Solar Panel Cost in New Jersey (2023 Local Savings Guide)
By Karsten Neumeister /
In this complete guide to solar benefit programs in New Jersey, you’ll learn:
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Converting to solar in New Jersey is expensive, but the incentives available do help make solar adoption more affordable overall.
The average cost to install a solar energy system in New Jersey is around $19,390. This is the typical upfront cost for solar, which assumes a per-watt price of $2.77 — which is above the national average — and the average local system size of 7 kilowatts (kW) — which is smaller than what most U.S. solar customers need.
This total initial cost is a few thousand dollars cheaper than what most Americans pay due to the below-average system size required to offset the relatively low electric bills in the area. Still, paying $19,000 for solar is prohibitively expensive for many New Jersey residents.
Thankfully, New Jesey has a Renewable Portfolio Standard (RPS) goal to produce 50% of its energy from renewable energy sources by 2030. To help reach that goal, it offers more incentives for solar conversion than most states, which, in turn, helps reduce the effective cost of solar panels.
In order to help its residents make the switch to solar, New Jersey offers the following helpful incentives:
|Solar Benefit Program in New Jersey||Incentive Type||Description||Occurrence||Estimated Dollar Amount You Can Receive|
|Federal Solar Investment Tax Credit (ITC)||Federal||This credit gets applied to your income tax burden for the year you install your PV system. It’s for 30% of your system value||One-time: This credit gets applied once when you file your taxes after going solar. However, any remaining credit can be carried forward for five years||$5,817 on average in NJ|
|Successor Solar Incentive (SuSI) Program||State||This program provides one credit for every 1,000 kilowatt-hours (kWh) your system generates. You can sell the credits for a profit||Ongoing: This program provides credits for total energy production for 15 years from installation||$10,800 over 15 years, on average in NJ|
|New Jersey Solar Sales Tax Exemption||State||This exemption reduces your upfront system costs by waiving sales tax on all PV equipment||One-time: This exemption gets applied once when you purchase your solar panel system.||$1,284 on average in NJ|
|New Jersey Solar Property Tax Exemption||State||This exemption prevents your property taxes from increasing due to the home value bump provided by your home solar system||Ongoing: Your property taxes will remain unaffected by the value added by your system for the life of the equipment||Varies based on the size and cost of your system and on your local property tax rate|
|Net Energy Metering||Local||Credits you for energy you produce and send to the grid instead of using. The credits can reduce future bills when energy needs overshadow production||Always in Effect: The perks from net energy metering will remain in effect for the life of your system. All excess energy will always be credited to your account||Varies based on your energy needs, the size of your system and more|
The federal tax credit is the most substantial solar benefit program available to New Jersey residents. It’s a credit for 30% of your entire system cost, including panels, inverters, batteries, electric vehicle chargers and the solar panel installation labor. In New Jersey, where the typical system totals $19,390, most residents see a credit of approximately $5,817.
That amount gets credited to the income taxes you owe for the year you install your system. If you can’t take the entire credit, you can roll over any unused amount for up to five years.
The federal credit was initially offered in 2005 for 30% of your system value, but that credit rate dropped in 2022 to 26%. It was scheduled to drop again in 2023 to 22%, but the federal government passed the Inflation Reduction Act in September of 2022 to improve the credit. The new rate schedule is as follows:
Claiming the federal credit couldn’t be much simpler. It just requires a single form filed along with your taxes for the year you install your system. You can follow the steps below to make sure you take advantage of this perk.
Alternatively, if you’re using TurboTax or HR Block to file your taxes, you can follow the prompts in the software to confirm you’ve installed solar equipment.
Although some of the other solar benefit programs in New Jersey are outstanding, the federal credit is still our pick for the most impactful and beneficial.
The credit averages over $5,800 for solar customers, and applying for the incentive program takes just a few minutes. Additionally, while it may not have the highest expected rate of return in the Garden State — since the SuSI program often yields greater financial benefits — the perk kicks in within a year of going solar and sometimes in just a few months.
It’s important to note that this is not a solar rebate, so you won’t get money back from the federal government. Instead, the credit gets applied to the income taxes you owe. While it can effectively reduce your solar project cost, you’ll only be able to take the credit if you owe money when you file your taxes.
If you don’t expect to owe at least $1,160 per year over the next five years for your income taxes, then you won’t be able to take the full credit.
You should also note that this solar incentive program is only available to customers who pay in cash or via a solar loan. It’s not available for leases or power purchase agreements (PPAs).
The SuSI program — also called the Administratively Determined Incentive (ADI) program and the SREC-II program — is similar to the Solar Renewable Energy Credit (SREC) programs in other states. In fact, the program replaced New Jersey’s now outdated SREC and TREC (Transitional Renewable Energy Certificate) programs.
The SuSI program guarantees one energy credit for every 1,000 kWh (1 megawatt-hour/mWh) you generate with your solar panel system. Unlike SRECs, which fluctuate in price based on supply and demand, credits earned via SuSI can be sold at a fixed rate of $90 each.1
The typical New Jersey solar power system is around 7 kW and is expected to generate approximately 8,400 kWh of solar electricity per year, or 8.4 megawatt-hours. That’s equivalent to eight energy credits, which can be sold for $720 per year. Over the 20 years your panels are expected to generate energy, that’s a total of $10,800 in credit value.
Your actual return will likely be a bit lower due to panel energy efficiency degradation, but it should be relatively close to this number. Panels with a lengthy efficiency warranty will see the most value out of this perk.
The SuSI program does have a limited number of applications it will process and New Jersey homeowners it can benefit. You need to make sure you get your application in as quickly as possible when you decide to convert to solar to get the maximum benefit. You can follow the steps below to apply.
The SuSI program requires an application process, so you’ll have to dedicate some time and energy to enroll. However, the process is relatively short and shouldn’t take more than an hour or so to gather the necessary information and apply.
Once you apply and are approved, you don’t have to do anything to accrue credits and get reimbursed for your energy production. Especially given that the average New Jersey system can generate credits valued at over $10,000 over the life of the equipment, this incentive is one of the most crucial ones to take advantage of.
The only real downside to this perk is that the spots available in the program are limited.
The New Jersey state government helps reduce the upfront cost by waiving state sales tax on all solar equipment. This includes the equipment and the labor to install it.
With an average system price of $19,390 and a sales tax rate of 6.625%, most homeowners will save around $1,284 on their installations using this perk.2
The exemption for sales tax is automatic in New Jersey, so you don’t have to worry about filing any paperwork to take advantage of it. Your system estimate won’t include sales tax, nor will your final price.
Exemptions for sales tax are a great way for states to reduce the financial burden of converting to solar and make renewable energy more appealing and accessible overall. We love to see sales tax exemptions for PV equipment, and the fact that it’s automatic in the Garden State makes it all the more enticing.
Solar panels are expected to bump up your property value by around 4.1%.3 Normally, any home improvement that positively affects your home value will also cause your property taxes to go up.
This exemption prevents that from happening with solar equipment. This perk doesn’t provide savings upfront, but it does reduce the long-term cost of solar adoption.
The exact amount you’ll save with this incentive will vary. Given the typical value of $19,390 and the local property tax rate of 2.42% — which is above the national average — this perk provides an average tax savings of $470 per year. Over the 20 years your system is expected to hold value, that’s a total savings of $9,400.
Keep in mind that this total assumes no panel depreciation, so your actual long-term savings will be somewhat lower.
Much like the exemption for sales tax, this exemption doesn’t require any action on your part. Your tax assessor will automatically exclude the value of your PV system when determining your property taxes.
Any incentive that requires little to no work for the solar customer and provides some financial benefit is a major plus in our book. Since you don’t have to do anything to take the exemption for property taxes, and you save thousands on your property taxes as a result, this perk is an outstanding one, in our opinion.
Net metering is a billing policy that credits you for any energy you generate with your panels above and beyond what you consume at any given moment. The electricity that you pass to the grid gets “banked,” and you can call on that banked energy at a later date if your consumption exceeds your solar production, like at night or on cloudy days.
The New Jersey Board of Public Utilities (NJ-BPU) mandates net energy metering for all utility companies. The BPU also mandates that every kWh sent to the grid is credited at the full retail rate. That means each kWh you send can offset one kWh you pull from the grid in the future. This is available for individual solar customers and community solar participants.
It’s important to keep in mind that net energy metering policies have been changing across the country, usually to the detriment of the solar customer. Credit rates have been getting less beneficial, and some states are abandoning the program altogether.
There is no plan in place for this to happen in New Jersey, but it’s always possible that the program will change.
Net energy metering (NEM) is another automatic perk in New Jersey that typically requires no effort on your part to enroll. However, there are a few things you can do to make sure NEM takes effect automatically.
A net metering program like the one in New Jersey — with credits at the full retail rate — is an outstanding program to have access to. It helps reduce your panel payback period — which is already below average in the area — and maximize your long-term savings.
Since the program helps most customers approach the average lifetime savings of nearly $24,000 in New Jersey, this is one of the most beneficial incentives available in the solar industry. Plus, it usually takes no effort on your part to apply.
Net energy metering is also more valuable in areas like New Jersey than the rest of the country, as the cost of energy is well above average, so the value of NEM credits is also above average.
Now that we’ve explained all of the incentives that are available in NJ, we’ll dive into the ones that we believe are the most beneficial. The perks below are the ones you should absolutely not miss out on.
The federal tax credit is the single most valuable perk available for solar conversion in any state. This credit can effectively bring down your panel costs by an average of around $5,800. Despite providing such a massive financial benefit, the program takes just a few minutes to apply for.
The SuSI program offers exceptional value, capable of generating an average of $10,800 in sellable energy credits over the 15 years for which it remains effective. This program does require an application process and approval, but the work you need to put in is well worth the financial benefit.
NEM is another perk we recommend making sure you take advantage of. This benefit program is automatic for most homeowners and requires no application process.
Despite the minimal or non-existent effort to enroll — depending on whether or not you already have a bi-directional meter — it helps you pay off your renewable energy system earlier and maximizes your energy savings.
New Jersey had a traditional SREC program up until it converted to a TREC program. That program ended in 2021 and was replaced by the SuSI program mentioned above.
Under the new arrangement, you still earn credits for every kWh you generate with your solar panels. The only difference is that the credits don’t fluctuate in price and instead sit at $90 each.
The typical 7 kW solar power system in NJ should generate enough power to earn eight credits per year, which yields $720 every year. Over the 15 years the program is active for after installation, that’s a total of $10,800 you can put toward paying off your system.
Yes! The money you earn through the SuSI program will have to be counted as income, which means you will have to pay taxes on the total.
As of right now, there are no plans for incentives to become less advantageous in NJ over the next few years. If something is to change, it would likely be net energy metering dropping to a credit rate below the retail rate for electricity. However, Jersey’s RPS goal extending to 2030 likely means the incentives available now will remain as they are in the near future.
Read More About Going Solar in New Jersey
Given the popularity of solar energy in New Jersey, we get a lot of questions from residents about how to save money in the conversion process. We’ll answer some of the most common questions we get in the sections below.
Currently, there is nothing to suggest that new incentives will become available in the Garden State in the next two years. There are also no pieces of legislation or proposed changes that will make the currently available perks more beneficial in the near future.
The IRA changed incentives available for both solar photovoltaic systems and electric vehicles (EVs) in NJ.
The most prominent change was to the ITC. The legislation bumped the credit rate back up to 30% — including retroactively for systems installed in 2022 before the legislation was passed — and extended the program by ten years through 2034.
The IRA also plans to increase the credits available for EVs purchased in 2023. The credit depends on the make and model but maxes out at $7,500.
There are no plans to make solar benefit programs less beneficial in NJ in the next two years. If something was to change, it would likely be NEM dropping to a credit rate below the retail electricity rate. While some other states have seen this credit rate drop, we don’t expect it to happen in NJ in the next few years.
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