New Jersey residents can use solar energy incentives, rebates and credits. Moreover, homeowners in the state are exempt from sales tax and property taxes even when their solar system increases the value of their homes.
However, purchasing a renewable energy system requires an upfront investment. Many homeowners choose to finance their plans with loans or power purchase agreements.
Cost
Solar power is a great choice for homeowners in NJ, but only some have the lump sum required to pay for a system upfront. To help make solar affordable, New Jersey has several incentives to reduce the cost. These include a rebate program, tax credits and net metering. It’s important to shop around and compare quotes from reputable solar companies before deciding.
The average cost of a 7 kW solar system in New Jersey is $13,573 after the federal investment tax credit is considered. Before the tax credit, the price is around $19,390. This is similar to the national average.
Many homeowners finance their system with a loan or a solar lease/power purchase agreement (PPA) to minimize the initial investment. The primary drawback of buying a system in cash is that it doesn’t qualify for the federal incentive. In addition, you’ll have to pay interest charges, which will increase the long-term cost of your system.
The most common panel types for residential rooftops are monocrystalline and thin film. Thin film panels are less expensive and work well in low-light conditions. The type of panel you choose will impact your total solar system cost but less than the location and size of your home or energy consumption needs.
Energy Efficiency
Solar panel energy efficiency can greatly impact your system’s costs. The most efficient options cost more. However, New Jersey homeowners typically don’t need the highest-efficiency systems since the state gets enough sunlight to offset energy consumption even with moderate-efficiency panels.
The purchase of your solar power system is exempt from the 6.625% state sales tax, which can significantly lower the total cost of installation. Additionally, the state’s net metering program lets you sell excess generation to your utility company for a retail rate credit that can roll over month-to-month.
Most customers choose to lease their solar power system, which allows them to avoid upfront costs and access all available incentives. However, a full solar purchase is the most cost-effective option in the long run because it eliminates interest charges and provides the greatest return on investment.
A full purchase also gives you a tax credit worth 30% of the total cost, which can dramatically reduce your upfront cost. This is particularly beneficial for those who plan to live in their home for ten years or more.
Your solar power system’s most significant maintenance requirement is keeping it free of snow and debris. A solar professional can help you minimize this maintenance by installing your panels at an angle allowing them to shed the snow and resume production.
Tax Incentives
New Jersey isn’t the sunniest state, but it makes up for that with a range of valuable solar incentives, rebates and tax credits. These can significantly reduce the upfront cost of solar panel installation in New Jersey, making it more affordable for homeowners.
The federal solar investment tax credit (formerly the Residential Clean Energy Credit or ITC) covers 30% of the PV system and battery storage cost. This is scheduled to reduce at the end of 2032. In addition, the NJ Clean Energy Residential New Construction program offers possible thousands in rebates for homes built to meet certain standards. These rebates require a bit of extra paperwork, but most expert installers will take care of this for their customers.
Property tax exemptions are also an attractive feature of solar power. According to the National Renewable Energy Laboratory, a home’s value increases by $20 for every $1 energy bill decrease. Typically, you would pay property taxes for the added weight, but many states, including New Jersey, offer property tax exemptions for solar systems.
If the upfront costs of a PV system are still too high, consider exploring alternative financing options with your chosen solar installer. This can include a mortgage refinance loan that can cover the installation of a PV system and structural roof repairs.
Financing
There are a few options to consider when financing your solar panel installation. Some local companies partner with financial institutions to offer loans specifically designed for solar panels. Another option is to work with a reputable installer that has built partnerships with lenders and can negotiate better terms on your behalf.
The type of equipment you select will also affect your overall costs. For example, a company like SunPower instals monocrystalline panels that are among the most expensive in the industry but offer higher efficiency and a longer warranty than other brands. New Jersey is a great location for solar panels, as we get enough sunlight on average to offset our energy consumption even with moderate-efficiency systems.
While most homeowners install their solar power system on the roof, it is also possible to ground-mount a system or install it facing a different direction. You can ask your installer which is the best option for your home based on factors such as roof size, solar insolation, and preferences.
Solar tax credits and rebates can lower your upfront investment. However, it’s important to consider the solar payback period (how long it will take to recoup your initial investment and begin saving) and potential maintenance expenses. In addition to yearly inspections, you may have to pay for a repair or replacement cost if your solar panel system experiences an issue.
