New Jersey has been a leader in US solar energy programs, and that status is only increasing. The Garden State is committed to renewable energy. NJ solar incentives and solar rebates provide excellent incentives for those looking to get started. New Jersey helps residents and business owners get started with solar energy while minimizing investment and optimizing cost-saving incentives.
In 2020, New Jersey was the seventh-largest producer of solar energy, and almost 75 percent of all its renewable energy production came from solar. Overall, the state boasts over 2,600 megawatts of installed solar panels across more than 112,000 installations. New Jersey is now home to one of the world’s first solar-powered amusement parks, further enhancing the state’s commitment to (and the public’s interest in) renewable energy. In June of 2019, the State of New Jersey released the Draft Energy Master Plan, (EMP) detailing the state’s full conversion to 100% clean energy by the year 2050. Strategy 2 of this plan includes developing solar energy even further in the Garden State.
Unfortunately, New Jersey has one of the highest average electricity rates in the US at 15.69 cents/kWh. Saving money on your electricity bills is arguably the biggest incentive to switch to solar energy in NJ. The good news is that solar panel installations in NJ are a smart financial investment.
Related Article: Top 10 Solar Installers in New Jersey
In addition to the environmental impact, you can reap the financial benefits of transitioning to solar power in your own home or business. The state offers a generous array of incentives intended to encourage homeowners and businesses to install solar energy systems.
NJ Clean Energy Program
New Jersey’s Clean Energy Program, established in 2001, offers incentives and services to New Jersey residents, businesses and government offices who choose solar. Since then, switching to solar has only become more common, and users will benefit from more support and financial incentives. New Jersey’s Clean Energy Program holds a strong Renewable Portfolio Standard (RPS), which requires an increase in energy production from renewable sources, such as solar. Also, highly effective standards developed for interconnection and net metering, which helps maximize savings from renewable energy sources. Last, the state’s SREC financing model offers long-term financing options for those looking to invest in solar.
NJ Solar Rebates
Once your solar system is up and running, you could cash in on it through New Jersey’s solar renewable energy credit (SREC) market. Homeowners or businesses receive an SREC for every 1,000 kilowatt-hours of electricity they produce. These credits are sold to energy utilities, which use them to fulfill their state-mandated obligation to use a certain amount of energy from renewable sources each year.
The value of an SREC fluctuates based on market variability, but it tends to hover around $220. Homeowners can qualify to receive SRECs for ten years after installing their solar panels. SREC credits alone mean your solar system could pay for itself in just five years, so it’s worth considering purchasing your solar system outright! See for yourself average SREC trade prices in the state of New Jersey.
If you want to benefit from producing solar power and earning SRECs, act fast! New applicants will only be accepted for a limited time. In New Jersey, about 4.2% of energy now comes from solar power producers. When that number reaches 5.1%, acceptance of new applicants will phase out, and by June 1, 2021, they will no longer be accepted regardless. The bottom line is if you want long-term gain on your solar investment, now is the time!
Another incentive to take advantage of in 2021 is New Jersey’s net metering policy. Net metering allows homeowners and businesses to transfer excess solar energy back to the grid. Homeowners can maximize their investments in solar energy by receiving compensation for the power their panels produce.
Your solar energy system may sometimes produce more energy than you need. For instance, you might be at work during the sunniest part of the day, when your solar panels are producing more power than your home is using. Without net metering, that energy would simply be wasted. But under New Jersey’s net metering regime, that energy is pushed back into the grid, allowing others to use it. At month’s end, you’ll receive a discount on your energy bill based on the amount of excess energy your solar panels produced. You will be compensated in credits for the full retail value of the excess energy your system produces.
Related article: How do solar panels work?
Federal Solar Energy Tax Credit
Federal Solar Investment Tax Credit
On top of these generous state incentives, New Jersey residents can also take advantage of the federal investment tax credit (ITC). The federal solar investment tax credit is a program that allows anyone paying federal income tax to take a 26 percent tax credit on the cost of installing their solar system. A tax credit is a dollar-for-dollar reduction in your total income tax liability. If your system costs $15,000, for instance, you could take advantage of the ITC to claim a $3,600 credit on your taxes. The ITC can be applied not only to solar panels, but also to contractor and installation costs, wiring, inverters, racking, and other balance-of-system equipment.
Unfortunately, the ITC won’t be around much longer. The tax credit will decline to 22 percent in 2023. After 2023, the ITC will phase out completely. That means that 2021 is a great year to go solar!
New Jersey Solar Tax Credit
Solar Energy Sales Tax Exemption
One of the biggest hurdles to going solar is the price. Average-sized systems cost around $20,000. To soften the blow, New Jersey offers a complete sales tax exemption for all solar energy equipment. That means that not only are your solar panels tax-exempt but so are your inverters and racking. Solar batteries (if you choose to install them) may also be tax-exempt.
NJ Solar Property Tax Exemption
Finally, New Jersey offers a property tax exemption for solar panels and other renewable energy systems. To qualify for the exemption, you simply need to apply for a certificate from your local tax assessor. Your local property tax liability will then be reduced by the amount of value added by the solar energy system. In short, your property taxes will not increase, even though installing solar panels increases the value of your property (especially if you own the panels rather than lease them).
NJ solar incentives and solar rebates have made going solar in New Jersey more affordable than ever, and installation costs have dropped over 40 percent in the past five years. If you have more questions about the costs and opportunities associated with going solar in 2021, contact your local installer to find out whether your home is a good candidate for solar panels.
Considering how customizable solar power can be, solar power installation costs vary greatly. The larger the array of solar panels, the more it generally costs. However, the quality of your panels and the accessories you purchase can make a difference in the overall savings you experience. Your home/roof design can also affect the cost. Solar panels can be installed on homes that face any direction, but for optimal usage, south or west-facing home is ideal.
People also ask
How much does it cost to install solar panels in NJ?
Solar panel costs in NJ are generally between $12k-$15k, after rebates and tax credits. Cost varies based on the size of the home, watt usage, and also by county. In Ocean County, for example, the average cost of installing a 5kW system is $12,622. That investment would go up to $18,985 for Cape May residents. These figures do not take into account the incentives previously noted- after the tax credit, the same system would run $8,836 in Ocean County, and $13,289 in Cape May. These numbers are just estimates, and solar systems are highly customizable to your finances and power needs.
Do solar panels increase home value?
Solar panels can certainly increase the value of your New Jersey home- but only if you own the panels. When you lease the panels, you are renting them from a third party owner. Therefore, when you assess your home’s value, the panels wouldn’t be considered.
If you own the system, then good news! Solar-powered homes benefit from an increased value of 3-4%. Zillow found an even higher figure in their recent study! Over the past year, solar-powered homes sold for an average of 4.1% more than similar homes without solar power. Going solar is an investment for a greener earth and savings on electric bills, and it can also be an investment in your home’s property value.
Will solar panels increase my property taxes?
While a solar power system will increase your property’s value, it will not increase your property taxes in New Jersey. New Jersey offers a property tax exemption for solar panels and other renewable energy systems. It is a pretty simple process- you just apply for an exemption certificate from your local tax assessor. This tax exemption will reduce your local property tax liability by the amount of value added by your solar energy system.
Do solar panels increase home insurance?
Most home insurance plans do cover customer-owned solar panels. Once rooftop panels are installed on your home, they are considered part of your property. Therefore, they wouldn’t require an add-on plan, such as, say, a jewelry or baseball card collection. All companies and plans are different, so it’s a good idea to check with your own on how they handle solar panels. Be sure to check your coverage limits to be sure your insurance covers the loss, as the system is a considerable financial investment.
Is SREC income taxable in NJ?
There is some conflicting information on this. The income generated from SREC does not seem to be an excludable source of income, but we would suggest following NJ Clean Energy’s advice and consult with a tax professional for their tax-related questions.