New Jersey's Rebates and Incentives for Solar Energy Systems
New Jersey is widely credited as one of a few states setting the bar for solar installation incentives. With an aggressive Renewable Portfolio Standard (RPS) and a very lucrative state rebate program, Jersey has been pushing hard to overcome its historic reputation as a rather "muddy" state. It's been succeeding thanks to an RPS requiring 22.5% of public utility power to come from renewables by 2021 (including a minimum 1,500 megawatts (MW) from solar).
Yet exactly how to accomplish these goals is still up for debate in New Jersey, leading the state to where it now sits – in a state of transition and unsure how to best reach a renewable benchmark. Here is how the state rebates for New Jersey break down, including one huge, but temporary, snag.
TAX CREDITS
Solar and Wind Energy Systems Exemption
- Since 1980, applicable solar and wind systems have been exempt from New Jersey's sales tax. With the sales tax now sitting at 7%, the exemption includes all equipment involved in the purchase and installation of the system.
- Eligible systems are passive solar design, solar space and water heating, photovoltaics (PV), solar thermal electric, solar thermal process heat, and solar pool heating.
REBATES & INCENTIVES
New Jersey Clean Energy Rebate Program
- This program covers PV and offers a pretty dandy incentive rate of $3.50/W for private sector systems up to 10kW, which includes the vast majority of homeowners. Rates drop incrementally as the system size increases. Rebates for self-installed systems are automatically reduced by 15%.
- Important! With a three year program budget of $273 million, the rebate program has run out of funds. Therefore, the New Jersey Board of Public Utilities (BPU) is NOT accepting any more applications. Compliant applications that are already on file will be given rebates as funding becomes available. It appears that the New Jersey legislature is looking to move away from rebates and toward State Renewable Energy Certificates (SREC) as a means of achieving the state's RPS. Yet nothing has been decided while the solar industry faces a lull in new projects. According to the Database of State Incentives for Renewables & Efficiency (DSIRE), it is likely that this rebate program will be extended for the next 3 to 4 years for smaller systems (good news for homeowners!) but eliminated for large systems altogether.
State Renewable Energy Certificates
- Currently in its pilot phase, this production incentive offers electricity generators SRECs for power generated using PV and other renewable sources. These certificates can then be sold to utilities so that they can meet their RPS requirements. Anyone can earn SRECs no matter the system size. Systems must be registered with the NJ Board of Public Utilities.
- As of June 2008, certificates paid out approximately $711/MWh ($0.71/kWh...at the high end). However, the selling price of SRECs will vary depending on availability at any given time. There is an effective cap on what the generator stands to make off an SREC. This is the Solar Alternative Compliance Payment (SACP) or the amount an electricity provider must pay if they do not meet the RPS standards. ALL providers, public or private, must register with the BPU and participate in the program.
- Even the SREC program is in a bit of limbo while the legislature debates the details. If the general consensus is to take New Jersey's solar incentives more into this direction, than you should expect some fairly large increases in the incentive rates. Check out the SREC website for more information.
NET METERING
- New Jersey's net metering laws are fairly straightforward and similar to those of other leading solar states such as Florida and New York. Solar thermal electric and PV systems are eligible and must be 2MW or smaller. Treatment of net excess generation (NEG) varies depending on the customer's preference.
- Solar electric customer-generators have several options for treatment of NEG. Most choose to have it carried over to their next month's bill, with any excess available at the end of the 12-month billing cycle to be purchased by the utility, from the owner, at the avoided cost rate.
- The rules apply to all investor-owned utilities and certain municipal utilities. Recently, net metering laws were expanded to include industrial and large commercial electricity producers. Customers participating in New Jersey's net metering program keep all available RECs as well.
- New Jersey is considered by many to be a paragon of the solar industry. Indeed the only thing they've done wrong is to underestimate the ravenous demand that resulted from the state's solar incentives. There is little to no doubt that Jersey will be back with funding galore for future solar projects. New legislation will likely increase SCAPs, making state renewable energy credits even more lucrative. It will be interesting to see how New Jersey's move to an REC-based incentive program plays out. While most homeowners will get another round of rebates you'd better act fast when the funding is announced. There is, after all, already a line!
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