Are solar panels worth it in New Jersey?

7 factors to consider before getting solar panels in New Jersey

ConsumerAffairs has heard from thousands of solar customers who have already gone through the installation process, including dozens from Michigan. Here’s what to consider before making the switch.

1. Solar panel installation costs
2. How much you can save
3. New Jersey solar incentives
4. Net metering buyback rates
5. How long you stay in your house
6. How you pay
7. The solar company you hire

1. Solar panel installation costs: $10,000 to $30,000

Average solar panel costs in New Jersey are comparable to the national average. Before the federal solar investment tax credit (ITC), a typical residential system ranges from $13,500 to $27,000. That price drops to $9,450 to $18,900 after the full 30% tax credit.

A typical New Jersey household needs a system with the capacity of 9.49 kW to offset its electricity needs with solar energy. You might need a larger or smaller system, depending on your current energy consumption.

Getting your electrical loads as low as possible before going solar is smart. That way, you can get a smaller, cheaper system. In other words, if you have older electrical appliances, upgrade those now.

2. How much you can save

It’s a common misconception that solar panels will completely eliminate your monthly power bill — but this is not always the case. Still, given rising energy costs in New Jersey and elsewhere, you’ll likely pay less than you would for traditional utility bills. On average, New Jersey homeowners with solar panels avoid $76,285 in total utility costs over 25 years.

Homeowners with solar panels typically save $20,000 to $90,000 over 25 years.

For example, Eric in Jackson isn’t generating 100% of his energy needs but still saves so much money. “My utility charges me about $30 to $70 each February, but that's it,” he said. Another resident, Frances in Old Bridge, got his bill down to $80 from $680.

You get the most out of solar if the majority of your appliances are electric. If you also have an electric vehicle, solar panels will save you even more. Solar panels generate electricity, so they unfortunately won't help you save on gas bills.

» EXPLORE: Where your solar savings go the furthest

3. New Jersey solar incentives: federal and state

Solar incentives in New Jersey include sales tax and property tax exemptions. Still, the federal solar investment tax credit (ITC) is the biggest incentive for many homeowners going solar. It provides a 30% tax credit on your total system costs, including equipment, labor and permits. It will drop to 26% in 2033 and 22% in 2034.

4. Net metering in New Jersey: retail buyback rates

Net metering in New Jersey gives you full retail credit for any excess electricity your system produces and sends back to the power grid. It’s a much better deal than in states where utilities can buy your electricity wholesale, like Florida.

Net metering customers can also apply to generate money back through Transition Renewable Energy Certificates (TRECs) at the same time as they receive bill credits. For instance, Marla in Paulsboro got credit for generating an extra 3,200 kWh last year. When we followed up, she told us the panels still generate plenty of electricity; she expects to get $600 to $900 back each year.

Another resident, Marisol in Perth Amboy, is also coming out ahead with solar. She said she earns $182 or $200 per month, which is enough to pay her solar loan “plus two tanks of gas.”

» GREENEST STATES: New Jersey ranked 20th in 2024

5. How long you plan to stay in your house

It takes years for electric bill savings to make up for the initial cost — about 4 years on average in New Jersey. If you sell your house and move before then, you might not fully realize the financial benefits of your solar investment.

Solar panels last 25 to 30 years.

A Zillow study found that, on average, houses with solar panels sell for 4.1% more. Let’s say you spend $25,000 putting solar panels on a house that costs $400,000. It might sell for $16,400 more in a few years, according to Zillow. But, you miss out on some of that $76,285 in total avoided utility costs over 25 years.

In other words, don't get solar panels just because you want to sell your house soon. Instead, consider a home improvement project with a better return on investment, like remodeling the bathroom or kitchen, instead.

6. How you pay

How you pay has a lot to do with your total costs, as Brenda in Dover found out: “I thought it would run me around $20,000. It ended up $40,000-something with financing.”

In an ideal financing scenario, your system generates enough extra power to pay off the loan, like Marisol’s in Perth Amboy. “I'm financing the system, and what I'm producing covers the price every month,” Marisol told us. “Plus, I'm making a little extra. My electric bill is $4.99 now.”

Marisol pays $107 per month on a 25-year loan. “But for every extra 1,000 kilowatts of electricity that I produce, I get paid $91.20,” she said. “And I’m producing more. It’s 2,500 kilowatts I'm producing. So, I'm making $182 or $200. So, it’s paying for itself plus two tanks of gas.”

Marla in Paulsboro started leasing a 26-panel system last year. “I pay one flat fee of $97 per month for my solar rental for 25 years, and the electric bill taxes, which have so far ranged between $5 to $7 per month,” she said.

» SOLAR PANELS: Lease vs. buy

7. The solar company you hire

We’ve heard from hundreds of solar customers in New Jersey. Sometimes, people get a good price on the installation, everything is fine for a couple of years, and then issues come up with equipment that requires customer support.

For example, Ryan in Voorhees told us he paid $35,000 for a solar system in 2019. In November 2022, he “found out that something was broken” with the system. It turned out Ryan’s inverter was broken, which is supposed to be a relatively easy fix. Ryan told us he’s frustrated with the lack of customer support, which is understandable, considering solar panels are such a big investment. As of June 2023, to our knowledge, the problem remains unsolved.

The lesson here: A reliable solar company might cost more upfront, but it's worth it now if you run into future complications with your system. New Jersey’s Clean Energy Program’s Assistance for Distressed Customers was created to help residents who had projects abandoned by a solar installer.

Monthly costs: solar payments vs. savings

Think of going solar in terms of your monthly costs. Given rising energy costs in New Jersey and elsewhere, financing solar panels makes sense if your monthly loan payment is less than what you would be paying the utility company anyway.

Is my house a good candidate for solar panels?

Going solar is usually worth it as long as your house is a good candidate to support the panel installation. Here’s what to think about before you commit:

• How much sunlight do I get? Solar panels need regular exposure to sunlight to produce the most energy possible. New Jersey averages 3.5 to 4 peak sun hours each day. However, lots of shading — like trees or tall buildings above your roof — could make your solar system less efficient.
• What is the size and angle of my roof? New Jersey (and the rest of the United States) is in the Northern Hemisphere, so solar panels perform best on south-facing roofs. The worst place to install would be on north-facing roofs, especially if those roofs have a high pitch. For example, if the only place you can install is a north-facing roof with a 30-degree pitch, your costs will likely go up by 30% to 40%.
• What is the condition of my roof? If you have to replace your roof, do that before you install solar panels. Solar panels are designed to last up to 30 years, so you want your roof to last just as long. Otherwise, it could cost thousands to remove the panels, fix your roof and reinstall the panels. Jamieson in Gloucester City was charged $5,000 to remove and reinstall his panels.

Pros and cons of solar panels in New Jersey

New Jersey has decent solar potential, although not as much as some sunnier states. South Jersey has a relatively higher average solar irradiance rating compared with the northern part of the state, according to the National Solar Radiation Database.

Benefits of solar panels in New Jersey

• Cheaper energy bills: The average New Jersey homeowner uses a lot of power, which adds up to a lot of savings when you switch to solar. Going solar now means your monthly energy expenses will be more predictable (often significantly lower). Solar panels also protect you from future energy cost increases.
• Better for the environment: Traditional energy sources like coal and natural gas release carbon dioxide and other harmful pollutants into the air. Solar panels generate electricity from sunlight, a clean and renewable energy source. Installing solar panels on your roof helps the environment by reducing greenhouse gas emissions and dependence on fossil fuels.
• Higher home resale value: Installing solar panels can significantly increase a home's value. According to the study above, houses with solar panels sell for 4.1% more on average. The exact increase in value varies by location, with homes in active solar markets sometimes seeing even higher boosts.

Drawbacks of solar panels in New Jersey

• Solar equipment is expensive: Even with rebates and other financial incentives, the price typically starts between $10,000 and $30,000. It’s even more expensive if you want a solar battery for energy storage. Solar battery costs are generally between $7,000 and $18,000. Getting a solar battery might be strategic if net billing rates continue to decline in New Jersey. That way, you can store energy at home instead of tapping into the local grid when needed.
• Potential roof leaks: The installation involves drilling holes into your roof to anchor the panel mounting systems. If not done correctly, this can lead to leaks or structural damage.
• Energy production varies: Solar panels are dependent on weather conditions and seasonality. Solar panels still work on cloudy days, but less available sunlight does affect how efficiently they produce energy. Snow cover may also temporarily reduce efficiency until it's removed or melts off.

» MORE: Solar energy pros and cons

Find solar companies in New Jersey

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for New Jersey’s top solar companies to learn more.

Bottom line: Is going solar in New Jersey worth it for you?

In the best-case scenario, it’s easy to make the switch, and you’re happy with your system’s performance. In the worst-case scenario, you end up paying thousands for mid-tier solar equipment from a company with poor customer service and no follow-up or support.

One of the most common complaints is related to pushy sales reps who make promises that can’t be delivered. That’s why it’s so important to thoroughly research and verify claims made by sales teams before making a decision. Use the National Renewable Energy Laboratory’s PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house — just type in your address. Project Sunroof is a free solar savings estimator powered by Google Earth imagery.

Solar costs vs. savings: New Jersey and nearby states