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The federal 25D tax credit is dead. With $0 credit for cash/loan buyers, PPA and lease are now the dominant financing options in NJ. Here are the real numbers for all 5 financing paths.
Important: The 30% federal solar tax credit (Section 25D) expired December 31, 2025.
Cash and loan buyers receive $0 in federal credits. PPA and lease still access 30% via Section 48/48E because the system owner (not the homeowner) claims the credit.
With the 25D tax credit dead, cash and loan buyers get no federal credit. But PPA and lease access Section 48 (30% ITC) through the third-party system owner. Cash still offers the best 25-year value (~$50K+) but requires $22-33K upfront. PPA/lease provide immediate savings with no upfront cost. Community solar is ideal for renters and shaded roofs.
Best 25-Year ROI
$50K+
Cash purchase
System Cost
$22-33K
9kW system
SREC-II Income
~$900/yr
Owners only
PPA Savings
10-20%
Below retail rate
Community Solar
10-40%
Bill savings
Best long-term ROI
Paying cash means you own the system from day 1. No monthly payments, no interest, and you keep all SREC-II income. The downside: you need $22,000-$33,000 upfront and you get no federal tax credit (25D expired).
Despite no federal credit, cash is still king for 25-year ROI. SREC-II income ($85.90/MWh for 15 years), 1:1 net metering, property tax exemption, and sales tax exemption combine to pay back the investment in 7-9 years.
Best for: Homeowners with capital who plan to stay 10+ years.
Ownership without upfront cost
A solar loan gives you system ownership with $0 down payment. Same economics as cash — SREC-II, net metering, tax exemptions — but interest adds 15-25% to total cost. Typical monthly payments run $200-$350.
Without the 25D credit to offset upfront costs, solar loans are less attractive than in prior years. However, if you want ownership and do not have cash available, it remains a solid option. Home equity line of credit (HELOC) options may offer lower rates.
Best for: Homeowners who want ownership without upfront capital.
Immediate savings, no risk
With a PPA, a third-party company installs, owns, and maintains solar panels on your roof. You pay for the electricity generated at a rate 10-20% below your utility rate. No upfront cost. No maintenance. The company claims Section 48 (30% ITC) and SREC-II income.
PPAs became far more competitive after 25D expired. Before, cash buyers got a 30% credit, making ownership clearly superior. Now that cash/loan buyers get $0, the PPA provider's Section 48 advantage closes the gap significantly.
Utility rate
~$0.18/kWh (NJ average)
PPA rate
~$0.14-0.16/kWh (10-20% below retail)
Your savings
~$0.02-0.04/kWh (~$250-500/yr)
Note: Most PPAs have a 1-3% annual rate escalator. Utility rates typically rise 3-5% annually, so the PPA generally stays below.
Best for: Homeowners wanting immediate savings with no risk or investment.
Predictable monthly payments
A solar lease works like a PPA but with a fixed monthly payment ($100-$180) instead of a per-kWh rate. The leasing company owns the system, claims Section 48, and handles maintenance. Your payment does not change based on production — sunny and cloudy months cost the same.
Leases are ideal for people who want predictable energy bills. The tradeoff: slightly less total savings than PPA over 25 years because you pay the same even when the system produces less (winter, cloudy days).
Best for: Homeowners who want predictable bills with no surprises.
No installation, no roof required
Community solar lets you subscribe to a shared solar project without installing anything on your property. You receive credits on your electricity bill — typically 10-40% savings. Ideal for renters, condo owners, shaded roofs, or anyone who cannot (or does not want to) install panels.
New Jersey's CSEP (Community Solar Energy Pilot) program has over 750 MW of capacity with a 51% mandate for low- and moderate-income (LMI) households. No long-term lock-in — most allow cancellation with 30-90 days notice.
Subscribe to a local shared solar project
The project generates electricity and feeds the grid
You receive credits on your electricity bill
Save 10-40% on your monthly bill
Best for: Renters, condos, shaded roofs, or anyone who cannot install panels.
All 5 solar financing paths side by side. All numbers reflect post-ITC NJ reality in 2026 for a typical 9kW system.
| Feature | Cash | Loan | PPA | Lease | Community |
|---|---|---|---|---|---|
| Upfront Cost | $22-33K | $0 | $0 | $0 | $0 |
| Monthly Cost | $0 | $200-350 | Per kWh | $100-180 fixed | Credit on bill |
| Federal ITC | $0 (25D dead) | $0 (25D dead) | 30% (Sec 48) | 30% (Sec 48) | Varies |
| You Own System | Yes | Yes | No | No | No |
| SREC-II Income | Yes (~$900/yr) | Yes (~$900/yr) | No (owner gets) | No (owner gets) | No |
| NJ Tax Exemptions | Yes (both) | Yes (both) | Yes (owner) | Yes (owner) | N/A |
| Net Metering | 1:1 retail | 1:1 retail | 1:1 (owner) | 1:1 (owner) | Bill credit |
| 25-Year Savings | $50K+ | $35-45K | $15-25K | $12-20K | $8-15K |
| Payback Period | 7-9 yr | 8-11 yr | Immediate | Immediate | Immediate |
| Contract Length | None | 10-25 yr | 20-25 yr | 20-25 yr | Flexible |
| Maintenance | You handle | You handle | Owner handles | Owner handles | None needed |
| Best For | Long-term investors | Ownership seekers | Risk-averse | Predictability | Non-owners |
Note: 25-year savings assume NJ electricity rates rising 3-5% annually. SREC-II at $85.90/MWh for 15 years. Actual numbers vary by system size, roof orientation, and electricity usage.
Before 2026, the decision was simple: buy with cash or loan, get the 30% tax credit (25D), and enjoy the best ROI. Ownership was clearly superior.
Now that 25D is dead, cash/loan buyers get $0 federal credit. But Section 48/48E (the commercial ITC) is still alive. Who claims it? The system owner — which in a PPA or lease is the financing company, NOT you.
This means the PPA/lease company gets 30% off the system cost from the federal government. They pass that savings to you through lower rates. The result: PPA and lease are far more competitive in 2026 than they ever were before.
Before 2026 (25D Active)
Cash: $26,550 - $7,965 (30%) = $18,585 net cost
PPA: ~15% rate savings
Cash won by a mile
2026 (25D Dead)
Cash: $26,550 - $0 = $26,550 net cost
PPA: Owner gets 30% (Sec 48) = lower rates for you
Gap closed dramatically
Section 48/48E is available for projects beginning construction before July 4, 2026.
Regardless of how you finance your solar, these New Jersey advantages make solar work — even without the federal tax credit.
SREC-II
$85.90/MWh
15 years of guaranteed income. ~$900/yr for a 9kW system. Owners only (cash/loan).
Net Metering
1:1
Full retail rate credit for exported electricity. Available with PSE&G, JCP&L, and ACE.
Property Tax Exemption
100%
Solar panels increase your home value but do NOT increase your property tax. Huge in NJ ($9,500/yr avg property tax).
Sales Tax Exemption
6.625%
No sales tax on solar equipment. Saves ~$1,760 on a typical system.
Community Solar CSEP
750+ MW
NJ program mandates 51% for LMI households. 10-40% bill savings with no installation.
Federal Tax Credit
$0
25D expired 12/31/2025. Cash/loan buyers get $0. PPA/lease access 30% via Sec 48.
Use this decision tree to find your best solar financing path in NJ.
No → Community Solar (CSEP). No installation, 10-40% bill savings, easy to cancel.
Yes → Next question
Yes → Cash Purchase. Best 25-year ROI ($50K+). You keep SREC-II income.
No → Next question
Yes → Solar Loan. $0 down, system ownership, SREC-II is yours. Payments $200-350/mo.
No → Next question
Fixed payments → Solar Lease. Fixed $100-180/mo payment. Simple and predictable.
Per-kWh → PPA. Pay only for what it produces. 10-20% below retail rate.
No. The residential solar tax credit (Section 25D) expired December 31, 2025 under the OBBBA. Homeowners who buy solar with cash or a loan receive $0 in federal tax credits. However, if you go with a PPA or lease, the third-party system owner claims the 30% commercial ITC (Section 48/48E), which lowers your rate.
It depends on your priorities. Cash purchase offers the highest 25-year ROI ($50,000+) but requires $22,000-$33,000 upfront. PPA and lease are now the most popular options because the third-party owner claims Section 48 and passes savings to you, giving you immediate savings with $0 down.
A third-party company installs, owns, and maintains solar panels on your roof. You pay them for the electricity generated at a rate 10-20% below your utility rate. The company claims the 30% Section 48 ITC and keeps the SREC-II income. Typical contracts are 20-25 years with a 1-3% annual rate escalator.
A lease charges a fixed monthly payment ($100-180) regardless of how much electricity the system produces. A PPA charges per kWh generated, so your payment varies by season. Both have $0 down, and in both cases the third-party owner claims Section 48. Leases offer more predictability; PPAs can save more in sunny months.
SREC-II (Successor Solar Incentive) pays $85.90/MWh for 15 years. If you own the system (cash or loan), you keep this income — about $900/year for a 9kW system. If a third party owns the system (PPA or lease), they keep the SREC-II income. This is a major financial advantage of ownership.
A typical 9kW residential system costs $22,000-$33,000 in New Jersey (about $2.75-$3.15/W). With no federal tax credit for homeowner purchases, the full cost must be financed or paid upfront. NJ still offers sales tax exemption (6.625%) and 100% property tax exemption.
Yes, but the economics shifted. Without the 25D credit, monthly loan payments are higher relative to savings. A typical solar loan in NJ runs $200-$350/month with interest adding 15-25% to total cost. However, you still own the system, keep SREC-II income (~$900/yr), and benefit from net metering and tax exemptions. 25-year savings are still $35,000-$45,000.
New Jersey offers two tax exemptions for solar: 100% sales tax exemption (6.625% — saving about $1,760 on a typical system) and 100% property tax exemption (solar panels increase home value but the added value is not taxed). With NJ having the highest property taxes in the US, the property tax exemption is especially valuable.
Yes, through community solar (CSEP program). You subscribe to a shared solar project and receive 10-40% savings on your electricity bill as a credit. No installation on your property, no equipment to maintain, and you can typically cancel with 30-90 days notice. Over 750 MW of community solar capacity is available in NJ.
Net metering still applies — excess solar is credited at 1:1 retail rate. However, with a PPA or lease, the system owner receives the net metering credit and factors it into the rate they charge you. You benefit indirectly through a lower per-kWh rate or fixed payment, but you do not see the net metering credit directly on your bill.
You have three options: transfer the contract to the buyer (most common, requires buyer qualification), buy out the remaining contract, or have the system removed (usually at your cost). Most buyers are willing to assume the contract since it provides immediate electricity savings. Your solar company can facilitate the transfer.
Before 2026, cash and loan buyers received a 30% federal tax credit, making ownership clearly superior. Now that 25D is dead, homeowner purchases get $0 in federal credits. But PPA and lease companies still claim 30% under Section 48/48E because they own the system. This advantage gets passed to you as lower rates, making PPA and lease far more competitive than before.
NuWatt Energy helps you compare all financing options — cash, loan, PPA, lease, and community solar. Get personalized numbers for your situation.
Questions? Call (888) 555-0199 — NJ solar experts available Mon-Fri 9am-6pm.