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What is the PSE&G Solar Loan Program? PSE&G has committed to provide approximately $105 million toward the financing of solar electric system installations over the next two years. The Solar Loan Program will allow solar systems to be installed on customers’ premises “behind the meter” using PSE&G as an essential source of capital. The PSE&G loan can cover about 40-60% of the cost of the system. (Back to Top)
Why did PSE&G initiate the Solar Loan Program? New Jersey’s draft Energy Master Plan goals seek to reduce projected energy use by 20% by 2020 and meet 20% of the State’s electricity needs with Class 1 renewable energy sources by 2020. PSE&G is committed to doing our part to save energy, slow global warming, and reduce our dependence on foreign oil. Solar energy is a clean, renewable source of electricity. However, due to the high upfront cost for these systems, new financing programs are needed to help customers pay for these systems. As New Jersey’s largest utility, PSE&G is uniquely positioned to provide the capital resources needed to implement this program and support the State’s renewable energy goals. (Back to Top)
Who is eligible to participate? All PSE&G residential, business, municipal, and non-profit electric customers can take advantage of the Solar Loan Program, provided they meet the minimum credit requirements. However, solar power systems must be installed within PSE&G’s electric service territory and must be eligible for net metering. (Back to Top)
Who is eligible for net metering? Net metering is available to customers that generate electricity, on the customer’s side of the meter, using Class 1 renewable energy sources (such as solar), provided that the generating capacity of the customer-generator’s facility does not exceed 2 MW, and does not exceed the customer’s historical annual electricity usage. (Back to Top)
What are the benefits of this program for residential customers? Solar power is a clean, renewable source of energy. By installing a solar electric system, you will do your part to help the environment and fight global warming. A solar electric system may also help you save on electricity costs. However, while solar electric systems will generate clean energy for many years, they require an upfront investment. PSE&G’s Solar Loan Program provides you with a unique and convenient way to finance part of the cost of your system. (Back to Top)
What is the size and cost of a typical residential solar electric system, and how much will I save? The size of your system depends on the electricity needs of your home. You should first look for ways to reduce the energy consumption in your home. For example, adjust the temperature of your thermostat and use high efficiency appliances. The average size of residential systems in NJ is 7 kW at an average cost of about $58,000. Costs will vary for a variety of reasons, and there may be other costs to consider in a solar installation, such as the cost for insurance or maintenance. The amount of money you will save on your energy bill will depend on many factors, such as the efficiency of the system being installed. A solar system installer can discuss the details of a solar installation with you. (Back to Top)
Where can I get more information about how solar energy works? For more information about solar energy from the U.S. Department of Energy, visit: http://www1.eere.energy.gov/solar/pv_consumers.html (Back to Top)
How does the residential PSE&G Solar Loan Program work? PSE&G will provide loans to residential customers who install solar electric systems on their homes that cover about 40-60% of the cost of the system. The borrower will repay the loans with Solar Renewable Energy Certificates (SRECs) or cash, over a 10-year period. (Back to Top)
What advantages does the Solar Loan Program have over a bank loan? Unlike bank loans, which can only be repaid in cash, Solar Loans can be repaid using Solar Renewable Energy Certificates (SRECs), and supplemented by cash if the system does not generate enough SRECs. SRECs have a value in the market, and PSE&G will value those SRECs at $475 or market price, whichever is higher. However, you must be the owner of the solar panels and PSE&G must have a first priority security interest in the solar panels as collateral for the loan. (Back to Top)
What exactly is a Solar Renewable Energy Certificate (SREC)? An SREC is a clean energy credit issued in the form of a tradable certificate by the New Jersey Board of Public Utilities (BPU). Every time the solar power system generates 1,000 kWh (or 1 MWh) of power, one SREC is earned, the value of which is applied to the balance of the loan. (Back to Top)
When do SRECs start accumulating? SRECs start accumulating on the day the solar power system is connected to electric service. Your system must also pass an inspection by the BPU’s Office of Clean Energy, and you must have established an account under the BPU’s SREC Program. (Back to Top)
How will PSE&G track my SREC repayments? PSE&G will track SRECs through the system output meter. The meter will be read by PSE&G’s meter reader. PSE&G will transfer an SREC from your account in repayment of the loan each time your system generates 1,000 kWh of electricity (which equals 1 SREC). (Back to Top)
What is the loan interest rate? The interest rate on a 10-year residential loan is 6.5%. (Back to Top)
How long is the loan repayment period? The loan repayment period is 10 years. (Back to Top)
How much of the cost of the solar electric system will be covered by the PSE&G loan? The PSE&G loan will cover about 40-60% of the cost of your system. The amount of the loan depends on the expected amount of energy that your system will produce. (Back to Top)
When will PSE&G pay me the money I am borrowing under the loan program? PSE&G will close on the loan and disburse the loan proceeds after the solar system is installed, has been inspected, and has been registered to produce SRECs.
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Will PSE&G give me some form of a commitment for the loan? Yes, once the project has been approved, you will receive a loan commitment letter that will be good for a year. If your system has not been completed in that time, PSE&G will rescind the commitment, although the commitment may be extended by an additional six months if the project could not be completed for reasons beyond your control. (Back to Top)
How will I know that the system will produce sufficient SRECs to be able to repay the loan? Your contractor will use a computer software program to estimate the system output over the life of the loan. This software will predict the number of SRECs to be generated. Using this estimate, PSE&G will determine the loan repayment schedule based upon a value of $475 per SREC. (Back to Top)
What happens if my system doesn’t perform as well as predicted? If you get behind in repaying the loan due to inadequate production of SRECs, PSE&G will require periodically that you make up any shortfall by paying cash. The true-up will be done annually to insure that the account is current. The true-up mechanism is explained in more detail in the residential loan documents. (Back to Top)
What if the value of SRECs is higher than $475? Will my loan be repaid sooner than 10 years? Yes. However, PSE&G will have the option to continue to purchase the SREC output from your system. The price that PSE&G pays you will be equal to 75% of the current market price of SRECs. After the end of the 10 year loan period, you will have full rights to the SRECs. (Back to Top)
What other incentives are available for solar installations? Participants may also be eligible for tax credits and incentives that may further offset the cost of the solar power installation. Participants should ask their solar installer/developer or tax advisor for details. (Back to Top)
Are Solar Loan Program participants eligible for rebates provided through New Jersey’s Clean Energy Program? Residential customers who participate in the PSE&G Solar Loan Program may apply for Clean Energy Program solar rebates, if available. Visit www.njcleanenergy.com for the latest information on available rebates. (Back to Top)
What happens if I sell my house? Generally, the loan is repaid at closing and PSE&G will continue to have an option to purchase SRECs from the new owner for any remaining option period (10 years from loan closing). However, if the new owner agrees to assume the loan obligation and passes PSE&G’s credit check, the loan can be transferred to the new owner, provided the new owner pays the associated legal and administrative costs (filing fees etc.) and meets all applicable credit criteria. (Back to Top)
How does a residential solar electric system work? An array of solar modules containing solar cells that are mounted on your roof converts sunlight directly into DC power. A component called an inverter is needed to convert this DC power into AC power that can be used in your home. Although solar cells can work with indirect sunlight, solar cells work best when mounted on a roof that is not obstructed from the sun, and when they face the south at an angle to capture the most sunlight.
The solar system is interconnected with PSE&G’s distribution system. If your solar system produces more electricity than your home is using, PSE&G allows net metering or the crediting of your utility account for the excess power generated being returned to the grid. PSE&G provides power as usual at night and during the day when your electricity demand exceeds that produced by your solar system. (Back to Top)
What is net metering? Net metering measures the difference between the electricity you buy from your utility and the electricity you produce with your solar electric system. Under net metering, any excess electricity produced by your solar electric system is delivered back into the utility grid, effectively spinning your meter backwards. Your meter spins forward when your solar electric system is not producing all of the electricity you are currently using. Your electric meter keeps track of this net difference as you generate electricity and take electricity from the utility grid. (Back to Top)
Can I have a solar electric system on my house and still be connected to PSE&G? Yes. In fact, systems are designed as on-grid systems, meaning they are designed to interconnect with utility power. (Back to Top)
Will the solar system continue to operate if PSE&G experiences an electric outage? In most cases, the solar system is shut down in order to protect the utility workers restoring power. However, some system designs include isolation circuitry that will allow continued operation. (Back to Top)
Will my system work at night or on cloudy days? Sunlight must be present for your solar modules to produce power. At night, you draw power from your utility. On cloudy days, your system will still work but produce less electricity. Under a light overcast sky, panels might produce about half as much as under full sun. (Back to Top)
What steps should I take if I am interested in getting started with solar? The first step is to obtain proposals from solar installers/developers. PSE&G advises that you seek references before you choose an installer. Click here for a list of installers/developers from NJ’s Clean Energy Program website.
PSE&G’s Solar Loan Program website contains important information about the loan program, including application instructions and forms, as well as copies of the loan documents. (Back to Top)
What if I have additional questions? Visit www.pseg.com/solarloan, send an e-mail to solarloan@pseg.com, or call the Solar Loan Program at 973-430-8460. (Back to Top)
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