FAQ's

How does New Jersey’s solar financing program work?
New Jersey’s solar financing program relies on a combination of electricity cost savings through net metering, SRECs through the RPS marketplace, and rebates for small systems that complement federal tax credits, and depreciation benefits to reduce the total cost of installation and drive investment in solar.
·         Federal Tax Credits
·         Electricity Cost Savings through Net Metering with a NJ Electric Distribution Company
·         SRECs sold to RPS & Voluntary Markets
·         Incentives from New Jersey’s Clean Energy Program
·         Out of Pocket and private capital
Historically, New Jersey’s solar financing program relied heavily on up front rebates to provide up to 70% of the installation cost. A combination of SRECs and electricity savings provided through New Jersey’s net metering regulations provide additional incentives that help bring the internal rate of return to approximately 12% or payback period to less than 10 years.

Should I buy or lease my system?
While PPA’s or Leases may offer low monthly payments, we think you should know some important aspects about leasing solar.
·         The leasing company keeps all incentive tax credits
·         You will spend years paying for a system you do not own
·         Interest on leases is not tax deductible
·         Since you are renting your system, it won't increase the value of your home
·         Because you are entering a long-term lease, selling your home may be difficult
   o    The buyer of your house would have to agree to take your place in the lease, and…
        o    The leasing company would have to accept the buyer of your home as a new lessee.

What is a Solar Renewable Energy Certificate (SREC)?
SREC stands for Solar Renewable Energy Certificate and is a type of clean energy credit in the form of a tradable certificate useful for demonstrating compliance in state RPS markets.  In New Jersey’s RPS rules, an SREC is issued once a solar facility has generated 1,000 kWh (1MWh) through either estimated or actual metered production, and the SREC represents all the clean energy benefits of electricity generated from a solar electric system. SRECs can be sold or traded separately from the power, thus providing solar system owners a source of revenue to help offset the cost of installation.

How do SRECs help finance solar development?
New Jersey’s RPS requires that electric suppliers and providers retire SRECs in scale with their retail electricity sales in increasing amounts each year through 2020 and beyond.  This long term demand for SRECs provides solar owners a predictable source of additional revenue that can facilitate long term financing for solar installations.

How will SRECs reduce the need for solar rebates?
SRECs provide an additional source of revenue and facilitate long term financing necessary to drive investment in solar. By increasing the value of SRECs, the rebate amount can be significantly reduced or eliminated, thereby reducing the annual impact of the program on ratepayers.
New Jersey is recognized as a solar market leader with a model program that integrates one of the nation’s best set of rules and financing programs for solar energy. The BPU decision on September 12, 2007 to move to a market-based solar financing program and the policies and programs which resulted ensure the continued growth and health of New Jersey’s solar market. New Jersey’s decision to phase out rebates by 2012 and rely on SRECs to spur private investment and market development sends a strong message of fiscal responsibility and commitment to New Jersey’s solar market and is a model for other states to follow.

How is the price of the SREC determined?
The price of an SREC is determined by a number of factors, including supply and demand for SRECs in any given year and the cost of SACP.  Electric suppliers and providers (load serving entities) are required to pay a SACP if they do not meet the Solar RPS through purchasing SRECs.  Generally, SACP levels are set by the BPU above the SREC levels necessary for electric suppliers to have an incentive to purchase SRECs instead of paying SACPs and necessary to provide an internal rate of return attractive for enough solar capacity to reach the RPS requirements.  Historical SREC pricing information is recorded.

What is “Net Metering”?
In New Jersey, Electric Distribution Companies and third party electric suppliers are required to credit customers with solar systems or other renewable energy generators for each kilowatt-hour produced on an annual basis.  The customer-generator reduces consumption for electricity with their renewable energy system during a monthly billing cycle with any excess generation being credited at retail rates on the following month’s bill.  Should excess generation accrue to the end of an annual period, the customer-generator is compensated for any remaining credits at the wholesale power rate by the Electric Distribution Company or their third party electric supplier.
In New Jersey, all BPU-regulated Electric Distribution Companies and electricity suppliers offer net metering to their residential and small commercial customers that generate electricity on the customer’s side of the meter, using Class 1 renewable energy sources, provided that the generating capacity of the customer-generator’s facility does not exceed 2 MW and does not exceed the customer’s annual electric consumption.
Together, our interconnection and net metering rules ensure solar generators are compensated for the clean, renewable energy they are generating, and that New Jersey ratepayers share in the benefits of solar and other small renewable energy generation.

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