Solar in New Jersey: Breaking Down Costs, Rebates and Estimates

New Jersey makes it easy to go solar. Driven by a cutting-edge program, the Garden State boasts the second-most PV installations after California, and has kept our CalFinder solar installers hard at work.

But New Jersey homeowners are the real winners. Due to a package of innovative incentives, New Jersey is now the least expensive state to go solar.

Comparing Costs of Solar Panels

Getting estimates for a solar array is easy, and helps you assess whether your rooftop is a good candidate for panels.

To compare pricing in your area, click here.

Then, read on to see just how much is available through solar rebates in New Jersey.

Take 30% Off with the Federal Tax Credit

Right off the bat, most homeowners in the U.S. qualify for the Residential Renewable Energy Tax Credit, a 30% return on PV and solar thermal installations. The original credit established by the Energy Policy Act of 2005 capped the credit at $2,000.

The American Recovery and Reinvestment Act of 2009, however, enhanced the credit to cover the entire cost of labor and equipment – uncapped at 30%. The credit can be carried over into future years if necessary for tax purposes.

Local Utility Incentives

PSE&G, NJ’s largest public utility, budgets for a loan program. If eligible, PSE&G’s loan program finances 40-60% of installation costs. They guarantee a fixed minimum SREC, locking in monthly payments for the duration of the loan. ACE, JCP&L, and RECO are regional utilities that offer financing programs and creative incentives for qualifying customers.

New Jersey Cost-Benefit Analysis: 5kW system at $5 a watt

Now, we’ll break down real cost savings for an average-sized solar system.

• Before Incentives: 5,000 watts x $5 a watt = $25,000
• State Rebates 2011: N/A = $25,000
• 30% Federal Tax Credit: $7,500 = $17,500
• SRECs: Approximately $3,000 in first year = $14,500
• Payback at $3,000 in yearly SRECs going forward = 5 years

Solar Renewable Energy Certificates (SRECs)

SRECs constitute a one-of-a-kind asset class conceived in 2004, providing a monetary credit for each megawatt generated from solar power. This unique financial model is the lifeblood of New Jersey’s solar success story.

Solar adopters can sell or trade these certificates at market rates. Market dynamics power New Jersey’s unprecedented system through basic supply and demand. Payments are measured by total megawatts generated, so consumers benefit whether they use the energy or not.

New Jersey law states utilities must produce 5,316 gigawatts of solar energy by 2026. Utilities buy SRECs on the open market to satisfy the state’s requirements. The market remains bullish, as average prices have hovered in the low $600 range during the first quarter of 2011.

The success of the SREC system has phased out New Jersey’s solar rebate program for residential customers. The Renewable Energy Incentive Program (REIP) no longer budgets for upfront solar rebates.

Why New Jersey?

New Jersey’s Energy Master Plan, rich with solar incentives, enjoyed a 140% megawatt increase in 2010, mainly due to an affordable formula for residential adoption. As of March 31, 2011, over 8,900 business and consumer solar systems had been installed.

New Jersey topped the 100-megawatt mark in 2010, becoming only the second state to accomplish this green feat. The potent combination of government backing and consumer adoption has pushed the state to the forefront of the U.S. renewable energy movement.

Traditional energy is very expensive, and the government believes running parallel systems will reduce the cost-per-watt burden for businesses and residents. Also, solar companies follow the lawmakers, and New Jersey has proven hospitable for manufacturers, solar installers, and creditors competing in the still-young U.S. solar industry.

Photos via Flickr Creative Commons

Posted on May 6th in Solar Funding by Brittany.