Solar Incentives in New Jersey
What type of solar incentives are available?
Several types of incentives can help you go solar.
New Jersey SRECs
Solar Renewable Energy Credits (SRECs) are an incentive designed to encourage solar adoption. New Jersey’s Renewable Portfolio Standard (RPS) currently requires that New Jersey facilities source at least 4.1 percent of their electricity from in-state solar systems by 2028. As a result of this solar carve out, New Jersey has one of the largest and most dynamic solar markets in the United States. This leads to high fluctuation rates in the Solar Renewable Energy Credit (SREC) market. New Jersey has worked very hard to maintain a competitive SREC market. The RPS standard and Alternative Compliance Payment (ACP) must be constantly adjusted to account for the massive generation of solar systems, and consequently SRECs, in the market. See current SREC prices in New Jersey.
New Jersey PACE
New Jersey passed Property Assessed Clean Energy (PACE) enabling legislation in 2012. Currently, one program supports both commercial and residential renewable energy, energy efficiency, and water conservation projects.
- AllianceNRG PACE – The AllianceNRG PACE program is jointly administered by Leidos Engineering and CounterPointe Energy Solutions. This program provides 100 percent financing for hard and soft costs with low interest rates and a repayment period of up to 30 years. The loan is paid back through your property tax bill.
- NJ PACE – NJ PACE is a nonprofit that runs the PACE program in New Jersey. Their financing is available to commercial properties only. One hundred percent financing is offered with low interest rates and a repayment period of up to 20 years.
New Jersey-specific incentives
PSE&G Solar Loan
PSE&G’s Solar Loan program provides access to financing for homeowners in the utility’s electric service territory. Borrowers can repay this loan by cash or through Solar Renewable Energy Certificates (SRECs). The loan program has helped more than 1,000 residential homeowners go solar.
The loans have an interest rate of 11.179% and a ten-year term. Before you decide to opt for this financing route there are some things you should consider.
The loan has a $20/kW application fee as well as an $85/kW administration and a $120/kW SREC processing fee. The latter two fees are deducted from loan proceeds at closing. This means a typical 5 kW system will have a $100 application fee, $425 administrative fee, and a $600 SREC processing fee. In aggregate, that amounts to $1,125 in fees. While these fees aren’t necessarily prohibitive, given that the administrative and SREC fees are deducted from your loan, they are an additional cost to keep in mind.
If you would like to participate in PSE&G’s loan program, you should talk with your installer upfront about whether they have experience applying for the loan program on behalf of their customers. A lack of experience could translate to an unsuccessful application and/or unnecessarily high administrative costs. A few of the installers we’ve spoken with note that their staff has to spend additional time applying for the loan on behalf of the customer. This can add labor costs to the customer’s final contract price. Installers also noted that it’s imperative to have someone on staff with experience with the application. PSE&G has developed a list of companies that have installed four or more systems through the loan program (PDF).
A final thing to consider is the likelihood that you will stay in your home the entire 10-year loan period. If you move and are still under the terms of the loan, you’ll either have to pay it off or assign the loan to the home’s new owner. PSE&G will vet the new owner and determine whether they’re credit worthy of a loan assignment. Program participants must have a minimum FICO score of 680 (for salaried employees or self-employed people of more than two years) or 720 (for self-employed people of less than two years). This may limit the number of bidders you will have on your home.
More information about the loan can be found on the PSE&G website: https://www.pseg.com/home/save/solar/pdf/FAQ_current-borrowers.pdf.