Princeton, NJ Solar Panels

New Jersey’s Property Tax Exemption for renewable energy systems allows homeowners to add solar panels or other qualifying renewable energy equipment to their property without increasing their property tax bill. When you install a solar energy system, your home’s value typically increases, which would normally result in higher property taxes. This exemption ensures that the added value from your renewable energy system is excluded from your property’s assessed value for tax purposes.

The financial benefit is straightforward: you pay property taxes based on your home’s value without the solar system, even though the system adds value to your property. For example, if your solar installation increases your home’s assessed value by $30,000, that $30,000 remains exempt from property taxation for as long as the system is in use. This exemption applies annually and continues indefinitely while your renewable energy system remains operational and primarily serves your property’s energy needs.

To qualify, your system must be certified by your local enforcing agency as a renewable energy system. You’ll need to submit a written application on the required form, and the local agency may inspect your property. The exemption covers solar photovoltaic, solar thermal, wind, geothermal, fuel cells, and other qualifying renewable energy technologies installed on residential, commercial, industrial, or mixed-use buildings. The system must be designed to provide all or a portion of your building’s electrical, heating, cooling, or general energy needs. The exemption becomes effective for the tax year following the year your system receives certification, so timing your application appropriately can maximize your benefits.

New Jersey’s Sales Tax Exemption allows homeowners to purchase solar energy equipment without paying the state’s sales tax. When you buy solar panels, inverters, batteries, and other qualifying solar equipment in New Jersey, you won’t pay the standard 6.625% sales tax that normally applies to most purchases. This exemption applies at the point of sale, meaning you see the savings immediately when you make your purchase.

To claim this exemption, your solar installer or equipment supplier will typically handle the paperwork by providing the appropriate exemption certificate to their suppliers. The equipment must be used for solar energy generation at your property. There are no income requirements or application deadlines—this exemption is available to all New Jersey residents who purchase qualifying solar equipment. Your solar provider should be familiar with this process and will ensure the exemption is properly applied to your purchase, reducing your overall system cost by eliminating sales tax on the equipment.

The Successor Solar Incentive (SuSI) Program is New Jersey’s current solar incentive program that pays homeowners for the clean energy their solar panels produce. For every megawatt-hour (MWh) of electricity your system generates, you’ll receive one New Jersey Solar Renewable Energy Certificate-II (NJ SREC-II), which the program purchases at a fixed rate for 15 years. This provides predictable, long-term income that helps offset your solar investment.

Residential solar installations of any size receive $90 per SREC-II (equivalent to $90 per MWh of electricity produced). Since an average home solar system produces about 10-15 MWh per year, this translates to approximately $900-$1,350 in annual incentive payments for 15 years. The program launched on August 28, 2021, and aims to support 3,750 MW of new solar capacity through 2026. Your system must be net metered and connected to the grid to qualify.

The SuSI Program is designed to work alongside your utility bill savings, creating two separate financial benefits from your solar system. The incentive payments are guaranteed for the full 15-year term, giving you financial certainty as you plan your solar investment. This program replaced New Jersey’s previous SREC program and offers more stable, predictable returns for homeowners going solar.

Net metering in New Jersey allows you to receive full retail credit for the excess solar energy your system sends back to the electric grid. When your solar panels produce more electricity than your home uses, that surplus energy flows to the grid, and your utility meter essentially runs backward. You receive a 1:1 credit, meaning each kilowatt-hour (kWh) you export is worth the same as each kWh you would normally purchase from your utility. This applies to all major New Jersey utilities, including PSE&G, Jersey Central Power & Light, Atlantic City Electric, and Orange & Rockland (Rockland Electric).

Any excess credits you earn during sunny months can be carried forward month to month throughout the year, helping offset your electric bills during periods when your solar system produces less energy. Once per year, on your account’s anniversary month (typically the date your system received Permission to Operate), your utility will perform a “true-up” of any remaining excess credits. At that time, credits are paid out at the utility’s avoided cost rate, which is approximately 3-5 cents per kWh, and your account resets to zero. You have the option to contact your utility one time to change your anniversary month if a different timing works better for your household energy patterns.