Until now, residential solar energy has been an expensive, and confusing, proposition. Residential systems routinely cost in the tens of thousands of dollars. And while there are solar tax credits available, these incentives vary from state to state. New Jersey appears to incentivize $3.50 per watt, which averages at 43% of a system’s cost.
The Energy Policy Act of 2005 also provides a federal tax credit of 30% of the system’s cost, with a $2,000 maximum allowance. Few systems actually fall within the federal allowance, however.
New Jersey also offers something called Solar Renewable Energy Certificates (SRECs). Because New Jersey law requires that energy providers invest in renewable energy resources, your unused solar output is tracked and credits are issued. These credits can be offered for sale, via the web, to providers that need to meet their renewable energy quotas. Forbes valued this subsidy at $887 annually, pointing out that demands may decrease as the number of solar installations increases.
Financing a solar energy installation in New Jersey has recently become much simpler, however. Late last year, PSE&G received regulatory approval to provided up to $105 million in loans to finance residential solar installations in New Jersey. These residential loans are payable over a 10 year period. Rather than repaying PSE&G in cash, however, payment will be made through the sale of electricity back to the grid. PSE&G explains:
Unlike bank loans, which must be repaid in cash, Solar Loans can be automatically repaid through Solar Renewable Energy Certificates (SRECs). What’s more, you may be eligible for valuable tax credits and incentives that may further offset the cost of your solar power installation (ask your Installer/Developer or Tax Advisor for details).
The program will only be opened to applicants until PSE&G has met its targeted development of 30 megawatts of solar power. PSE&G customers considering the program should visit the Solar Loan Program website for more information and to begin the application process.