Solar Rebates and Incentives for New Jersey
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 2.12% solar electricity by 2021).
Yet exactly how to accomplish these goals is still up for debate in New Jersey, leading the state to where it sits now – in a state of transition and uncertainty in how best to reach a renewable benchmark. Here is how the state rebates for New Jersey break down, including one huge but temporary snag.
Solar Energy Sales Tax Exemption
- In New Jersey, all solar energy equipment, including that for passive solar design, are exempt from the state’s 7% sales tax.
- Eligible systems are passive solar design, solar space and water heating, photovoltaics (PV), solar thermal electric, solar thermal process heat, and solar pool heating.
Property Tax Exemption for Renewable Energy Systems
- Solar water, space and thermal process heating, as well as photovoltaic systems, are also exempt from property taxes. 100% of the added home value incurred by the solar system is exempt.
- Among other renewable energy systems exempt from NJ property taxes are wind turbines, geothermal heat pumps and fuel cells.
Renewable Energy Incentive Program (REIP)
- New Jersey’s PV incentives change from time to time. For standard residential systems the current rate is $1.55/watt. However, if your home achieves a Tier I or II Home Performance rating with Energy Star, that rebate goes up to $1.75.
- PV systems installed as part of new construction are currently eligible for $1.00/watt. But again, there’s a boost for participants in NJ Energy Star Homes program. Tier I gets $1.25/watt, and Tiers II and III get $1.50 and $1.75 per watt, respectively. In order to qualify for rebates, newly constructed homes must be built within designated NJ Smart Growth areas.
- Under new 2010 rules, residential solar incentives will decline as New Jersey reaches certain solar capacity benchmarks. The first block is 20 megawatts. According to DSIRE, rebates are expected to decline by $0.20/watt at each benchmark, possibly depending on how fast each capacity block is reached.
- New Jersey’s PV rebate program is fairly complex compared to most other states and is full of little details and frequent changes. For more detailed information, see the DSIRE page for this rebate, or visit NJCleanEnergy.com.
State Renewable Energy Certificates (SRECs)
- If New Jersey’s solar rebates seem low given its solar reputation and stance as second-best solar power-producing state in the union behind California, that’s because they are intended to be used in conjunction with state renewable energy certificates (SRECs). This production incentive offers electricity generators certificates 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, although systems must be registered with the NJ Board of Public Utilities.
- SRECs are handed out in 1 megawatt-hour (MWh) blocks, meaning that every time your solar home feeds 1,000 kilowatt-hours (the unit of measurement you’ll see on your smart meter) into the grid, you will get one certificate.
- As of December 2009, certificates paid out approximately $560/MWh, although DSIRE notes that trades of up to $700/MWh have been recorded. Whatever the average, expect the selling price of SRECs to vary at any time depending on availability. 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. Of course, if you install solar power on your home with the help of the REIP program, then you are automatically signed up upon completion.
- Check out the SREC website for more information.
- New Jersey’s net metering laws allow all solar energy producers to be credited for net excess generation (NEG) at their utility’s retail rate. NEG is whatever energy a solar system produces beyond what the home or business requires. This energy is fed back to the grid and used elsewhere, which is why the utility must repay the system owner for it.
- 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. There are also provisions allowing real-time crediting using a marginal pricing rate tool. However certain factors have yet to be addressed by administrative rules, so real-time crediting is not yet available.
- Net Metering 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 SRECs as well, although new laws allow utilities to recoup the cost of new meters or other components necessary to net metering. They may do this through an increase in regulated rates or as a charge to net metered customers.
- Other new rules proposed by the Board of Public Utilities but not yet in effect include a removal of the 2 MW cap on eligible renewable energy generators and a removal of all limitations related to generator capacity (where previously system size was also limited to annual on-site electricity demand of the generating party).
- See New Jersey Clean Energy for more information