Homeowner Highlights on New Jersey Solar Investment
For homeowners in NJ, an investment in a home solar electric system is a smart choice that provides both financial and environmental benefits.
Solar will:
- stabilize or reduce your energy costs
- increase the value of your home
- create a cleaner environment
- allow you to generate your own supply of clean energy
- generate a financial return comparable or better than alternate investments
How the Technology Works
A solar electric system converts sunlight directly into electricity when sunlight strikes the solar panels. Modules are wired together to form an array which is connected to an inverter that changes the DC current produced by the panels to AC current that can be used by the appliances in your home. Most systems in New Jersey are connected to the utility grid which allows you to continue to use power from your utility at night or if you need more power than your system can produce during the day. Any excess power you produce can be sent to your utility and will be recorded as a credit on your bill. This concept is known as net metering and is an important benefit to owning a solar electric system.
Benefits
Solar is the most widespread renewable resource available to New Jersey residents. With your system you will be able to:
- reduce your electric bill because you'll be generating your own power
- through net metering further reduce your bill with the credits you'll receive for the surplus electricity you send back to the grid
- generate significant revenue through the sale of solar renewable energy credits (SRECs)
- stabilize your electricity cost over the life of the system, which can be as long as 35 years
- be friendly to the environment because there are no emissions or noise
Key Considerations
For your system to operate at its highest efficiency your roof will need an unobstructed view of the sun during most of the day and preferably your system will face south. Most homes have enough roof area to supply their power needs but if you don't have a large roof area you can take advantage of higher efficiency panels. Mounting panels on the ground is another option. An asphalt shingle is a preferred roof material but a panel system can be installed on almost any roof type. Since panels have very long lives, if your roof is a candidate for replacement in the near future, you should consider obtaining a new roof prior to the panel installation.
OnPeak can help you determine the size of the system that will meet your needs. Larger systems will produce more power but will also require more of an investment from you. Because of installation labor, a larger system will be more cost effective than a smaller system on a per watt basis. For New Jersey, the average system size is about 7 kilowatts.
Required Investment Amount
Residential systems will require an investment of approximately $7 per watt before any up-front rebates and tax incentives. A 5 kW system would be $35,000 but after application of rebates and tax incentives the out-of-pocket investment is significantly reduced to $18,000. The attractive rates of return for systems make it possible for homeowners to leverage their investment by financing the remaining cost with available low rate programs.
Incentives
For homeowners there are three incentives that currently apply
1. Federal Solar Investment Tax CreditProvides a 30% investment tax credit with no maximum credit limitation.
2. State Rebate (up-front rebate based on solar capacity installed)For residential systems less than 10 kW in size and for which generation does not exceed the home's past usage, New Jersey provides an up-front rebate of $1.75 per watt for installations with a "Home Performance with ENERGY STAR audit" or who participate in the "Residential New Construction Program". After rebate application approval, you have 12 months to install your system. The state requires the system and panels to be warranted for a minimum of 5 years although most panels are warranted for considerably longer.
The state rebate will decline on a per watt basis as applications are approved. Having OnPeak submitting your application as soon as possible is very important to maintaining the rebate value noted above.
3. Solar Renewable Energy Credits (generation based incentive)
These credits are created through the generation of solar electricity and are considered a production based incentive.
New Jersey and other states have created Renewable Portfolio Standards or RPS's. The New Jersey RPS requires utilities in the state to obtain 22.5% of their power from renewables by 2021 of which 2.12% needs to be from solar electric system. 2% does not sound like much but it is over 1,500 mW of installed capacity or 200,000 average residential installations. In order to meet their RPS requirements, the utilities purchase SRECs from homeowners and business which have solar electric systems and are generating SRECs. If they don't purchase the SRECs, there is a minimum value they need to pay to the state called a Solar Alternative Compliance Payment (SACP) whose value is $711 for 2009. It is expected that SRECs will trade in the open market at approximately $100 below the SACP, however, the values could fluctuate depending on the number of SRECs available.
For every mWh generated by your system, one SREC will be provided by New Jersey to you which you can then trade(sell) to the utility that needs it to meet their RPS requirements. Companies and even individuals can purchase SRECs which allows anyone who purchases an SREC to say they use solar power and are "green". SRECs are created for 15 years, however, after that period you can still create Renewable Energy Credits and be able to trade them on their respective market.
Financing
Your investment can be acquired with cash or by financing through a refinancing of your existing home mortgage or by acquiring a home equity loan or a solar loan from your utility. See our Financing page for detail on these options.
Inspections and Administrative Matters
Most of the paperwork involved in acquiring your solar electric system will be handed by OnPeak. We'll need to provide an application for your rebate and then have the system inspected after it is installed to receive payment. We'll also need an interconnection agreement with your Utility in order to connect you system to the grid. As usual, we'll need a permit from your local municipality and they will also require an inspection. In addition, OnPeak will set up your SREC trading account so you can begin generating and selling your solar renewable energy credits (SREC's).
It's time to get started with Solar!
Now that you have an overview of how to Go Solar in New Jersey, take a look at our Residential Solar web pages for detailed information. You can find them here: Residential.