New Jersey has long been a leader in the solar energy industry. In 2017, the state was the fifth-largest producer of solar energy, and almost 75 percent of all its renewable energy production came from solar. Overall, the state boasts over 2,600 megawatts of installed solar panels across nearly 100,000 installations.
New Jersey’s leadership in solar energy production is no coincidence; the state offers a generous array of incentives intended to encourage homeowners and businesses to install solar energy systems.
One of the biggest hurdles to going solar is the price. Average-sized systems cost around $20,000. To soften the blow, New Jersey offers a complete sales tax exemption for all solar energy equipment. That means that not only are your solar panels tax-exempt, but so are your inverters and racking. Solar batteries (if you choose to install them) may also be tax-exempt.
Once your solar system is up and running, you could cash in on it through New Jersey’s solar renewable energy credit (SREC) market. Homeowners or businesses receive an SREC for every 1,000 kilowatt-hours of electricity they produce. These credits can be sold to energy utilities, which use them to fulfill their state-mandated obligation to produce a certain amount of energy from renewable sources each year. The value of an SREC fluctuates based on market variability, but it tends to hover around $220. Homeowners can qualify to receive SRECs for 10 years after installing their solar panels.
Another incentive to take advantage of in 2019 is New Jersey’s net metering policy. Net metering allows homeowners and businesses to transfer excess solar energy back to the grid. For instance, you might be at work during the sunniest part of the day, when your solar panels are producing more energy than your home is using. Without net metering, that energy would simply be wasted. But under New Jersey’s net metering regime, that energy is pushed back into the grid, allowing others to use it. At month’s end, you’ll receive a discount on your energy bill based on the amount of excess energy your solar panels produced.
Finally, New Jersey offers a property tax exemption for solar panels and other renewable energy systems. To qualify for the exemption, you simply need to apply for a certificate from your local tax assessor. Your local property tax liability will then be reduced by the amount of value added by the solar energy system. In short, your property taxes will not increase even though installing solar panels significantly increases the value of your property (especially if you own the panels rather than lease them).
On top of these generous state incentives, New Jersey residents can also take advantage of the federal investment tax credit (ITC). The solar investment tax credit is a federal program that allows anyone paying federal income tax to take a 30 percent tax credit on the cost of installing their solar system. A tax credit is a dollar-for-dollar reduction in your total income tax liability. If your system costs $20,000, for instance, you could take advantage of the ITC to claim a $6,000 credit on your taxes. The ITC can be applied not only to solar panels, but also to contractor and installation costs, wiring, inverters, racking, and other balance-of-system equipment.
Unfortunately, the ITC won’t be around much longer. The tax credit will decline to just 26 percent in 2020, then to 22 percent in 2021. After 2021, the ITC will remain available only for commercial and utility projects, which can receive a tax credit of just 10 percent. That means that 2019 is a great year to go solar!
Together, these incentives have made going solar in New Jersey more affordable than ever, and installation costs have dropped over 40 percent in the past five years. If you have more questions about the costs and opportunities associated with going solar in 2019, contact your local installer to find out whether your home is a good candidate for solar panels.