New Jersey is one of the top states for home solar on the east coast, with annual residential installations blowing past 100 MW for the first time in 2016 and expected to hit 200 MW in 2017 according to the Solar Energy Industries Association (SEIA). Like most successful solar states, this growth is due to a confluence of market forces and smart policy.
First, New Jersey has great economic fundamentals for solar: it has high residential electricity prices as well as high per capita income, which means solar is a smart investment that many Garden State homeowners are ready to make. Not only that, but as the most densely populated state in the country, it’s easy for solar to go “viral” – since homeowners seeing solar panels on their neighbors’ roofs, and word-of-mouth referrals in general, remains one of the biggest drivers for growth in our industry.
So what exactly are the policies that have helped the Garden State’s home solar sector bloom? Like the rest of the country, New Jersey residents benefit from the federal solar income tax credit worth up to 30% of installation costs. But beyond that, there are also three types of mutually reinforcing state-level incentives at work.
Net Metering: Net metering is the core of solar’s success in New Jersey and many states, since it allows homeowners to derive a simple, direct benefit from their solar generation: every kilowatt-hour of power you generate from your roof rolls your electricity meter back one kilowatt-hour, resulting in a “net” bill every month equal to your consumption minus your production. With New Jersey residential electricity prices of over 15 cents per kilowatt-hour and rising, the savings can add up in a hurry – in fact, Trinity customers have saved over $18 million and counting from their solar installations!
Tax Exemptions: New Jersey residents frequently complain about being subjected to one of the highest overall tax burdens in the country, but solar installations actually benefit from tax exemptions to ensure they don’t add any additional costs. First, solar equipment is exempt from the state sales tax, currently equal to 7% – potentially worth several hundred dollars. Solar installations are also exempt from property taxes, which means that the value that solar adds to your home is tax-free.
It’s important to note that these exemptions, like the federal tax credit, is only available to homeowners that purchase their solar system with cash or a loan – and not via leasing or power-purchase agreement (PPA) arrangements, in which case the leasing company receives the credit. Trinity can help connect you with a wide range of solar financing options and help advise you on what makes most sense for your budget.
Renewable Portfolio Standard and SRECs: Finally, New Jersey residents also benefit from a powerful incentive that is a bit more complicated to explain – Solar Renewable Energy Certificates (SRECs), which are created by solar generation and must be purchased by state utilities under the terms of the state Renewable Portfolio Standard (RPS), which was initially created all the way back in 1999. New Jersey’s RPS requires utilities to derive an increasing amount of their electricity from renewable sources, reaching 20.38% of their total demand in 2020-2021 and at least 4.1% from solar by 2027-2028.
One SREC is generated from every megawatt-hour of solar electricity generated – or, one for every 1,000 kilowatt-hours. For example, a typical 5 kW residential solar system might generate 5 megawatt-hours of electricity per year, yielding 5 SRECs that can then be sold to utilities based on current market prices. Historically, SREC pricing has varied widely, with monthly weighted averages for 2016 sales ranging from $164.40 to $256.30, but regardless of prices it can add a significant revenue stream to your solar investment. Alternately, if you want to avoid the hassle of selling SRECs, Trinity can help you receive their expected value in an up-front payment through our financing partners.
Trinity’s New Jersey Success Story
This combination of good market fundamentals and strong, pro-solar policies have helped support the development of a thriving ecosystem of New Jersey solar industry manufacturers, distributors, project developers – and installation companies like Trinity, which is headquartered near the famous Jersey Shore in Wall Township! In fact, according to the Solar Foundation there are over 532 companies involved in the solar industry based in New Jersey supporting over 6,000 jobs, and over half of those jobs are at installation companies.
Trinity is responsible for over 1,000 jobs in the six east coast states where we operate, and our commitment to supporting our community begins at home right here in New Jersey. Click here to get a free solar quote and learn more about going solar in New Jersey with us – you might be surprised just how good a deal it is.