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2019 Policy Grade

A

Avg. Yearly Savings

$3,033

Congratulations! You've found the ultimate guide to New Jersey solar power for home use

2019 Policy Grade

A

Avg. Savings/year

$3,033

Your 2019 guide to getting solar panels for your home in New Jersey

This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your New Jersey home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!

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** What's new for 2019 **

New Jersey has long been a leader in renewable energy, and as of 2018 the state ranks #5 in the nation for total generation from solar panels. More importantly, New Jersey ranks #1 in our state solar power rankings, because the incentives here are so good, homeowners in New Jersey can't help bu make tons of money by installing solar.

But that's about to change, because the state's best solar incentive is ending soon.

Back in May of 2018, Governor Murphy signed Assembly Bill 3723, authorizing a new standard of 50% renewable energy by 2030. It was a huge success for solar, but there was a dark cloud for people who haven't yet installed solar: the Solar Renewable Energy Credits (SRECs) that have been the #1 incentive for New Jersey solar owners, will be phased out when the state hits 5.1% solar.

Currently at just under 4%, the threshold will likely be hit in 2019 or 2020, leaving precious little time for solar owners to take advantage of the program. Let's put it bluntly: If you miss out on the SREC market, you're leaving thousands of dollars on the table. The average homeowner will reap nearly $12,000 in rewards over the next 10 years from earning SRECs. It pays to go solar sooner, so get a quote for your home from local installers today.

If you want to read more about how SRECs work, skip ahead to the section about them.

What you'll find on this page:

The Solar Strategy section is focused on the 3 ways of paying for solar in New Jersey, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.

The Solar, Step by Step section is a guide to everything that happens from before you get solar quotes to the time when the panels are on your roof and you're getting ready to claim that sweet solar tax credit.

The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in New Jersey. These policies and rules govern everything from renewable energy mandates to interconnection, and have a huge effect on the viability of solar.

Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in New Jersey.

Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.

Your Solar Strategy in New Jersey

Figuring out the best way to go solar in New Jersey can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.

We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:

How should you pay for solar?

Use our decision tool to find out!

How to pay for solar panels in New Jersey

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. One thing it's important to note is: solar makes you a lot of money in New Jersey. Yes, we said "makes!" You see, New Jersey has a special financial incentive for encouraging homeowners to go solar, and it means thousands of dollars in your pocket for the next 20 years.

The incentive is called the Solar Renewable Energy Credit, or SREC. One SREC represents one megawatt of electricity generated from solar, and in New Jersey, you get about 6 per year. Now, the Garden State requires its utility companies to produce certain amounts of electricity from solar, and buying SRECs from solar generators helps them meet those goals. On average, a homeowner makes about $170 from the sale of an SREC (though prices vary throughout the year), so those 6 SRECs you get equal about $1,000 in your pocket, every year until 2030.

That's huge! We hope your interest is piqued, so now let's discuss that chart above. We've examined three scenarios for going solar in New Jersey, including a solar Power-Purchase Agreement (PPA), buying solar with a home loan, or paying for solar with cash. As you can see, the cash purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a solar loan or Home Equity Loan or Line of Credit (HELOC—the orange bars) and paying for the system over time means you'll actually spend zero dollars of your own money over time, while reaping a big financial benefit in year 1.

That's because you'll be paying over time for the system, but you still get all the benefits of paying up front. In New Jersey, that means a 30% federal tax credit, energy savings, and SREC sales. With those huge incentives, you'll actually make money in the first year. And even though you'll be making loan payments for 15 years, the cost will be obliterated by the money from SRECs and electricity savings, making this investment essentially free money for having a roof and some home equity.

Lastly, take a look at the blue bars. They represent a solar Power-Purchase Agreement (PPA), which are also called third-party ownership. With a PPA, the solar installation company puts panels on your roof at no cost to you, and you make monthly payments for the energy they produce. It saves you you only about $12 per month to start, but it gets bigger over time, because the PPA payments will rise by less than the electric company's annual rate hikes. Third-party ownership is an excellent option if you don't have any equity or cash to put down, and it still saves you money!

Read more below about each of three very good options for solar in New Jersey.

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Option 1: Paying cash for solar

An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true—with rebates and tax credits, solar costs less than ever before, and the SREC market and electricity savings in New Jersey are so good that a solar installation pays itself off in just a few short years. But if you're interested in solar as an investment, taking a loan to pay for the system is a better option.

With a loan, you can make monthly payments instead of putting $16,000 down on a solar system, which means you save money on electricity as you pay down the cost of your panels. If you have equity in your home or can get a large loan with an interest rate of 4% or less, a loan is the option to go with. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.

If you've got cash and you prefer to pay up front, you'll have to plunk down $16,250, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced about $35,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you $936 in year 1—and it just goes up from there. As the electric company raises rates, you save more and more, and more...

Here’s how the numbers work for a 5-kW rooftop solar system in New Jersey:

  • Installing a typical 5-kW solar system should start at about $16,250. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
  • The Federal government offers a great income tax credit of 30% of system costs. That's $4,875 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $11,375.
  • After the tax credit we subtract your first year’s energy savings, which we estimate to be $936. That reduces your cost after the first year to only $10,439.
  • But wait, New Jersey has that excellent SREC market we talked about above. The sale of your SRECs will net you $1,164 this year, bringing our final first-year estimate to just $9,275. That's 40% off the starting cost, just in year 1! And here's more good news: those SREC sales will continue for 15 years, which means lots of income through 2030!
  • Those electricity savings and SREC sales will quickly make your money back, and your system will pay for itself in just 6 years. You'll see a total net profit of $34,753 by the end of your panels' 25-year warranty. The internal rate of return for this investment is an amazing 18.3%. That's basically twice the return the stock market's traditional return, and it's more reliable, too!
  • And here's a nice bonus to consider: your home's value just increased by just about $22,000, too (your expected electricity savings over 20 years).
  • In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 97 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in New Jersey. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 2: Using a loan to pay for solar

You don't need $16,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.

That’s because, in New Jersey, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break. You'll come out thousands ahead this year, and you'll still see a spectacular profit over the 25-year life of your system. The reason this works so well is that you're paying over time, but reaping all the benefits now. You'll get tax breaks, SRECs, and energy savings to offset the loan payments, which sounds a lot like it's too good to be true... so let's take a look at the numbers.

A solar purchase like this will make sense for you if the following is true about you and your current situation:

  • You can qulaify for a solar loan or home-equity line of credit (HELOC) for $16,250, with a fixed rate of 4% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
  • You love making money without much risk.

Here’s how the numbers pencil out for a New Jersey homeowner who makes a solar purchase with a loan:

  • Installing a typical 5-kW solar system should start at about $16,250. That's how big your loan will need to be to cover it.
  • The electricity you'll save in the first year of operation would have cost $936, but your annual loan payments will be $1,442, meaning you would spend $506 on solar this year, but...
  • You'll also get to sell your SRECs for about $1,164, putting you $1,670 ahead for the year! But then...
  • You'll also see a huge Federal tax breaks! Uncle Sam will give you 30% of the cost of your system back as an income tax credit, which in this case means $4,875 you won't be paying the government this year.
  • All those incentives mean you'll come out $5,532 ahead after year 1, and it's clear skies from them on out. You'll continue to net over $600 per year after your loan payments, making home solar in the Garden State a $0 investment that pays from day 1.
  • By the time you've paid off your loan in 2031, you'll see yearly savings of over $1,200. After 25 years, your total profit will be $29,367!
  • On top of the green that will stay in your pocket, your system will mean green for the environment, too—97 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in New Jersey. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)

A PPA is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. It's possible to get solar panels for $0-down and see big savings over 20 years!

As for leases in New Jersey: the electricity costs here are pretty high— 20% higher than the national average. That means a PPA saves you money starting on day 1! For now, the payments on the energy produced by a 5-kW solar system should be around $796 per year, but the energy you're not buying from the utility company would have cost $936—a savings of $140, just for saying yes to solar!

That might not sound like a huge amount of money right now, but as the utility company raises rates, you will start to see greater annual savings. Over 20 years, our estimate shows a total savings of $4,707. And the best part is the panels will be owned and maintained by the installation company, so all you have to do is brag to the Joneses down the street about your green habits!

Here's a little more about how a New Jersey solar PPA works:

Keep in mind, the numbers above are based on an average home in New Jersey. If you're ready for a custom quote for a solar PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

How much can you save with solar?

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Is solar right for your New Jersey home?

A beautiful home with solar panels

If you answer “yes” to each of the following questions, you’re probably a good candidate for solar.

  • Do you own your home?
  • Does your roof get direct sun for most of the day?
  • Does your electricity bill bother you (specifically how much you have to pay)?

The ideal home for solar has a south- or west-facing roof that gets little to no shade throughout the day. The roof can be covered with anything from asphalt shingles to clay or slate tiles, but the easiest roofs to work with are asphalt and standing-seam metal roofs.

Even if your home does not completely meet these conditions, you may still see huge savings from going solar. Your installer will take everything into account when providing you with a savings estimate.

And hey, if your roof just isn't right at the moment, that doesn't mean solar power can't improve your life. For a quick way to bring some of the benefits of solar, check out outdoor solar lights. Installing them beats running wires under your yard!

We get more in-depth with roof shape, covering, and orientation in two useful articles:

The step-by-step process for going solar in New Jersey

The most important thing to know about the entire process of going solar is that your solar installer is good at this stuff.

They'll make sure all the T's are crossed and the I's are dotted during the whole process:

Step 1: Getting and Comparing Quotes

There are now many slick solar estimate tools online. Some have you draw lines on your roof from satellite imagery to place your panels and explain your savings. Others pit solar companies against each other in an automated battle for your dollars. Others still track the sun over the course of the year to show you your electric production with the panels you just struggled to draw on your roof.

In our view, they're all a waste of time. If you're serious about installing panels, the best way to get an accurate view of your costs and savings is to get actual quotes instead of messing around with these online tools.

After all, you're not a solar PV designer, it's better to let an expert who knows what they're doing use their own fancy tools for you (believe us—they have fancy tools).

Also, nothing beats a human connection from a trusted source. We've been forging relationships with strong partners and installers since 2007. They know what they're doing, and they're good people.

When you complete our form, we'll connect you with them. You’ll quickly get an accurate reflection of how much electricity your roof can make, how much your system will cost, and how long it will take before you see a profit. In New Jersey, with a loan or PPA, you'll be in the green immediately.

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What you should look for in a solar installer

Solar customers with a contractor looking at contract

If you seek solar quotes directly from providers without our help, be sure to judge them by the following criteria. All partners in our network are:

  • Trained and Skilled - The standard for solar installers is certification by the North American Board of Certified Energy Practitioners (NABCEP for short). That means they’ve undergone training and passed tests that ensure they know what they’re doing.
  • Experienced - How many solar systems has the company installed? A minimum of 10 is a good number to shoot for, unless you know they company well. Of course, choosing Tesla or Sunrun means you’re with a company that has installed thousands of systems, but their process can seem less personal, and their prices are often higher than smaller companies.
  • Well-regarded - Look at reviews of solar providers on Yelp and Google and other review sites. Or simply ask the salesperson to speak with one of the company’s former clients. Solar owners generally love talking about their systems, and you can benefit from their experience.
  • Licensed, bonded, and insured - Make sure the installation crew includes a licensed electrician, because if not, that can be a surprise charge to get the system hooked up.And of course, the company you’re going with has to be bonded and insured in case they do any damage to your home.

The solar quote process

Your first contact with one of our solar providers will be over the phone. They’ll take a look at a satellite photo of your roof and verify some simple details about you and your home. Many will be able to provide you a complete estimate without coming to your house. If you prefer, you can review your estimate in person.

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Information included in solar quotes

A sample solar quote

Your quote will include information about how many panels will be used, how much electricity they can produce, your expected savings over time, and more.

  • System size - System size isn't just about the square footage the panels will occupy on your roof. In the solar industry, size refers to the number of watts your system can produce in full sun. The average solar panel puts out 250 watts at a time, so your installer would call a system of 20 panels a "5-kW system."
  • Energy production - Your solar panels' energy production is measured in kilowatt-hours (kWh), just like your electricity usage is measured by your utility company. The quote will include an estimate of the average kWh your system will produce per year, and might even show you how the seasons affect expected production by month.
  • Cost and incentives - Solar system prices are quoted as "total cost" and "dollars per watt." For example, a 5-kW system that costs $15,500 has a $3.10 cost per watt. These are the first figures to compare what you’re being offered. The installer should also show you the available incentives that being the net cost of the installation down. Everyone is eligible for the federal solar tax credit of 30% of the system's cost, but there may be local incentives available, as well.

    Note: if you're considering a PPA, you won't be eligible for incentives, and the cost section will include your expected costs per kWh.

  • Equipment - Not all solar panels are created equal, but nearly all the panels used by reputable installers should be able to reliably make electricity for the next 25 years. The options are numerous, and your installer should be able to provide you quotes for a few different kinds. For example, if having panels made in the USA is important to you, your installer should be able to offer you a quote for a system using panels from the USA and panels made elsewhere.
  • Warranties - A solar system has multiple warranties that cover the panels, the inverter, and the installer’s work on your roof. What can change between quotes is the length of the warranties and what they cover. Read our full post on solar warranties and what they cover.

Deciding which solar quote is the best

Now for the easy part: choosing which solar company has the best offer. If one installer offers a lower cost per watt using great equipment, they might be the best choice. Just keep in mind that important considerations other than price set solar companies apart.

Larger installers are all about full service and efficiency, making the process of going solar fast and streamlined. They all offer in-house financing options and multiple ways to pay, and they might also throw in bonuses like free monitoring equipment and long-term warranties.

Smaller installers don’t have the overhead of national solar companies, so they can compete more on price. You might even develop a meaningful relationship with a member of your community who has been doing this for a while, and if something goes wrong with your system, it might feel better to pick up the phone to call them rather than an 800 number tied to a high-volume call center. Just keep an eye on their financing offerings. Third-party lenders for solar financing sometimes include finance charges or higher interest that can mean you save less in the long run.

For more of our guidance on choosing an installer, check out these useful articles:

Step 2: Financing your system

Pile of cash

If you plan to pay up front, this step is easy. Just get your checkbook out and make it happen, high-roller! But if you’re interested in a loan or PPA, it’s time to explore options.

Many installers will offer you financing at this point. Compare their offer to the other options you have. If they offer third-party financing, it might be time to explore a HELOC with your bank before you sign their financing arrangement.

We discussed the options in the section on loans above, but here’s a quick refresher:

  • Home Equity - Probably the best way to pay for solar, because you control it, the rates are lower, and you can repay it in a more flexible way.
  • Solar loans - Most solar companies work with a financing partner to offer solar loans. If you choose a big installer like Sunrun, Vivint or Tesla/Solarcity, your loan will be handled through their own online portal. Many small and mid-sized installers offer loans that are managed by a partner like Mosaic, though whose website you'd be signing documents and making payments. These loans are usually structured with the solar tax credit as a balloon payment after 1 year, and the balance of the system cost as a long-term loan at 5%-7% interest.
  • PACE loans - Property-Assessed Clean Energy financing is good for people who don’t have amazing credit or tons of equity, but who plan to live in their home for years to come and don’t mind slightly higher interest rates. The loan is repaid through your property tax bill, the interest is often tax-deductible, and repayment can be spread across as many as 25 years.
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Don't forget about PPAs

If you don’t mind giving up a little control and letting your solar company own the panels, choose a PPA instead. These are only available through an installer, since they’ll be the ones who own the system.

Again, a PPA is best if you don’t have enough income to take advantage of the 30% federal solar tax credit, but it can work for anybody. It’s generally simpler than owning your own system. You just sign on the dotted line and start getting lower cost electricity from your solar company.

Step 3: Signing a contract, and what happens after

hands signing a contract

So, you’ve settled on a solar installer, and lined up the funding to pay for your shiny new panels! After you sign on the dotted line, it’s time for the pros to begin their work!

Site Inspections

First up, you’ll be seeing a few folks out for site inspections. There will be a master electrician out to look at your main circuit panel and wiring, a solar contractor to do a detailed analysis of your roof and determine the best placement for the panels, and a roofing contractor to examine the structural integrity of your roof.

Design and permitting

Following the inspections, the system designer will get to work on a digital design for your system. Your solar company will finalize the design and components, and give you a final price for approval. Once you’ve authorized the final design, your solar installer will finalize the documents and submit them to your locality for permitting.

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Step 4: Installation, Inspection & Interconnection

Two workers install solar panels on a roof

New Jersey is a mature solar market and most installers have their procedures down pat. Installation, which used to take several days, now usually takes between 4 and 8 hours. Unless your roof is complicated or your electrical systems need updating, your crew should arrive, perform their duties, and be done within one day.

Installation day

Your installer will have already completed their site surveys and the workers on the truck will know exactly what they're installing and where. The crew will arrive at your home, set up their gear and get to work on your roof.

The first thing they'll do is mark off all the places the solar panel mounts will be placed, then attach those mounts to your roof. If you'd like to know more about the big metal bolts that will be screwed into your rafters, check out an article on how solar panels are attached to your roof.

The crew will then install the racks and panels, making connections that either wire the panels together in strings, or bring the wires from the micro-inverters together. If the crew includes a master electrician, that person will make the final connections between the panel, inverter, and your main AC panel (you may have to wait a day or two for the master electrician to finish the wiring).

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What the heck are micro-inverters?

Traditionally, solar panels are wired in a series and connected to a single inverter box, which converts the electricity from DC to AC so it can be used in your home. Those large inverters work great for most people, but tend to make the system overall a tiny bit less efficient. Also, if a shadow or cloud passes over and blocks sunlight to some of your panels, the whole system suffers.

Micro-inverters, on the other hand, are attached to the back of every panel, which ensures that the maximum energy output of each panel reaches your home wiring. They cost a little more, but for a house with a partially-shaded roof, they can pay for themselves quickly.

Here's an infographic showing how the two types of inverters differ:

A string of solar panels with one shaded produces only half its rated power With micro-inverters, one shaded panel doesn't affect the whole bunch, allowing more electricity to get to the meter

Inspection and Interconnection

After your system is installed, it needs to be connected to the grid, and for that, you’ll need to have it inspected. Your installer will line all this up for you, too, and it may take between a couple days and a couple weeks to get the final inspections scheduled and completed.

An inspector examines and electrical box

Your city may require an inspection from the fire department, but the most important inspection will come from the utility company, who will send out someone to examine your system’s components and wiring and install the new electric meter that will record your solar kWhs.

At this point, you might even get a chance to turn the system on yourself!

Step 5: Operation, Maintenance, and claiming your tax credit

A squeegee cleaning solar panels

So you’ve got a shiny new solar system installed and it’s working. Now what? To be honest, not much. Solar panels are the platonic ideal of a Ron Popeil creation: set it and forget it. Still, you might find yourself compulsively checking your monitoring software to ensure those panels are working as promised.

After the deep breath of fresh air that comes with seeing your new electric bills, you'll relax into a state of solar bliss. During other moments, you'll smile as you think of all the acreage of forest you basically just planted using only the few hundred square feet of your roof.

There are a few important things to know after your panels are installed:

How to maintain your solar panels

Maintaining solar panels is a breeze. Solar panels are designed to handle rain, wind, snow, hail, and whatever nature throws at them for 25 years or more. All the maintenance a solar panel system needs is a yearly rinse and squeegee to take off extra dust and grime; maybe 2 or three times yearly if you live in a very dusty place. You can get by with a hose, if you need to, but you can also contract out the work to a cleaning company for a relatively low annual cost.

How to tell if your solar components are working

Other than cleaning, you may someday experience the failure of one or more components. Right off the bat, you should be able to see whether your panels are delivering energy on the panel of your inverter or net meter.

Read the user manual of your inverter to find out how to access the proper information, but most inverters will have a real-time production number on an LCD readout right on the front.

If you have a system with a central inverter, you will likely need to replace it after 10-15 years. If, instead, you have micro-inverters attached to each panel, they should last for the life of your system, and if not, they’re usually covered by 25-year warranties.

A micro-inverter attached to the underside of a solar module

Micro-inverters, like the one shown above, coupled with monitoring software can make it easier to tell when a panel isn't producing enough energy

Your installer may also have included monitoring software as part of your installation, either on a screen attached to your system or on the web. The monitoring software will tell you if the system is functioning properly, and, if you have micro-inverters on each of your panels, can even tell you if any panels are not working as they should.

If you discover that one or more of your panels isn’t working, it’ll be time to file a warranty claim.

What to do if your panels stop working

If you’ve done a good job by choosing one of our installer partners, you’ve got warranties that cover the installation (e.g., watertightness of roof penetrations and structural integrity of your roof), the panels (manufacturing defects) and the energy (production guarantee).

Your first step is to figure out who to contact. If you have a PPA contract, that step is simple: call your installer or contact them via their customer portal. That might also be the case if you sign up for a solar loan from a big installer. Oftentimes, the loan comes with a similar kind of protection.

a cracked solar panel

This isn't supposed to happen, so if it does, know who to call.

If, however, you went with a different installer, perhaps sourced through a different website, you’re probably stuck looking through the paperwork you got with the system to find the manufacturers of your panels, inverter, or other components.

How to claim the federal tax credit for solar

Claiming the Federal Solar Investment Tax Credit (ITC, for short) is easy, just have your personal assistant fax all the necessary paperwork to your accountant in the Caymans, and wait for your huge refund.

A fanned-out stack of a few 1040 tax forms

Oh wait, you don't have millions in an offshore account? Then we've got the necessary info for you. The ITC is claimed by filling out a special schedule, Form 5695, and entering the credit amount from that into your 1040 form.

For your edification and convenience, we've prepared a step-by-step guide to claiming the solar tax credit.

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New Jersey Solar Policy Information

Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.

State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.

Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in New Jersey:

New Jersey RPS Law

50% by 2030

Grade: A

New Jersey's Renewable Portfolio Standard grade

A Renewables Portfolio Standard (“RPS”) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.

New Jersey used to have one of the strongest RPS goals in the nation, mandating that 22.5% of all energy must come from renewable sources by 2021. That number is looking very attainable, and, truth be told, it’s in the middle of the pack now compared to the best solar states. The one thing the RPS has going for it is a huge solar-specific target of 4.1% of all electricity, meaning that solar is vital to the state meeting its goals (more about the carve-out just below).

New Jersey’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.

What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.

An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner. Read more about Renewable Portfolio Standards.

New Jersey Solar Carve-Out

5.1% by 2021

Grade: A

New Jersey's Solar Carve-out grade

The New Jersey RPS now includes a solar specific carve-out of 5.1% by 2021. That means for every 100 kilowatt-hours of electricity generated in the state, just over 5 have to come from the sun by 2021. That may not sound like much, but trust us, that's huge!

New Jersey mandates solar production by the utility companies, and if they don't either produce or procure that much electricity from solar, they have pay fines called "Alternative Compliance Payments" (ACPs). But planning, siting, and building huge solar facilities is hard to do, so instead of doing it themselves, the utility companies pay money to people who can prove they've generated solar electricity in their area.

This is where you come in, New Jersey homeowner. The proof of that generation is called a Solar Renewable Energy Certificate (SREC), and you get one for every megawatt-hour (MWh) your system generates. As of right now, the average New Jersey homeowner will earn more than 8 of these SRECs, which they can sell at the market price.

Read more about SREC sales in our section on New Jersey SRECs, below.

What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.

Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.

For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!

New Jersey Electricity Prices

$0.16/kwh

Grade: A

New Jersey's Electricity cost grade

As homeowners in New Jersey, we pay about 16 cents per kilowatt-hour of electricity we use. That's solidly above the national average of 13.6 cents/kWh. Paying upwards of 20% more for electricity than many other people in the country is painful.

But while you see larger bills now, you could be seeing bigger savings in the future with solar power! Higher electricity prices means greater opportunity to save money by producing your own clean, earth-friendly power with solar panels. And electricity prices will likely continue to rise in the future with new regulations on carbon pollution and decreased supplies of fossil fuels. People who switch to solar now will be patting themselves on the back in short order.

Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.

The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.

New Jersey Net Metering

Statewide

Grade: A

New Jersey's Net Metering grade

Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus.

New Jersey’s net metering rules ensure the utility company tracks your excess power generation and credit it to your next bill at the full retail rate. If you run a surplus for an entire year, the utility will cut you a check for the surplus at the company's avoided-cost (wholesale) rate. All investor owned utilities and certain competitive municipal utilities and electric cooperatives are required to provide net metering.

What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.

The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.

New Jersey Interconnection Rules

Statewide

Grade: B

New Jersey's Interconnection Standards grade

Interconnection standards are strong here as well. Regulations have created a three-tiered system for interconnection procedures, depending on the size of the energy system. Your residential system of less than 10 kW qualifies for simplified procedures with no application fees. The law actually prevents the utilities from charging small systems like yours any additional fees whatsoever to get hooked up to the grid. Nor may the utility require you to install a redundant external disconnect switch, or to purchase any additional liability insurance. There is a bit of room for improvement on standard procedures for larger generators (hence the "B" grade), but everything should be smooth sailing for your residential solar power systems.

Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.

Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.

Solar Incentives in New Jersey

Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.

These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 30% of your costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.

Let's see how New Jersey measures up:

New Jersey Solar Rebates

Varies, New Construction Only

Grade: C

New Jersey's Solar Rebates grade

New Jersey's renewable energy program does offer rebates for some clean energy types. Unfortunately legislators made the decision to back solar power exclusively with the SREC market. That means the cost of solar panels in NJ may be a bit higher at the outset, but those tremendous long-term payments still more than make up for it.

BUT... there is a way to get some rebates if you're building a new home and using renewable energy to power it. New Jersey has a program called "The NJ Clean Energy Residential New Construction Program," which offers rebates to incentivize the construction of new homes that meet the New Jersey ENERGY STAR standards.

Do some reading at the link above, and you'll see that it's possible to get thousands back if you build a home that meets or exceeds those standards. Connect with our solar experts in New Jersey to find out more about this exciting program!

How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.

The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.

New Jersey Solar Tax Credits

None

Grade: F

New Jersey's Solar Tax Credits grade

New Jersey also lacks any personal tax credits for solar panels. NJ's pending reduction in SREC prices means a statewide solar power rebate or tax credit (with rollover, if necessary) would be an excellent way to keep solar growth humming here. With SREC prices still providing substantial payments, even a small rebate or tax credit would be a significant boon to homeowners like you, without costing the state all that much.

About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.

(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)

The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.

Solar Performance Payments

SREC Market- Varies

Grade: A

New Jersey's Solar Performance Payments grade

The heart of New Jersey's solar panel push can be summed up in four words: “Solar Renewable Energy Certificates” (SRECs). Let's talk a little more about SRECs, from the top.

Think of SRECs as proof for the New Jersey’s utilities that they are complying with the law to produce their share of power from solar. If they’re not producing that power through their own solar farms or wind farms, then they have to “buy” that power from someone else. Someone like you, Mr. and Mrs. Homeowner. That means extra moolah for you!

At this point, we should tell you, the New Jersey SREC program will end soon, once the state's electric utilities reach their goal of 5.1% of electricity coming from solar. Read more about the New Jersey SREC program expiration date.

How do you get New Jersey SRECs?

Each time your panels generate 1,000 kilowatt-hours (kWh) of electricity, you get an SREC which you can sell for cash! For NJ solar panels, the ratio of SRECs produced per year to system size in kilowatts is about 1.15 to 1. So if you've got a 7-kW solar system (a solid average for a single-family home), you will generate a bit more than 8 SRECs a year.

How much are New Jersey SRECs worth, and how do you get money for them?

SRECs are traded on an open exchange, so their value will vary from year to year. However, in New Jersey, their value is strongly correlated to the Solar Alternative Compliance Payment (SACP) the utility would incur for not meeting their requirement to source some of their electricity from the sun.

Remember those fees called ACPs from above? For 2019, they're about $270 per MWh, which keeps SREC prices around $225. The ACP will be slowly decreasing to $128 by 2033. Recent SREC market prices can be found at the New Jersey Clean Energy website.

New Jersey SREC prices

Recent New Jersey SREC Prices

To get money for your SRECs, you can sign up with an SREC broker, such as SRECtrade. These guys handle the paperwork, aggregate a lot of homeowner SRECs together, handle the trading with the utility companies and take a commission for their trouble. Their efforts are worth the hassle, since it isn't cost effective for the utilities to connect with thousands of homeowners to negotiate a small number of SREC purchases each month from each homeowner.

This is a whole lot of money, paid straight to you every year! SREC prices should continue to track the ACP, meaning you figure to bank nearly $1,600 a year, as long as you sign up soon. As the ACPs go down, so do SREC prices, and by extension, you potential profits. Don't sleep on this! Get solar savings estimates from local experts today.

Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!

Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.

Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.

We've got a great article if you like to read more about what SRECs are and how to earn them.

Property Tax Exemption

100%

Grade: A

New Jersey's Solar Property Tax Exemptions grade

When the property tax assessor comes a knockin’ at your front door, by law, they are not allowed to charge you any more property taxes because you’ve got a new valuable solar system on your roof. At the same time, your home WILL be worth significantly more when you sell, because, hey, what home buyer doesn't like free electricity?

About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Some argue that solar power adds approximately 20 times your annual electricity bill savings (if you own the system and are not leasing). Other studies seem to indicate a home price premium about equal to solar panel cost, minus any incentives like the federal solar tax credit.

For many average-sized solar power systems on a house, that can mean adding $20,000 to your home value. And if you don't believe us, believe the bean counters: Many banks and solar financing companies now offer traditional style equity-based home loans for installing solar. An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!

The availability of a property tax exemption for solar energy was sourced from the Database of State Incentives for Renewables and Energy Efficiency. Grades in this category are basically all-or-nothing. Either you got it or you don't. Thankfully, many states have "got it.".

Sales Tax Exemption

100%

Grade: A

New Jersey's Solar Sales Tax Exemption grade

Contrary to other home improvements like a new kitchen or bathroom, with solar panels in NJ, you will not have to pay any sales taxes on your system. That's 7% you're saving right upfront, even without any statewide solar power rebates.

What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).

The final word on New Jersey home solar rebates and incentives:

New Jersey has done just about everything right when it comes to helping homeowners go solar. The payback time here is a phenomenal 6 years, meaning you’ll have nearly 2 decades of free power under the original 25-year solar panel warranty.

If you can get solar for your New Jersey home in 2019, you should! The end of the SREC program very near and the decrease in the amount of the federal solar tax credit will have a negative effect on solar payback time after 2019.

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Donald Pavon

I have been checking out a few of your stories and i can state clever stuff. I will definitely bookmark your website.

Anonymous

Can anyone tell me if there is a NJ code requirement to have a DOUBLE POLE circuit with a solar panel installation (residential) versus SINGLE POLE circuit?

Cynthia

I live in NJ and I have been able to save money on solar between the savings on my electric bill and the SREC’s (http://www.goingsolarNJ.com).

Mark

My third party supplier has charged me every month for electric where the utility hasn’t charged me except $2.43 for rental of I guess poles.The charges ranged from 25.00 to 150.00 a month.

Mark

I Have PSE&G and a third party supplier .My panels this year gave me a surplus of electric. Who buys back my extra electric that I produced if I am in the positive. Is it PSE&G who a third party supplier?

Danny

The pop up on your mobile site makes it impossible to use FYI

Robert Spiegel

I am looking for an off the grid system and have a farm with plenty of roof space in NJ. Can you help me?

Anonymous

after getting a solar systm 11.13 kwh. i’m doing the geothermal which is up to a 75% savings more on my bill and much more money coming in.not everyone can do this but my daughter will be happy knowing she has n’t any bills to worry about in the future

Anonymous

Does NJ allow me to install my own Solar System. I’m looking at a PlugNPlay system or Kit from a number of venders.

Our dream is to turn your thoughts of solar power for your home into reality

The first step is calculating how much you can save with solar

Cool, let’s calculate my savings Nah, maybe we’ll do that later

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