INCENTIVES
There are substantial financial incentives for installing a solar panel system as of January 2009, including:
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Federal Tax Credit
You receive a 30% tax credit on the cost of your solar electric system. You can take the credit in the tax year in which the system installation is complete. You can also carry over the credit to the next year if it exceeds your tax liability for the current year.
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NJ State Rebate
You receive $1.55/watt ($1.75/watt if you participate in an energy audit) from the Renewable Energy Incentive Program of the New Jersey Board of Public Utilities Clean Energy Program. Typical residential solar electric systems might range from 4,000 to 6,000 watts.
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Solar Renewable Energy Certificates (SRECs)
Electricity suppliers buy SRECs from you to fulfill their state-mandated renewable energy requirements. The price is set by the market, but is not expected to be less than $475 per MWh. The number of SRECs depends on the size of your solar electric system. For example, a 6,000 watt system could be estimated to qualify for 7 SRECs per year. You sell SRECs to utilities at the market price. Your SREC sales contribute significantly to realizing back your investment in a solar electric system.
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Net Metering
As your solar electric system generates more electricity than you can use, your meter spins backwards, you are credited for the electricity you are not using, and your stored credits are paid back to you at full retail value on an annual basis.
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Property Tax Exemption
Renewable energy systems are exempt from local property tax, so while a solar electric system adds value to your property, it does not increase your property tax.
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Sales Tax Exemption
As a home improvement, solar electric systems are exempt from New Jersey’s 7% sales tax. You will not pay sales tax on the installation of your solar electric system.
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Accelerated Depreciation
Commercial property owners, you can depreciate your solar electric system at an accelerated rate over 5 years, so you reach the breakeven point on your investment more quickly.
For detailed information on all of the financial incentives for installing a solar electric system, visit DSIRE’s (Database of State Incentives for Renewables & Efficiency) list of New Jersey state incentives and list of Federal Incentives.
There are various loan programs, including one offered by PSE&G for both residential and commercial customers that covers 40-60% of the cost of the solar electric system, which can be repaid in SRECs at a minimum price of $475 per MWh. For more information, visit PSE&G’s program page.
Other solar financing programs include:
JCP&L and Atlantic City Electric Solar Financing
Rockland Electric Company Solar Financing