Saturday, June 9, 2018

Financial Considerations

After three and a half months of owning my rooftop solar array, I have to say that this is turning out to be a very good investment decision.  Even in the first year of operation when I will be making 14 HEL payments (Jan. 2018 – Feb. 2019), it is becoming apparent that I will save several hundred dollars over what I spent in 2017 on electricity.  In succeeding years, I expect to save more.  Since my investment gains come from savings rather than income, there are no taxes to be paid on it.  It should be noted that I closed on my home equity loan before the solar installation and therefore made four HEL payments before the SREC payments started to kick in.  Something to be aware of and plan for if it would be a bit of a hardship.

Another way to look at the financial angle, is that I will be paying out $148.45 x 180 = $26,721 over 15 years.  This is balanced by the fact that I will save over $1000/year in electricity costs, my 30% solar tax credit next year will be $5970, plus I will receive SREC’s for 15 years. Note that with the recent passage of the NJ Renewable Energy bill S2314/A3723 the number of years that new solar projects can receive SREC’s has been lowered to 10.  Even so, the SREC’s over a ten-year period along with the federal tax credit and electricity savings, will be enough to pay for the installation of a solar array.  Also note that the SREC program will end on June 1, 2021 or when applications are received that will make NJ solar power production equal to 5.1% of solar power consumption, whichever comes first.  The solar alternative compliance payment (SACP) will drop from $300 to $268 in June 2018 and the SACP will drop $10 per year in each successive year until the SREC program ends in 2033.  The SACP is the amount electricity suppliers have to pay per MWh to meet New Jersey’s Renewable Portfolio Standard (RPS) solar requirement if they are unable to generate it themselves or buy those solar MWh’s through SREC purchases.  Since the state’s electricity utilities do not deal directly with individual homeowners, it costs them something to purchase SREC’s from the entities that do collect large numbers of them.  Therefore the value of an SREC to a homeowner will always be less than the SACP.  It can be expected that SREC’s will gradually decrease in value going forward in time till 2033.

Increase in Home Insurance

I notified my insurance company in January 2018, when my solar system was installed.  They sent me a bill and my home insurance increased by $23.00 on an annual basis.  Apparently rooftop solar arrays are not considered to be a high-risk item.  In New Jersey, your property tax cannot be increased due to a solar array.

Impact of Solar Tariffs predicts that the January 2018 tariffs on imported solar panels will increase the cost of the typical residential solar installation by $500-$1000. If you are paying for your solar project over a 10- or 15-year time period, that will result in a negligible increase in price.

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