New Jersey has established itself as a state leader in the adoption of solar energy because of its strong incentive programs and generous supporting policies. These incentives not only make solar more affordable for homeowners, but also help the state meet its lofty clean energy targets.
Homeowners in the Garden State can benefit from a residential solar panel system. Solar can help homeowners save money by producing low-cost, clean energy. This can help homeowners save thousands over the 25 year lifetime of their panels.
Enact Solar serves as a trusted advisor for homeowners in New Jersey looking into solar and energy storage. Our state-of-the-art software designs custom solar energy systems for homeowners based on their address and energy needs.
Federal Solar Investment Tax Credit (ITC)
The Federal Solar Investment Tax Credit (ITC) is the largest solar incentives offered to homeowners in the U.S. The program is available to New Jersey households, offering a significant tax credit on qualifying costs of a solar energy system installation.
The Investment Tax Credit for a solar installation covers 30% of the total cost, including equipment and labor. This credit is applied to the taxpayer’s federal income tax burden for the year the system is installed. If the credit provided in that regard exceeds the individual’s tax due for the tax year, the excess can be carried over to future tax years.
For an example,
- Total cost of solar installation: $20,000
- Federal ITC (30%): $6,000
- Net cost after ITC: $14,000
The tax credit amount homeowners can earn will remain at 30% until 2032. The ITC is reduced to 26% in 2033 and 22% in 2034. The federal incentive will expire for residential installations in 2035 if the government does not extend it further.
Who Qualifies for the Federal ITC?
Any tax-paying homeowner in New Jersey can benefit from the Solar Investment Tax Credit. The solar system must be placed on your property — whether roof or land — and must be installed and operational during the tax year you’re claiming the credit.
The basic requirements to qualify for the ITC include:
- The solar system must be new (not used or reinstalled).
- It must be installed between January 1, 2006, and December 31, 2034, to be eligible.
- The system must be located in the United States.
- The property owner must have a sufficient tax liability to claim the full credit, worth up to 30% of qualifying costs.
What Solar Costs Qualify for the Federal ITC?
The ITC covers 30% of the total cost of installing solar systems, including equipment, labor, permits, and related costs. The Federal Solar ITC helps reduce the upfront costs of going solar, making it an essential incentive for New Jersey residents interested in solar. For an exact authority on tax credit specifics, consult a professional tax accountant prior to filing your taxes.
Solar equipment that qualifies for the tax credit includes the solar panels, inverters and mounting equipment (racks, rails and wiring). Energy storage technology is also included, which can include home batteries.
Certain labor costs, such as installation labor, on-site preparation, assembly and electrical work required to connect the system to your home and the utility grid are covered. Additionally, permitting and inspection fees required to meet local building codes are included in the ITC.
Successor Solar Incentive (SuSI) Program
The Successor Solar Incentive (SuSI) scheme was launched by the New Jersey Board of Public Utilities in August 2021 to encourage solar energy development in the Garden State. The SuSI program aims to provide long-term, consistent financial incentives for solar systems.
Under the SuSI program’s Administratively Determined Incentive (ADI), homeowners who install solar panels can earn Solar Renewable Energy Certificates (SREC-IIs). An SREC-II is a certificate that solar system owners receive for each megawatt-hour (MWh) of energy generated by their solar panels. For every one MWh of solar power produced, owners receive one SREC-II, which may be sold to supplement the savings from lower electricity costs.
For residential installations, the ADI program provides a set reward of $85 per megawatt-hour of power generated for 15 years. SREC-IIs give an additional financial advantage to solar owners by allowing them to monetise the clean energy produced by their systems, making solar energy more appealing to New Jersey households. This financial incentive can accumulate into hundreds or thousands of dollars across the 15 year period, depending on the solar system.
How to Benefit from the SuSI Program in New Jersey
Homeowners in New Jersey can significantly benefit from the Successor Solar Incentive program by installing a qualifying solar panel system. The first step is to have a licensed solar installer set up a system that meets the program’s criteria, specifically one that is 5 MW or smaller to qualify for the Administratively Determined Incentive (ADI). Once installed, the installer will typically assist in registering the system with the New Jersey Clean Energy Program, which includes obtaining a NJ Certification Number.
A production meter, which is usually included in your solar inverters, is required for homeowners to measure the energy produced by their system. Homeowners are required to open a payment account with InClime, the SREC-II Administrator, and create an account in the PJM-EIS Generation Attribute Tracking System (GATS).
For every one MWh generated, homeowners will get Solar Renewable Energy Certificates by reporting their monthly solar generating statistics to GATS. Then, for a set price of $85 per certificate for residential systems, these SREC-IIs may be automatically sold through the InClime system. Although this could differ across aggregators, direct bank transfers are often used to pay for sold SREC-IIs.
Homeowners can get significant additional revenue from SREC-IIs over a 15-year period in addition to savings on their power costs. This makes solar energy a worthwhile investment in New Jersey.
Solar Sales Tax Exemption In New Jersey
New Jersey offers homeowners a sales tax exemption for solar energy devices or systems. This allows homeowners to invest in their solar system without paying sales tax, which is now 6.625%. This exemption applies to solar energy systems used to provide electricity, heating, cooling or mechanical power. To receive the tax exemption, New Jersey homeowners can issue the manufacturer or supplier a fully completed Form ST-4.
For a $20,000 solar system, a homeowner can save considerably without paying the sales tax. In this example, let’s assume the solar system costs $20,000 — with the Garden State’s 6.625% sales tax, this would amount to $1,325. These upfront savings minimize the initial cost of adopting solar, increasing the number of households and companies that can afford it.
Property Tax Exemption in New Jersey for Solar
New Jersey tax law also exempts all renewable energy systems used to meet on-site electricity, heating, cooling or general energy needs from state property taxes. The property tax exemption means that any additional value to your home because of the installation of solar will not increase your property tax burden. New Jersey’s exemption applies to residential and commercial properties.
Solar energy systems can increase your property value in select markets. This increase is due to an increased demand for sustainable housing and lower utility bills. According to Zillow studies, solar homes can sell for more than equivalent homes without solar — and can sell faster than equivalent homes.
For example, if your home was worth $300,000 before adding solar panels and increased — by the national average 4.1% — to $312,300 after going solar, the property tax assessment will remain based on the original $300,000 valuation. In this example, we are assuming all other factors remain equal. Homeowners can benefit from increased house value from a custom solar system without having to pay higher property taxes.
Net Metering in New Jersey
New Jersey’s net metering regulation plays an important role in making solar energy more appealing to homes. Net metering is a billing mechanism that allows homeowners with solar energy systems to send excess electricity they generate back to the grid in exchange for credits. Net metering can significantly lower utility bills and improve the return on investment for solar installations.
Net metering provides customers full retail credit for the electricity generated by their renewable systems. If more electricity is produced than used, the excess energy is credited and “netted” annually. This allows homes to lower their total energy expenses by balancing energy usage and solar generation. Switching electric suppliers resets the net metering balance, and excess energy is credited at wholesale rates.
New Jersey’s interconnection and net metering rules are considered a national model, encouraging investment in renewable energy and ensuring customers are compensated for contributing clean energy to the grid.
The policy is even more favorable because it allows extra credits to roll over from month to month. If there are any residual credits at the end of the year, they are rewarded at wholesale power’s lower avoided cost. This guarantees that solar owners are fairly compensated, maximizing the financial advantages of their solar investment.
Go Solar With Enact
New Jersey’s mix of federal and state incentives makes it one of the most appealing states for solar energy deployment. These incentives all work together to give significant financial incentives for homeowners looking to go solar.
If you’re a homeowner thinking about solar and/or energy storage in New Jersey — or the broader Mid-Atlantic region — Enact is here to help. Now is the best time to go solar, with lowering costs of solar equipment and homeowner incentives in the Garden State. Enact offers homeowners custom solar proposals, designed on our award-winning software for your home.
To get started with a free custom solar proposal, schedule a free consultation with a member of Enact’s team of home energy advisors. Based on a copy of your latest utility bill, Enact can use accurate satellite imagery to design the optimal system for your home over a Zoom call. Not only can we determine the best placement for your solar panels, but we can design a system that meets your energy usage.
Schedule a consultation today and get started on your solar journey. Once we find the right solar panel system for you — Enact will coordinate the entire installation and permitting process with a trusted installation partner in your area. When your solar system is up and running, Enact’s solar monitoring app will show you how your system is working for you.