In the world today, electrical power is an essential resource that is mainly sourced from fossil fuels such as coal and natural gas, which emit harmful gasses that are the main cause of air pollution and climate change. Fossil fuels are also a finite resource which creates an unstable market in which energy prices can skyrocket in a short period of time. Luckily, we are starting to convert to totally clean, renewable sources of power such as solar. The state of New Jersey is a great example of conversion to cleaner power. New Jersey is second in the nation in the total number of homes and businesses which have solar panels installed. New Jersey has some of the best policies and financial incentives for anyone who is looking to get involved in the clean energy movement. Presented below is the basics of everything you need to know about going solar in New Jersey.
In general, there are three main categories of information that you should know:
Solar Purchases, Solar Loans, and Solar Power Purchase Agreements (PPA): These are the various financial options that you have in New Jersey.
Solar Policy: These are the rules set by the state legislature and public utility commission that determines how easy it is to go solar in New Jersey. They govern everything from renewable energy mandates to the rates you receive for the extra energy that your system produces.
Solar Incentives: These are the financial benefits you could receive for going solar, such as money-back rebates, grants, tax credits, and tax exemptions.
You have three main options when considering installing solar panels on your home, and that is whether to straight up buy the whole solar system, take a solar loan, (which is essentially like a car lease), or make a power-purchase agreement.
|Local Rebates||Varies, New Construction Only|
|Tax Credits||None :(|
|Performance Payouts||SREC Market|
|Property Tax Exemptions||100%|
|Sales Tax Exemptions||100%|
Solar Purchases: If you were to purchase the whole solar system today in New Jersey, it would cost you about $16,250. A total purchase of a solar system in New Jersey will technically provide the biggest financial return and will pay itself off in a few years due to available rebates and tax credits. Over 25 years, your system will have produced nearly $35,000 in income, after your system cost is paid back. In addition, New Jersey offers an incentive called Solar Renewable Energy Credits (SREC), in which case one SREC represents one megawatt of electricity generated from solar, and in New Jersey, you get about 6 per year, equaling about $1,000 in your pocket every year. However, a majority of people do not have the $16,250 to buy a solar system upfront, but there are solar loan options available.
Solar loans: These are the best option when it comes to the percentage return on your investment. This is because you are using someone else's money for the purchase price, which is then paid back over time. If you have equity in your home or can get a large loan with an interest rate of 5% or less. You will also receive the 30% federal tax credit and the energy bill savings that come along with it. However, your loan payments will initially be higher than the energy bill savings, but the difference will come down each year as electricity prices rise. Currently, the net present value of solar investments in New Jersey is +$14,478 for solar loans and +$11,365 for solar purchase.
Solar PPA: A power-purchase agreement is definitely the cheapest and easiest way to get involved with solar. With a power-purchase agreement, you are leasing solar panels from a third party solar company. You put $0 down and pay about $796 per year. With this option, you save about $140 because you would normally pay $936 to the utility company. The perk of doing a PPA is that since the company owns the panels, they will do all the maintenance for you and will take care of any problems. However, in New Jersey, a PPA has the lowest NPV at +$2,239.
When it comes to the availability of access to solar power, state legislatures, and public utility commissions can enact rules to make solar power accessible for everyone. Luckily, New Jersey has some of the best solar policies out there. There are four main categories of rules and policies to know:
Renewables Portfolio Standard (RPS): This requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar. New Jersey has one of the strongest RPS goals in the nation, stating that 22.5% of all energy must come from renewable sources by 2021. Out of this 22.5%, 4.1% must come from solar, which means that solar is crucial in order to meet requirements. This is great because it forces the usually unwilling utility companies to aid in the transition to solar.
Electricity Price: Currently the average price of power in New Jersey is about $0.16 for a kilowatt-hour of electricity, which is about 3 cents more expensive than the national average. Although this seems unfortunate, the higher electric prices could mean even larger savings if you switch to solar power.
Net Metering: This requires your utility company to monitor how much energy your solar power system produces and how much energy you consume. They use this to make sure that you get the full retail rate for any surplus energy you produce. This credit is applied to your bills for up to 12 months. At the end of the 12 months billing period, they pay you for any remaining energy at an avoided-cost rate. New Jersey has a pretty ideal net metering policy.
Interconnection Policies: Interconnection policies allow you to connect to the electrical grid with solar panels on your roof. If you are looking to have solar panels on your single home, you should have no problem connecting, with no application fees, if your system is 10kw or less. If your system is larger than 10kw, you will not be required to install a redundant external disconnect switch or be required to purchase additional liability insurance. Overall, New Jersey has pretty smooth and easy interconnection policies.
When it comes to the perks of installing a solar system on your house, New Jersey is pretty good. There are four main types of incentives you may have the option for:
Solar Power Rebates: Some state legislatures provide rebates for solar panel purchases to branch on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which is generally a large payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex. Unfortunately, New Jersey does not offer rebates for clean energy types. New Jersey legislators made the decision to back solar power with only the SREC market. However, you may be able to get some rebates if you are building a new home and using solar to power it. The program is called "The NJ Clean Energy Residential New Construction Program".
Solar Power Tax Credits: State tax credits are not technically free money. They are 'credits' and not 'deductions' which means that if you have the knowledge of taxes, you can take advantage of them. They could essentially be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. However, New Jersey does not offer any personal tax credits for solar panels.
Solar Power Performance Payments: These are essentially small payments for each kWh a solar system produces. In New Jersey, the performance payments are in the form of the SRECs. SRECs act as proof that the utility companies are following the law to produce their share of clean power. If they do not produce clean power through their own means, they must buy it from the average solar power homeowner. To get money for your SRECs, you can sign up with an SREC broker, such as SRECtrade. These guys handle the paperwork, aggregate a lot of homeowner SRECs together, handle the trading with the utility companies and take a commission for their efforts.
Property Tax Exemption: Property tax exemption status is a large factor when putting together your investment considerations. It is argued that solar power adds approximately 20 times your annual electricity bill savings if you happen to own the system. In New Jersey, they cannot charge you more property tax if you add solar to your house. In turn, your home will be worth much more if you decide to sell your home. Many average-sized solar power systems on a can mean $20,000 to your home value.
Sales Tax Exemption: Most things that you purchase have a sales tax that is an extra small fee just for purchasing the product. Luckily in New Jersey, there is no state sales tax on the purchase of home solar panels. This will essentially save you %7 or more on your purchase. To learn more about solar incentives in New Jersey click here or visit here.
When it comes to deciding whether or not to invest in solar power for your home in New Jersey, there are many things that you should keep in mind. Overall, getting involved in solar power in New Jersey is a great idea. They have a strong RPS program that makes sure that New Jersey's utility companies have to help you get into solar. They offer sales and property tax exemptions along with a solid net metering program. This ensures that you will be able to save some money with installation to eventually make money back from excess power produced, which come in the form of SRECs. Getting involved in solar power is not only a great investment financially but it is also a great investment for the health of this planet.
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