Everything You Need to Know About the PSEG Solar Loan Program
PSE&G solar loan program is available to New Jersey residents. It enables you to pay off a part of your loan by giving the rights to your SRECs (Solar Renewable Energy Credits) to PSE&G, who then sell it in your name. This means that your solar loan can be paid off much faster and that you get to enjoy the benefits of renewable energy and lower electricity bills right now. Let’s read on and learn about the PSE&G solar loans.
What is the PSE&G Solar Loan Program?
PSE&G solar loan is a program that should increase the total solar capacity in New Jersey. The program finances 40-60% of any new solar capacity and helps the transition to clean energy. It is organized by the New Jersey Public Service Electric and Gas Company (PSE&G) and has been an ongoing program from 2008 onwards. Applications are accepted every second month until the quota for that application period is met.
Under this solar loan, any New Jersey resident can submit loan applications and get 40-60% of their installation costs covered. The total amount that is available for loans is $105 million. The remaining amount is paid by the owner of the system itself, but the new solar owner may apply for other solar incentives, such as the Federal Solar Investment Tax Credit.
Program Overview
The PSE&G solar program was carried out in four stages. Each of these has a certain time span of possible applications, allowed budget, and the target solar capacity. Under each of these subprograms, a part of your solar investment is covered by the New Jersey PSE&G program, while you can pay off the remainder of the cost either through another type of financing or through cash payments. The system output is calculated via your meter, so having access to net metering is a prerequisite. There is also a $20/kWh of installed power application fee.
| Program Name | Public Service Electric & Gas Company Solar Loan |
|---|---|
| Eligible Clean Energy Technologies | Solar PV (Photovoltaic) Panels |
| Website: | http://www.pseg.com/home/save/solar/index.jsp |
| Utility in Charge: | Public Service Electric & Gas Company |
| Program 1 Name: | Solar Loan I |
| Program 1 Budget: | $105 million - 30 MW of capacity |
| Program 2 Name: | Solar Loan II |
| Program 2 Budget: | $140 million - 51 MW of capacity |
| Program 3 Name: | Solar Loan III |
| Program 3 Budget: | $100 million - 97.5 MW capacity |
| Program 4 Name: | PSE&G Solar 4 All |
| Program 4 Budget: | $515 million |
| Eligible Customers: | Residential, Commercial, Industrial and Public Customers |
| Estimated Payoff Time: | ~10 years |
Solar Renewable Energy Certificates (SREC)
If you would like to start producing clean energy, you should know about the SRECs or Solar Renewable Energy Certificates. These certificates are at the core of the PSE&G program and, as such, are essential in calculating your solar investment payoff time and how profitable your investment will be. First things first, what is an SREC?
An SREC is a certificate that you get issued for every 1,000 kWh or 1 MW your solar system produces. SRECs can be sold at an SREC market, and you can make some extra money off those. However, if you apply for the PSE&G financing, your SRECs will belong to that company, and it will be able to sell them at the market price or the guaranteed floor price. This means that even if the SREC price falls down, as higher SREC prices are not guaranteed, you will still be given your guaranteed floor price.
After this payoff period, obtaining SRECs means keeping them as well. You will be able to sell them on any SREC service you would like, such as SREC Trade. As a solar array can produce SRECs for at least 15 years, and it takes around ten years to pay off your solar investment, you will be making some extra cash for at least five years.
Do-It-Yourself SREC Service
It is important to note that the floor price given to you by the PSE&G is guaranteed even if the market value of a single SREC is lower than the floor price. With this security in mind, it is a bit easier to apply for the loan service. However, after this period, there are two options for selling your SRECs: by yourself or through the Flett REC-Manager service.
If you decide to sell your SRECs by yourself, you will be able to do that at the time and with the pricing that is most convenient for you. This means you will be able to get some extra cash if you time the selling the right way. To do that, you need to:
- Apply for a Flett Exchange account,
- Create a GATS account,
- Submit Schedule A (sent to you by Public Service Electric and Gas Company),
- Enter meter readings from your net meter every month,
- Allow seven days for system processing,
- Transfer your SRECs from your GATS to the Flett Exchange, LLC, and
- Wait for the payment (3 business days after transfer).
Flett REC-Manager SREC Service:
If you would like a professional to manage your SRECs, and get a higher price for your SRECs after the repayment of the loan, you should understand that this is a high-quality service. You will get the handling of your GTA account, and your meter readings will be entered every month. Your SRECs will be sold as blocks, conjoined with other SRECs (therefore the higher price). The repayment is carried out in the middle of each month.
To be eligible for this automated type of service, you should:
- Apply for the Flett REC-Manager Account,
- Fill out and send Schedule A sent by Flett Exchange, LLC, not the one sent by PSE&G,
- Wait for the Flett Exchange to reach out to you.
Incentives
Solar incentives are all the hype now. Solar systems with a good inverter meter can cost a lot, so many New Jersey residents are hesitant to join the process and take advantage of the incentives. Under the PSE&G, there are two types of incentives: residential and commercial.
Residential
The current program includes residential loans. These loans are given out with a loan term of 19 years and interest of 11,179%. Although the interest rate may seem high, it is important to note that the short payoff period still means you will be able to pay it off completely and make some cash aside in the final few years of your PV system performance.
Commercial
Commercial or industrial customers can expect to see the same loan contract terms as residential customers. The loan term is ten years with an interest rate of 11.179%. Good standing companies which are future-oriented can expect their PV systems to pay off in the same period of time. An important note on the loans is that they are available only for systems less than 5.000 kWh DC connected to the utility network.
FAQs
How does the Solar Tax Credit work if I owe taxes?
Your solar tax credit will reduce the amount owed, but not past $0. If you have any solar tax credit (or solar investment tax credit) remaining on your balance, you can roll it over to the next year. If you owe significantly less in taxes than your solar credit allows you to deduct, you can keep rolling the credits over for up to ten years. This is applicable to the Federal Solar Investment Tax Credit (Federal ITC).
How can I get out of a solar loan?
You can get out of your solar loan with no fees to be paid if you decide to opt out up to three days after receiving the signed loan contract copy. In other cases, you may have to pay out the loan to actually get out of it. If you would like to pay out your solar loan faster, you should contact your local bank and check with them which terms apply to faster payoff, as some banks may charge additional fees for reprocessing your loan request.
How much does a solar panel loan cost?
If you would like to install solar panels and finance them through a loan, there are a few things to know beforehand. Loan terms are usually 24 to 84 months, but depending on the bank, the state, and the solar system you would like to install, other terms may be applicable. The APR, in general, ranges from 5.94% to 35.9%. If you want to finance solar panels through a personal loan, you will be subject to the origination fee, anywhere from 2.9% to 8%.
Do banks finance solar?
Yes, banks finance solar. You can opt for a personal loan or a specific solar loan. For more information, you should contact your bank. Do not forget to also contact your municipality office and see what solar incentives your state or city offers to new solar owners. You may also find specialized financial institutions that will cover a part of your solar installation cost.
Conclusion
The PSE&G loan program is the way to go if you live in New Jersey. The generous 40-60% back seems amazing, and the solar owners who do not have to pay the utility bill anymore say that they should have done it sooner. You, too, can take advantage of the program and secure an energy-independent future for both you and your family.
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