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The Economics of Residential Solar Electricity in New Jersey, New York and Connecticut
The economics of investing in a solar electric system for your home or business varies depending on a number of factors, including:
- Solar system performance - a function of orientation, pitch (slope) and shading issues
- Electric rates - depends on your individual utility rates (note that rates in NJ, NY and CT have all increased from as little as 7.7% to nearly 40% for some rate payers -- the economics below assume these new rates)
- Utility or state subsidies (usually referred to as rebates)
- 30% federal investment tax credit, uncapped for residential
- 25% state income tax credit for NY residents, with a cap of $5,000 (none in NJ or CT)
- Annual Sale of Solar Renewable Energy Certificates (SRECs) in New Jersey (sometimes called "Green Tags")
Below are the economics for typical 5000-watt residential solar systems in New Jersey, New York, and Connecticut, on fully-sunny, south-facing roofs. The calculations include an assumed 5% average annual escalation in electric rates, which is approximately the historical average for the region over the last 30 years. If rates go up more quickly, then annual rates of return will be higher and payback periods will be shorter.
The opportunity to sell SRECs in New Jersey comes about from the passage of Renewable Portfolio Standards (see Renewable Portfolio Standards). (New York and Connecticut may have SRECs in the future - such programs are under evaluation -- but there's no guarantee that they will or what their value will be.)
| 5KW SYSTEM NJ SOLAR REBATE PROGRAM |
| System Price | $38,000 | | |
| Rebate | $8,750 | $1.75/Watt: 19.5% Savings |
| System Price less Rebate | $29,250 | $7.23/Watt | |
| Fed Investment Tax Credit (30%) | $8,775 | | |
| Net Effective Purchase Price | $20,475 | $5.06/Watt | |
Year 1 Solar Savings: | | | |
| Electricity Savings | $1,095 | 23.0% | |
| Solar Renewable Energy Credits (SRECs) | $2,750 | $550 per SREC |
| Total Year 1 Solar Savings | $3,845 | | |
| | | | |
| Years to Break-Even: | 6.1 | | |
| Internal Rate of Return (20-Yr): | 24.8% | | |
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5KW SYSTEM LIPA SOLAR REBATE PROGRAM
Pricing for High Output Panels |
| System Price | $38,000 | | |
| LIPA Rebate | $12,500 | $2.5/Watt: 46.1% Savings |
| System Price less Rebate | $25,500 | | |
| NY State Tax Credit | $5,000 | NY: 25% ($5K cap) |
| Fed Investment Tax Credit (30%) | $7,650 | | |
| Net Effective Purchase Price | $12,850 | | |
Year 1 Solar Savings: | | | |
| Electricity Savings | $1,095 | 23.0% | |
| 20-Year Solar Benefits: | | | |
| 20 Yrs Electric Savings | $37,978 | $0.346/Watt (avg) |
| | | | |
| Years to Break-Even: | 9.2 | | |
| Internal Rate of Return (20-Yr): | 15.7% | | |
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5KW SYSTEM NY STATE SOLAR REBATE PROGRAM (NYSERDA)
Pricing for High Output Panels |
| System Price | $38,000 | | |
| Rebate | $9,056 | $3/Watt: 39.5% Savings |
| System Price less Rebate | $28,944 | $5.59/Watt | |
| NY State Tax Credit (if applicable) | $5,000 | NY Residential: 25% ($5K cap) |
| Fed Investment Tax Credit (30%) | $8,633 | | |
| Net Effective Purchase Price | $15,261 | $2.95/Watt | |
Year 1 Solar Savings: | | | |
| Electricity Savings | $1,154 | 20.9% | |
| 20-Year Solar Benefits: | | | |
| 20 Yrs Electric Savings | $51,241 | | |
| | | | |
| Years to Break-Even: | 10.4 | | |
| Internal Rate of Return (20-Yr): | 13% | | |
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| 5KW SYSTEM CONNECTICUT SOLAR REBATE PROGRAM |
| System Price | $38,000 | | |
| Rebate | $25,000 | $5/Watt: 65.8% Savings |
| System Price less Rebate | $13,000 | $2.6/Watt | |
| Fed Investment Tax Credit (30%) | $3,900 | | |
| Net Effective Purchase Price | $9,100 | $1.82/Watt | |
Year 1 Solar Savings: | | | |
| Electricity Savings | $990 | 32.6% | |
| Total Year 1 Solar Incentives | $990 | | |
| 20-Year Solar Benefits: | | | |
| 20 Yrs Electric Savings | $42,574 | $0.429/Watt (avg) |
| | | | |
| Years to Break-Even: | 8.3 | | |
| Internal Rate of Return (20-Yr): | 18.5% | | |
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