Solar Guide

New Jersey’s Property Tax Exemption for renewable energy systems allows homeowners to avoid paying property taxes on the added value that solar panels and other renewable energy equipment bring to their home. When you install a solar system, it typically increases your home’s assessed value, but this exemption ensures you won’t pay additional property taxes on that increased value. The exemption covers solar panels, wind energy systems, geothermal systems, fuel cells, and other qualifying renewable energy equipment that provides power, heating, or cooling for your home.

To qualify for this exemption, your renewable energy system must be certified by your local building department (called the “local enforcing agency”). You’ll need to submit a written application on a form provided by your local agency, and they may inspect your system to verify it meets the requirements. The system must be designed primarily to generate renewable energy for your home’s electrical, heating, cooling, or general energy needs. Once certified, the exemption becomes effective for the tax year following certification and continues as long as the system remains in use for its intended purpose. Keep in mind that your local agency can revoke the certificate if the system stops being used primarily for renewable energy or if you made significant changes that affect its renewable energy function.

New Jersey’s Sales Tax Exemption allows homeowners to purchase solar energy equipment without paying the state’s 6.625% sales tax. This exemption applies to solar panels, inverters, batteries, and other qualifying solar equipment when purchased for residential use. The financial benefit varies based on your system size – for example, on a $20,000 solar system, you would save approximately $1,325 in sales tax.

To qualify for this exemption, you must be purchasing solar equipment for installation on your New Jersey residence. The exemption is automatically applied at the point of purchase when you work with registered solar installers who handle the proper exemption certificates. There are no income limits or application deadlines, making this benefit available to all New Jersey homeowners who choose solar. Your solar installer will typically handle the paperwork by providing the appropriate exemption certificate (Form ST-4 or ST-SST) to equipment suppliers, ensuring you don’t pay sales tax on your solar investment.

The Successor Solar Incentive (SuSI) Program is New Jersey’s current solar incentive system that replaced the previous SREC program in August 2021. This state program provides guaranteed payments to homeowners and businesses for the solar electricity they produce over a 15-year period. The program aims to double New Jersey’s solar capacity by adding 3,750 megawatts of new solar generation by 2026.

For residential homeowners, the program pays $90 for every megawatt-hour (MWh) of solar electricity your system produces through New Jersey Solar Renewable Energy Certificates-II (NJ SREC-II). This translates to approximately $90-100 per year for every kilowatt of solar capacity installed on your home. Commercial properties receive different rates ranging from $70-120 per SREC-II depending on system size and installation type, with public entities like schools receiving an additional $20 bonus.

The program is available to all residential solar installations regardless of size, as well as commercial systems up to 5 MW that are connected to the grid through net metering. There are no specific application deadlines, but the program has capacity limits that could affect future availability. Homeowners should know that this incentive is separate from federal tax credits and can be combined with other solar benefits, providing long-term financial certainty for solar investments in New Jersey.

Net Metering in New Jersey is a billing arrangement that allows homeowners with solar panels to receive credit for excess electricity they generate and send back to the grid. When your solar system produces more power than your home uses, the extra electricity flows back to your utility company, and your electric meter literally runs backward, giving you a 1:1 credit for each kilowatt-hour (kWh) you contribute. This means you receive the same retail rate credit for the power you send to the grid as you pay when you buy electricity from the utility.

The financial benefit works on a monthly rollover system where unused credits carry forward from month to month throughout the year. However, during your anniversary month (typically when your solar system first connected to the grid), any remaining excess credits are “trued-up” at a much lower rate of approximately 3-5 cents per kWh – the utility’s avoided cost of power. After this annual settlement, your account resets to zero. All major New Jersey utilities participate in this program, including PSE&G, Jersey Central Power & Light, Atlantic City Electric, and Orange & Rockland. Homeowners should note that while they can change their anniversary month once by contacting their utility, timing this strategically can help maximize the value of their solar investment by ensuring credits are used at the higher retail rate rather than the lower avoided cost rate.