New Jersey finalizes successor solar incentive program
It’s been a long time coming, but the New Jersey Board of Public Utilities (BPU) has finally agreed on a framework for their new solar incentive program. The new Successor Solar Incentive program, officially dubbed “SuSI”, is replacing the state’s popular solar renewable energy credit market. The SuSI program officially opens for new projects on August 28, 2021.
While we’re glad the Garden State has finally put out the final guidelines for the Successor program, it could result in lower savings for homeowners. But does it really impact your return on investment by that much? Or does the program’s reliability make the slightly lower savings worth it?
How does the NJ Successor program work?
The SuSI program works kind of like other Solar Renewable Energy Credit (SREC) programs: your solar panel system generates electricity as it normally does, and for every 1,000 kilowatt-hours of electricity it generates, you are awarded a certificate that represents the positive environmental value of solar electricity.
These certificates, called SREC-II’s under the SuSI program, are then sold, earning you extra money. SREC-II’s are sold independently from electricity, meaning you will still earn all of the money you normally would through your utility’s net metering program. SREC-II’s just earn you additional cash on top of that.
A solar system will generate SREC-II’s for 15 years.
Where New Jersey’s Successor program differs from traditional SREC programs is how the value of SREC-II’s are determined. Different solar system types will receive different incentive values. There are two sub-programs within the SuSI program that solar systems can fall into:
- The Administratively Determined Incentive (ADI) program provides incentives of predetermined value to residential net-metered systems, small non-residential net metered systems, community solar systems, and solar projects that qualify for certain conditional approval.
- The Competitive Solar Incentive (CSI) program is for large commercial and grid supply solar projects, where incentive values are determined through a competitive solicitation process. However, this process has not been finalized.
How much are SREC-II’s worth?
Residential net-metered solar panel systems will receive $90 per SREC-II generated. The following table outlines incentive values for other solar system types that fall under the ADI sub-program:
|System type||Size||Incentive value per SREC-II|
|Residential net-metered||All types and sizes||$90|
|Small non-residential net-metered (rooftop, carport, canopy, floating solar)||Projects smaller than 1 MW||$100|
|Large non-residential net-metered (rooftop, carport, canopy, floating solar)||1 MW to 5 MW||$90|
|Small non-residential net-metered ground mount||Projects smaller than 1 MW||$85|
|Non-low-middle income (LMI) community solar||Up to 5 MW||$70|
|LMI community solar||Up to 5 MW||$90|
|Interim subsection (t) projects||All types and sizes||$100|
The BPU will re-evaluate these incentive values three years after the start date of the SuSI program to determine if the program is properly incentivizing solar projects.
How much can you save with the NJ Successor Program?
How much you’ll save depends on the size of your solar system and how much solar electricity it generates. However, based on the average solar panel system in New Jersey, you can expect to earn over $7,000 just from SREC-II’s over the lifetime of the system.
Let’s break down how you can figure out how much you can save with SREC-II’s.
Step 1: How much electricity do your solar panels generate in a year?
In New Jersey, you can expect to produce about 1,200 kWhs of solar electricity for each kilowatt of solar panels you install. So, a 6 kW system would produce about 7,200 kWh of electricity in the first year they’re installed.
If you’re not familiar with kW and kWh, you can read our complete guide on the difference between the two here.
But we need to know how much electricity the panels will produce over 15 years. It’s important to keep in mind that solar panels degrade over time, so as they age, they will produce less electricity. Usually, solar panels degrade at a rate of about 0.5% per year, but the specifics for your solar panels will be listed in the panel’s production warranty.
Once you take degradation into account, our 6 kW system will produce about 79,800 kWh over 15 years.
Step 2: Determine the number of SREC-IIs you generate
This step is easy. One SREC-II is created for every 1,000 kWh of electricity your solar panels produce.
We estimated that our solar system will generate around 79,800 kWh over 15 years, which works out to 79.8. We’re going to round that number down to 79, as you don’t get paid for partially generated SREC-IIs. Typically, that “partial credit” would carry over to the following year, but since this is the total at the end of 15 years, there’s no “next-year” for the credit to carry over to.
So, over the course of 15 years, our 6 kW system will generate about 79 SREC-IIs.
Step 3: Find out how much money you’ll earn!
Now that we know how many SREC-II’s our system will generate, we can figure out how much money we’ll get. All you have to do is multiply the number of SREC-II’s by the incentive value:
79 SREC-IIs x $90 per SREC-II = $7,110 total
How does the Successor program impact solar savings?
Unfortunately, the SuSI program provides lower savings for homeowners than either of New Jersey’s previous solar incentive programs. However, the good news is, it’s not by much.
The state’s most recent solar incentive program, the Transition Incentive program, provided homeowners with $91.20 for each 1,000 kWh generated. So, the same system we used in the example earlier would have earned about $94 more over the system’s qualified life under the Transition Incentive program.
But in the grand scheme of things, that’s not that much of a difference compared to the SuSI program.
It is true that the savings through the SuSI program are substantially lower than what homeowners would get with the state’s original SREC program. However, NJ SRECs were traded on a market where incentive values fluctuate based on market conditions, so you never knew how much you would get for your SRECs.
SRECs were selling for about $235 when the program closed in mid-2020. While that is much higher than the new value of SREC-IIs, there was no guarantee that price would stay. Any change in market conditions could have caused SREC prices to crash down to prices we’ve seen in states like Ohio, where SRECs sell for just over $7 apiece.
How to apply for the NJ Successor program
In order to produce SREC-IIs, your solar panel system must be registered with the state’s Generation Attribute Tracking System (GATS). Once registered, you must enter your solar panel system’s monthly solar generation in GATS in order for SREC-II’s to be generated and then sold.
Your solar installer will be able to help you with the application process, and can explain the best ways for you to report your solar generation and sell your SREC-II’s.
How will the New Jersey Successor Program impact the state’s solar industry?
Despite being a lower-value incentive than ones previously offered in New Jersey, the Successor Program should have an overall positive impact on the state’s solar industry, especially as the cost of solar panels continues to fall. Plus, the SuSI program is way less complicated than a traditional SREC market, which makes going solar way less scary for homeowners.
Who wants to deal with watching market prices, figuring out the best time to sell, and finding aggregators to sell SRECs on top of everything else going on in life? The fixed SREC-II incentive structure guarantees a certain level of savings for homeowners so they can feel confident that going solar was the right choice.
Not only that, but the Successor Program is designed to be dynamic. The Board of Public Utilities will revisit incentive values every few years to reassess the solar market to gauge if incentives need to increase (or decrease) in order to meet the state’s clean energy goals. In fact, the program has the potential to nearly double the amount of solar installations in the Garden State.
Previous proposals for the SuSI program have mentioned the state may be looking into establishing an energy storage incentive program, so we should be on the lookout for that as well in the near future.
If you’re looking to go solar in New Jersey, you should start by using our solar panel calculator. Our calculator will give you an estimate of how much a solar installation will cost for your specific home and how much you could earn back in solar savings. Plus, you can get in contact with local solar installers in your area, who can help you better understand how much extra cash you can earn with SREC-II’s.
- New Jersey is replacing its SREC program with its new Solar Successor Incentive program.
- Under the new program, one SREC-II is created for every 1,000 kWh of solar energy a solar system produces.
- Solar homeowners will earn $90 per SREC-II they generate for 15 years.
- An average 6 kW system in New Jersey can earn about $7,000 through SREC-II’s over the lifetime of the system.
- Although the value of SREC-II is slightly lower than previous state incentives, the simplicity and dynamic nature of the program has the potential to expand the solar industry in the Garden State.