As soon as you convert to a solar electric system, you save money by generating your own power instead of buying power from a utility.  With skyrocketing electricity prices, you will save surprising amounts by owning your solar electric system.  
 
Commercial Federal Solar Incentives  
The federal government encourages solar electricity by providing the following incentives:
 
• 30% Energy Investment Tax Credit 
• 5 year Accelerated Depreciation

Tax Benefits

•Carryback/Carryforward Provisions
 
A commercial solar tax credit that a taxpayer cannot use in any year can be carried back one year. Any remaining unused credit can be carried forward 20 years.
 
• Business energy credits are claimed by attaching Form 3468 to one's tax return.
http://www.irs.gov/pub/irs-pdf/f3468.pdf
 
• General Business credits are claimed by attached Form 3800.
http://www.irs.gov/pub/irs-pdf/f3800.pdf
 
Accelerated Depreciation
 
•  For solar property placed in service after 1986, the current Modified Accelerated Cost-Recovery System (MACRS) property class is as follows.
 
Year     Depreciation Rate for Recovery Period
 
 1            20.00%
 
 2            32.00%
 
 3            19.20%
 
 4            11.52%
 
 5            11.52%
 
 6            5.76%
 
Depreciation Basis Calculation
 
For the purpose of calculating depreciation on a commercial solar system, the tax depreciation basis that the taxpayer uses is 85% of the solar equipment cost.

State Incentives

While incentives vary from state to state, programs in the northeast are typically rebate-based, production-based or both.  Incentive programs customarily attempt to provide you with a rate of return equal to or greater than 12% per annum cash-on-cash.

All states leverage federal incentives.  
 
How Rebate-Based Incentives Work
 
Those states that provide rebates or grants provide a "dollars per watt" rebate check after your system is installed.  For example, if you install a 10 kW system under a $3/W rebate program, you will receive a check from the state for $30,000.  Rather than require you to pay the full amount for your system then wait for your refund check, we deduct the rebate from the amount you owe us and you simply assign the rebate to us.  We then whatever length of time it takes for the state to make the refund to us.
 
How Production-Based Incentives Work
 
Some states use production-based incentives to reward the solar electric system owner for producing as much electricity as possible.  This type of incentive is tied to how much energy you actually produce in units of MWh (which equals 1,000 kWh).  A common production-based incentive used on the East Coast is Solar Renewable Energy Credits.  For example, in New Jersey, for every MWh generated by your system, the State provides you with one "credit", called an SREC.  You can sell SREC to a utility that needs to meet a legal requirement called Renewable Portfolio Standard requirements.  SRECs currently sell for approximately $475 each.

New Jersey Solar Incentives

Imagine never having to worry about rising costs of electricity.  New Jersey wants you to 'go solar' and they have created the right incentives for you to do so. 

Renewable Portfolio Standard

New Jersey's renewable portfolio standard (RPS) is one of the most aggressive in the United States. All energy suppliers (utilities) are required to obtain 22.5% of their power from renewables by 2021.  A total of 2.12% is required to come from energy generated by solar power systems.

As a result, the energy produced by your solar electric system has additional value because the utilities need it to meet these standards.  This creates a market for Solar Renewable Energy Certificates (SRECs), also know as "Green Tags."  To a system owner, this is worth about $250.00 per year per kilowatt-hour generated.

The New Jersey Clean Energy Program Summary

New Jersey's 1999 electric restructuring legislation provides for investments in energy efficiency and renewable energy through a "Societal Benefits Charge" (SBC) collected from all customers of electric public utilities. In March 2001, the New Jersey Board of Public Utilities (BPU) approved funding for renewable-energy programs, including a customer-sited renewables rebate program for homes, businesses, institutions and non-profit facilities.
Solar systems must include at least a five-year, all-inclusive warranty. Eligible solar systems should be sized to produce no more than 100% of the historical or expected (if new construction) amount of electricity consumed at a system's site. Financial incentives for solar systems larger than 1 megawatt (MW) are available through the state's Renewable Energy Project Grants and Financing Program.

Residential PV Rebates

PV systems (solar electric systems) are eligible for incentives paid incrementally, based on the size of the solar system installed (DC rating).  Note that single-family rebate applications are limited to the first 10 kW of project capacity. The rebate is reduced by 15% for owner-installed solar systems.

The New Jersey Clean Energy Program web site provides all application materials, complete funding schedule and information about current incentive levels. Visit the NJCEP website for the latest statistics on the number and types of projects supported through this incentive program.

Solar Renewable Energy Certificates

Solar Renewable Energy Certificates provide an additional income stream beyond your electricity savings.