New Jersey is one of the leading states in the US in terms of solar installation and the promotion of renewable energies. It is one of seven states with an active open SREC market. This is helping to achieve the green NJ initiative along with other supportive solar incentives from the state and federal governments. New Jersey’s state government is determined to go forward with its active SREC program.
SREC stands for Solar Renewable Energy Certificate; this is a tradable certificate representing the benefits of a solar energy electric system by providing clean electricity to the State’s Renewable Energy Portfolio (RPS). Every solar energy producer is entitled to an SREC when the system generates 1-megawatt hour (1MWh=1000KWh) of electricity. Each SREC can be traded or sold. This is a very good initiative for individuals and businesses to willingly invest in solar energy. The solar investment is going to recover its cost over time; thanks to the SREC program initiative. The program has been running in New Jersey for almost a decade now. On average a 5KW of solar power system earns almost 6 SREC annually. SRECs are amounting to a current worth of $235. Green Power Energy provides its own in-house SREC brokerage division to help make the selling of the incentive a breeze for our customers.
SRECs enable the customers to generate an additional source of income while also taking advantage of lower bills with Net Metering. The Net Metering billing system allows the on-grid solar energy producers to put the excess generated energy not in their use back to the grid. In the case when the solar system is producing more energy than the site’s consumption, the utility meter spins backward to put the surplus energy back on the grid for other users and the producer gets a credit for this which can be used in future. The owner producing solar is only billed for the “net consumption” at the next billing cycle which is the balance of energy taken from the grid and energy put back onto the grid.
The Federal Government offers the Solar Investment Tax Credit (ITC) incentive which compensates individuals and businesses that have invested in a solar power project. This incentive gives a rebate to those individuals and business owners in the form of the federal tax credit by reducing their tax liability proportional to the invested amount in the solar project. All business and residential solar project owners are eligible to receive the value of 30% of the total amount invested in the solar power project.
A solar project costing an amount of $10,000 will be entitled to receive a tax rebate of $3,000. This federal tax rebate will continue through till 2019. It will then be reduced to 26% in 2020 and 22% in 2021. After that, the rebate will be dropped to zero for residential owners whereas commercial project owners will continue to get 10% on a permanent basis. The solar project owners who finance their project using a solar loan are also eligible to receive the federal solar tax credit (ITC).
Solar installation projects in New Jersey are also going to enjoy the added incentive of 100% exemption from sales tax under PV energy sales tax exemption and from additional property taxes under Property tax exemption for renewable energy systems.
An average residential user in New Jersey will experience a return on investment (ROI) of 5 years as a result of these commendable incentives by the state and federal governments. Solar project owners who choose zero down payments are going to have positive cash flow in the majority of the cases thanks to the solar incentives in New Jersey. This is a great way to motivate people to opt for solar power. These incentives make sure that the customer can get the solar system installed without any actual investment from their side and for the project to be financially attainable.