Solar in New Jersey

You are eligible for a federal tax credit in the amount of 30% of the total cost of your solar system investment. The average system in in the range of $15,000 on the low end, to up in the $40-60K range for what we would consider larger residential systems. This means that if you invest $30,000, for example, your net cost will really be $21,000 after the $9,000 tax credit is taken. 

In order to qualify to the federal tax credit, you need to be paying federal income taxes. They will pay you back up to the amount that you paid in that year. If you have a larger tax credit than your yearly federal tax amount, the remaining tax credit amount can be used the following year. The solar tax credit is able to roll over 5 consecutive years if the total cannot be used the first year. 

To incentive you to go solar, the utility companies in NJ credit homeowners with solar at a 1 to 1 rate. This means that a solar system can eliminate the utility company's bill (other than a low monthly connection fee of around $10) WITHOUT the need for battery storage. With full 1:1 credits, the system banks power all throughout the middle of the day when the system is producing more than the house and then in the evening, you do draw power from the grid, but the credits you built up in the day simply cancel out the night time bill. Most states do not have a net metering policy that credits you at the same value as what you actually are paying. Net metering will go away as solar participation increases so lock yourself in before the credit value starts to drop. Batteries start at around $10,000 and so do not want until you inevitably need to add at least $10,000 in cost to your total.  

In order to incentivize more solar installations, New Jersey offers SRECS in a program, called SuSI. Currently for every 1000kWh of production, the homeowner is paid $85. This is good for 15 years! 

The idea is that large corporations need to fulfill a certain size carbon footprint. When corporations cannot achieve their sustainability goal, they have to purchase SRECS to make up the difference. This is technically an open market based on supply and demand and the value of SRECS can change over time although the credit is fixed at $85 for the 15 years once locked in even if it changes later. 

Let's say you build a system that will produce 10,000kWh a year. This means that you would be eligible for 10 SRECS a year and 15 years of production is used. In this example, with $85 credits...  $85 x 10 SRECS = $850. This is for one year! The SRECS stay with the house, and so if the homeowner moves, the new owner would continue receiving the checks from there on out. But this would be a 15 year program and so every year, an $850 check would be sent to the homeowner. It can be set up to be paid out quarterly, bi-annually, or annually. 

This is an incentive that ultimately is for the installer or whomever is purchasing the equipment. But, it brings down the cost to install by several hundreds of even around $1000 for a large system. 

Since solar raises the value of a property or home, in order to incentive you to install solar, NJ has put into law the practice of not taking the value of the solar system as part of the property's assessment when deterring the property tax amount.