Going Solar in New Jersey: Cost and Incentives
The fast-rising cost of energy is leading us all to consider different ways to reduce our energy bills. Many homeowners consider going solar only to push it off for another year like that garage that was supposed to be cleaned out in 2007.
But unlike neglecting your garage, putting off going solar can cost thousands of dollars per year in lost energy savings.
New Jersey is increasingly one of the fastest growing solar markets in the country due to a wide-range of federal, state, and local incentives that help make solar a reliable and lucrative investment.
In this article, we’ll dig into New Jersey’s solar incentives and the lifetime savings using real binding quotes generated from a solar.com customer.
Let’s dive in with a summary of the cost of going solar in New Jersey.
Solar Panel Cost in New Jersey
For all the beauty that New Jersey provides, one thing that is not so pretty is the price of electricity. in 2022, the average New Jersey electricity rate is 17.4 cents per kWh and 24.5 cents per kWh in the New York City-Newark-Jersey City metro area.
And if history is any indicator, we can expect electricity prices to continue rising for as long as they are tied to fossil fuels.
That is where solar comes along.
Let’s look at a real binding quote for a 9.3 kW solar system presented to a solar.com customer in New Jersey:
|Gross solar installation cost||$42,275|
|Cash Discount (Amount saved from no loan)||$12,467|
|30% Residential Clean Energy Credit||$8,942|
With 4.21 peak sun hours per day, a 9.3 kW solar system can be expected to produce on average:
- 668 kWh of electricity per month
- 8,013 kWh kWh of electricity per year
- 200,335 kWh of electricity over 25 years
If you divide the net cost of the project by the lifetime production, the cost per kilowatt-hour of home solar for this New Jersey customer comes to 10.4 cents per kWh, or 14.9 cents per kWh without the 30% tax credit.
Now, let’s compare the cost electricity from home solar to the cost of grid electricity:
|Source of electricity||Cost of electricity (cents/kWh)||Cost per month 668 kWh of electricity||Cost per year for 8,013 kWh of electricity|
|Solar – With tax credit||10.4||$69.47||$833.71|
|Grid – New York City-Newark-Jersey City metro||24.5*||$163.66||$1,963.19|
|Grid – New Jersey state average||17.4**||$116.23||$1,394.26|
|Grid – National average||16.7||$111.56||$1,338.17|
In the first year alone, that amounts to:
- $1,079 in energy savings in the Newark-Jersey City metropolitan area
- $560 in energy savings based on state average electricity prices
But here’s the thing with electricity prices: They rise over time.
The price of grid electricity has increased on average 3.51% per year over the last 5 years, according to the Bureau of Labor Statistics. Meanwhile, solar freezes your electricity cost at a low rate for 25 years – and that’s where the energy savings comes in.
Here’s how the cost of solar panels compares to grid electricity in New Jersey.
Over the 25-year warrantied life of a solar system, this New Jersey homeowner can expect to save:
- Between $38,000 and $63,000 if they claim the 30% solar tax credit
- Between $29,000 and $54,000 if they don’t claim the solar tax credit
Based on New Jersey’s above average electricity prices, going solar has a huge potential for energy savings. Those savings get even better when you factor in New Jersey’s solar incentives, like the SuSI program.
New Jersey solar incentives
Even though New Jersey is home to some of the best tans in the nation, that sunny weather only lasts for so long.
Luckily, what New Jersey’s sunlight lacks in regards to year round production, is made up for in incentives, like the solar tax credit and SuSI.
Federal Tax Credit
The first tax incentive to get into is the 30% solar investment tax credit – also known as the ITC or Residential Clean Energy Credit.
This federal tax credit is worth 30% of the cost of installing solar and battery storage systems. Thanks to the Inflation Reduction Act, the ITC will remain at 30% until 2032 and starting on January 1, 2023 can be applied to battery storage that isn’t hooked up to solar.
This tax credit is worth $6,000 on a $20,000 solar system – effectively reducing the net cost to $14,000.
This article does not constitute tax advice. Consult a licensed tax professional with questions about applying the 30% solar tax credit.
New Jersey Successor Solar Incentive Program (SuSI)
New Jersey has been through a few incentive programs in recent years. You may have heard of SRECs and TRECs, but as of August 2021, the latest iteration is the Successor Solar Incentive Program, known as SuSI.
SuSI has two subprograms, both with terribly boring names:
- Administratively Determined Incentive (ADI) Program
- Competitive Solar Incentive (CSI) Program
The ADI program pertains to residential solar owners, so we’ll focus on that one.
How does New Jersey’s ADI program work?
The Administratively Determined Incentive program under SuSI works similarly to SuSI’s predecessor programs.
Net-metered residential solar owners earn one certificate for every 1,000 kWh of electricity their solar system generates for 15 years. These certificates – called SREC-II’s – can be sold to utilities for $90 each.
For our 9.3 kW system generating just over 8,000 kWh per year, that adds up to $720 in SREC-II earnings per year.
Here’s how that looks over 15 years:
|Year||Cumulative SREC-II earnings|
Remember, these SREC-II earnings are in addition to the energy savings and increased home value from going solar and can substantially increase your return on investment.
Applying to SuSI
The ADI program through SuSI works on a first-come, first-serve basis until the 150 MW program capacity has been reached or June 1, 2023, whichever comes first.
New Jersey solar owners can apply to the ADI program here.
Property tax exclusion
Studies by Zillow, and Berkeley Lab have all shown that solar panels increase home values by up to $4,000 per kW. Additional home value is great for homeowners – until it comes time to pay property taxes.
But thanks to New Jersey’s Renewable Energy System Property Tax Exemption , going solar won’t increase your property tax. This exemption applies to 100% of the value added to your home by an active solar system.
In order to claim the exemption, property owners must apply for a certificate from their local assessor which will reduce the assessed value of their property to what it would be without the renewable energy system.
In simpler terms, solar increases the value of your home in New Jersey without increasing your property taxes!
Net Energy Metering
New Jersey is notorious for having one of the best net metering programs in the U.S. In some cases, utilities buy back your excess energy at a lower rate than the energy you buy from them.
In New Jersey, you get a full credit for solar electricity that gets exported to the grid, known as a 1-to1 credit. Unused credits can be rolled over to the next month, and you get paid for accumulated credit once per year.
It is also important to note that most utilities do not allow for oversizing a system in New Jersey, which means you won’t be compensated for producing more energy than you use.
We always recommend talking to your dedicated energy adviser and local utility provider to properly size your solar system.
Are solar panels worth it in New Jersey?
Solar panels are absolutely worth it in New Jersey. ITC, sales and property tax exemptions, a strong net metering policy, and frequent power outages make solar and battery storage a worthwhile investment in New Jersey.
Based on a real quote from solar.com, a 9.3 kWh solar system can pay for itself in 7-8 years. That leaves 17+ years of zero to very little electricity costs and a cumulative savings of nearly $45,000.
New Jersey Solar FAQs
How much do solar panels cost in New Jersey?
Based on a real quote from solar.com, a 9.3 kW solar system costs $20,866 after the 30% federal tax credit is applied.
That breaks down to 10.4 cents per kilowatt-hour for electricity, which is much lower than New Jersey state average electricity price of 17.4 cents per kWh.
The cost of solar goes down even further for New Jersey homeowners that take advantage of the Administratively Determined Incentive (ADI) program through SuSI. This program awards $90 per 1,000 kWh of solar generation for 15 years.
For a solar system producing 8,000 kWh per year, that adds up to $10,800 over the life of the program, effectively reducing the cost of going solar to around 5 cents per kWh.
How long do solar panels last in New Jersey?
Most solar panels are warrantied to last 25-30 years, but have the ability to continue producing electricity for much longer.
Exactly how long solar panels last depends on a multitude of factors. But with fair sun exposure and mild to normal temperatures you should be set for several decades.
Do solar panels add value to your home in New Jersey?
Yes, solar panels can add to your home value. New Jerseyans don’t pay property tax on the value added by solar and/or battery storage which makes it even more of an incentive to add solar if you plan on selling your home in the future.