How much will my solar electric system cost?

The cost of a system depends on many factors, including whether your home is under construction, if modules are being integrated into the roof or mounted on an existing roof, or if you are planning to replace your roof. Prices also vary based on the equipment options you select, the system component manufacturer and the contractor’s installation costs.

The size of a system is often the most significant factor in assessing costs. Typically a residential system will cost between $8 and $10 per watt, installed. A two-kilowatt system that offsets the needs of an energy-efficient home will cost in the range of $20,000 installed, or $10 per watt. A five-kilowatt system that could completely offset the energy needs of most conventional homes may cost about $40,000 installed, or $8 per watt.

Note that these prices are estimates, and your price will depend on system configuration and installation costs. Installation contractors can provide quotes for actual costs.

What kind of savings will my system provide?

Try this formula: A one-kilowatt system should meet about 10% to 20% of a typical residential customer’s needs. Depending on where you live in New Jersey, a one-kilowatt system will produce from 1,500 to 1,600 kilowatt-hours annually. If you multiply this annual power output by your average electricity rate and divide that number by 12, you can calculate your estimated monthly dollar savings. System payback time will vary based on system cost and the cost of electricity over the system’s life. The New Jersey Clean Energy Program offers significant financial incentives to reduce the up-front cost of your system and, thereby, shorten the payback period.

Ask your contractor for a written estimate of the expected annual energy generation from your solar electric system. Note that although this estimate may be accurate for an average year, actual electricity production will fluctuate from year-to-year due to weather and climate variations.

What is Net Metering?

Available through New Jersey’s electric utilities, net metering is an option that actually provides you with a credit for the excess energy produced by your system. For example, if the system generates 300 kilowatt-hours of electricity in a month, and you use only 250 kilowatt-hours, your utility will “store” the surplus until you need it. Your stored kilowatt-hours are “netted,” or paid back, on an annual basis. If your system generates more electricity than you use over the course of a year, your utility will reimburse you for the unused balance.

Meters: With net metering, your electric meter spins forward when electricity flows from the utility into the home and backward when power flows from the home to the utility. Your electric utility will either provide you with one meter (that can register both functions) or two meters (one for each function).

What financial incentives are available?

The New Jersey Clean Energy Program offers substantial incentives to assist you with system purchase and installation. Approved by the New Jersey Board of Public Utilities, the Program is designed to encourage residents to enjoy the benefits of renewable energy, including solar electricity.

Additional financial information

New Jersey Sales Tax Exemption: Available to all New Jersey taxpayers, the state offers a full exemption from the 7% state sales tax for all equipment purchases directly associated with a solar electric system.

Standard financing: Your lending institution can supply information on mortgage financing options.

In addition, businesses may qualify for federal tax incentives:

Federal Business Investment Tax Credit: Up to 10% of the purchase and installation cost of a qualifying system can be claimed by a business when filing annual tax returns. (For details, see the IRS Instructions for Form 3468: Investment Credit.)

Federal Modified Accelerated Cost Recovery System (MACRS): Solar electric generating systems installed on commercial facilities are eligible for five-year accelerated depreciation. (For details, see the IRS instructions for Form 4562: Depreciation and Amortization.)

The Incentive Application Process