New Jersey's new solar incentive program: SuSI

New Jersey is no stranger to solar incentives, thanks partly to one of the country's most ambitious renewable portfolio standards (RPS). The clean energy targets laid out here, specifically the solar carve-out portion, prompted the state to implement one of the country's most successful solar renewable energy certificate (SREC) programs as early as 2004.

But the incentive landscape has been shifting in New Jersey, and change is finally here; beginning in late August, the Garden State will launch its new Successor Solar Incentive (SuSI) program. Below, we'll give an overview of the new incentive program and discuss what it means for New Jerseyans going solar.

In case you're not familiar with solar incentives in New Jersey, we'll kick things off with a quick primer:

SRECs

SRECs are popular performance-based incentives offered in a few states around the country. As a solar panel system owner, you can earn one SREC for every megawatt-hour (MWh), or 1,000 kilowatt-hours (kWh), of solar electricity your solar panels generate. Then, investor-owned utilities like Atlantic City Electric, Jersey Central Power & Light, and Public Service Electric and Gas Company (PSE&G) buy these SRECs to meet the mandated renewable electricity generation requirements outlined in the state's RPS.

TRECs

In 2018, Governor Murphy signed the Clean Energy Act of 2018, which put plans in motion to overhaul the state's existing SREC program by 2021. But given the popularity of solar in New Jersey, the state began creeping up on the SREC program cap more quickly than they originally planned. To ease the transition between NJ's SREC market and its future successor, the state developed an intermediary program for New Jerseyans going solar between 2020 and 2021, the Transition Renewable Energy Certificates (TRECs) program.

TRECs and SRECs are more alike than different: your earnings in both incentive programs depend on the production of your solar panel system, and you earn one certificate for every MWh of solar production. The one big difference between these two incentive offerings is fixed versus variable pricing; while the prices of SRECs vary over time based on supply and demand in the market, TRECs have fixed incentive values based on the type of installation and system size – $91.20 per TREC for rooftop, residential solar panel systems.

Successor Solar Incentive Program

The transition period has ended: in July of 2021, the New Jersey Board of Public Utilities (BPU) approved its next performance-based solar incentives, the Successor Solar Incentive Program. According to SRECTrade, the program "...will support the development of 3,750 megawatts (MW) of new solar generation by 2026, effectively doubling the state's current solar capacity and driving solar to become approximately 10 percent of the state's total electricity supply."

The SuSI program works just like NJ's previous SREC and TREC programs: the incentive program is production-based, and you earn certificates–dubbed SREC-IIs–for every 1,000 kWh your solar panel system generates for 15 years. But unlike with the original SREC program, the value of an SREC-II is fixed and depends on the type of installation and the size of the system you install – similar to a TREC.

As a homeowner installing a residential system, you will earn $90 for each SREC-II your system generates.

Notably, the incentive value for a net-metered, residential solar panel system only dropped by $1.20 per certificate between the TREC and SuSI program ($90 per SREC-II, $91.20 per TREC). In comparison, original SRECs in New Jersey are selling for closer to $220 as of August 2021, about $130 more than what's offered in either the TREC or SuSI program. At the same time, you'll likely save less overall than if you were to go solar under the state's original SREC program, there's a lot to be said for the predictability and guaranteed savings SuSI has to offer.

Additionally, any participating public entity is eligible for a $20 per MWh adder on the above values. This means schools, public universities, municipalities, and more have even more to gain through this incentive program.

Let's do a bit of math for this one.

On the EnergySage Marketplace in 2020, the average residential solar panel system size quoted in New Jersey was 11.6 kilowatts (kW). Assuming conservative production estimates, you can expect a system of that size to generate roughly 13,092 kWh during year 1. For the SuSI program, this translates to 13 MWhs or 13 SREC-IIs:

13,092 kWh / 1,000 kWh = 13.092 MWh = 13 SREC-IIs

Now, all SREC-IIs generated from net-metered, residential solar panel systems earn $90 per certificate; if you sell 13 SREC-IIs, this comes out to $1,170 in earnings:

$90 per SREC-II x 13 SREC-IIs = $1,170

And that's just year one! But remember, because solar panels degrade over time, systems typically produce less electricity each year. Assuming a 0.5 percent annual degradation rate over 15 years, an 11.6 kW system will generate 12,205 kWh in year 15, or 12 SREC-IIs.

This system would generate about 189,653 kWh of solar electricity over 15 years. That comes out to 189 SREC-IIs, or $17,010.

189 SREC-IIs x $90 = $17,010

Now that we've broken the calculations down, here are the estimated savings from the SuSI program by various system sizes:

Importantly, these are rough estimates and assume a higher degradation rate than many types of panels have in real-life conditions (we have a separate article about the impact of degradation on solar savings here.) Remember that solar energy production varies from system to system, and how much you can earn from selling SREC-IIs will depend on how many panels you install, the quality of your solar equipment, how much sunlight hits your solar panels, and more. The best way to get an accurate estimate for estimated SuSI program benefits is to compare multiple custom options to your property.

On EnergySage, you can compare up to seven quotes from local New Jersey installers. All quotes on our Marketplace will consider the current incentives, such as SREC-IIs and the federal investment tax credit. Sign up on the EnergySage Marketplace today to start receiving free solar quotes. Or, if you'd prefer to start with a quick estimate of how much you can save with solar, try our Solar Calculator.