Rebate Cost of Solar Panels in New Jersey: Solar Incentives, Tax Credits

Georgette Kilgore headshot, wearing 8 Billion Trees shirt with forest in the background.Written by Georgette Kilgore

Solar Panels | March 18, 2024

Woman sitting on a solar panel gets money from New Jersey solar incentives to lower the cost of solar panels in New Jersey after learning how to reduce home solar panel installation using solar tax credits and rebates.

Thanks to rebates and tax credits, the cost of solar panels in New Jersey is more affordable than ever, with New Jersey solar incentives offered by a number of agencies.

Replacing (or at least supplementing) New Jersey energy with clean options is a primary goal for both the federal government and the state.

And in order to make the transition desirable, the federal Solar Investment Tax Credit is available, along with net metering options in the state which reduce your electricity bill every month.

This guide explains how New Jersey solar incentives work to lower the cost of solar panels in New Jersey for both residents and businesses.

How Much Are Solar Panels in New Jersey?

Consumers often wonder how much do solar panels cost and why there is such a wide price variance in the price of solar panels.

Why are solar panels so expensive? You may want to know.

When you look online and see a solar panel for $175, you’ll probably wonder exactly how much electricity it can generate and if they are all the same.

Not quite.

There are mainly 3 types of solar panels on the residential market made from different materials under manufacturing processes that will affect the end price to the consumer.

They are:

  • Polycrystalline silicon solar panels
  • Monocrystalline silicon solar panels
  • Thin-film solar panels

But what will alter the price of the installation in your New Jersey home is going to be the amount of electricity you wish to produce, the wattage of the panels, the efficiency of the panels, and even the peak sun hours in your area.

First, look at the price difference in solar panel kW outputs.

Graphics of average cost of solar panels in New Jersey showing cut-out map of state of New Jersey and cost of each solar panels systems producing electricity from 3kW to 10kW.

Size of Solar Panel Basic Average Cost
3 kW $8,280
4 kW $11,040
5 kW $13,800
6kW $16,500
7 kW $19,320
8 kW $22,160
10 kW $27,600

It is vital when going solar that solar panels are never going to operate at 100% efficiency when they are installed.1

This is because the environment is never going to be as good or perfect as in a laboratory setting. There may be times when the day is overcast, trees block the sun from reaching the cells, or the daily exposure to sunlight even on a clear day is not constant.

In the real world, the majority of residential panels operate at roughly 20% efficiency, and this will reflect the number of panels needed.

For that reason, the price of solar panels in New Jersey can fluctuate from as little as $8,280 to $27,600 without additional equipment such as inverters, smart meters, battery storage systems, and installation costs.

For an average residential property the finished cost of solar panels in New Jersey before any credit or rebate deduction will be between $13,573 – $19,390.

There are panels with a 40% to 50% efficiency rating, but they come with a significantly higher price tag.

Solar Panel Cost Calculator New Jersey (Cost of Solar Panels in NJ)

The most widely used solar panel for residential properties across the country is the 400 kW, but in New Jersey, the 500 kW is often chosen to deliver more power.

That is because even though the yearly electricity consumption in New Jersey at 8,244 kWh is cheaper than the national average of 10,632 kWh, the electricity rate is higher so more panels need to be installed to offset that, or more powerful ones.

Most houses do not fall into the average category, however, with consumption even in New Jersey exceeding 12,000 kWh a year.

New Jersey has some renewable energy in place, but not enough to power everyone.

Pie chart showing New Jersey renewable energy consumption including New Jersey wind energy, biomass energy, geothermal energy, hydroelectric energy and solar energy in the state of New Jersey for 2022.

The difference in solar panels required can be calculated by dividing the yearly consumption by the panel size and adding 25% for any discrepancies in the output.

That discrepancy from the factory rating can come from the panels simply being in a real-world setting where the sun doesn’t shine every single day for the same number of hours, the effect cloudy days will have on the readings, or any trees or buildings that can overshadow the solar arrays.

  • 8,244 ÷ 500 = 17 panels
  • 17 + 25% = 21 Panels

At a yearly consumption level of 12,000 kWh, the calculations for the size of the solar panel system would look like this,2

  • 12,000 ÷ 500 = 24 panels
  • 24 + 25% = 30 panels

To get a more accurate count, refer to your utility bill to verify how much yearly electricity your household uses.

Yet another factor that will weigh in on the number of solar panels needed and the cost of solar panels in New Jersey will be the peak sun hours in your area. New Jersey has an average of 3.5-4 hours, half of what Arizona receives on a daily basis.

Solar Power in New Jersey and the Effect of Peak Sun Hours

Solar panels rely on sunshine to function at maximum capacity to supply the energy you need for your home or business.

If you live in Alaska where the daily peak sunshine hours is an average of just 2 hours, you will need to install a lot more solar panels to create the same quantity of electricity as Arizona which has 8 hours of sunshine daily.

Map of the state of New Jersey with each county colored to show the daily peak sun hours in each New Jersey county ranging from 4.04 to 4.37 daily hours of sunlight.

The time of maximum solar irradiation, also known as sunshine, is at midday when 1,000 watts of energy is beaming down. In a lab, that exact amount is used to rate the efficiency level of a solar panel over the period of an hour.

Under those perfect conditions when the level of light can be constantly maintained, a 300-watt solar panel will provide 3 kWh, and a 500 watt will provide 500 kWh, and so on.

Throughout the day, the sun will arc across the sky, reducing the intensity of the sunlight hitting the face of the solar cells and the amount it can absorb. A solar tracker will help to counter this movement somewhat, but cannot increase intensity and duration.

All you can do is work with the peak sunshine in your area, whether it’s an average of 4 hours or at the top end of 8 hours.

One thing that residents in New Jersey and every state in the country is access to an ever-widening range of incentivized programs to help them get on the solar ladder.

New Jersey Solar Program (New Jersey Solar Incentives)

Being one of the few states in the country with a solar infrastructure able to generate 1 GW of energy, New Jersey is a resounding success in developing clean energy sources for its inhabitants.3

This has been achieved due to some innovative New Jersey solar incentives implemented years ago, like the Solar Renewable Energy Certificate (SREC), which is still continuing today under the new name of the Successor Solar Incentive (SuSI).

Successor Solar Incentive (SuSI) Program

There are 2 separate organizations under this program, one catering for residential properties, the Administratively Determined Incentive (ADI), and the one for commercial, Competitive Solar Incentive (CSI) program.

An array of solar panels is situated next to a pathway by a parking lot with the blue sky in the background.

(Image: AssateagueNPS15)

The ADI program will reward you with a certificate called SREC II worth about $85 for every megawatt-hour that your solar panel system produces.

The yearly amount you can earn will vary on the capacity of your solar array, which will continue for 15 years.

  • A 400 kW system generating 5000 kWh annually would have a financial return of $340 a year, totaling $5,100 over 15 years.
  • A 600 kW system generating 7000 kWh annually would have a financial return of $595 a year, totaling $8,925 over 15 years.
  • A 10 kW system generating 12,000 kWh annually would have a financial return of $1,020 a year, totaling $15,300 over 15 years.

To participate in the program, you will have to be directly connected to the grid so the utility company will be able to track the correct energy levels accurately.

New Jersey Solar Power and Net Metering (New Jersey Solar Incentives, Tax Credits)

This billing strategy opens up the door for you to receive credit for any excess electricity you supply back to the grid.

Once you have enrolled in the program, a bidirectional smart meter system will be installed in your home when you, the property owner, advise the local power grid that you would like to return any unneeded electricity produced by your PV system and get credit for it against your current bills.

Your new electricity meter will keep track of all the power produced by the solar panel system during the day and create a balance between what has been consumed and what is remaining.

The bidirectional electric meter precisely records all electrical movements,4 of which are completely reflected on your utility statement so at a glance you can determine how well the program is working.

At the end of the year, your account will be credited at the retail market rate for the total remaining credits to put your future bills in the positive column.

But not just that, net metering is a way to save money when purchasing a PV system that provides a renewable and effective energy resource and eliminates the expense of an expensive battery storage system which will save thousands.

In this manner, net metering is a popular method of reducing the overall upfront cost of solar panels in New Jersey and still being able to appreciate all the benefits.

Federal Solar Tax Credit (Solar Investment Tax Credit)

About 20 years ago the federal government made available a tax break for any tax-paying homeowner interested in owning a photovoltaic system.

Formerly known as the Solar Investment Tax Credit (ITC), the name was changed in 2022 to the Residential Clean Energy Credit and is one of the best solar rebates from the government.

The program still makes a 30% tax credit available to encourage investment in solar energy for homeowners in every state in the country and is an excellent helping hand that shouldn’t be ignored. But it’s not for everyone.

If you do not own the property where you live, you cannot apply, nor if you are renting the PV system, and if you do not pay any taxes you will also be disqualified from participating in the federal solar tax credit.

These Federal energy credits can only be claimed once, but you are not obligated to claim them all at once.

For example, if in the year of installation, your taxes are only $2,000, but the 30% valuation from the $18,000 PV system you have just installed comes to $5,400, your tax liability will be zero.

The remaining $3,400 would be offset against the following year’s taxes and the next if necessary for up to a period of 5 years.

This is a substantial amount of money that if you are a qualifying applicant, is easy to claim by filling in the Residential Energy Credits form (5695),5 which needs to be submitted with your other tax forms physically and online.

Information such as wattage, number of solar panels installed, where they are located, and, of course, the price must be included in the form, and then it will be automatically offset from your taxes for the next 5 years until the total amount has been allocated.

The program will be discontinued in 2035 so if you’re sitting on the proverbial fence, jump off and go solar now. But even before that expiry date it will be reduced from 30% to 26% in 2033, then further down to 22% in 2034 which will be the last year they can be claimed.

It would be a shame to miss out.

New Jersey Solar Tax Credit (Solar Panels NJ)

New Jersey has been a staunch advocate of clean solar energy since 2012, boosting awareness of their incentive programs and rebates.

One of the programs exempts residents from paying the 6.625% sales tax on the new PV systems and can save over $1,000 on the entire sale price and that includes batteries, the solar panel racking system, and even tracking modules.

New Jersey Solar Property Tax Exemption (Rebate Cost of Solar Panels in New Jersey)

Installing a ground-mounted or rooftop photovoltaic system will increase the value of your property by about 4%.

This is the national average but varies across states, but even if it didn’t, house prices do and are often higher or lower in different parts of the country. House prices in New Jersey are generally quite high.

For clarification, here’s a chart of the 5 states with the lowest house prices with the 4% extra value added on.

Graphics of property value increase in states with lowest house prices showing cutout maps of West Virginia, Mississippi, Arkansas, Louisiana, and Oklahoma on the 1st row and each states' median house value and increased value on 2nd and 3rd row respectively.

State Median House Value Percentage Increase Difference Increased Value
1. West Virginia $146,578 4% $5,863 $152,441
2. Mississippi $162,292 4% $6,491 $168,783
3. Arkansas $178,744 4% $7,149 $185,893
4. Louisiana $182,959 4% $7,318 $190,277
5. Oklahoma $188,453 4% $7,538 $195,991

On the other hand, here’s a chart of the 5 states with the highest house prices with the 4% extra value added on.

Graphics of property value increase in states with highest house prices showing cutout maps of New Jersey, Washington, District of Columbia, California, and Hawaii on the 1st row and each states' median house value and increased value on 2nd and 3rd row respectively.

State Median House Value Percentage Increase Difference Increased Value
1. New Jersey $451,559 4% $18,062 $469,621
2. Washington $562,936 4% $22,517 $585,453
3. District of Columbia $627,158 4% $25,086 $652,244
4. California $728,134 4% $29,125 $757,259
5. Hawaii $834,583 4% $33,383 $867,966

Increasing the value of your property is excellent news and, in some states, the percentage increase due to solar upgrades is even higher. What would not be welcomed is to be taxed on it.

The property tax in New Jersey is 2.26%. The before and after solar taxes due for the property would look like this.

  • $451,559 x 2.26% = $10,205
  • $469,621 x 2.26% = $10,613
  • Difference of = $408

But rather than penalize residents who have increased the value of their homes by adopting a renewable energy source that is becoming more popular,6 this program allows them to be exempted from being taxed on it.

If you are a commercial or industrial enterprise, this legislation will also apply to your circumstances.

This exemption certificate has to be applied to reduce the newly assessed property value but will save over $5,000 over the next 10 years.

So not only will installing a PV system in your home help to save the planet, but it will increase the value of your property and save you thousands on your utility bills over the lifetime of the system.

Is It Possible To Get a Free Roof Replacement With Solar Panels NJ?

Older houses have old roofs that may not be strong enough to support the additional weight of a solar array and all the equipment that comes with it.

If the structure itself must be upgraded, if the roof qualifies, the cost can be reduced by the Federal ITC.

Three solar panel technicians on the roof of a house and heavy equipment showing how to install solar panels on a roof with a cloudy gray sky in the background.

(Image: Daniel Rubin/U.S. Department of Energy Solar Decathlon16)

Just because there are no leaks or visible problems doesn’t mean there aren’t cracks or minute holes that have weakened the structure.

These problems can sometimes only be uncovered when you decide to go solar and the inspection team gives you bad news after crawling all over your tiles.

Their report may state that immediate repairs are not urgent and that the roof is still good for another 10 years, so you breathe a sigh of relief, thinking the installation can proceed.

With the useful lifespan of solar panels being over 30 years, the last thing they would recommend is fitting it now and then having to unmount the entire array in a few years’ time to replace the roof, which would be quite an expensive process on top of the roof replacement.

Fortunately, there are options available from New Jersey solar incentives, government credit programs that may include roof replacement expenses, interest-free loans, and even discounts offered through your solar installers from contacts they may have in the roofing sector.

Consult with your solar company and your tax advisor for more information.

Solar Leasing and Solar Loans in New Jersey

If you’re considering the finance option to purchase your PV system, you’re probably wondering which is best: a leasing option or a loan as the option to buy is off the table.7

The main point to remember is that with a leasing or Power Purchase Agreement (PPA), you will not own the equipment and will not be eligible for the 30% federal tax credit program.

Your monthly payments on a leasing contract with your solar installer who will own the system, will be based on your kWh consumption from your old utility bills and calculated so that you will be paying less for your electricity, sometimes with no downpayment.

An option when researching a loan is what’s known as a Mortgage Rehab Loan. It can be tailored to not only include the installation of your PV system but also include structural roof repairs and other home renovations at the same time.

Insured by the Federal Housing Administration (FHA), it is in essence a remortgage that is ideal for home improvements.

The repayment terms should be compared against a standard loan from a lending agency or your solar installer to calculate which is better for your situation.

After all, the idea of going solar, apart from reducing climate change, is to lower the cost of your utility bill.

At the end of the day, the advantage of actually owning the PV system, whether through a loan or purchasing outright, is that extra income or credits can be earned by selling unused electricity back to the grid to offset the costs. And that’s something you can’t do with leasing.

New Jersey Solar Farms (NJ Solar Program and Free Solar Panels New Jersey)

How to get solar panels for free in New Jersey isn’t easy, but one New Jersey program may come close to doing just that.

New Jersey has long been a proponent of solar farms, encouraging entrepreneurs, farmers, and landowners to convert their land into solar farms by installing hundreds if not thousands of solar panels on their land.

Map showing locations of solar plants in New Jersey using yellow markers and New Jersey solar panels with a US cut out showing the location of the state of New Jersey.

Understanding that projects of that magnitude will come with an equally big bill, they have ensured that many and occasionally more credits, rebates, and incentives were made available for them to do so.

Building the infrastructure of large-scale utility solar farms can cost millions of dollars, but rather than that being a deterring factor they are popping up all over the United States as a lucrative business venture.

Commercial farms of this size feed electricity back into the utility grid, and the owners get paid handsomely for their investments.

On a smaller scale are community farms for communities.8 Compared to a gigantic solar farm like the one in Tinton Falls, New Jersey, that covers 170 acres of land and is able to produce 28.5MW of energy, a community project is normally placed on a nearby tract of land and only capable of producing about 5MW of electricity.

It is aimed at local businesses and local residents who are interested in utilizing a clean solar energy source to reduce utility bills but are unable to have a PV system on their property for space constraints or financial reasons.

Participation in the program is on a subscription basis as all the electricity is first fed back into the local grid and then apportioned out to householders’ premises.

Members sign a contract and agree to pay for a set amount of kWh monthly at a rate generally between 5-15% cheaper than the rates from the local utility provider.

The average monthly kWh usage per household in New Jersey is 687 kWh so as a member, depending on the kWh to be divided among the members, you could subscribe for 500-600 kWh to cover your electricity usage completely.

When your bill arrives, it will be credited with the kWh that you have attributed to your home from the community farm, or garden as it is sometimes called, and you will just pay for the electricity you have used from the grid itself.

There are no upfront payments when subscribing to a community farm, the contracts are flexible, and maintenance is undertaken by the third party who is the actual owner of the facility.

If you live in premises, commercial or residential, where installing a PV system is not feasible, then enrolling in a community solar farm is a solution that can help to keep those ever-rising electricity bills down along with your blood pressure.

Some residents have taken the leap and completely severed their connection to the grid and are able to live a very stable, cheaper existence off-grid.

And, even though not exactly free, a community solar farm will relieve the strain on your bank balance and give you the opportunity to enjoy the benefits of solar power without having to part with any cash upfront.

Carbon Footprint Solar Panels From Production to Recycling

What are the pros and cons of solar panels in NJ?

Whenever the topic of investing in a rooftop-mounted PV system, the cost is the first concern. But just like in the rest of the United States, the cost of solar panels in New Jersey has reduced year in and year out by about 5%.

Couple that price decrease with all the New Jersey solar incentives that have been instigated over the years and price no longer becomes the sole objection to becoming less reliant on fossil-fuel-generated electricity.

And talking of fossil fuels and carbon footprints.9 It is a known fact that solar panels do not create any carbon emissions while they are in operation, but they do take a number of years to offset the carbon footprint solar panels generated during the mining, manufacturing and disposal process.

Even before that, greenhouse gases are emitted because the method of procurement of materials needed to graft the cells together is an energy-intensive process, and the same is true with the storage (batteries) needed.

A great deal of fossil fuels, gases, and labor is needed to harvest the silica from its natural form and then melt it down in giant furnaces with other ingredients to form the silicon cells.

While in operation, clean energy is produced for decades, but after a while, the efficiency of the panels will become less, and they will start to degrade.

Wide shot of a building roof showing a row of solar panel installation on white roof with dense foliage of trees and clear blue sky in the background.

(Image: Alachua County17)

When that point is reached, they will be thrown onto the scrap heap and replaced by upgraded models.

Landfills up and down the country are beginning to buckle under the weight of old, disused solar panels that are once again contributing towards climate change instead of mitigating its effects.

To ease the strain from this new form of environmental pollution, solar panel recycling companies are slowly being formed to recover any reusable components from these end-of-life solar panels.10

The technology has improved substantially to the point where a greater degree of materials can be separated profitably whereas before it was too labor-intensive and not worth the expense to separate any salvageable parts.

Because it is now viable not only to recover valuable metals such as copper and silver as well as silicon from old, thrown-away solar panels, a new industry is growing from the mountains of solar landfills that have the potential to be worth billions in the coming years.

In New Jersey, there is a dedicated solar panel recycling center in Newark, and the New Jersey Solar Panel Recycling Commission will be able to advise you where there is a center near you.11

Also, several local solar panel manufacturers are expanding their facilities to cater to the ever-growing demand for solar panels that have reached the end of their useful life and are in need of dismantling.

For them, it is an opportunity to reuse components that are still as good as new and can be incorporated into new solar modules with no decrease in capacity or lifespan.

In some cases, the company passes the discount on to the customer, in others it simply realizes are slightly higher profit margin.

A new sideline industry has also opened up for householders who have realized the potential of recycling solar panels.

In their case, it’s not down to any new methods of dismantling them but selling them as used on online selling, social media, and other similar sites.

The fact of the matter is that the only thing wrong with 90% of the PV systems that are deemed to be at the end of their useful life is that the output capacity has decreased to a lesser level than when they were initially installed and don’t provide sufficient energy for the residence anymore.

If you have a mobile home, for example, that doesn’t require too much power, a few of these may just do the job for you and work out a lot cheaper than new ones.

Benefits of NJ Solar Rebates and Some Fast Facts About Solar

New Jersey ranks in position number 8 of all the states for the overall solar panel capacity they have installed, a position to be proud of.

They have streamlined the integration process for their residents to supplement the energy they are using or convert fully to solar power by going off-grid.

And a simple trick to cut back on your household’s energy expenditure and the watts in your PV system,12 is to use more energy-efficient appliances that require less power.

The rebate, credits, and incentive programs in New Jersey are unparalleled, with over 370 solar companies advising homeowners how to transition away from the grid or even profit from feeding electricity back into the grid.

But apart from those achievements here are a few facts and milestones that New Jersey has surpassed to maintain that number 8 position.

  • A groundbreaking project was launched in 2009 by the Public Service Enterprise Group. Their goal was to attach 200,000 solar panels to utility poles throughout the region, and being the largest utility company, they were more than confident they could achieve this.
    It was a 5-year commitment from them at a cost of $773 million.
  • The same organization, PSEG, continued along the solar route and constructed 28 solar sites, some on landfills that were useless for any other type of business, and some had the capacity to power 20,000 homes.
  • When it was erected in 2020, the 4.4 MW system in Sayreville was the biggest in the nation but that was surpassed in 2022 when the 2-year 8.9 MW project at the Millburn Treatment Facility of New Jersey American Water became the largest floating solar array in North America.
  • The solar panels installed in New Jersey are enough to power 705,165 homes.
  • Over $12.6 billion has been invested in the solar industry.
  • Only 7% of the state’s electricity is produced from solar power.

New Jersey Solar Incentives: Rebate Cost of Solar Panels in New Jersey and Why They Make a Difference

The cost of solar panels in New Jersey is no longer a reason not to transition from the grid, either partially or fully, due to the wide array of New Jersey solar incentives available to apply for.

Eye-level shot of a building rooftop showing solar panels mounted on racking system with building's top floor and blue sky in the background.

(Image: MN Senate DFL18)

The Federal tax credit is an excellent addition to all the helping hands extended to those eligible to register in New Jersey. But even if you’re not, there are still community projects and low-interest loans designed to reach the state’s goal of becoming 50% powered by solar energy by 2050.

Reducing the cost of solar panels in New Jersey for all, regardless of their financial situation, and tackling the looming crisis of recycling solar energy systems,13 is a worthy target and New Jersey solar incentives and tax credits can help achieve those goals.

Frequently Asked Questions About New Jersey Solar Incentives

Is Solar Worth It in NJ (New Jersey Solar Incentives)?

The availability of New Jersey solar incentives easily makes solar energy worth having as they significantly reduce the cost of solar panels in New Jersey to a more affordable level.

How Does the Solar Tax Credit Work if I Don’t Owe Taxes for That Year?

To those asking, how does the solar tax credit work if I don’t owe taxes for that year? The Federal energy credits of 30% can be rolled over for 5 years; so if for one year you have no taxes to be paid, the credits will be offset against what you will owe in the following years to come.

Does Solar Increase Home Value?

To those asking, “Does solar increase home value?” the answer is “Absolutely.” A PV system increases the property value by about 4%, while in some states can be considerably higher.

Do Solar Panels Increase Property Taxes in New Jersey?

No. New Jersey provides limited property tax exemptions to solar panel and other renewable energy installations as long as certain conditions are met.14


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