New Jersey Solar Incentives and Rebates Guide
Key Takeaways
- New Jersey offers a state-wide clean energy program that is a one-stop location for all solar programs offered to residential, commercial, or even local government divisions.
- Residents of New Jersey can still take advantage of a 30% tax credit through the year 2032, with varying tax credit percentages in the following years offered by the Federal Solar Tax Credit.
- The state of New Jersey no longer includes an SREC program but has included a Community Solar Energy Program as an overall incentive towards clean energy.
- Since 2005, Net metering has been an option for New Jersey residents who obtain energy from many different utility providers.
Energy users know that solar energy is a great way to help the environment and reduce overall utility fees, but making the switch can feel impossible without knowing how to pay for the upfront costs. On average, the initial residential solar installation fees in New Jersey can be over $20k. Even though solar is an option for everyone from residential to commercial, homeowners, in particular, may fear that they won’t be able to pay off any solar-related loans before selling their house.
New Jersey, however, provides a variety of financial incentives for residents looking to take advantage of solar energy through federal and state financial incentive programs as well as initiatives.
Between sales tax exemptions on solar systems and property tax exemptions, there is no shortage of opportunities for those interested in solar energy equipment and looking to make the switch.
Let’s take a closer look at the New Jersey-specific programs that are available.
New Jersey Solar Incentives
Successor Solar Incentive (SuSI) Program
This performance-based, state-offered incentive program helps a multitude of sectors, including residential, school, and commercial. The SuSI program is divided into two sub-programs that offer financial returns based on the type of solar system and whether the system’s location is considered residential or non-residential.
According to the New Jersey Clean Energy Program’s information page, the two sub-programs include the Administratively Determined Incentive (ADI) Program, which offers incentives for residential net metering projects, community projects, and non-residential net metering projects as long as they are less than 5MW (dc).
The second sub-program, the Competitive Solar Incentive (CSI) Program, focuses on projects greater than 5MW (dc). Even though New Jersey no longer offers traditional Solar Renewable Energy Certificates (SRECs), the SuSI program offers a similar, newer version. You can still submit a registration through the SuSI Program Portal. You can then go through the process of registering your solar projects through a tracking system where SREC-IIs are created, ultimately exchanging your SREC-IIs for payment.
New Jersey Solar Sales Tax Exemption
The New Jersey Division of Taxation offers a full exemption from all state taxes with no maximum incentive amount. This means that residents can buy solar equipment and bypass New Jersey state sales tax. The incentive includes 100% exemption, but the system needs to be approved by the Board of Public Utilities, Division of Energy.
Property Tax Exemption
Offered by the New Jersey Department of the Treasury, commercial, industrial, and residential properties are eligible for property tax exemptions. Started in 2008, the program allows eligible solar system owners to apply for an exemption that would reduce the assessed value of their property to what it would be without a renewable energy system. Not restricted to solar, the program encourages all New Jersey residents to swap out older systems for energy-conscious solutions.
Community Solar Energy Program
In an effort to get closer to clean energy, the Community Solar Energy Program is an initiative from the state of New Jersey to allow residents to reach their solar goals. The program works by offering an opportunity for individuals to participate in remote solar projects. The main target for this program is those who have been previously unable to switch to solar energy either because of solar installation costs or because of unsuitable roofs. Renters, businesses, schools, and New Jersey homeowners are all eligible participants as long as they are meter customers.
The program provides financial credit to all subscribers’ utility bills once they participate in the subscription service. Even though the solar system is not physically on the subscriber’s property, the solar array is still serving the property that they are signing up for.
Before signing a subscription agreement, investigate if this program makes sense for your particular situation and if it is cost-efficient. The credit to your bill will not typically cover the entire cost of your electricity, but the savings can indeed add up. The program encourages low and moderate-income households to participate.
The Community Solar Energy Program site includes a locator tool where residents can enter their ZIP code to find nearby projects seeking registrants. This main page includes resources, such as videos and brochures, for those looking to make the switch to solar power. There are also sample utility bills of residents participating in residential solar community projects so interested participants can view what their energy bills may look like.
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Federal Incentives
Federal Solar Tax Credit
The Inflation Reduction Act, initially signed into effect by the federal government in 2022, extended the Federal Solar Tax Credits (ITC) for all solar installations. This helps consumers by including a 30% tax credit for solar systems installed from 2022 through the end of 2032. After the year 2032, installations will receive up to 26% of a tax credit. Beginning in 2034, the federal tax credit amount will be up to 22%.
Besides offering steep tax credits, the Residential Renewable Energy Tax Credit program does not have a financial cap for the provided incentive. This means that larger initiatives can take advantage of this program and not have to worry about limited financial credits.
Federal Solar Investment Tax Credit
| Through 2032 | 30% |
|---|---|
| 2033 | 26% |
| 2034 | 22% |
New Jersey’s Net Metering Program
Net metering allows solar system owners to receive credit toward their electric bill for the energy their solar system generates that their home doesn’t consume. In other words, during sunnier daytime hours, your solar system may generate excess energy you don’t use. In this case, you would not be charged anything for the duration of the time. At night, however, when you need to use electricity and your solar panels are not producing any energy, you would be charged at the regular rate.
Essentially, you receive a kickback to your credit account from the excess solar energy that you produced during the day. This can equate to reduced overall utility costs. For New Jersey residents who aren’t eligible for other state incentives, net metering can be a great solution. There is a system capacity limit: the solar panel system must be sized so that the overall energy production does not exceed the consumer’s annual on-site consumption.
According to DSIRE, the following utilities participate in the net metering program: Atlantic City Electric Company, Jersey Central Power & Light Company, Public Service Electric & Gas Company, and Rockland Electric Company.
The Garden State has taken its net metering program seriously in that it has strived to ensure strong interconnection protocols are in place. According to their Clean Energy site, New Jersey was one of the first states in the country to strengthen interconnection between the consumer and the utility grid. This means that residents can be assured regarding both their connection and the amount of compensation from their utility.
Impact on the Payback Period of Solar
With the promise of savings after making the switch to solar, residents may wonder how long it will take to see actual returns on their investment. The payback period for any investment can be explained as the time it takes for the savings generated by an investment to match its cost.
Even though the average payback period for solar systems is about 10 years, the incentives mentioned above can help reduce this payback period so you can see your savings that much faster.
Of course, the ultimate amount of your savings depends on available incentives you are eligible for in your area, and the initial cost of your solar power system. These two factors, plus your average electricity rates, all play a role in determining your payback period for solar power systems.
| Typical 6kW solar system installation cost | $17,700 |
|---|---|
| 30% Federal Tax Credit | $5,310 |
| Total Cost After Incentives Not including local incentives, which vary | $12,390 |
| Assumed Electricity Produced by a 6kW Solar System in New Jersey | 8,591 kWh |
| Annual Electricity Cost Reduced or Offset Assuming 100% utilization by the home | $1,520 |
| Sample Payback Period | 8 years |
Sources: https://www.nrel.gov/docs/fy22osti/83586.pdf, https://globalsolaratlas.info/map (Newark); https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
Conclusion
The state of New Jersey continues to participate in federal and state programs that offer residents a chance to make the switch to solar without financial pressure. From the Successor Solar Incentive Program to sales and property tax exemptions, there are plenty of financial saving opportunities when it comes to harnessing the power of solar. Instead of an unattainable improvement, solar panels have become a realized upgrade that can help consumer pockets with environmental benefits to boot.