be eligible to claim the federal tax credit. The savings should still be passed to you though. That’s because your solar provider can claim those incentives and factor them into your monthly payment. The solar provider will also claim SRECs from the system but you can take advantage of net metering.8 Lease and PPA customers typically aren’t required to make a down payment.
Savings can be easier to compare with leases or PPAs. Just take the monthly payment specified on your solar bid and compare it with your average monthly electric bill. You can also compare the rate from your utility company with the rate from the solar provider. Keep in mind you’ll likely still have to pay a small monthly fee to your utility for grid connection and you may occasionally need to buy power from them.
More Energy Savings - EVs, Home Batteries and Utility Rates
There are even more ways to save with solar in New Jersey. You can choose these products or programs when you have your solar system installed or add them later to maximize your clean energy benefits.
- Learn more about saving money (and improving air quality) with your own solar Electric Vehicle charging station in this Q&A with a Clean Energy Trailblazer.
- Add a home battery to maximize flexibility of when to use the power generated by your solar panels.
- Look into your utility’s Time of Use rates to find out if you can save money by switching to an optional rate structure. The flexibility you get with solar panels - especially combined with a home battery - can make it easier to choose when to use power from the grid.
Get the Figures for Your Home
What it all comes down to is this: Jersey is a prime place to eat disco fries, shop at Wawa, and choose solar power. This post should give you an idea of how much you can save with solar panels. But the only way to know your specific savings is to get a solar bid tailored to your home and electricity use. Let us give you a free one! Start yours here.
7. Project Sunroof