Albuquerque balloon festival
The Land of Enchantment is doing some good things to keep captivating residents and visitors alike with its mountains, deserts, lakes, and forests. The New Mexican legislature has been hard at work enacting solar and renewable energy programs to protect the natural beauty all around the state. This legislation will help preserve Pueblo and Aztec ruins, as well as many other great outdoor wonders.
New Mexico’s Renewables Portfolio Standard
A Renewables Portfolio Standard is a law or other piece of regulation that mandates that a certain percentage of a state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments.
New Mexico’s RPS establishes separate standards for the big investor-owned utilities, and the smaller rural electric cooperatives. Investor-owned utilities must generate 20% of electricity from renewable resources by 2020. For rural electric cooperates, the requirement is only 10% of retail electricity sales by 2020.
Investor-owned utilities must also generate 4% of retail electric sales from solar power by the 2020 target date. That’s one of the strongest solar carve-outs we’ve seen! In addition to the solar carve-out, 0.6% of total energy must be generated from small-scale distributed generation power; i.e., from sources like your residential solar power system instead from giant earth-killing power plants.
Solar Performance Payments in New Mexico
Three New Mexico utilities currently offers performance payments for the production of solar energy. All three are structured identically, but the numbers vary a little bit from utility to utility:
First, El Paso Electric Company will pay its net-metered customers $0.10/kilowatt-hour (“kwh”) for the rights to the Renewable Energy Credits (“RECs”) produced by solar power systems under 10 kilowatts (“kw”) capacity. These payments are built into the net metering program, and do not replace it. REC payments will start as a credit on your next month’s bill. Every time the rolling credit goes above $30, the electric company will cut you a check. Payments are made for 12 years.
Second, PNM offers a 12 year purchase contract at $0.05/kwh. REC payments will be applied to your next bill. Once the rolling credit exceeds $20, the utility cuts you a check.
Finally Xcel Energy’s Solar Rewards offer twelve year contracts at $0.10/kwh for systems up to 10kw. Payments are credited to your next bill, and once the credit owed exceeds $50, the Xcel will cut you a check.
Please note that all three of these are tiered programs. That means that as certain goals are met (i.e. as the utilities convince enough people to switch to solar power to keep on target with their RPS mandates) the rates currently being offered will be lowered step by step. That means less money for you, so the sooner you sign up, the better!
New Mexico Solar Power Rebates
There are currently no up-front rebates available on the installation of a solar power system in New Mexico. Especially with three of the big utilities offering ongoing performance payments, the legislature is missing a golden opportunity to promote clean, efficient, reliable solar power. Even a small solar power rebate can go a long way when New Mexicans know those REC payments will kick in once the system is up and running!
Solar Tax Credits in New Mexico
While there is no solar rebate available, the lawmakers here have passed a personal tax credit on the installation of a residential solar power system. When you install that system, you are eligible for a credit up to 10% of the costs of purchase and installation; that credit can then be applied against your state tax burden in April. Solar tax credits are capped at $9,000, can be carried over for ten full tax years until fully expended.
Solar Tax Exemptions in New Mexico
The legislature has also built tax exemptions into the laws here, saving you money both up-front and every year thereafter, for the life of your next solar power system.
You save up-front with an exemption on New Mexico’s alternative to sales tax. Instead of charging a sales tax, New Mexico generally charges businesses a “gross receipts” tax. The details and differences aren’t important; what matters to you is that businesses that sell solar equipment should be building that tax discount into the price they give you – the saves you money on day one.
After that you keep on saving every year via New Mexico’s property tax exemption. When you install a solar power system, your home goes up in value by about twenty times your annual electricity bill savings. That adds up to a lot of money in most cases! Normally you’d pay taxes on that rise in value, but thanks to the exemption in place, your property taxes stay the same.
Utility Prices in New Mexico
New Mexico pays an average of 10.81 cents/kwh of electricity. That’s just a tad below the national average of 11.43 cents/kwh. Here at Solar Power Rocks, we actually think the national average is too cheap, so we definitely think energy in New Mexico is currently too cheap as well.
We know you hate those electric bills, but hear us out when we say that electricity prices are too low – at least for current production methods. Right now most of our electricity still comes from burning millions of tons of fossil fuels. The cost of those fossil fuels in dollars and cents may be low (for now), but the environmental costs are astronomically high. Switching to solar power now saves you money (and helps save the planet); when scarcity and environmental costs drive up the monetary costs of fossil-fuel based energy, the early switch to solar power is going to be saving you piles and piles of money. Just remember to thank us.
New Mexico Net Metering and Interconnection
Net metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume. If you produce a surplus, you get credit for it on your bill.
New Mexico’s net metering law requires utilities to pay you for your surplus electricity at the utility’s avoided cost rate. Net Excess Generation (“NEG”), i.e. surplus, under $50 will be credited to your next monthly bill. If your credit exceeds $50 during one monthly period, you’ll get a check from the utility the following month. The law applies to all New Mexico utilities except for municipal electric providers.
Interconnection (getting onto the grid to get net-metered) is very strong for residential customers here. Overall we gave interconnection a “B” because of some potential hurdles to large commercial/industrial sized systems, but your residential solar power system of less than 10kw qualifies for simplified procedures that will make it easy for you to get on the grid. You will not be required to carry any additional liability insurance, and no redundant external disconnect switch is required.
5kW Example Return on Investment in New Mexico
What do all the numbers add up to for you? Let’s check:
Installing a typical 5kW solar system should start at about $25,000. Don’t worry, that’s going to drop fast!
Even without a state solar power rebate, you’re going to get huge discount real fast via the federal solar tax credit. Subtract $7,500 (30% of $25,000) for a new price of $17,500. Don’t forget about the NM solar tax credit either. If your state tax bill isn’t large enough you can roll this over, but we went ahead and assumed you can take the $2,500 in year 1. That brings your cost to $15,000, a price drop of ten thousand already. Next we subtract your $390 in REC payments from PNM for a new price of $14,610. Finally we subtract the estimated $858 you’ll save on just the first year’s electricity bills. That gives us a final price after year 1 of just $13,752 – almost half of where we started! With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 12 years. After that you’ll be turning a profit (yes, a profit) for the rest of the life of your solar panels (typically about 25 years). We estimate that profit to be about $27,293 through 2037. In addition to all that money directly in your wallet, that new solar power system also increases your home value by $17,160, all of it tax free. Not to be forgotten, you’re also pumping out a bunch of green for the environment. Tree green that is. The fossil-fuel energy you’re not using is the carbon-saving equivalent of planting an astonishing 138 trees a year, every year your solar power system is humming.
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
New Mexico Solar Consensus
The overall solar outlook is pretty sunny here in New Mexico. Part of that is because we get so much of that glorious sunshine here, so our potential for solar power production is tops in the nation. Solar policy is strong, but not quite as strong as it could be. All of the right foundations are in place with a solid RPS, strong net metering, and sensible, solar-friendly tax policies. All that’s missing is a stronger up-front solar power rebate, or a more extensive statewide performance payment incentive. Lawmakers are currently doing a passable job, but are missing the chance to truly harness one of New Mexico’s greatest resources. For now, that keeps our grade limited to a “B.”