If you’re a homeowner in New Jersey, did you know about all the incredible incentives available to you if you decide to invest in solar power? Beyond the fantastic energy savings, there’s a lot of potential for tax savings and more.
If you’re new to renewable energy or don’t know much about the solar incentives in NJ, we’re sharing all the ins and outs below in this detailed guide. By the time you get through this guide, you’ll know what benefits you qualify for and how to get started.
What Are Solar Incentives, and How Do They Work?
Solar incentives are strategies the government uses to convince more people to start using renewable energy through solar panels on their homes or businesses. These incentives could be tax credits, rebates, and more.
The purpose of solar incentives in NJ is to reduce the financial impact of the high up-front investment cost for solar panels. Most systems wind up in the $15,000-$20,000 range. These programs lessen the burden for homeowners to pay these up-front costs through incentives.
A Note About Solar Incentives in NJ
One thing that’s important to note about green energy incentives is that by design, they won’t last forever. The goal is to incentivize more people to start participating in renewable, clean energy.
As more and more people install solar systems, incentives will begin to go down until they run out eventually. At this point, enough people will be using solar power in New Jersey that the government won’t need to incentivize anymore, and it will phase out the programs.
Currently, New Jersey is in the first phase of solar incentives in NJ, called the Transition Incentive Program. Plans are still underway for moving into the next phase for the Successor Program.
It’s essential to consider this, as the quicker you decide to invest, the more benefit you’ll get. If you are hesitant and wait a year or two before you finally make a move, the incentives may not be as high as they are now.
Now that you understand how incentives work, let’s explore the details of solar incentives in NJ.
New Jersey Net Metering
With a net metering program, your utility will track how much power your solar panel system generates and how much of that energy you use each year. Anything leftover is net energy and becomes available to sell back at the full retail rate.
New Jersey’s Net Metering program lets homeowners sell their excess energy back to the power grid at the retail rate, which is much higher than the wholesale rate that power plants typically receive. The state’s rules dictate that the utility company must credit your next bill with that energy at the retail rate, but if you run a surplus over the entire year, they’ll cut you a check for anything leftover.
This monetization is a great way to make some money back on your already low energy bill. It is also a great way to prevent excess energy from going to waste.
The price you can get for each TREC will vary based on the system that you installed. A residential rooftop system, for example, can earn you around $90 per TREC. Let’s say your system produces 7 MWh of energy per year. All in all, your TRECs could make you $630 back per year, just for doing the work you installed them to do.
This TREC program recently replaced the state’s former SREC program, which was similar. However, this is a perfect example of an incentive program reaching its goal and end. The SREC program ended earlier than initially intended because so many New Jersey residents switched to solar power quicker than expected.
Solar Investment Property Tax Exemption
Installing a solar-powered system on your property will make your property taxes go up, right? Wrong!
While adding a solar panel system to your home will increase the value when it comes time to sell, it won’t hurt you while you’re still living in it through property taxes. You are legally exempt from any higher property taxes due to your highly valuable solar system.
Solar Panel Sales Tax Exemption
Unlike home upgrades such as a new oven, garage door, or bathtub, you won’t have to pay any sales tax on your home solar system.
Sales tax is a small amount when buying small consumer items, but that percentage can turn into quite a few dollars when you’re purchasing something as expensive as solar panels. Luckily you get to pocket that 7% that you would otherwise be paying for something of that cost.
Low-Income Solar Programs
Back in 2019, the state of New Jersey developed a new type of solar incentives in NJ for low-income residents. This 3-year community pilot program aimed at low- and moderate-income households who would like to invest in renewable energy but are facing financial difficulties.
With this program, program applicants (AKA the developers) can propose solar integration plans to the New Jersey Board of Public Utilities, and 51% of the chosen projects must benefit these moderate- to low-income families.
NJ Clean Energy Program
The NJ Clean Energy Program is a statewide plan. Its goal is to help New Jersey residents, local governments, and business owners preserve energy. In the process, these beneficiaries save the environment and put some money back into their pockets.
While there aren’t solar rebates directly available through NJ Clean Energy Program, you can find a number of renewable energy resources. There are also a number of rebates for other energy efficiency purchases available to both New Jersey residents and businesses.
There are additional benefits to investing in green energy outside solar incentives in NJ. The Federal Solar Investment Tax Credit is the big one. Here’s what to know about this substantial advantage:
Federal Solar Investment Tax Credit
The most significant impact you’ll see after investing in green energy will come from the Federal Solar Investment Tax Credit. Known as the ITC for short, this is a major perk if you decide to install photovoltaic panels on your property. The tax credit will cover 26% of the upfront cost of your solar panel, saving you thousands of dollars the year you install it.
For example, if your system costs you $20k, then your solar credit would be 26% of that, which is a whopping $5,200.
One thing to note is that the federal tax credit will fall from 26% to 22% by the end of 2022. If green energy has been on your mind, there’s never been a better time to make a move!
Getting the Most Out of Solar in NJ
Investing in solar panels for your home is a great move. Not only will you cut back your energy costs drastically for years to come, but there are also several perks available to you up-front. However, not everyone is aware of the solar incentives in NJ, however, deterring them from pulling the trigger and making the investment.
There’s an opportunity for enormous savings through the federal solar investment tax credit paired with the various state incentive programs. You can sell back your unused energy, earn TRECs for every MWh of energy your system produces, and get great sales and property tax exemptions to sweeten the pot.
If you’re still on the fence about investing in renewable energy, what are you waiting for? As incentive programs dwindle over time, your best bet is to act as soon as you can.