Many people who are considering going solar in New Jersey in 2018 seem to have the same question:
Did the tax reform bill just passed in December by Congress and signed into law shortly afterwards affect the federal incentives to install solar power?
Fortunately, the quick answer is “no” — Homes and businesses in New Jersey and around the country can still get the 30% tax credit if they install a solar energy system.
To drill down a bit, PV Magazine writes that the tax reform bill leaves federal solar incentives relatively unaffected, saying that any changes are “so small as to be almost cosmetic.”
So, even with the changes coming to the federal tax code this year, the solar tax credit is still available for the near future, though its value is slated to start to decline in the next couple years. See below for the details.
Other solar incentives vary by state. And fortunately, New Jersey has some of the best solar incentives of any state in the country. That’s why we’ve ranked in the top ten states for the most solar power capacity installed each year for the last few years, installing enough solar panels to power a quarter of a million homes.
And New Jersey is still going strong for solar. In the most recent year for which complete data is available, 2016, New Jersey came in at #5 according to the Solar Energy Industries Association.
New Jersey solar incentives are still strong too. Because incentives change every year, below I’ll cover the other incentives that New Jersey homeowners and business property owners can take advantage of to go solar in 2018.
A couple things to note. First, all of these incentives require you to install solar panels on site. They don’t count for accessing solar power through the grid from your utility or from another company. Also, to qualify for these incentives you must get your solar panels through a purchase, rather than a lease or power purchase agreement. There are pros and cons to going solar with a lease or power purchase agreement vs. owning your own solar panels, and buying panels may not be the best choice for every situation. But owning panels at your own locations delivers the greatest overall savings. Add in these incentives, and buying your own solar panels becomes a very good deal in New Jersey.
- Solar Federal Tax Credit. Let’s start with the tax credit we talked about above, just because it’s a big part of the benefit that anyone in New Jersey who has to pay taxes can get for going solar. If you owe enough federal tax to make the credit worthwhile and if you buy your own solar panels (instead of getting panels at your place through a lease or power purchase agreement), the federal tax credit can bring down the cost of a solar system by 30%. But you can only qualify for that high rate if you go solar in the next couple years. After 2019, the rate of credit will decline and then disappear entirely for homeowners in 2022. Read more about the federal tax credit.
- New Jersey Net Metering. Net metering enables customers to obtain full retail credits on their utility bill for each kilowatt hour of electricity their solar energy system produces up to 100% of their electricity usage over the course of a year. This means that, on any particular day, if you produce more solar power than you need, you get credits that you can apply to days when you produce less power than you use. You can apply those credits anytime you need them during that same year. With net metering, your electric meter spins forward when electricity flows from the utility into the home, and backwards when power flows from the home to the utility. Your stored kilowatt hours are “netted,” or paid back, on an annual basis. There are a few exceptions, so read more about NJ net metering.
- New Jersey Solar Renewable Energy Certificates (SRECs). Along with solar power you can use in your home or business, in New Jersey, your solar system also generates a credit for every megawatt hour of solar power that you produce. You can then sell that credit, known as an SREC, on New Jersey’s SREC market, the largest in the nation, to utility companies that need to increase their use of clean energy under New Jersey’s Renewable Portfolio Standard. While the value of SRECs varies over time, recently NJ SRECs have traded at just above $200 each. At that rate, an average 5 kilowatt home solar system that generated 5 megawatt hours of solar power per year would earn about $1,000 by selling its SRECs. Read more about NJ SRECs.
- Solar Equipment Sales Tax Exemption. New Jersey offers a full exemption from the state’s sales tax (currently 7%) for all solar energy equipment. This exemption is available to all taxpayers. Read more about the NJ sales tax exemption.
- Property Tax Exemption. Since 2008, New Jersey has required all localities that charge a property tax to exempt the value of solar energy systems.
Together, these incentives make solar more affordable in New Jersey than in most other states. That said, some incentives may soon decline in value or go away completely, so if you’ve been thinking of going solar, you should plan ahead.
Depending on your situation, 2018 may turn out to be the year that solar will pay back most quickly.
Would you like to know what incentives are available to you and how much they can help you save on solar? Then just request a free solar quote from EcoMen Solar. No pressure and no obligation — just straight talk and honest numbers about solar at your place.
— Joe Aurilia, Jr, EcoMen Solar
Photo by free pictures of money