Climate change has been a top-of-mind topic for quite some time. Replacing fossil fuels with renewables will help to reduce the amount of carbon emissions and greenhouse gases. While not a new technology, the solar industry has continued to innovate and incorporate new tech that has helped drive prices down. That said, it’s still more expensive to install solar than other traditional energy types. While its solar panel price has decreased 45% over the past five years, New Jersey — like many states — has incorporated a variety of incentive programs to help offset costs.
The state ranks 7th in the US for solar and by 2030, it will generate 50% of its energy from clean, renewable sources. Residents and commercial businesses already benefit from the incentives, since NJ’s electricity rates soar about 33% higher compared to other states.
Having greater control over utility bills isn’t the only benefit from switching to solar. Batteries storing excess energy help reduce carbon footprints and offer protection from unexpected outages. The financial incentives help with panel and battery purchases and leases.
Solar Tax Credits and Rebates
Purchased home solar systems installed prior to Dec. 31, 2022, qualify for a 26% federal solar investment tax credit (ITC). Whether purchased with or without battery storage, purchases qualify for the credit. Currently, the residential ITC drops to 22% in 2023 and ends in 2025. One caveat to the ITC program: it applies only to outright PV system purchases (via cash or solar loan), and recipients need a high enough income for the tax credit to be meaningful.
Solar Renewable Energy Credits (SRECs) identify how much electricity — kilowatt-hour (kWh) — a solar energy system produces. One can sell or trade SRECs separate from the power — an approach that produces additional revenue to offset the system installation’s cost. The Board of Public Utilities (BPU) NJ’s Clean Energy Program offers SRECs according to current market value. Those who’ve registered for the program are eligible to receive SRECs for 10 years from the operation date granted by the utility.
Another incentive includes the solar investment property tax exemption, which increases the home’s value based on the installed rooftop system. Although your home’s value can increase approximately 4.1%, property taxes will not increase from the value add of solar panels and batteries.
NJ homeowners who purchase new home solar energy systems don’t pay sales tax. Solar projects including installations, solar water heaters, and solar pool heaters receive 100% exemption, which saves 6.625% right away.
NJ Solar Programs
The state offers two programs: one to compensate solar users for energy the systems produce and one offering rewards for using clean energy.
NJ Net Metering
This policy allows solar users to sell excess electricity to the grid at the current retail rate, which is typically higher than wholesale rates power plants earn for electricity sold to utilities. Buying and selling electricity from the grid facilitates the balance of consumption and production and significantly reduces waste. The state’s top two utility net metering programs are PSE&G and Jersey Central Power & Light.
Transition Renewable Energy Certificates (TRECs)
Solar energy systems produce megawatt-hours (MWh) of solar power and TRECs. For each MWh, a system generates one TREC. System owners can sell TRECs on the market to utilities to help meet the NJ Renewable Portfolio Standard (RPS). TREC prices vary, but a 7kW system generating 7 MWh annually could earn up to $638 each year by selling TRECs for $91.20 each. While the NJ Board of Public Utilities voted to end the TREC program on August 27, 2021, it’s been replaced with the Successor Solar Incentive program (SUSI).
Although an individual or company can use a PPA to finance a solar project, paying for it out of pocket creates an asset that pays for itself in fewer than four years and generates passive income for 15 – 20 years. The Successor Solar Incentive Program, or SuSI, has replaced the SREC SRP on July 28, 2021. Comprised of two sub-programs, The Administratively Determined Incentive (ADI) Program and the Competitive Solar Incentive (CSI) Program, SuSI offers incentives for net metered residential/non-residential projects and grid supply projects. Navigating all things solar can present quite a challenge for commercial entities. Talking to a commercial solar advisor like CREAUnited Member Paul Abramson of SolarKal can help. He is well-versed on the nuances of each incentive available to companies within New Jersey. The services he provides include financial and technical analyses to determine feasibility for adding solar to a property. SolarKal also oversees the installation, providing end-to-end buyer’s representation.