New Jersey Solar Energy System Payback in 1.5 Years

Fifteen years ago, homeowners calculating the payoff period of a solarphotovoltaic energy system were looking at something like a mortgage;that is, roughly 30 years. More recently, with solar prices fallingfrom their 1990 high, paybacks can be estimated closer to 10 or 15years.

But a recent survey by the Global Solar Center, a groupthat networks solar buyers with sellers, shows that payback times havefallen dramatically in some very unlikely places, and the figures arebeing hotly disputed by solar energy experts across the Internet.

InNew Jersey, for example, the payback period has reportedly fallen to1.5 years. Part of this is no doubt due to the falling cost of solarphotovoltaic systems, which now average about $2.40 per watt, or halflast year’s cost.

The rest is due to government initiativeswhich, in the Garden State, offer both a property tax and sales taxexemption apply, as well as state grant and loan programs, one throughregional utility PSE&G (Public Service Electric and Gas), and asolar renewable energy certificate (SREC) program that pays $1.55 perwatt.

This translates, during the 2009-2010 year, to about $593per megawatt-hour, a return that is well in excess of the retail priceof electricity from regional utilities. New Jersey also has the bestnet metering policies, with no cap on enrollment and systems up to 2megawatts eligible.

Second in line in the survey wasPennsylvania, closely followed by New York, Delaware, and Colorado, allof which had paybacks between three and six years. Interestinglyenough, none of these locales is particularly high on the solarinsolation scale. New Jersey, New York and Delaware all fall at about3.0 (on a scale from 2 to 9), with Pennsylvania averaging less than 3.0.

Nextwas sunny California, where insolation values run the gamut from 3.0 to6.5 in the Mojave Desert. Maryland, Massachusetts and Wisconsin alsotied with California, though none of them has solar insolation valuesabove 3.0. All of these states had, according to the survey, paybackstargeted at 7 years.

Keeping in mind that the federal governmentnow offers an investment tax credit of 30 percent under the 2005 EnergyPolicy Act – upgraded and enhanced by the recent American Recovery andReinvestment Act – it’s still hard to believe these figures.

Onefigure that isn’t hard to believe is a recent assessment by a solaraggregator that notes utility incentives are bringing the cost of solarenergy down to about 10 or 15 cents per kilowatt hour, which suggests apayback time of 5 to 7 years.

And a 2005 European study byUtrecht University and The Energy Research Centre of the Netherlandsshowed typical solar energy payback times of between 1.7 and 2.7 years.So perhaps Global Solar Center’s figures aren’t too far from reality. 

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