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How to Save Money on Solar Panels In New Jersey

The photo with solar panels and a woman's palm holding a toy house shows the flag State of New Jersey in the sun.

How to Save Money on Solar Panels In New Jersey

Key Points

  • New Jersey ranks 8th in the US for solar energy production with over 4.4 GW installed.
  • Switching to solar panels in New Jersey can save homeowners nearly $17,000 over the system’s lifetime.
  • Residents can take advantage of a federal solar tax credit worth 30% of all solar purchases, cutting up to $5,000 off the installation price.
  • New Jersey’s net metering policy allows homeowners to sell excess electricity back to the utility company for a credit on their next bill.
  • Through the Successor Solar Incentive program, residents can earn about $470 annually by selling their Solar Renewable Energy Certificates (SRECs) to the utility at a rate of $90 each.

New Jersey is the 8th most productive state for solar energy, with over 4.4 gigawatts installed. This makes considering a switch in the Garden State an easy decision. With a wide range of financial incentives, government regulations, and community support, homeowners can save big on solar panels in New Jersey.

But what exactly are the available opportunities for solar energy? In this article, we break them down one by one. We’ll get into net metering, performance payments, and renewable standards below. Let’s get started learning about New Jersey’s solar programs.

How to Save Money on Solar Panels in New Jersey: Overview

Just considering the cost of solar panels, homeowners in New Jersey already have reason to consider making a switch. With high electricity rates, decent sunlight, and low power needs, residents of the Garden State can save nearly $17,000 throughout their system’s lifetime. And with incentives, there’s even more financial gain.

Unexpectedly, solar panels in New Jersey have some of the best support in any state. The efforts made to invest in renewable energy have led the Garden State to the 8th leading in the country. As a result, homeowners have available opportunities to save on installation and even earn money over time. Let’s break down these opportunities in detail below.

Solar Panels in New Jersey: Federal Incentive

Before getting into state-level programs, residents of New Jersey need to apply for the federal solar tax incentive. This benefit offers a 30% return on any solar purchases, which includes labor, equipment, and sales tax. Right off the bat, this cuts as much as $5,000 out of the price of an installation.

The program has a few prerequisites, which include:

  • Owning the solar panel system outright
  • Purchasing new equipment
  • Living in the house where the system is installed

The federal solar credit starts to taper off its incentive in 2033, so while you’ve got some time to use the federal return, don’t wait too long. The program terminates in 2035 unless it’s extended.

New Jersey’s State Credits and Rebates

Here’s where things get juicy — because New Jersey is pushing hard for renewable energy, homeowners can receive a paycheck simply for producing solar power. In the Garden State, these benefits come in the form of net metering and performance payments.

New Jersey has kept a strong stance on their net metering policy. This mandate requires utility companies to purchase a portion of their power from solar panels. This means that any excess electricity you produce can be sold for a credit off your next month’s utility bill. At the end of the year, if you still have any credits left, the power company will write you a check for the wholesale cost.

Additionally, the state of New Jersey presents homeowners with a solar renewable energy credit (SREC) for every megawatt of energy their panels produce each year. 

Under the Successor Solar Incentive program, residents of the Garden State can sell their SRECs to the utility at a rate of $90 each. With the average 6kW system producing around 5 to 6 SRECs a year, this equals about $470 earned annually.

Aerial Drone of Solar Panel
You can earn a paycheck with solar panels in New Jersey through net metering and SRECs

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Solar Panels in New Jersey: Government Regulations

The Garden State also has great state-level regulations. Right off the bat, New Jerseyans get to take advantage of sales and property tax exemptions. With no sales tax, homeowners are already saving about 7-9% on the purchase of an installation. And without additional taxes on increased property values, New Jerseyans save thousands more throughout their system’s lifetime.

All of these great financial incentives and regulations stem from New Jersey’s great renewable portfolio standards (RPS). An RPS is a state’s internal goal to promote renewable energy and is a great resource for determining the future of solar in the area. 

New Jersey’s RPS was just adjusted in 2018, requiring 50% of its power to come from renewable sources by 2030. This suggests a strong push toward solar investment, which we see in an updated net metering policy and a brand-new community solar program.

The Garden State goes one step further with a solar carve-out. This is a regulation that requires a specific amount of renewable energy to come from solar energy. In New Jersey, the solar carve-out was about 5.1% (about 3,400GWh) by 2021, and decreases each year until it reaches 1.1% in 2031.

Should New Jerseyans Lease Solar?

In many states, homeowners have the option to lease a solar panel system if they don’t have the capital to purchase one outright. While this disqualifies them from many incentives, including the federal solar tax credit and net metering, it’s a decent option for reducing their solar footprint. In New Jersey, solar leasing is available, and can even result in decent savings on utilities over time.

However, if you’re not interested in lease payments, the Garden State just introduced a new community solar program in February 2023. The Community Solar Energy Pilot Program allows participants to pay a subscription fee to a remote solar garden to access a lower energy bill without having to install panels on their roofs. This is a great option for those without enough money for an array of their own or who don’t have control over their roof.

Solar Panels in New Jersey: Incentive Summary

FeatureAccess
Federal Tax Incentive30% credit
New Jersey Tax Credits / RebatesNone / none
Net MeteringFull retail credit each month, annual check for wholesale rate
Renewable Portfolio Standard50% by 2030, 5.1% solar carve-out by 2021 decreasing to 1.1% by 2031
Property Tax Exemption100%
Sales Tax Exemption100%
Performance Payment ProgramSRECs at $90 each

Frequently Asked Questions

Do you actually save money by going solar in New Jersey?

New Jerseyans can save up to $17,000 or more on their utility bills with solar panels. Furthermore, homeowners can save money and even earn on electricity produced through available incentives.

How long does it take for solar panels to pay for themselves in New Jersey?

With an average annual electricity bill of $1,339.20, homeowners in New Jersey can offset the initial cost of a 6kW solar panel array in 12.5 years.

How much do solar panels cost in New Jersey?

New Jerseyans can expect to spend about $2.78 per watt for solar energy. This equals about $16,680 for a 6kW system before incentives.

Can I use the federal tax incentive in New Jersey?

Homeowners in New Jersey can take advantage of a federal solar tax credit worth 30% of all solar purchases. Those that apply their credit to a 6kW installation can save as much as $5,000.

Does New Jersey have an RPS?

New Jersey’s renewable portfolio standards (RPS) were just updated in 218, now requiring 50% of energy production to come from renewable sources by 2030. Furthermore, the state has a 5.1% solar carve-out which decreases each year to 1.1% by 2031.

Does New Jersey have a community solar program?

In February 2023, the Garden State began supporting community-based solar gardens. Instead of installing an array on your home, you can pay a subscriber fee to access solar energy at a discounted rate.

How much solar energy does New Jersey produce?

New Jersey produces about 4.4 gigawatts of solar energy. This is the 8th most of any state in the country.

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