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Juliansolarguide.com

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  • Home
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  • Roof Stand-Offs/Racking
  • Purchase vs Lease/PPA
  • Is Clipping a Problem?
  • Cash vs Financing
  • Are you a solar candidate
  • Commercial/Rental
  • SDG&E Vs Solar Investment
  • System Monitoring
  • Solar Tax Credit
  • Solar Panel Cleaning
  • Solar in California
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Solar in New Jersey


Does Solar Make Sense in New jersey?

New Jersey has one of the fastest payback periods in the entire country with the help of multiple incentives being offered.  If your roof is not shaded by trees in the middle of the day and have a bill of at least $100, solar could make a lot of sense. With good light exposure on your roof, we see, on average, 5-7 year payback periods which is phenomenally fast. New Jersey offers multiple incentives that help bring the net investment cost down to less than half the total cost. Combine the incentives with one to one net energy metering ( 1:1 NEM ) and already expensive and rising electricity rates, New Jersey is setting itself up to have solar be a no-brainer for most homeowners. Below I am going to describe the incentives one by one and then give an average cost breakdown showing how much the incentives take off the total so you can see an ideal payback period example. This is "cash" deal so with financing the interest will add to the total cost. 


1. Federal 30% tax credit

2. One to One Net Metering credits (1:1 NEM)

3. New Jersey Successor Solar Incentive Program (SuSI)

4. Solar Equipment Sales Tax Exemption

5. Solar Property Tax Exemption 

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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. 



So what does the average cost breakdown look like?

Let's suppose we are going to eliminate a $150/month bill


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Every scenario will be different, but lets say that in this case, in order to go from a $150 dollar per month bill to a $10 a month bill, we are going to need a 7kW system producing about 10,000kWh a year. The price per kWh would be about 18 cents here. 10,000kWh x $.18/kWh = $1800 per year. 


The 7kW system would be around $25,000 in this scenario. 


Total cost- $25,000

(30% Federal Tax Credit -$7,500)

(SRECS - $850 a year for 15 years = $12,750 total)

---------------------

Net Cost - $4,750

==================

Even if the price of power does not go up...

 $4,750 net cost /$140 a month in savings = 3 years. BUT, the full SRECS are not paid out within the first 3 years and so while in the long run, looking back it's like the system paid for itself in 3 years, but for real world cash flow it'll be about 6-8 years. 

In some cases the system could cost a bit less or more. 


Calculations:

Tax credit - $25,000 x .3

SRECS - $85 x 10 SRECS x 15 years

*One SREC is for 1000kWh of production*


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