Frequently Asked Questions

Solar PV (Photovoltaics) works by taking the energy from the sun’s rays and converting it into electricity. The sun’s rays contain photons. When these photons hit a solar module, electrons inside of the solar module move and an electrical current is created. This electricity then travels from the solar array to an inverter. The inverter takes the electricity which is in DC form and switches it to AC. Once that switch is made to AC, the electricity is ready for use. From the inverter, the power is fed directly into the main electrical panel and can provide power to the site. If the site demands more power than what is provided by the solar it will pull from the grid. If the sun produces more than the site needs, then that overproduction is put back into the grid for a credit in a process known as Net Metering.

Net Metering is a billing mechanism which allows grid-tied solar producers to put electricity that they do not use from their solar array back into the grid. When the solar produces more power than the site needs, the utility meter spins backward and the account holder will have a credit against future energy use. The solar producer is then billed for their total “net” usage at the end of the month which is the balance between the power pulled from the grid and the power put back into the grid.

The Solar Investment Tax Credit (ITC) has undergone several updates in recent years. As of 2023, the ITC provides a 30% tax credit for the cost of installing new solar energy systems. This rate applies to systems installed in tax years 2022 through 2032​​​​. It's important to note that this tax credit can be claimed on federal income taxes for both residential and commercial projects​​. The credit was previously set at 26% for systems installed between 2020 through 2022​​. It is also worth mentioning that the credit rate will phase down to 26 percent for property placed in service in 2033 and 22 percent for property placed in service in 2034​​. This tax credit has been a significant incentive for individuals and businesses to invest in solar energy, reducing the initial cost of solar installation by a considerable margin and making solar projects more financially feasible.

Customers who purchase or finance their systems through a solar loan continue to be eligible for this incentive. The ITC has been a critical factor in the expansion of solar energy across the United States, enabling more businesses and homeowners to contribute to a cleaner and more sustainable energy future.

SREC stands for Solar Renewable Energy Certificate and it is a tradable certificate that represents all the clean energy benefits of electricity generated from a solar electric system. Each time a solar electric system generates 1,000 kilowatt-hours (1MWh) of electricity, an SREC is issued which can then be sold or traded through an on-line SREC broker, such as the Flett Exchange, SREC Trader or directly posted on the NJ Clean Energy Website. A grid-connected solar electricity system is eligible to collect SRECs on all energy produced by the system for a 15-year period. The price of an SREC can fluctuate based on the market’s supply and demand as determined by New Jersey’s Renewable Energy Portfolio Standard (RPS). In other words, the utility is required to produced renewable energy, and if they do not produce the amount defined in the RPS, they pay a fine. To avoid paying that fine, they can buy SRECs from solar energy producers to satisfy their requirements. Green Power Energy provides an SREC brokerage program for our customers which can greatly simplify the process by selling the SRECs produced by the solar electricity systems we install.

Going solar creates a great investment and revenue stream on your home and also has positive environmental implications. Going solar will provide a strong ROI for those looking for an investment, and can even provide monthly cash savings for those who finance. By going solar, you are creating clean power on your own property and reducing the need for electricity from power plants powered by fossil fuels. A solar array that produces 5,000 kWhrs annually will save the equivalent of 1.875 tons of coal from being burned each year.

In New Jersey, with SRECs, the Solar Tax Credit, and utility savings, the average return on investment for a residential solar array is just 6 years. For example, a $20,000, 6 kW Solar Array may produce 8,000 kWhrs of solar per year. The net cost of a $20,000 system after taxes is $14,000. After that, at .18 cents per kWhr from the utility, this system will produce $1,440 of electricity per year, and at $200 per SREC, produce $1,600 in SREC income. This results in a 5.5-year ROI. Commercial Solar will have an even quicker ROI due to the Depreciation schedule available to many building owners.