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New Jersey solar incentives, tax credits and rebates

Resources for going solar in 2023

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There is a light at the end of the (bridge and) tunnel, and it’s New Jersey’s solar incentives. New Jersey's Clean Energy Program helps homeowners, businesses and municipalities offset the cost to invest in renewable energy.

In addition to the federal solar investment tax credit (ITC), you'll be exempt from paying sales tax, saving an extra 7% on your solar equipment. Plus, the property tax exemption means you won't pay property taxes on the added value of your solar panels.

Key insights

  • You can take advantage of solar tax breaks, rebates and loan programs.
  • The average federal tax credit value is $5,310 in New Jersey.
  • The estimated 25-year savings are $23,806 with solar panels.

Solar incentives in New Jersey

Even in New Jersey, the federal solar investment tax credit (ITC) is still a huge factor in reducing the cost of going solar. If you install a residential solar panel system by the end of 2032, you can deduct 30% of the system's total cost — including equipment, labor and permits — from your federal taxes. For example, for a $20,000 system, you can get a $6,000 credit when you file your taxes.

The ITC drops to 26% in 2033 and 22% in 2034.

The solar tax credit is not a rebate or refund — you have to claim it when you file federal taxes for the year that your solar panel system becomes operational. To do this, you must complete Form 5695. The tax credit is also nonrefundable, meaning it will be carried forward to future years if you owe less than the amount of your credit.

Some solar companies in New Jersey also offer rebates. Marisol in Perth Amboy got $500 from SunPower when she installed a small system (you can get $1,000 for systems over 10,000 kilowatts (kW). NJ Clean Energy’s Residential New Construction Program also offers rebates for solar panels, though the amount varies.

New Jersey solar incentive details

Incentive amountIncentive typeApplicable sectorsFrequencyAdministrator
Solar Energy Sales Tax Exemption 100% (no maximum) Sales tax exemption Residential, commercial, industrial One time New Jersey Division of Taxation
Property Tax Exemption for Renewable Energy Systems 100% of added value Property tax exemption Residential, commercial, industrial Ongoing New Jersey Department of the Treasury
Solar Renewable Energy Certificates (SRECs) Registration Program Varies Solar renewable energy credit program Residential, commercial, construction, industrial, nonprofit, schools, installers/contractor, agricultural Ongoing New Jersey’s Clean Energy Program
Residential New Construction Program Varies Rebate program Residential, construction, multifamily, low-income residential One time New Jersey's Clean Energy Program
Successor Solar Incentive (SuSI) Program Varies Performance-based incentive Single, multifamily and low-income residential, commercial, agricultural, government, nonprofit, schools, industrial, institutional Ongoing Board of Public Utilities
Edison Innovation Clean Energy Manufacturing Fund - Grants and Loans Grants up to $300,000; loans up to $3 million Industry recruitment/support Commercial, industrial One time New Jersey Economic Development Authority

Statewide New Jersey solar programs

New Jersey residents can take advantage of local financial incentives, including valuable tax exemptions.

Solar Panel System Sales Tax Exemption

New Jersey offers a total sales tax exemption for all approved solar energy equipment, including solar panels, plus solar water heaters, solar pool heaters and more. Considering the state sales tax is 6.625%, you can save nearly $900 on a $13,573 solar investment (the average cost to get panels in New Jersey).

All taxpayers are eligible. To claim it, you must submit Form ST-4 (Exempt Use Certificate) to the seller instead of paying sales tax.

Solar Investment Property Tax Exemption

In October 2008, New Jersey passed a law exempting renewable energy systems used for on-site electricity, heating, cooling, or energy needs from local property taxes. In other words, installing solar panels won’t make your property taxes go up.

Considering one study suggests that solar panels increase property values by an average of 4.1%, it’s great that New Jersey residents don’t have to pay higher taxes to invest in clean energy.

Eligible systems include solar photovoltaics (PV), wind, geothermal and other systems. To claim the exemption, you must apply for a certificate from your local assessor. It takes effect the year after your certification is granted.

» MUST-KNOW: The tax benefits of home ownership

Solar Renewable Energy Certificates (SRECs)

New Jersey’s Clean Energy Program lets you earn Solar Renewable Energy Certificates (SRECs). These are sold separately from electricity, meaning you can cash in on SRECs and whatever your utility company pays you for net metering (more on that below).

You can get one SREC for every 1,000 kilowatt-hours (kWh) of electricity that your system generates, based on market value. To get the credit, you have to report your energy production through the Generation Attribute Tracking System (GATS).

Residential New Construction Program

New Jersey has a valuable incentive program to help builders achieve certifications from Energy Start and ZERH (Zero Energy Ready Home). Single-family and multifamily buildings can both qualify.

Energy StarZERHZERH + RenewablesAffordable House Bonus
Single-family $1,000 per home $4,000 per home $6,000 per home +$500 per home
Townhouse* $5,000 per home $2,500 per home $4,000 per home +$500 per home
Multifamily** $500 per unit $1,500 per unit $2,500 per unit
*3+ connected units; **5 stories or less

Successor Solar Incentive (SuSI) Program

SuSI lets you earn certificates called SRECs for every 1,000 kWh of solar energy production for 15 years. This program replaced the SREC Registration Program (SRP) in 2020. Residential, nonresidential and community solar systems are eligible.

SuSI is made up of two sub-programs. The first is the Administratively Determined Incentive (ADI) Program, which incentivizes net-metered residential projects, net-metered nonresidential projects of 5 megawatts (MW) or less and all community solar projects. The second is the Competitive Solar Incentive (CSI) Program, which applies to large nonresidential, net-metered solar installations.

Net Metered ResidentialNet Metered NonresidentialCommunity Solar
Eligible sizes All sizes 5 MW-DC max 5 MW-DC max
Incentive amount $85/SREC-II $85-$130/SREC-II $70-$90/SREC-II
Maximum incentive 250 MW 257 MW 150 MW

What to know about net metering in New Jersey

New Jersey's net metering program serves as a model for other states to incentivize people to invest in renewable energy. The four electric utility companies regulated by the New Jersey Board of Public Utilities — PSE&G, Jersey Central Power & Light, Atlantic City Electric and Rockland Electric — all offer net metering by state mandate.

How it works

Net metering lets you sell any extra electricity you generate back to the grid for credits. These credits can be used as needed. This way, you always have access to power.

When your system generates more electricity than you use, the utility meter spins backward, giving you credits. If your system doesn’t generate enough electricity, the utility meter spins forward, taking away credits.

For example, you might use less electricity than your system generates on a sunny day or need more on an especially cloudy day. On sunny days you sell your extra electricity; on cloudy days you can buy a little back.

Why it’s worth it

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.

Marla in Paulsboro got credit for generating an extra 3,200 kWh last year. When we followed up, Marla told us the panels still generate “way more than enough electricity.” She expects to get $600 to $900 back each year.

Marisol in Perth Amboy is also making money through net metering. She said she earns $182 or $200 monthly, which is enough to pay her solar loan “plus two tanks of gas.”

» GUIDE: Solar panel installation guide

Solar resources in New Jersey

Here are some more resources to guide you through transitioning to solar in New Jersey.

State resources

Local utility resources

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    Can I get free solar panels in New Jersey?

    You can lease or enter a PPA with little to no upfront costs. Still, neither is totally free. Solar leases generally require a flat monthly fee; PPAs make you pay per unit of electricity.

    » MORE: Solar lease vs. solar PPA

    How does a PPA work?

    A solar power purchase agreement (PPA) works similarly to a lease. A solar developer buys, installs and maintains the panels on your property, and you pay for the power generated on a per kilowatt-hour (kWh) basis. The cost per kWh is typically lower than the utility's rate for the same amount of electricity. It's a good option to get solar without high upfront costs, but you’ll miss out on some tax incentives.

    Is my HOA allowed to restrict solar panels?

    No. New Jersey Statute § 45:22A-48.2 clearly states that homeowners associations (and similar organizations) “shall not adopt or enforce a restriction, covenant, bylaw, rule or regulation prohibiting the installation of solar collectors on certain roofs of dwelling units.” However, an association can regulate the installation and maintenance of your solar panels.

    What has been New Jersey’s investment in solar energy so far?

    New Jersey has already invested more than $12 billion in solar, and it's committed to 100% clean energy by 2035. Governor Murphy has also set the goal of registering 330,000 electric vehicles (EVs) in the state by 2025.

    What other clean energy incentives are available in New Jersey?

    The Garden State has some of the best clean energy incentives in the U.S. In addition to solar programs, you can find incentives for electric vehicles.

    Charge Up New Jersey offers incentives of up to $4,000 if you purchase or lease an eligible zero-emission vehicle (including battery electric and plug-in hybrid electric). You can also get a $250 rebate when you buy an eligible charger for your house.

    How much can I save with solar panels in New Jersey?

    Many people we talk to who went solar in New Jersey saw significant savings, even if they still have a monthly payment. For example, Wanda in Teaneck said her bill went from $600 to $200, “so, there is a significant improvement.”

    The estimated net savings equal $23,806 over 25 years, according to EcoWatch.

    Bottom line: How much are solar panels in New Jersey?

    In New Jersey, the average cost to go solar is $13,573 after federal tax credits, according to data from EcoWatch and the Energy Information Administration. The ConsumerAffairs research team conducted an in-depth analysis to determine how much it costs to go solar in New Jersey and the average solar costs in other states.

    Your total cost includes materials (like panels and inverters), labor and permitting expenses, plus sometimes grid energy payments and maintenance to ensure peak performance.

    In New Jersey, leasing is sometimes more convenient, but buying can provide long-term savings and increase your property value. If you are considering a solar loan, lease or PPA (power purchase agreement), always ask:

    • Is there a down payment?
    • How much will I pay per month?
    • When will monthly payments increase, and by how much?

    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. Database of State Incentives for Renewables & Efficiency (DSIRE), “New Jersey Programs.” Accessed Aug. 1, 2023.
    2. EcoWatch, “Solar Panel Cost in New Jersey.” Accessed Aug. 1, 2023.
    3. United States Environmental Protection Agency (EPA), “Summary of Inflation Reduction Act provisions related to renewable energy.” Accessed Aug. 1, 2023.
    4. Environment+Energy Leader, “New Jersey Commits to 100% Clean Energy by 2035.” Accessed Aug. 1, 2023.
    5. New Jersey’s Clean Energy Program, “Net Metering and Interconnection.” Accessed Aug. 1, 2023.
    6. New Jersey’s Clean Energy Program, “SREC Registration Program.” Accessed Aug. 2, 2023.
    7. New Jersey’s Clean Energy Program, “Electric Vehicle Incentive Programs.” Accessed Aug. 3, 2023.
    8. New Jersey Legislature, “45:22A-48.2 Solar collectors on certain roofs, homeowners association authority limited.” Accessed Aug. 3, 2023.
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