Cost 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 (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%    

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%    

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%    

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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About FreeCleanSolar

I love solar panels
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