How Net Metering Works in New Jersey

Residents and businesses in New Jersey can enjoy reduced utility bills and increased sustainability by participating in net metering programs offered by their electrical company. These systems are a great way to make the most of a solar panel installation by returning surplus energy to the grid in exchange for credits on future electrical bills. 

Ready to see how net metering can benefit folks in New Jersey? Join us for a guide to this popular solar incentive program!

What is Net Metering?

Net energy metering, better known as net metering, is a billing arrangement between utility companies and consumers who produce electricity using renewable energy sources like wind and solar. When connected to the regional electrical grid, customer-generators can send excess energy back to their utility provider for other customers to use. In turn, those sending surplus electricity to the grid receive credits on their utility bills to offset future costs. 

In other words, utility companies repay customers for the difference between their energy consumption and generation. 

Net Metering Policy in New Jersey

According to state rules and regulations, all electrical providers under the New Jersey Board of Public Utilities must offer net metering opportunities to retail customers. Eligible participants must have renewable energy systems that do not exceed their estimated annual energy consumption. 

Aggregated net metering is available for public entities in New Jersey, including governmental facilities and public school systems. This arrangement allows such customers to generate renewable energy using multiple meters in order to meet their electricity needs. Additionally, a number of community solar programs give subscribers the opportunity to earn energy credits from offsite installations. 

How Solar Energy is Generated and Managed in New Jersey

Photovoltaic panels, or solar panels, absorb UV radiation, which displaces electrons in embedded silicon cells. In turn, these tiny semiconductors generate an electrical charge in the form of direct current (DC) energy. An inverter converts this DC energy into alternating current (AC) energy, which can be used to power homes and businesses. 

When a solar panel array is connected to a net metering program, any unused energy generated is logged by a bidirectional meter and then sent back to the grid through the same power lines used to receive electricity. The utility company uses the data collected from the interconnected meter to determine whether the customer used or generated more electricity. The difference is applied to each monthly bill based on kilowatt-hours (kWh). 

Billing and Credit System in New Jersey

Every month, utility companies balance each customer’s energy usage and generation. When a customer produces more power than they use, their account is credited for the difference to offset future energy consumption. At the end of each annual billing cycle, providers typically reimburse customers for excess power generation at a lower rate. 

Since net metering rules limit the size of solar energy systems to a user’s annual energy needs, it’s unlikely that people will see massive payouts at the end of the year, but the savings each month can add up to a significant dollar amount. 

Net metering customers in New Jersey can choose from three different reimbursement options for net excess generation (NEG). The most common is a monthly credit equal to the full retail rate for electricity with annual settlements at the avoided wholesale cost. Some customers opt for repayment based on real-time prices according to the PJM power pool real-time locational marginal pricing rate. Finally, customers may enter into individualized agreements for the sale and purchase of their surplus energy. 

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Economic and Environmental Benefits

As of 2023, New Jersey ranked 10th in the US for installed solar capacity, thanks in part to its generous net metering programs. Altogether, the state’s solar market is worth over $15 billion. Here are a few reasons customers are signing up for these systems: 

Reduced Electricity Costs

Utility savings are a key incentive for net metering customers. These programs allow consumers to offset their energy bills by earning credits for excess power sent to the grid, resulting in significant savings. Since electrical companies in New Jersey reimburse customer-generators at the full retail rate for monthly production, local solar panel installations may pay for themselves more quickly than in other states. 

Environmental Benefits

Net metering programs in New Jersey help reduce strain on the electrical grid and ensure that excess energy generated by customers doesn’t go to waste. Traditionally, surplus power that wasn’t used right away would be lost or stored in a solar battery, but these green energy initiatives help customers assist in broader goals to decrease reliance on fossil fuels and reduce carbon emissions. 

Property Value Increase

Homes with solar installations are more attractive to buyers due to the promise of reduced energy costs. According to the US Department of Energy, residential values increase by $20 for every $1 reduction in utility costs. If a solar panel array saves a homeowner $275 each year in electricity, it may increase their property value by $5,500. To sweeten the deal, New Jersey residents don’t have to pay additional property taxes on that value. 

Long-Term Financial Rewards

Over time, savings from net metering – along with other financial incentives – can cover the initial investment in solar panels, providing a long-term return on investment for homeowners and businesses. In fact, solar panel arrays typically pay for themselves within 6 to 10 years. 

Customers also enjoy a number of state and federal tax incentives and rebates that can keep cash in their pockets. 

Community Awareness and Education

As net metering becomes more widespread, it raises awareness about renewable energy and environmental sustainability, encouraging broader community involvement in clean energy solutions. The state has set aggressive goals for renewable energy, aiming to source 50% of the state’s electricity from renewable sources by 2030. Each net metering participant in New Jersey can help the community achieve these objectives. 

Solar Energy World Can Help You Save with New Jersey’s Net Metering Programs

Net metering programs in New Jersey allow homeowners and businesses to maximize savings and increase the return on their solar investment. These billing arrangements help solar producers ensure their excess electricity doesn’t go to waste, which ultimately supports state-wide renewable energy initiatives.
If you’re curious about installing solar for your home or business, Solar Energy World is here to help! Contact us today to get started with a free solar estimate!