The collapse of New Jersey’s solar energy credits market last year apparently convinced a lot of homeowners that installing a solar electricity system no longer made financial sense.
But the value of Solar Renewable Energy Credits — paid to the owner of an operating system for 15 years — has increased nearly 60 percent from its low last year.
Meanwhile, the cost of solar panels has plunged, and the federal government is still covering 30 percent of the cost of systems installed through 2016 with a tax credit.
The result: A pollution-free system that can provide all of a home’s electricity will pay for itself in eight or nine years — then keep paying for many more.
“If the system is fairly priced near $3.50 a kilowatt, and SRECs get back to about $200 as expected (from the current $130), the homeowner will earn their money back in five or six years,” said Bill Driscoll, owner of Ocean Solar LLC in Northfield.
Richmond Solar, of Margate, has just installed a solar power system on the roof of Kristin Levin’s energy-efficient home in Margate.
Levin said the system should provide half or more of the power needed by the all-electric home. Electric bills through the summer air-conditioning season have been only about $100 a month.
She said there is room on the roof to add more solar panels if she wants them, but a higher priority is switching to hybrid electric cars to complete their environmentally friendly lifestyle.
Utility companies, and their customers, are required by the state to use green energy, which they can do by buying SRECs. In meeting that requirement, the price of the credits was bid up past $600 in 2008.
But those high prices prompted more homeowners and businesses to install solar energy so they could earn and sell SRECs.
In 2011 alone, 260 megawatts of solar power was added to New Jersey, according to the state Board of Public Utilities. The next year, a utility could buy an SREC for as little as $75, local solar companies said.
As the value of the solar energy credit fell, so did installations, the companies said.
Driscoll said only 11 megawatts of solar power were installed in June in the state, a rate about half of that in 2011.
“That downward trend in installations will raise SREC prices,” he said. “Utilities still have to purchase renewable energy.”
In fact, Gov. Chris Christie doubled the amount of electricity that must come from renewables going forward. “I think $200 is a very conservative and fair number for SRECs in the next five years,” said Driscoll, of Northfield.
While the value of incentives to install solar is rebounding, the cost of the materials is plunging as manufacturing companies around the world compete for the business.
Bob MaDan, director of operations for one of the largest solar firms in the region, Brite Idea Energy in Egg Harbor Township, said customers have saved 30 percent to 40 percent on materials just in the past year or so.
MaDan said the maturing of New Jersey’s solar industry — among the top in the nation — has benefited consumers and established companies such as his.
Homeowners have more options now for financing solar, with a variety of leasing arrangements, some of which require no down payment at all.
MaDan, of Mays Landing, said Brite Idea has seen installations start to increase and will be better positioned as SREC prices rise and the economy recovers.
“Over the past couple of years, a lot of companies have gone under. It shook them out of the mix,” he said. “If you’re left standing, you’re doing well. We feel we have only a few competitors in this area.”
Samantha Danaher, a partner in Richmond Solar and director of operations there, said an appealing arrangement for customers now is leasing a solar energy system instead of paying the electric company.
Unlike the rising electric bill, the lease payment stays the same for 20 years and the homeowner gets to keep all of the SRECs generated for 15 years, she said.
A couple of years ago, there was a concern that Atlantic City Electric’s grid might be overloaded by the number of solar energy systems being connected to it, but Danaher said that concern has faded as the utility has upgraded facilities, and it isn’t an issue for residential projects.
“We’ve haven’t been refused for a single interconnection,” she said.
MaDan said the main challenge for the solar industry in New Jersey is still the adverse publicity from last year’s plunge in SREC prices.
“We’re fighting that negative perception everywhere. We’ve got to get it turned around, so people can still see that it’s a great deal for them,” he said.
For the homeowner, the main challenge isn’t incentives, financing or connection issues, but something more basic that always has been at the core of solar energy: Does the house have a suitable surface for installing solar panels?
“A south-facing roof is still the most important thing. The Earth is still rotating the same direction,” Danaher said with a laugh.
Contact Kevin Post: