Make Sure You Are Aware, Before Signing A Solar Energy Installation Agreement
These days it seems like more and more people are “going solar.” There is certainly a lot more interest than there was a couple of years ago. Now, those selling solar energy systems are encouraging businesses and property owners to sign agreements to have solar energy systems installed before year-end…even though those systems may not actually be installed until the beginning of 2020. Some of the financial incentives for going solar are scaling back, so make sure that you are aware of exactly what benefits you will receive (and when), if you decide to have a solar energy system installed.
At the federal level, the present 30% income tax credit (30% of the total cost of installation of a solar energy system) scales back to 26% effective January 1, 2020; 22% effective January 1, 2021 and 10% beginning January 1, 2022 and thereafter.
At the State level, changes to New Jersey’s Solar Renewable Energy Credit program (a system earns one SREC for every 1,000 kWh it produces) are looming, as the State gets closer to attaining its goal of 5.1% for solar power generation. The SREC program, in its current form will change as early as June 2020.
For both business and residential owners of solar energy systems, it’s the revenue stream generated by the sale of a system’s SRECs that can make the difference in whether it makes financial sense to go solar. Currently, SRECs have been selling for close to $222 each. On even a moderate solar system, i.e. one that generates 25,000 kWh/year, the sale of those 25 SRECs amounts to over $5,500 (annually) of tax-free income.
Earlier this fall, the New Jersey Board of Public Utilities published a notice of proposed amendment to its “Renewable Energy and Energy Efficiency” regulations. In response to the concern of what will happen to the current 10-year SREC, when New Jersey attains the 5.1% goal for solar power generation, the following statement regarding the SREC program was included in the NJ PBU’s notice of proposed rulemaking:
“…The qualification life shall be 10 years for all solar generation projects for which the Board receives a complete registration or application for designation as connected to the distribution system or conditional certification after October 29, 2018, which achieved commercial operation prior to attainment of the 5.1 percent milestone, and which is otherwise eligible for conditional registration.”
Prior to finalizing a deal to have a solar energy system installed for your dealership, you should plan to sit down with the contractor and have a frank discussion as to whether they will guaranty that any planned solar energy installation for your dealership will qualify for New Jersey’s current (10-year) SREC program.