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New Mexico Solar

New Mexico is one of the sunniest places in the United States. Much of New Mexico is desert. The sparsely populated state is home to the cities of Santa Fe and Albuquerque. New Mexico state government policies favor solar tax incentives. Despite relatively low energy prices, its encouraging utility policies, tax incentives and sheer abundance of sun make New Mexico a favorable place for businesses and residents to install solar panels and battery systems.

Let’s learn about some of those incentives, the utility policies associated with interconnection and setup, and special solar financing plans for solar panels and battery systems in New Mexico.

New Mexico Solar Incentives

New Mexico provides multiple solar energy rebates and incentives that help to reduce the overall cost of solar systems. Our EnergyPal Advisors can help you navigate all of the solar incentives available in New Mexico and also apply them to the available solar panel offerings.

In summary:

• New Mexico offers a 10% credit, up to $6,000, on a solar, solar-battery or battery system. It’s applied to your owed income taxes.
• Renewable Energy Credits (RECs) offered, but payment price is currently quite low.
• No property tax on any increase in property value from installing solar

New Mexico Rebates and Tax Breaks

Here are more details about the incentives available in New Mexico:

• The New Solar Market Development Tax Credit is the principal solar incentive in the state of New Mexico. Residential property owners can be reimbursed 10% of the cost of solar panels, solar systems, solar hot-water heaters, etc. The maximum rebate amount is $6,000, and the credit comes off of your income taxes within five years of when you install the equipment.
• Power New Mexico (PNM) customers can get RECs. RECs can be sold at the current rate of $0.025 per kWh for a term of 8 years. There is an application fee of $150. You can also opt to hold on to your RECs by paying an application fee of $50. They could be worth more in the future.

• New Mexico’s property tax exemption is a tax break where you won’t pay additional property taxes if your property value increases when you add a solar system (and with solar, your property value does go up!).

Other Solar Energy Incentives

The US federal government helps residents and businesses pay for their solar systems. The federal investment tax credit (ITC) allows for a tax deduction of 30% of the cost of a solar system currently. Tax credits can be rolled over if you can’t use the whole credit this year. The ITC cannot be claimed for solar leases or power purchase agreements (PPAs) where the third party financier takes the credits themselves, but that is typically baked into a reduced lease/PPA monthly for you. For the actual US government bill, see 4908 of the HR 133 (It’s a giant file, so watch out!).

If you purchased a $20,000 system, your savings from the federal tax credit would look like this:

$20,000 X 0.26 = $5,200 savings

You also would save an additional $2,000 by taking advantage of the New Mexico tax credit. So if you spent $20,000 on that system, your cost would go down to $12,800.

Utility Policies

Utility policy factors determine what your utility provider pays you for the excess power you produce and what you save on your power bill by reducing electricity usage. New Mexico gets a high score for utility policies.

Net Metering and Interconnection Policy

One important policy for solar customers is called Net Metering. Net Metering is a billing mechanism that allows solar customers to push electricity to the grid for credit that can be used later, like at night when your solar panels aren’t generating power. This incentivizes people to go solar, provides clean energy for others to use and prevents waste. Some states have poorer net metering policies than others, meaning that credits may not be able to be rolled over to the next month or year, or that you don’t earn full watt-for-watt credit for your excess energy.

New Mexico’s Net Metering program is favorable. You are paid the full retail amount for your excess energy in the form of a bill credit. Credits can be carried over into the next month and do not expire. The exact details depend on your electricity provider’s policies.

Solar Setup Fees

You must have a bi-directional meter (necessary for Net Metering), which is installed at no cost. There are no interconnection fees in New Mexico. If you want to subscribe to the REC program, costs are $50 or $150.

Electricity Prices

Electricity prices in New Mexico are on the low end. Usually you don’t want high prices, but with solar, the higher the prices, the more you save, and the more economical a solar system becomes.

According to the US Energy Information Administration, the average total cost of electricity in New Mexico is $0.129 per kWh for residents. The national average for all states is $0.134 per kWh, ranging from $0.967 to $0.288 per kWh.

Rate Design

Rate designs are comprised of monthly fees and either a flat or tiered rate you pay for electricity. Good rate designs, which save you money when you conserve energy, are tiered and have low fixed monthly fees. Poor rate designs have flat rates and high fixed monthly fees. 

New Mexico is above average when it comes to the quality of its electricity bill rate design. It has a tiered rate program and low fixed fees (around $7 per month).

You still pay fixed monthly fees when you go solar because you are still tied to the grid. Being tied to the grid is a good thing, because otherwise you might not have power at night or if your system stopped working suddenly. Even if you go off of the grid and rely on a battery source, the high cost of the battery would not outweigh the low monthly fee and the savings obtained from a net metering program.

PACE Programs

PACE stands for Property Assessed Clean Energy and is a financing program for solar projects that is tied to the home instead of the homeowner. The PACE program is not available in New Mexico.

Other Energy Financing

Solar systems can be financed by bank loans, solar installer financing, new home mortgages, energy loans and home equity loans or lines of credit. Cash works too. 

Talk to your EnergyPal Advisor about financing solar options in New Mexico. We regularly source the best deals and terms for our customers.