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 incentive ensures you won’t pay extra property taxes on that increase. The exemption covers the difference between your home’s assessed value with the solar system versus without it.

To qualify, your renewable energy system must be certified by your local enforcing agency through a written application process. The system must be designed primarily to produce renewable energy for your home’s electrical, heating, cooling, or general energy needs. The exemption becomes effective for the tax year following certification and continues as long as the system is used primarily for renewable energy purposes. You’ll need to apply using a form prescribed by the state, and the local agency may inspect your property and require additional documentation to verify your eligibility.

New Jersey’s Sales Tax Exemption for solar energy systems allows homeowners to purchase solar equipment without paying the state’s 6.625% sales tax. This exemption applies to solar panels, inverters, batteries, and other components that are part of a residential solar installation. Instead of paying hundreds or thousands of dollars in sales tax on your solar purchase, you can invest that money directly into your clean energy system.

To qualify for this exemption, your solar installer must provide the proper exemption certificate (typically Form ST-4 for exempt use) to their suppliers when purchasing your solar equipment. The exemption is available for solar energy systems installed on residential properties in New Jersey. Your installer should handle the paperwork automatically, but it’s worth confirming they’re applying this exemption to reduce your overall project cost. This tax savings is immediate and applies at the time of purchase, making solar more affordable from day one.

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 offers $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. The program includes two main components: the Administratively Determined Incentive (ADI) for smaller projects like residential systems, and the Competitive Solar Incentive (CSI) for larger commercial projects. Residential systems of any size qualify for the ADI program with the fixed $90/SREC-II rate.

All residential solar installations in New Jersey are eligible for this program, regardless of system size. The incentive payments are guaranteed for 15 years from when your system begins producing electricity. Public entities like schools and municipalities receive an additional $20/MWh bonus, but this doesn’t apply to residential customers. The program launched on August 28, 2021, and continues to accept new applications as long as program capacity remains available within the 3,750 MW total target.

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 to the utility grid and you receive a 1:1 credit on your electric bill – meaning you get full retail rate credit for every kilowatt-hour (kWh) you contribute.

The financial benefit works through a monthly credit system where excess credits roll over from month to month throughout the year. However, during your anniversary month (typically when your system first connected to the grid), any remaining excess credits are paid out at the utility’s avoided cost rate, which is approximately 3-5 cents per kWh. After this annual settlement, your credit balance 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 know that while you can change your anniversary month once by contacting your utility, the timing of this annual settlement can impact your financial benefit. Since the avoided cost payout rate is significantly lower than retail electricity rates, it’s most beneficial when your system size closely matches your annual energy usage to minimize excess credits at year-end.