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FAQ (Frequently Asked Questions)

How do solar program participants justify the cost of installing a solar system?
Program participants rely on a combination of electricity savings, selling SRECs, depreciation, and federal tax credits.

What is "Net Metering"?
Electric Distribution Companies and third party electric suppliers are required to credit customers at retail rate for each excess kilowatt-hour produced and back fed to the grid for later use. Should excess generation accrue at the end of an annual period, the customer is compensated for any remaining credits at the wholesale power rate by the Electric Distribution Company or their third party electric supplier.

What is a Solar Renewable Energy Certificate (SREC)?
SREC stands for "Solar Renewable Energy Certificate" and is a type of clean energy credit in the form of a tradeable certificate useful for demonstrating compliance in state RPS markets. For example, with New Jersey's rules an SREC is issued once a solar system has generated 1,000 kWh (roughly $150 in electricity). The SREC represents all the clean energy benefits of electricity generated from a solar electric system. SRECs can be sold or traded separately from the power, thus providing solar system owners a source of revenue to help offset the cost of installation.

What are Federal Tax Credits?
Solar electric systems qualify for a 30% federal tax credit for tax paying entities. 30% of the system cost is paid back through federal tax credits to the system owner. These credits may be used in place of cash payments to the federal government for tax purposes.

What is Accelerated Depreciation?
Commercial customers enjoy the benefit of depreciating 85% of the gross system cost over a 5 year period called MACRS (Modified Accelerated Cost Recovery System). Special bonus depreciation in the amount of 50% is additionally deductible in the first year for all projects completed in 2013. The depreciation schedule is as follows: Year 1-60%, Year 2-16%, Year 3-9.6%, Year 4-5.76%, Year 5-5.76%, Year 6-2.88%.

Who buys SRECs?
Solar system owners can choose to sell their SRECs to a broker, aggregator, or Load Serving Entity (LSE), ie the electric suppliers and providers, who must buy SRECs to meet their RPS obligations.

Will I still be connected to the electric grid?
Yes. Systems must be connected to the electric grid to be eligible for SRECs. Look at the grid as a giant battery. During the day if your system is producing more than you are consuming, your electric meter will spin backwards, earning a credit from the electric company. At times when your system is producing less than your consumption, your meter will spin forward.

Will my system work if the electric grid is down?
No, Solar is not a backup system. To ensure safety for utility workers, your solar system will shut down during utility interruptions and automatically turn back on when electricity is restored.

What maintenance is required?
Your solar energy system has no moving parts, so it requires very little maintenance. Most systems, however, require remote monitoring and occasional inspections.

Do my solar panels produce power when the sun isn’t shining?
Since the amount of power your solar system generates is a direct result of sunlight, it will produce slightly less energy when the weather is cloudy. Your system will not produce any energy at night. You won’t experience any power interruptions. To find the answers to more frequently asked questions, visit our FAQ section.

What’s the difference between a solar lease and a solar PPA?
While the terms “solar lease” and “solar PPA” are very similar in practice, there is a difference between the two. With a solar lease, you agree to pay a fixed monthly “rent” or lease payment, which is calculated using the estimated amount of electricity the system will produce, in exchange for the right to use the solar energy system. With a solar PPA, instead of paying to “rent” the solar panel system, you agree to purchase the power generated by the system at a set per-kWh price.

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