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