PV in New Jersey—Incentive Ups & Downs

With favorable financial incentives for PV systems, it’s no surprise that solar energy has had a strong start in New Jersey. During the first six years of the New Jersey Clean Energy Program (NJCEP), the state granted more than $120 million in rebates for PV projects, with the highest number of rebates and installations occurring in 2006. The total amount of rebates given in 2006 was 1,670 times greater than that in 2001.

But with so many new systems going online with the help of state funds, New Jersey’s Board of Public Utilities began reducing the rebate in 2005. When the solar rebate program launched, the NJCEP offered $5.50 per watt, or 70% of the cost of the installed system (whichever was lower), up to a maximum of 10 KW of installed capacity. As of August 2007, the rebate is $3.80 per watt—smaller, but still substantial. The NJCEP has announced a new rebate reduction to $3.50 per watt effective September 1, 2007. However, due to high demand and rapid growth of the program, some customers and installers have been waiting more than a year to find out whether their rebate applications have been accepted.

In an effort to smooth what has at times been a roller-coaster ride for New Jersey PV system installers and potential customers, NJCEP is investigating a performance-based rebate structure for commercial systems and a performance-based/smaller up-front rebate structure for systems less than 10 KW. Under the performance-based model, consumers receive their incentives on an ongoing basis as their systems produce clean energy, and solar facility owners are awarded a cost-per-KWH incentive for the electricity they generate with PV systems. This past spring, the NJCEP implemented a pilot program in which the state does not offer an up-front rebate, but instead compensates system owners by awarding them SRECs (Solar Renewable Energy Certificates), financial credits granted by the state’s public utility commission.

Significant financial incentives that support solar electricity are not limited to New Jersey. About 20 states have their own clean energy rebate programs that make solar energy an attractive investment for residential and commercial energy consumers alike, and individual utilities in these and other states may offer their own incentive programs as well. (For specifics, see the Database for State Incentives for Renewables & Efficiency at www.dsireusa.org.)

A one-time federal tax credit of up to $2,000 is also available for residential solar energy systems, and business owners investing in renewable energy technologies are eligible for a federal tax credit equal to 30% of their system’s costs.