Is Now the Time to Buy Solar?
Nov 05, 2015 11:27AM
By Andy von Aulock
With the federal incentives for purchasing solar energy about to expire in 2016, this is a great question to ask now. There are several incentives offered by New Jersey that still make solar an excellent investment. However, with the current federal incentives, people can use tax credits to oﬀset the cost of a solar system. These “solar systems” not only create reliable energy from the sun for years to come but also have the ability to provide a good rate of return on investment. Many people consider solar energy something they should take advantage of, but the time to do that most cost-effectively is rapidly running out. Here are current incentives to help you decide if going solar is right for you.
For solar installations that were placed in service between January 1, 2006, and December 31, 2016, there is a federal investment tax credit (ITC). The ITC is a dollar-for-dollar reduction in the amount of income tax an individual would owe. Photovoltaic Solar Systems have a 30 percent ITC, which means that 30 percent of the overall cost of the installed system can be credited to the tax owed. So, a $30,000 system offers a $10,000 tax rebate. If you’re unable to take the whole amount the first year, the rebate rolls into the next year, but that rebate expires at the end of 2016, and only installed systems that are active are eligible. That means with a projected 60 to 90 days to install, the time is running out to take advantage of this opportunity.
New Jersey Rebates + Incentives
New Jersey’s solar rebates and incentives, which help keep the cost of residential solar systems low, can be broken down into just a few simple categories. The ﬁrst and most beneﬁcial to homeowners is the Solar Renewable Energy Credit, or SREC. New Jersey, one of the ﬁrst states to participate in a program of this kind, makes it possible for owners of solar systems to sell the SRECs their panels produce and earn a return on their investment for 15 years from the time the system is powered on. SRECs are based on system production, not on usage, and currently generate around $230/SREC or 1000 kilowatt hours (kWh). The average home in the Garden State can produce 10 SRECs per year and can be sold online to an SREC aggregator. To learn more about how the SREC market works and how SRECs can be sold, contact an SREC aggregator. Knollwood Energy, based in Chester, has answered my own questions about this somewhat confusing commodity.
Net Metering is another great incentive currently oﬀered in New Jersey. As solar panels create energy on the roof, that power is used by the home. Any additional power created is then credited on the monthly power bill. That credit can be used to oﬀset any balance that might be on the bill in months where the solar panels are not able to oﬀset usage completely. If a credit remains at the end of the yearly cycle, the power company buys back any credits at a wholesale rate. For solar owners, it’s a great idea to move the anniversary date to a month like March or April so that most credits are used at the retail rate rather than losing the value of produced energy.
The other two New Jersey incentives are the Property Tax Exemption and the Sales Tax Exemption. Like most home improvements, an installed solar system on any residential property will raise the home’s value. However, with solar, this happens without fear of reassessment or property taxes increasing, since all residential solar is exempt from property taxes. The same is also true for state sales tax. This means that the purchase of a PV solar system will not include any state sales tax.
New Jersey Solar Financing Options
New Jersey homeowners can purchase and own a solar panel system, or they can sign up to use solar power as a monthly service, replacing their utility power and high bills with clean, low-cost solar energy at a ﬁxed kilowatt-hour rate. There are good reasons to pick either solar payment option, and each has its own benefits. Speaking to a local solar energy broker is a great way to understand what those beneﬁts are. Every home has its own individual needs, and for that reason, every home has its own individual solutions.
Andy von Aulock is a Solar Energy Broker for RGS Energy. He can be contacted at 908-581-2355 or [email protected]