New Jersey Residential Incentives

Federal Tax Credit (ITC)

What is the Solar Investment Tax Credit (ITC)?

The Investment Tax Credit (ITC) is a 30 % federal tax credit claimed against the tax liability of residential and commercial solar system owners. The residential ITC allows the homeowner to apply the credit to his/her personal income taxes. This credit is used when homeowners purchase a solar system and have them installed on their homes or office.

New Jersey Solar Renewable Energy Credit (SREC)

In New Jersey, once your installer has connected your PV system to the grid, you’ll earn one SREC for every 1000 Kilowatt hours (kWh) of generation, which is the same as one Megawatt hour (mWh). Mid-Atlantic states typically get 10,000-12,000 hours of usable sunlight per year, which means for every kilowatt in your PV system, you’ll get 1-1.2 SRECs annually. So if a typical home requires a 7 kilowatt system, you can expect to earn at least 7 SRECs per year. Once you install your system, you can earn SRECs for fifteen years and they last for two years once issued.

What is it that SRECs do for you? Make you money! Once you register your system with the SREC Tracking System, you’ll create an online account that will log your green power generation. You’ll be issued energy credits, which you can then post onto a message board on the website and negotiate the terms of your sale directly with utility buyers. For those who’d prefer to let someone else handle the negotiations, you can arrange to have an agent or “aggregator” handle the sales of SRECS.

Electricity suppliers, the primary purchasers of SRECs, are required to pay a Solar Alternative Compliance Payment (SACP) if they do not meet the requirements of New Jersey’s Solar RPS. One way they can meet the RPS requirements is by purchasing SRECs. The actual price of an SREC during a trading period can and will fluctuate depending on supply and demand.

How much can you expect to make? Well, in New Jersey the state has issued what’s known as a Solar Alternative Compliance Payment. It’s the penalty per mWh that utilities have to pay if they don’t have enough SRECs relative to their target. So if you’re generating 7 SRECs per year, that’s money in cash coming in to you every year. Not bad!

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