It isn’t the sunniest place in the country, but New Jersey earns the top spot in our annual ranking of the states for their friendliness to home solar. The Garden State earns that top spot both because it has excellent legislative policy driving the solar marketplace, which includes the nation’s top solar incentive: Solar Renewable Energy Credits, or SRECs for short.
Here are the most important things you need to know about SRECs:
- Each SREC is worth about $200 to owners of solar systems in New Jersey
- The average homeowner can earn about 6 SRECs per year (that’s $1,200, for those of you playing along at home)
- You get SRECs for the first 10 years of owning your system (that’s $12,000 over 10 years.)
- The SREC program will soon close to new applicants. Maybe in 2019, but certainly by 2021
- People who install solar before the end of the program can receive SRECs for the full 10 years
So that, uh… means you’ve gotta act fast, and the cost of not acting could be $12,000 or more. Local solar installers are the experts on making sure you get the most value for the SRECs your system can produce.
If you’re ready to find out how much you can save with a solar panel installation for your home, get multiple quotes for solar from expert installers and make sure you get an estimate of the SRECs your system will produce.
The details of the current and historical SREC program are a little complicated, so let’s delve in:
How do New Jersey SRECs work?
Like we said above, SRECs are used as proof that a solar installation has generated electricity; one SREC is earned each time a single solar system has generated a megawatt-hour (MWh) of electricity.
The reason SRECs are valuable is because utility companies in New Jersey are required by law to get a certain amount of their electricity from solar, and if they don’t they’re subject to high penalties called “alternative compliance payments.” Buying SRECs to prove that solar generation is taking place in their distribution area is cheaper than paying the payments.
How can you sell your New Jersey SRECs?
As part of the process of installing your new solar system, you’ll get a new electric meter called a “revenue-grade meter” installed at your house, and you’ll be invited to sign up for an account with the group that manages the electricity market in the northeast region, called the “Pennsylvania-New Jersey-Maryland Interconnection,” or PJM. PJM maintains an SREC tracking system called a “Generation Attribute Tracking System” (GATS).
Sorry about all the acronyms. The electric utility industry absolutely loves them, but you won’t have to dip your toes in much deeper than this.
Once you’re signed up for an account and your meter is recording generation, you’ll be awarded an SREC each time your system generates a MWh of electricity. At that time, you can log in to your GATS account, transfer the SREC to one of several available SREC aggregators (they collect SRECs from lots of homeowners and sell them in bundles to the utility company), and get a check sent to you by your aggregator once the transfer completes.
It’s a pretty painless process that you’ll be able to engage in for 10 years, earning about $200 for every SREC you transfer. Anyone who installs a solar system in New Jersey can earn SRECs… for now. The program will end soon! (ominous laugh)
When will the New Jersey SREC program end?
The current SREC program has been successful for years. New Jersey currently gets about 4% of its electricity from solar power, and even as a small state, has the 5th-highest amount of solar of any state in the Union. In fact, the program and New Jersey’s solar requirements have been so successful that the government has decided that they’re no longer necessary.
After the state hits 5.1% of all energy coming from solar, the program will end.
Given how booming the New Jersey solar market is, that could happen within a year of this writing (Sep 2018), but the 2018 expansion of the state’s Renewable Portfolio Standard requires that the SREC program end by 2021 at the latest. If you haven’t yet installed solar on your home, that gives you between a year and 2.5 years to make it happen.
Do you want to gamble that it will take until 2021 to end the program? we wouldn’t. Get a quote for solar from a local installer now.
How much money can you make with New Jersey SRECs?
Here’s where the rubber hits the road. Considering you’ll be jumping through a few hoops to get signed up witha new meter, a PJM-GATS account, an aggregator/buyer for your SRECs, and more, you’d better be getting something worthwhile for your time and effort, right?
We’re here to tell you that the SREC program is worth the trouble. Oh boy is it ever. Let’s explore the financial implications of installing solar in New Jersey, and show how SRECs make a huge difference:
The image above shows the difference between installing solar with and without the SREC program in place. our estimated numbers are based on the average system for a home in New Jersey, capable of generating 5.35-kW of electricity under full sun. The total out-of-pocket cost for this system would be about $16,300, but after the first year, energy bill savings and the federal solar tax credit would eliminate around $5,900 of that.
Here’s where the differences start: by earning and selling SRECs, you will save an additional $1,250 (approximately) in the first year. Each year for the next nine, you’ll continue to reap the benefits of SREC sales, earning over $12,000 in that time. The total time to pay back the cost of this average system using SRECs as well as other incentives is just 5 years. Everything after that is gravy, and it adds up to over $36,000 in savings over the 25-year warrantied life of the panels.
If, however, you snooze on the SRECs and end up with the same 5.35-kW solar system, you’ll end up waiting 10 full years for the system cost to be paid back, and end up with $12,000 less at the end of 25 years.
Those are the facts as they exist today in New Jersey. The question is, what are you going to do about it? Get quotes for solar today and get in the SREC program, or sit on the sidelines?
Last modified: October 11, 2018