Did you know that now you can put solar on your roof in New Jersey, and earn actual cash for 15 years for doing so? Even though you'll also get to use that clean power you make - because you can stop paying electric utility bills (that average 17 cents a kWh in the state) yet simultaneously: your solar home actually earns money for producing electricity, too. You get to have your cake and eat it too.
The money you can earn comes through legislation akin to the remarkable Feed-in Tariffs that shot Germany and Spain to solar leadership. You earn the money for sending clean sunshine power to the grid with Solar Renewable Energy Credits (SRECs)that utilities have to buy.
The money you can make can be staggering. As much as $100,000 over 15 years.
Here's how it works.
New Jersey utilities have to add a certain amount of renewable energy every year to the grid to meet a Renewable Portfolio Standard (RPS), like the utilities in more than half the states now. In New Jersey's case, some solar is a requirement. Utilities must get over 200 MW of solar power onto the grid, or 3 percent of the energy they sell by 2020 (and that rises to 5 percent by 2026).
Rather than battle over building their utility-scale solar requirement on empty deserts, like utilities here in California have to do - (empty desert land being so hard to find in New Jersey) the utilities are allowed meet the requirement if enough New Jersey homeowners and businesses in the state install a little bit of solar on each roof. ("Distributed" electricity)
Then the utility is allowed to simply account for the power being produced off each roof, each megawatt-hour at a time.
Each time your meter shows you've generated a megawatt-hour - you can sell what amounts to "your certification of power produced for your neighbors on the grid" with a Solar Renewable Energy Credit or SREC. You get paid for your SRECs by auctioning them atSRECTrade (or Envirotrade which has operated in Europe for some time) because utilities will compete to buy your SREC at auction, or pay a non-compliance fine, that is kept at over $600 in New Jersey. This amount is what keeps NJ SREC auction prices high.
In 2008, when they first went on sale, a New Jersey SREC auctioned for $461 (for an annual megawatt-hour or for each 1,000 kWh you make in a year), but that price sailed up over $600 within months and has since consistently remained at over $650 a megawatt-hour. This month it is $665.
You get to sell your SRECs even though you use the solar yourself!
You are supplying clean power to the grid. You are on the grid so you get to use it, but that means your utility does not have to build more dirty power for your needs, so that is fair.
So how many megawatt-hours can your roof make?
Most homes have enough roof space to make 4,000 to 10,000 kilowatt-hours a year or 4 megawatt-hours to 10 megawatt-hours a year. The earnings potential for this range is from $2,660 to $6,665 a year. Not just one year. Every year for 15 years.
Total you can earn earn over 15 years? That comes to between about $40,000 and about $100,000.
This huge return means most solar systems in New Jersey will be fully paid for with SRECs within four years, no matter what size they are. And then you would be earning actual money while you stop paying your utility for electricity.
For example, a big 11 KW system (over 50 panels: you'll need about 30 x 40 feet) would produce over 12,000 kWh a year (12 megawatt hours a year) of solar energy.
Lets say you connected 11 KW to the grid this month. The current auction price this month is $665 per megawatt hour, so this year's 12 megawatt hours you will make will earn you almost $8,000 this year. Each year you sell that annual supply of 12 megawatt hours, so you keep earning about $8,000 a year in passive income from the one 11 KW solar system you hooked up this month ($8,000 x 15 years).
Over the 15 years that would be about $120,000.
Now subtract the cost of your 11 KW system. Such a large one would be between $25,000 and $30,000 with the current rebates. That leaves about $90,000 in cash profit over the next 15 years. You canlock in your rate for 15 years.
Now, before you think of rushing to New Jersey to retire on a passive income from a solar farm, (which is exactly what I thought of!) - there is a drawback:
You are not allowed to install a larger system than you need, which is based on your past usage. So this is not like a Feed-in Tariff that directly encourages solar farming, like in Germany or Spain or Ontario. You can't just go out there and build solar farms on every roof. You need to have been using electricity in the house you put the panels on.
And it is probable that eventually the SREC income will be taxable (it isn't currently), once you have passed your first four years and are in the pure profit portion of your 15 year trading partnership for your SRECs, especially once the GOP is back in the majority.
You can lock in the rate you get now. It is likely that New Jersey SRECs will eventually trade for less because so many New Jersey homeowners and businesses will by then have jumped at this chance to earn serious Benjamins making clean power for the grid, so that will give utilities more options for SRECs on the market to buy.
For example, if you get your system on the grid this year, you'll earn precisely $664.99 per SREC. Next year? $600. So the longer you wait, the more of your neighbors you'll be competing against.
Don't have any money to invest? You can also put solar on your roof, and sell your SRECs, even if you use a leasing program like SolarCity's or get a residential PPA like SunRun's (Power Purchase Agreement) and add rock bottom neighborhood discounting through 1Block off the Grid.
You'll still get to sell your SRECs, and use the solar power as well. You won't make as huge of a profit with a PPA or leasing, but you do have the same chance to earn cash from the SRECs - so you have your cake and eat it too: a pretty good deal.