New Jersey is the sunniest state in America, offering solar energy incentives for residential systems that can pay for themselves in as little as three years.
The state is second only to California in the number of homes outfitted with solar technology, drawing so many applicants for generous rebates in May that the Board of Public Utilities has put new requests on hold.
New Jersey is the only state to mandate a Solar Alternative Compliance Payment, essentially a penalty a utility must pay if the company does not reach its SREC target. To make that goal, utilities buy these green-energy credits from consumers and businesses.
Consumers who have been interested in green energy for years are now taking the plunge because rebates and advances in technology have lowered the cost. Yet even in New Jersey, population 8.7 million, there are only 5,800 solar-powered homes.
Tax credits from the federal government that are equal to 30 percent of the cost of an installed system. The deal will run through 2016, which Lloren figures gives the program time to gain traction. Previously, Uncle Sam’s contribution topped out at $2,000.
On May 3, the first day of the state funding cycle, more than 1,100 New Jersey residents submitted applications for rebates averaging about $10,000 per household. On May 11, the BPU announced it would stop taking applications until September.
Other states, strapped for cash, have batted back renewable energy rebates. In Delaware, rebates for solar photovoltaic installations were reduced from 50 percent to 25 percent.
It has the best economics in the country for solar.John Martin of River Vale in Bergen County paid $37,500 out of pocket for a $75,000 system.
A retired film editor, Martin expects solar power will provide about 60 percent of his energy needs.
He has been intent on raising his level of energy independence since the 1973 oil embargo, which sparked long lines of cars at the pumps and generated America’s first solar power boom.
“I’m doing it to be a responsible citizen of the planet — and to stick it to OPEC a little,” Martin said.
New Jersey residents also are motivated by the high cost of electricity produced at coal-fired and nuclear plants. The average cost per kilowatt hour in the state is 19 cents, compared to the U.S. average of 11 cents.
According to the federal Energy Information Administration, the use of solar electricity grew 40 percent between 2004 and 2008. Still, solar represents only a tiny fraction of the market, just over 1 percent.
Our understanding is that the state is considering a lottery for people who want rebates. The likelihood is that not everyone who applies for a rebate will get one.
BPU spokesman Gregory Reinhert did not return calls for comment.
Martin and other homeowners can expect to earn Solar Renewal Energy Credits, or SRECs, one credit for every 1,000 kilowatt hours of generation.
“When I’m using more electricity than I produce, the meter goes one way,” said Martin, a PSE&G customer. “It turns the other way when I’m producing more than I need.”
So, how much money can a homeowner expect to make selling SRECs to utilities?
An SREC unit is currently selling for up to $600 in New Jersey. The average residential solar producer can expect to generate seven SRECs annually, according to Residential Solar 101, a renewable energy blog. Total savings: $4,200.
With SRECs, the federal tax credit, state rebates and energy savings, 1BOG estimates it will take a household in New Jersey 2.8 years to pay for a solar system. If the state turns out the lights on the rebate program, it will take 4.2 years to recoup the costs. “That means it goes from being great to really good,” Lloren said.
The return outpaces California, which boasts the highest number of solar-powered residences. In that state, the break-even point is 6.7 years. In New Orleans, which also offers generous incentives, homeowners can expect the system to pay for itself in 7.6 years.
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