New Jersey Solar: 5 Reasons Why New Jersey is the Best Place in the Country to Go Solar (UPDATED)

posted by Adele on June 9th, 2010

$5,000 – that’s how much you could be getting paid in New Jersey this year, just for having solar panels on your roof.

It may come as a surprise, but New Jersey has the best financial incentives in the country for home solar power. The combination of high electricity rates, the federal tax credit, and solar renewable energy credits (which pay you for producing renewable energy) means a typical solar array will pay for itself in just 4 years. After that it’s free electricity and, thanks to the renewable energy credit market, a viable source of income for the next 11 years.

Even without a solar rebate, NJ beats every other state, even sunny California (where solar is immensely popular):

solar-economics-solar-payback-time-8

The two left columns show New Jersey solar payback time with and without a state rebate. No rebate = no problem.

Why is the payback time so fast? Here are the 5 reasons why New Jersey is the best place in the country to go solar:

1. Electricity in NJ is expensive

The typical cost of electricity in NJ is $0.19 / kWh, compared to the US average of $0.11 / kWh. That means that the average electricity bill in New Jersey is around $190-$228 per month. An average-sized solar array will cover most of this, knocking about $175 / month off of that bill.

2. The Federal Solar Tax Credit puts 30% back in your pocket*

The Federal solar tax credit is a tax credit for 30% of the total system cost. While you’ll have to shell out the money up front, at the end of the year you will get a tax credit of $10,500 for a $35,000 system (assuming you have tax liability for that year–otherwise it will rollover into another next tax year). Confusing? Yes. But don’t worry – your solar installer can help you with the right forms, and you can always consult your accountant.

3. SRECs turn your roof into an ATM*

Solar Renewable Energy Credits (SRECS) are credits you get for producing renewable energy. A home accrues 1 credit for every 1,000 kWh of solar energy produced, and each credit is currently worth around $650. We’ve estimated that the average home will produce about$5,000 worth of SRECs on average per year. A new solar energy system is eligible to produce SRECs for 15 years, meaning that an average roof could earn over $75,000 by selling credits over that time period.

4. You’re getting a 15-30% discount on panels and installation with group discounts

Although we can’t disclose our south New Jersey 1BOG rate for solar just yet**, we can tell you the price for our last New Jersey solar campaign: $5.54 / DC watt. If you went to a local big box store for solar today you would see prices around $8 per DC watt–or $17,958 more for an average sized system. Our group discount is typically around 15% off competitive market rates, although in New Jersey we anticipate it will be considerably more than that.

5. If you don’t want to purchase, you can go solar for $0 down.

Our local installation partner offers PPA-financing through SunRun, which means that you can install a system for $0 out of pocket.

Even though it’s our job to bring you good deals, we’re blown away by how good solar in New Jersey looks right now. There’s no better time to make the investment, especially since you can start generating SRECs as soon as the system is installed.

Want to evaluate the numbers for yourself? Use our calculator to estimate the cost of solar panels for your home. Want access to the 1BOG group discounts on solar? Sign up now! It’s free.

Stay tuned, as we’ll be writing more about solar in New Jersey soon. You can also learn more about our Southern NJ Solar Campaign.

* We are not tax professionals, so please make sure to consult your accountant on the tax implications of a solar installation. Additionally, please be aware that these calculations are based on several assumptions, including the future cost of electricity and value of SRECs. Yearly SREC payments have been updated in this post based on the most up-to-date information we have.

**1BOG discounted member pricing for southern New Jersey will be announced on Monday (June 14). Sign up here to be among the first to get 1BOG exclusive pricing details.


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22 Responses to “New Jersey Solar: 5 Reasons Why New Jersey is the Best Place in the Country to Go Solar (UPDATED)”

  1. Kathleen Llorens says:

    Hi Clayton,

    I really like your post on why New Jersey is the best place to go solar. It’s clearly written, logical, and sensible. I would be going solar if I lived in New jersey. $6500/yr is a great return on the initial investment.

  2. new jersey solar says:

    great article -

    great points – NJ is one of the best states for going solar

  3. Mitch Kolesaire says:

    You are in essence, making a product offer based on futures.
    To that end, you don’t fully describe the risks and how they are mitigated.
    The rate by which electricity costs will rise is both a function of the energy trends in America, especially New Jersey investments in clean energy and Board of Utilities policy for rate hikes.
    You should spell out the variables by which you make your assumptions, as even though the tax credits and SRECs exist, the cost of entry is still HIGH.
    Especially, it assumes you’ll be in your home long enough to break even.
    Given the current economy, the lack of SREC knowledge and trading knowledge, on the part of consumers, and real estate agents there is more variables in the “pitch” that should be disclosed.

  4. Clayton says:

    Hi Mitch,

    That’s partially true. You can actually sell SRECs up front in some areas, which can be as much as $3,000 per installed kW. So that’s money in your pocket either way.

    The cost of entry for solar in NJ is (I think) low, compared to any other investment or expense. It’s the only home improvement that will pay for itself, no matter what the future value of SRECs is.

  5. Dan Seyler says:

    Solar panels are like paying for electricity needs up front
    and then recovering the initial outlay through panel’s
    production of electricity. I understand that part of the plan,
    but where does the money for the SRECs come from? None of the
    production charts I’ve read indicate where this mystery money
    is coming from.

  6. Clayton says:

    Hi Dan, the money to pay consumers for SRECs comes from the Utility company. To them it’s a smart investment since they would otherwise be slapped with larger fines for non-compliance with renewable energy standards.

  7. Leonardo Gutierrez says:

    This renewable energy scheme is in favor of the power company.

    Consumers’ participation to produce their own renewable energy is saving the power company from generating the energy produced by solar panels owned by consumers. With the renewable energy scheme, the power company may avoid investing more in putting up new power plants, upgrade capacities of substations, transmission and distribution lines, etc. as new or additional loads go on the power network. The cost of all of these upgrading will be enormous on the part of the power company.

    If consumers will contribute by financing the up front cost of solar panels and other renewable energy sources such as windmills for household use, such avoided cost of putting up new power plants by the power company is a big savings.

    The comment that with the present and probably future economics problems will negate the prosperity of the Solar Energy drive anywhere, as no one including those still holding their lucrative jobs can be sure they will stay on the job. Many have lost their homes to greedy banks because they could not pay the mortgages.

    Another topic that will hurt the electric power industry is the E-Cars that will surely create a big KW power demand once millions of them are charging their batteries at the same time. Most if not all E-Cars will be charging batteries at night. The peak power demand caused by charging most of the E-Car batteries at the same time will not be economically healthy for the power companies. Power companies will have to generate more power capacities in KW to meet the demand, upgrade all their facilities, etc to minimize energy loss and keep low voltage drops. By doing this, cost of energy will rise so much to recoup the investment and for more profit.

    With increased cost of electric energy because of the E-Cars, even those who do not drive or own E-Cars will be paying for expensive energy (KWH) tantamount to subsidizing the E-Car owners or drivers.

  8. Jim Flip says:

    I will tell you first hand the solar in NJ is a short term investment with guarentees for profits. My 10K/watt system has generated all of my power needs since 6/2010 including central air for 2500 sq. ft. house. I save $300 a month on electricty and generate approx. 1 SREC per month which sells for $650 each to the power company. Who pays for the SRECs take a good look at your monthly electric bill….you do. The break even time for a 10 k/watt system is about 3.5 to 4 years. Then there is another 11 years of SREC credits to sell, and no electric bills ever! Also in NJ adding a solar system adds to the value of your home yet the property tax man is not allowed to add one penny of additonal taxes for the improvement.

  9. Praneeth says:

    How about solar farm (10 MW) in Louisiana where there are no SRECs? The payback time is 10-15 Years.

  10. zinunula christopher says:

    our company is interested in buying solar panel modules pv 250watt.our terms of payment is USA Dollar check.if your willing to sell your products to us;we will be waiting for your kind reply .Hoping to hear f
    rom you soon .best regards zinunula electronics

  11. Jim says:

    There are some good points in the comments above. I have had my solar system installaed since 2008. I was fortunate enough to receive 50% matching from the state. The SRECS are great, but I think that the sales talk presented above fails to take into account that the SREC market is changing. SREC’s that now sell for 650 were selling for considerably more in 2008 (I sold some at 784). So, it might be a bit misleading to calculate the value of future SREC’s at 650 and then use that number to justify the expense now. Unfortunately, my system does not generate enough electricity to take me off of the grid. I generate about $2000 worth of electricity per year, which is less than 25% of my yearly usage. However, the SREC’s are a nice incentive and will bring my payback period to 4.84 years. Going solar is definitely something to investigate, just make sure that the contractor is reputable (insured, performed numerous installation – go look at them and talk to their installs), there are a great number of fly by night operations that you’ll want to avoid.

  12. Dan D'Errico says:

    I live in NJ and I have a question. In a typical house household in NJ (whatever that means), how much is the electric consumption from the grid reduced? Is my dependency reduced by 30% 80% ? Thanks!

  13. anthony d says:

    Is it ok to run my solar before it is inspected by the state i am in new jersey i have it installed but am told i have to wait 4 to 8 weeks for inspections before i can run it any body have info thanks

  14. anthony d says:

    IT ALL DEPENDS HOW MANY PANELS YOU HAVE AND WHERE YOUR HOUSE SITS IF IT FACES SOUTH THERE WILL BE BETTER PRODUCTION

  15. Martin P says:

    Everyone get solar panels, no matter where you live. Energy costs WILL rise. WHY would they ever go down? Are we finding more energy in the ground, more coal, more oil, more natural gas? Are we finding it in easier spots? Last time I checked, off shore drilling required miles of pipe and high risk catastrophes (BP Oil).

    Panels are warrantied for 20 years on their output. Every system will definitely pay itself off over 20 years. Just consider inflation of the cost of kWh and increase in home value. It’s a no brainer. Save your money for coffee and invest in solar.

    One day when gas is $10 per gallon, you will wonder why you didn’t spend the $70K for the Hummer, on solar panels on your roof ($45k) and a Nissan Leaf ($25k) instead. You will run your Leaf for free off solar energy. Your Hummer will eat $1 of gas for every mile you drive. Even at kWh rates now, 13 cents per kWh multiplied by 24kWh to charge the Leaf for 80 miles (actually 100) is $3.12. That’s cheaper than a gallon of gas, and you went atleast 80 miles, quietly and you never need a oil change. You can go with a domestic Volt, too. But GM had their chance and ruined it back in 2000 with the EV-1. Thanks GM for demolishing perfectly good non-CO2 emitting vehicles. Stinks that lung cancer and asthma risk increases in cities like LA. Go figure. Volts are more expensive anyway, but at least you won’t be caught on the highway with a spent battery. Ow yeah, that’s right, most people only commmute less than 50 miles a day. Woop!

    GO solar. YOu won’t be wrong. Anywhere you are. Had my solar installed 8 months ago for $44K. So far I’m only out of pocket less than $28k from recouping cost from fed gov’t and free electricity and SRECs which always fall in price. Never regretted it at all. Wife loves the increase in monthly income though. She didn’t trust me at first either. I can make a believer out of anyone.

  16. Robert W Simpson says:

    Jim # 11,
    Pleasse tell me where you got $784 dollars for a NJ SREC. The highest ACP (Alternative Compliance Payment) in NJ ever has been $711. Anyone who paid you more than that was, well, downright stupid.
    While we’re on that issue. FULL DISCLOSURE in this article left out the fact that the ACP in NJ DECREASES each year. The estimate of getting $75,000 for SRECs over 15 years does not consider the declining NJ APC scale. An “average roof” figure of generating $5,000/year in SRECs comes out to a 7.69kW system IF you got $5,000 the first year and EVERY year for the next 14 years. I don’t think that 7.69kW is average in NJ, but if it is, and the first year yields $5,000, because of the annual declining ACP, it won’t work out to $75,000. This is MISLEADING ADVERTISING.

  17. SolarOwner says:

    Just wanted to say that SREC values can plunge, this is probably still a good investment, but like someone else said, you should know the variables and risks. If SREC values plunge by 50% or 75% you should know ahead of time what your payback period will be (maybe 15 years instead of 5). NJ has the strongest SREC program right now, but who knows if it will remain strong in the future? PA SREC values just collapsed in the last several months – you don’t hear many solar promoters talking about that…

  18. Ed F says:

    SRECs…what if they go down in value (which they will) or if the SREC scheme is scrapped? SRECs are earned by producing so-called renewable energy. They are traded on the open market however producers/suppliers are required to purchase SRECs or pay a fee (penalty). This fee is transferred to the consumer in the form of higher energy costs. Only legislation can continue to sustain the SREC market.

    How exactly are you (Martin P.) running your Leaf for free off solar? Someone is paying your local power company to operate regardless of the source so that you can plug in your Leaf. What about the expense of battery replacement?

    If you really believe in solar, then pay for it yourself and keep the gov’t out of it.

  19. Howard M. Sjursen says:

    We had a outfit here trying to sell the lease deal . The way that I figure over 20 years we would pay over $ 17000 to save $ 14000 ???????????????????????

  20. Dave W says:

    I am considering a 10KW system. It seems prudent to include extra capacity for an electric vehicle. Who can act as a consultant (reasonably) to enable me to put my own system in? Right now I’m thinking how much extra cap over the 10KW and what are my best sources of supply? Getting ready to put up a structure 20X60 with a 6/10 pitch to mount the panels. 609-694-8242.

  21. katy says:

    Hi Dave,
    We don’t recommend installing solar panels yourself– it takes experience to place the panels for optimal performance, and you could actually damage your roof (or hurt yourself!). Here’s a link to some info that explains why installing home solar panels is best left to the pros: http://howsolarworks.1bog.org/how-to-install-solar-panels/

    Best,
    Katy

  22. John Thaller says:

    Interesting. I live in New Jersey.

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