Welcome to the Ultimate Guide to Solar Panels in New Mexico

Your Solar Strategy in New Mexico

Figuring out the best way to go solar in New Mexico can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.

We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:

How to pay for solar panels in New Mexico

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, New Mexico has the potential for good financial returns. The purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a loan (the orange bars) and paying for the system over time means you'll never actually put down any of your own money.

That's what makes the solar loan option better. If you take a HELOC, you'll pay the system cost down monthly, but you still get a huge tax credit after the first year. All you need is decent credit—or the equity for a HELOC.

The option with the smallest savings is for a solar lease or PPA, which means you put $0 down on a rooftop solar system and pay monthly while you accumulate electricity bill savings over time. Leases and PPAs are an excellent option if you don't have any equity or cash to put down, and they still save you thousands.

Read more below about each of three very good options for solar in New Mexico!

Option 1: Paying cash for solar

An outright purchase used to be the only way to get solar, and it's still the option that provides the 'biggest' financial returns. The reason we put 'biggest' in quotes here is because it's technically true. You'll see a net return of almost $22,000 in 25 years if you pay up front. But it requires a significant up-front investment.

If you have equity in your home or good credit, you can get a solar loan or HELOC with an interest rate of 4% or less. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.

If you've got cash and you prefer to pay up front, you'll have to plunk down $16,380. But by the end of year 1, incentives and energy savings will erase a bunch of it. Over 25 years, your system will have produced about $22,000 in income. The reason this works is that solar panels in New Mexico make a ton of electricity without a ton of up-front investment! Solar offsets enough of your electricity bill here to save you about $1,165 in year 1, and it just goes up from there. As the electric company raises rates, you save more and more, and more...

Here’s how the numbers pencil out when you pay up front for a 5.2-kW rooftop solar system:

• Installing a typical 5.2-kW solar system should start at about $16,380. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
• The Feds calculate their incentive based on actual out of pocket costs, so take 26% of $16,380, for a tax credit of $4,259. Your total investment is now down to just $12,121.
• After the tax credit we subtract your first year’s energy savings, which we estimate to be $1,165. That reduces your cost after the first year to only $10,956.
• Your system will pay for itself in just 6 years, and over its 25-year life, you'll see a total net profit of $22,025. The internal rate of return for this investment is a stupendous 10.8%!
• And don't forget... your home's value just increased by around $12,700, too (your expected cost after solar incentives)!
• In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 258 trees a year, every year your solar power system is humming.

Keep in mind, the numbers above are based on an average home in New Mexico. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 2: Using a loan to pay for solar

You don't need $16,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.

That’s because, in New Mexico, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break. Your tax savings will be huge in the first year—more than enough to offset the small difference between the loan payments and electric bill savings. And you'll come out way ahead over 25 years.

A solar purchase like this will make sense for you if the following is true about you and your current situation:

• You can qualify for a solar loan or home-equity line of credit (HELOC) for $16,380, with a fixed rate of 4% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
• You love making money without much risk.

Here’s how the numbers pencil out for a New Mexico solar purchase with a loan:

• Installing a typical 5.2-kW solar system should start at about $16,380. That's how big your loan will need to be to cover it.
• The electricity you'll save in the first year of operation would have cost $1,165, but your annual loan payments will be $1,504, meaning you would spend $339 on solar this year, but...
• You'll also see a huge tax break. The Feds give you 26% of the cost of your system back as a tax credit, which in this case is $4,259. You'll be paying over time but getting all the benefits up front!
• The electricity savings will continue for 25 years, while your loan payments will last only 15. By the end of the 25-year life of your panels, you'll come out $15,850 ahead.
• On top of the green that will stay in your pocket, your system will mean green for the environment, too. 258 trees-worth, every year!

Keep in mind, the numbers above are based on an average home in New Mexico. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

Option 3: Buying the electricity, not the panels with a Power Purchase Agreement (PPA)

A PPA is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. With thrid-party solar like this, it's possible to get solar panels for $0-down and see big savings over 20 or 25 years!

As for PPAs in New Mexico: the electricity costs here a little below the national average, but the amount of sun you get makes a lot of energy out of solar panels! That means a PPA doesn't save you a ton right away. The average homeowner will still bank about $152 in savings this year from a PPA, so you're able to save the planet and make a little cash doing it!

Now that might not sound like a huge amount of money right now, but as the utility company raises rates, you will start to see greater annual savings. Over 25 years, our estimate shows a total savings of about $6,499. The panels will be installed and maintained by professionals, and all you have to do is brag to the Joneses down the street about your green habits!

How a PPA saves you money

Unlike a loan or cash purchase, a PPA means you don't own the panels on your roof. Instead, the solar company fronts the money for the installation, claiming all the available government incentives for themselves. Then over a term of 20 years (plus a 5-year renewal, in our estimate), they sell you the electricity produced by the panels, starting out a little cheaper than the fossil-fuel energy you had been buying from the utility company. Of course you'll still be hooked in to the grid to ensure you have power both when the sun is shining and when it's not, but the excess energy produced by the panels offsets your whole electicity bill just like it would if you own the system.

If you can get a good initial rate and a low escalator clause (the amount the PPA price increases per year), a PPA can truly be a win-win-win; for you, the solar company, and the environment. Of course, if you have the cash, equity, or credit, a solar loan is the best option. But for those without those things, a New Mexico solar PPA can be a great option.

Keep in mind, the numbers above are based on an average home in New Mexico. If you're ready for a custom quote for a solar PPA, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.

New Mexico Solar Policy Information

Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.

State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Georgia—are doing so poorly.

Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in New Mexico:

New Mexico Solar Incentives

Next to high electricity prices and net metering, solar incentives have traditionally been the most important factor for whether home solar power makes financial sense in a state. In the past, some states with otherwise lousy policy had tremendous incentives that drove down the up-front cost of going solar so much that homeowners could save oodles of money even without net metering or a good RPS.

These days, the big incentive most people can get is the Federal Solar Tax Credit that earns you 26% of your total system costs back after just 1 year. State incentives play less of a role than in the past, but some really good ones are still out there, ready to help homeowners go solar and save money before you know it.

Let's see how New Mexico measures up:

The availability of state solar incentives for residential solar systems was sourced from the Database of State Incentives for Renewables and Efficiency, utility company websites, and the state public utility commission.