New Jersey Solar Incentives in 2023
If fast-rising electricity prices weren’t motivation enough, New Jersey has a handful of solar incentives that can help homeowners maximize the energy cost savings of installing a home solar system.
New Jersey is 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 lifetime savings using real binding quotes generated from a solar.com customer. First, let’s go over some pros and cons of solar panels in NJ.
Pros and cons of solar panels in NJ
|NJ has some of the most valuable solar incentives||NJ is not a particularly sunny state|
|High utility rates fuel greater solar savings||Solar can be tricky on flat roofs and shared buildings|
|Increase home value||Need cash or access to financing to buy solar panels|
|Clean up NJ’s gas-heavy electricity mix||Can’t take solar panels with you if you move|
|Backup power for outages (when paired with battery)|
New Jersey solar incentives
New Jersey has perhaps the best combination of solar incentives in the entire US that can be used to reduce the cost of a solar system by well over 60%. These include:
- The federal solar tax credit
- The Successor Solar Incentive (SuSI) Program
- Sales and property tax exemptions
- One-to-one net metering
Keep reading or watch the video to see how each New Jersey solar incentive works. Then, we’ll go through an example of how these solar panel incentives can be combined to substantially reduce the cost of going solar.
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.
Through SuSI, New Jersey solar owners earn certificates for their solar production that can be sold to their utility provider for cash.
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 SuSI solar incentive work for homeowners?
Through the ADI program under SuSI, 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 – are worth $85 each for solar systems registered after March 13, 2023.
For a solar system generating 8,000 kWh per year, that adds up to $680 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.
Sales and property tax exemptions
New Jersey has two solar incentives in the form of tax exemptions.
First, there is a sales tax exemption for the 6.625% state sales tax rate. That amounts to $1,656.25 in avoided sales tax on a $25,000 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
Net energy metering is one of the best solar incentives available, and New Jersey has one of the most favorable net metering programs in the US.
In New Jersey, solar owners earn credit for solar generation that gets exported to the grid based on the retail price of electricity, known as a 1-to-1 credit. This credit is used to offset the cost of using grid electricity when their solar panels aren’t producing.
Unused credit can be rolled over from month to month, and at the end of the annual billing cycle, net metering customers receive a credit for excess generation at the wholesale rate of electricity.
This net metering policy is offered by New Jersey’s largest utility providers, including:
- Atlantic City Electric Co
- Jersey Central Power & Lt Co
- Public Service Elec & Gas Co
- Rockland Electric Co
It’s important to note that most utilities do not allow for oversizing a system in New Jersey, so it’s unusual to have a large balance of excess electricity at the end of a billing cycle.
So, New Jersey has a handful of solar incentives that reduce the cost of going solar. Now, let’s see how much solar panels cost in New Jersey and how much homeowners stand to save by going solar.
Cost of solar panels in New Jersey
There are two ways to measure how much solar panels cost in New Jersey.
Price Per Watt (PPW) measures the cost of a solar project per Watt of solar capacity installed.
- In the New Jersey, solar systems typically cost between $3 to $4.50 per Watt before incentives, and between $2 and $3 per Watt after incentives
- PPW is a great way to compare quotes from multiple solar installers
Levelized cost of energy (LCOE) measures the cost of electricity produced by a solar system over its lifetime.
- Solar systems purchased on solar.com typically have an LCOE beween 6-8 cents per kWh
- LCOE is a great way to compare the cost of solar electricity versus grid electricity
Let’s look at a real binding quote for a 9.3 kW solar system presented to a solar.com customer to see how much solar panels cost in New Jersey.
|Item||Cost||Price Per Watt|
|Gross solar system cost||$42,275||$4.50|
|Cash Discount (Amount saved from no loan)||-$12,467|
|30% Residential Clean Energy Credit||-$8,942|
This net cost does not include money earned for selling SREC-II’s through SuSI, which would be over $900 per year for a system this size.
Cost of solar panels verus grid electricity in New Jersey
So, the cost of solar panels ranges from $2.24 to $4.5o per Watt in New Jersey, but how does that compare to paying for grid electricity?
For that, we simply divide the net cost of the system ($20,866) by the expected production over its 25-year warrantied life to get our levelized cost of energy.
According to NREL PVWatts calculator, a 9.3 kW system in New Jersey can be expected to produce ~965 kWh per month and 289,285 kWh of electricity over 25 years.
$20,866 / 289,285 kWh = 7.2 cents per kWh
Now, let’s compare the cost electricity from home solar panels to the cost of grid electricity:
|Source of electricity||Cost of electricity (cents/kWh)||Cost per month 965 kWh of electricity||Cost per year for 11,580 kWh of electricity|
|Solar – With tax credit||7.2||$69.48||$833.76|
|Grid – New York City-Newark-Jersey City metro||23.7*||$228.71||$2,744.46|
|Grid – New Jersey state average||16.7**||$161.15||$1,933.86|
In the first year alone, that amounts to:
- $1,910 in energy cost savings in the Newark-Jersey City metropolitan area
- $1,100 in energy cost savings based on state average electricity prices
But here’s the thing: Electricity prices rise over time while the cost of your solar panels stays the same.
The price of grid electricity in New Jersey has increased on average 2.5% per year over the last 10 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 come in.
Are solar panels worth it in New Jersey?
The chart below shows the cumulative cost of four methods for paying for 11,580 kWh of electricity per year. As you can see, paying for solar panels is far less expensive than paying for grid electricity in New Jersey.
Factoring in the solar tax credit and 15 years of SuSI incentives (worth $935 per year), the net cost of a 9.3 kW system drops to just under $7,000 while the expected cost of grid electricity in the Newark-Jersey City metro area is over $90,000.
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.
And remember, SuSI enrollment closes on June 1, 2023, so it’s worth jumping on this program while its available!
Free solar panels in New Jersey?
We’ve all seen ads on Facebook and YouTube for free solar panels in New Jersey. And if your gut is saying that’s too good to be true, your gut would be right.
Although solar incentives can substantially reduce the cost of going solar, there is no such thing as free solar panels in New Jersey — or anywhere, for that matter.
These free solar ads are a common scam used to promote solar leases that are far less beneficial than owning a solar system. To avoid solar scams, always get multiple quotes from vetted installers that are local to your area and take the time to research the person or company trying to sell you a system.
The bottom line
New Jersey’s robust solar incentives and high electricity prices it make one of the best states in the US to save money by going solar.
Going solar is something people do once — maybe twice — in a lifetime. So it’s natural to feel nervous about the process.
Solar.com makes the solar process easy by providing a pressure-free environment to compare solar quotes and make informed decisions.
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 7.2 cents per kilowatt-hour for electricity, which is much lower than New Jersey state average electricity price of 16.7 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 $85 per 1,000 kWh of solar generation for 15 years.
For a solar system producing over 11,000 kWh per year, that adds up to $14,025 over the life of the program — effectively reducing the net cost of the system to $6,841.
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.