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When a PV system is installed in NJ, the homeowner enters into a net-metering agreement with the local utility.  Net metering helps customers maximize their renewable energy investments.  It enables customers to obtain full retail credits on their utility bill for each kWh of electricity their system produces up to 100% of their electricity usage over the course of a year.


While a system may produce what a customer uses over the course of the year, depending on the time of the day, or season, the system will produce that energy at a rate that varies from the actual usage.  As a result, the system will always be doing one of two things.  It will either be producing more, or less than the customer needs.

When a PV system is installed, the utility will install a new bi-directional net-meter that has both an "IN" and "OUT" reading.  Now, when that system is producing more than the customer needs at that moment, that energy will flow back out into the grid, registering on the OUT reading.  When the system is producing less than the customer is using at that moment, the additional energy needed will flow in from the grid and register on the IN reading.  At the end of the month you are either billed or credited on the difference between those two readings.

The excellent below video will explain in great detail how net-metering works.  While it is prepared for utility customers in New York, the principles are the same as in NJ.

NJ Property Tax Exemption

New Jersey offers a property tax exemption for installing a solar system, installing a solar system will not increase your tax liability. Forms for this exemption are available from your local municipaility.

30% Federal Income Tax Credit

The federal government provides a one-time 30-percent renewable energy tax credit to individuals who install a solar photovoltaic (PV) system. Unlike a tax deduction, this tax credit offsets your taxes on a dollar-for-dollar basis and can be carried forward into future years.  This is not a rebate a must be used to offset taxes you've paid or owe.  The Inflation Reduction Act extended this tax credit through 2035.

State Incentive Program Details

New Jersey's incentive program for solar installations began in 2001 with the goal of promoting renewable energy adoption. Over the years, it has evolved to offer various incentives, including performance-based incentives (PBIs) and solar renewable energy credits (SRECs), to encourage the growth of solar energy systems. Initially the incentive was a market driven value sold on a broker platform.  However, that program was determined to be unsustainable and not suitable for more current efforts to drive solar deployment across the many market segments in NJ.

On August 2021 the BPU approved the current incentive program, referred to as the ADI program (Administratively Determined Incentive).  This program established an incentive referred to as either the Successor Solar Incentive (SuSI) or more commonly the SREC-II.  This incentive is a fixed amount that a qualified system is eligible to receive for 15 years.

A key element to this new program is that is is given an annual review to determine how each market segment (i.e. residential, small commercial, ground mount, commercial rooftop, etc.) progresses towards the state's established goals for solar deployment in that segment.

Should one market segment outperform expectations while another underperforms, the state can adjust those incentives as they did in 2023.  At that time, the small commercial market was underperforming while the residential market was overperforming.  As a result, the incentive was increased for small commercial and decreased for residential.

Below is a chart showing the original values set for the SREC and the adjustment made in July of 2023.  While each year the incentive may change, the value of the incentive for the PV system owner will be locked in at the value at the time of their program application acceptance date.

What are SRECs

When a grid tied PV system is installed, a second, revenue-grade production meter is installed at the same time.  The purpose of this meter is to measure the total generation of the system.  Each time a solar installation generates 1,000 kilowatt-hours (kWh) of electricity, an SREC-II is earned.


Because this meter is installed between the PV system and your electrical panel, it has nothing to do with your usage or it being "extra" energy.  It gives the system owner credit for every single kWh of production, whether it is used by the facility at that moment or not.

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