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New Jersey Solar Financing Options: Which Is Better for You?

Many people recognize the benefits of investing in solar energy -- and when it comes to funding your solar system installation, several options are available to NJ residents and businesses. Some of the most popular methods are paying cash, financing through a solar loan, or a solar lease.

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Most Common Solar Financing Options for New Jersey Homeowners

Ownership Solar Loans in NJ Solar Leases in NJ
Price $13,750 - $9,625 after claiming the federal tax credit $0 to install; financing available from Fibank. Repayments dependent on credit score and contractors $0 to install
ROI Average ROI in 5 years Reduce your electricity bill Opportunity to eventually buy system
Savings Protect against utility rate increases. Protect against utility rate increases. Protect against utility rate increases.
Tax incentives Receive NJ solar credits and tax rebates 30% federal income tax incentive. Receive NJ solar credits and tax rebates 30% federal income tax incentive. Only available when the system is purchased.
Benefits Increased property value. Sell energy back to the grid. Maintain power through utility outages Increased property value. Sell energy back to the grid. Maintain power through utility outages Maintain power through utility outages

Cash Purchase

A cash purchase will maximize your access to solar savings. Think of it this way: If your solar panel system produces 100% of your electricity, you've paid for roughly ten years of power upfront, safeguarding against rising energy costs.

New Jersey also offers several solar incentives, including the Federal Tax Credit, the New Jersey Solar Renewable Energy Certificate (SREC) program, and the New Jersey Solar Rebate Program. Respectively, they provide a 30% tax credit on the system's cost, allowing you to sell excess power back to the grid or utilize the credits to pay for your electricity bill.

Installing a solar system may also increase the value of your home, making it more attractive to potential buyers — a significant benefit for homeowners looking to sell their homes.

The only downside of buying a solar system with cash is the high upfront cost. Depending on the type and size of the system, it can exceed $25,000 before applying incentives. Other costs include obtaining permits or hiring a professional installer, which can add to the overall expense.

Solar Loan

The second way to access a solar power system is via a solar loan. This financing option is ideal as there is no up-front payment, and the monthly payment typically costs less than your monthly electric bill if you have good credit.

With a solar loan, you are effectively paying a fixed monthly fee for your solar panel system with the potential to reduce your electricity bill instead. Various types of loans are available, including unsecured loans, which, as the name implies, don't require any collateral.

Many energy-efficient and home improvement loans exist, along with tax-deductive options. Those with the best credit histories can attain even lower rates of interest. In contrast to leasing, a solar loan gives customers ownership benefits such as access to all tax credits and rebates.

However, owning your solar panel system does mean that you’ll be the one who has to fix it if anything breaks. That’s why getting a system with an extended warranty is imperative.  

Another valid option is using the equity in your home to fund your installation through a home equity loan or home equity line of credit (HELOC). These loans are secured against your home, similar to refinancing, but require you to have plenty of equity in your house to borrow against. They typically have an interest rate that does not vary but are available through a limited number of lenders.

With this in mind, selecting a loan amount close to the required total cost is essential. The loan should have a competitive interest rate and credit term. Although solar loans in NJ may have some beneficial aspects, you must consider the interest. Any loan is going to include some finance charges, which will increase the overall cost of your system and impact your return.

Solar Lease & PPA

Power purchase agreements (PPAs) were instrumental in the development of the solar industry in the past, even though their popularity has diminished in recent years. Both solar leases and PPAs involve third-party ownership (TPO), where the third-party owner installs solar panels on your property and then sells you the electricity produced at a set rate, according to the U.S. Department of Energy.

A lease or solar PPA in N.J. typically locks in a rate for electricity for the next 25 years, generally 10-30% lower than what you currently pay. Historically, leases and PPAs have included an escalator to payments, which means you have to pay more for solar energy every year. Nevertheless, more recently, a trend has been to lock in a fixed rate for the contract term.

Furthermore, the third-party owner is tasked with monitoring the system and making necessary repairs, thus caring for the solar panel system. Still, since you do not own the solar setup, you won't be able to take advantage of the associated financial incentives and solar credits in N.J.

Additionally, while properties with solar have historically been sold for 3-4% more, this is not true in the case of leases or PPAs since the legal owner of the panels and equipment is not the homeowner.

A solar lease is generally better than a loan or cash payment if you plan to stay in the same location for at least the lease term. Since loans involve an interest rate and cash payments involve a much larger upfront payment, leasing can often provide the most cost-effective way to obtain solar panels.

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Which NJ Solar Financing Option Is Right for Me?

Not sure if you should purchase it up front, take out a loan, or lease it? Here are a few considerations.

If you want to maximize the amount saved through solar energy, a cash purchase is the best option. Cash purchasers can use the Solar Investment Tax Credit and various rebates, providing a larger investment incentive, without incurring any additional upfront costs outside of the solar equipment and installation.

If you can’t or don’t want to pay the full amount of cash upfront, but still wish to save on electricity, help the environment, and reap the benefits of a solar panel system, opt for a solar loan. While it won’t give you the same return as an outright cash purchase, you’ll still insulate yourself from increasing utility costs, gain access to all the incentives, and become energy independent.

A solar lease or solar PPA in New Jersey is perfect for those looking to reduce their electricity bill and/or lock it in for a certain period, without having to maintain and monitor the system themselves.


Looking to save energy and money while reducing your carbon footprint? Consider Solar ME for all your solar needs in New Jersey. With over ten years of experience in solar installation and 144 five-star ratings from customers, Solar ME is your trusted source for solar panel installation.

Our solar experts are available to answer questions and provide a free, no-obligation proposal to help you make the best decision for your family and budget. Contact us today at (844) 976-5276 or fill out a Contact Us form to chat with an experienced solar installer.