Since New Jersey has consistently been a top ten solar state for the last five years and more, homeowners here clearly know that you can save money by going solar.
But unfortunately, too many electricity customers have realized that if you go solar the wrong way, you may not save any money at all. Even worse — if you sign up for solar power from certain providers, you could actually pay more for electricity than if you had just stuck with your local utility company.
On-Site Solar vs Off-Site Solar in New Jersey
There are two basic ways to get solar power in New Jersey.
First, you can get solar the good old fashioned way by having solar panels installed on your roof (or, if you have some land, out in your yard). And whether you do that by buying solar panels with cash, financing them with a loan, leasing the panels from a solar company or buying the electricity from the panels through a power purchase agreement, hosting solar panels at your own location is a proven way to save money on electricity in New Jersey.
Depending on how much solar you get, you can cut your electric bill down to nearly zero. And even if you have a monthly payment for the solar, any reputable installer will make sure that it’s less on average over the whole year than you would have paid to get power from your local utility.
On-site solar is available in every state, even in those where monopoly utilities are the only electricity provider available. But in a state like New Jersey that has deregulated its electricity market, there’s a second way that homeowners and businesses can get solar power. They can sign up for solar energy service from a third-party energy supplier.
There are other forms of off-site solar — such as shared or “community” solar where you sign up to get power from a local solar array that you share with your neighbors. But signing up for solar power service from a third-party provider is especially popular in New Jersey because homeowners believe that companies offering this service can save them money without the homeowner having to make the effort and investment to get solar panels on their own roof.
Under the NJ Power Switch program, depending on where you live, you can choose from multiple third-party providers of natural gas or electricity, including companies that will sell you solar power right from the electrical grid without having to install solar panels at your home. If you decide to go this route for your electric service, you have several options to choose from, including whether the third-party supplier will charge you a fixed or a variable rate per kilowatt hour for the power you buy from them.
A fixed rate will save you money over your local utility if that utility raises its rates in the future. By contrast, a variable rate is a better deal if your utility has to lower its rates. Of course, predicting future electricity rates is a guessing game, and customers who choose a third-party supplier are taking a bit of a gamble when they commit to either a fixed or variable rate.
And this is where things can get tricky when choosing a third-party supplier of solar or any other kind of electricity in New Jersey. Because if you choose wrong, or you just get unlucky, then you can actually wind up paying more for power from a third-party supplier than if you had just continued to buy electricity from your local utility.
There are five big red flags for third-party solar suppliers that homeowners should watch out for. If you encounter any one of these, you should be skeptical — and maybe even suspicious — about the sales pitch of any company trying to sell you solar power from the grid. The following list is taken from advice given to electricity consumers in Illinois, but it applies equally well to any state with a deregulated power market, including New Jersey.
- Exorbitant Rates: Especially for variable rates, it can be confusing to figure out exactly how much a third-party solar provider will charge you per kilowatt hour, how often the rate can change and how much the rate can go up or down in a given period. If it’s not clear that your rate will be lower than the local utility’s rate over the next few years, that’s a red flag.
- Low Introductory Rates that Disappear: You’ve probably heard about problems with adjustable-rate home mortgages, where the borrower is lured in with a low interest rate for the first three years or so, but then hit with a big rate increase after that. Unfortunately, some third-party solar providers make it so tempting to sign up with them with such cheap power at the beginning that you don’t notice how much you’ll pay when the low rate expires.
- Extra Fees: Is there a monthly fee just to be a customer of a third-party solar provider? If so, you’ll have to factor that into your rate per kilowatt hour. Even a low come-on rate might not look so good once you factor in extra fees.
- Punishing Exit Fees: You have to sign a contract to start service with third-party providers, and to qualify for a low initial rate, the contract may lock you in for years. In that case, if they tack on extra fees and raise your rate so that you find you’re not actually saving money with them, you may not be able to just cancel your contract early without paying a hefty charge, in some cases $100 or more.
- High Pressure Sales Tactics: Some third-party solar providers use aggressive telemarketing and even door-to-door sales to try to pressure homeowners into signing up for their service. Any caller or in-person sales rep who claims to be from the “electric company” is sure to try to mislead you into signing up for an offer you may regret. If you have questions or complaints about third-party solar providers that contact you this way, contact the New Jersey Division of Consumer Affairs at 800-242-5846 (toll-free within New Jersey) or 973-504-6200.
In 2014, the state of New Jersey filed lawsuits against three third-party electricity providers for allegedly defrauding hundreds of consumers by lying about how much money the consumers could save on their electric bills.
“These three companies allegedly lured consumers with promised monthly savings that turned out to be fictional. Even worse, consumers who hoped to save money instead saw their bills increase to unconscionable levels,” Acting Attorney General John J. Hoffman said at the time.
Since then, the state has continued to collect and investigate complaints about third-party suppliers of power and natural gas in New Jersey.
Of course, some of these companies do have satisfied customers. The devil is really in the details. If you’re interested in getting solar power from an off-site source, do your homework.
But if you’re really interested in saving money on your electric bill, I’d strongly urge you to consider going solar on site. It’s a proven way to save money.
With solar panels that you can actually see at your own home, you can be sure that you’re getting solar power and getting the most certainty about your future electricity costs no matter what happens to utility rates in the future. And with a variety of financing options and strong New Jersey solar incentives continuing into 2018, this year solar is more affordable than ever.
Would you like to know how much you could save with solar panels installed on site at your home? Then contact EcoMen Solar for a free quote. There’s never any obligation or any high-pressure sales tactics. Just fact-based advice on the best way for you to save money on electricity with solar. And if we can’t save you money with solar, then we’ll tell you that too. Get a free quote today.
— Joe Aurilia, Jr., EcoMen Solar