Your 2019 guide to getting solar panels for your home in New Mexico
This page is a complete guide to the complicated and sometimes confusing process of installing solar panels on your New Mexico home. Since there's a lot to consider, we've separated the page into sections to help you find what you are looking for. If you find this page useful, please share it with someone who might also find it interesting!
** What's new for 2019 **
2019 was a banner year for New Mexico solar power, because this is the year when the legislature teamed up with new Governor Michelle Lujan Grisham to pass a law requiring 100% of all energy generated in the state to come from renewable sources by 2045.
That's an amazing feat! The Land of Enchantment joins just 3 other states in setting the 100% renewable goal, and with this kind of commitment, the outlook for solar power in New Mexico is great!
What you'll find on this page
The Solar Strategy section is focused on the 3 ways of paying for solar in New Mexico, so you can decide which is best for you. We've created a tool that asks you a few questions and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we provide detailed analysis of how each works.
The Policy Information section contains all our latest research on the rules set by lawmakers and the Public Utilities Commission, which determine how easy it is to go solar in New Mexico. These policies and rules govern everything from clean energy mandates to interconnection, and have a huge effect on the viability of solar.
Finally, the Solar Incentives section includes information about money-back rebates and grants, tax credits, and tax exemptions for going solar in New Mexico.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your New Mexico Solar Strategy|
|Comparing Solar Investment Options|
|Paying Cash for Solar in New Mexico|
|Solar Loans in New Mexico|
|Solar PPAs in New Mexico|
|Solar Purchase Payback Time in New Mexico|
|New Mexico Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
How to get solar panels in New Mexico
Figuring out the best way to go solar in New Mexico can be a little daunting. First you have to find if your home is right for solar, then you've got to figure out the best way to pay and how much you'll save.
To help with that last part, we've created the handy decision tool below. Answer a few simple questions about you and your home, and we'll recommend the best option.
After discovering your best way to pay for solar, look below to see how much you might save with solar panels.
Payback estimates for solar panels in New Mexico
The chart above shows an estimate of solar savings over 25 years for the three most popular ways of paying for solar panels: paying cash, getting a solar loan, or signing up for a power-purchase agreement (PPA).
Average New Mexico solar savings if you pay with cash: $26,074
If you pay cash, you’ll have to plunk down over $17,000 for the average 5.2-kW solar system, but you’ll be eligible for a federal solar tax credit of more than $5,200 at tax time next year. After your solar panels are switched on, you’ll save over $1,000 in the first year!
Solar panels can stay on your roof for 25 years or more (and many companies offer warranties that cover the whole time). In our estimate, your savings will pay back the initial cost in 10 years, leaving 15 years if free solar electricity, equalling an estimated $26,000 in total savings.
Average New Mexico solar savings if you take a solar loan: $19,507
Taking a loan for solar panels in New Mexico results in a slight decrease in overall savings, but the details make the difference! Taking a loan means you’re not throwing down a huge chunk of change up front, but you still get that juicy solar tax credit. In our estimate, you'd take a 15-year loan for the purchase price, with an interest rate of 4.5%.
Your cost of making the loan payments in the first year is nearly $1,600, while your savings are the same as above: $1,081. That means you’d be paying about $500 more this year to install solar, but then at tax time in April you’d get an extra $5,200 back, netting you $4,700.
In our estimate, your solar loan payments would continue for 15 years, during which time you’d basically break even on electricity costs. But after the loan is paid off, the last 10 years of free electricity end up saving you $19,500!
Average New Mexico solar savings from a solar PPA: $6,527
A PPA is one way many people get solar installations these days. It’s a contract between you and the solar company that says you’d like them to install solar panels on your roof and sell you the electricity produced by the panels.
Under a PPA, you don’t get to take the solar tax credit. Instead, you get solar electricity for slightly cheaper than you’ve been paying the utility company. If you have income, it’s much better to own than sign up for a PPA, but if you pay no taxes or are on a small fixed income, a PPA might be an option to pursue.
Keep in mind, the numbers above are based on an average home in New Mexico. If you're ready for a custom quote for home solar panels, 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's Renewable Portfolio Standard
100% by 2045
A Renewables Portfolio Standard (“RPS”) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels. New Mexico has one of the best RPS laws in the country, aiming for 100% renewable energy by 2045. The state joins a few others at the top of our rankings, all of which are aiming for the 100% standard, but each with their own way of getting there.
The New Mexico RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower utility bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.
New Mexico's RPS solar carve out
4% 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.
New Mexico Electricity Prices
New Mexico pays an average of 13 cents/kWh of electricity. That’s just a tad below the national average of 13.6 cents/kWh. Here at Solar Power Rocks, we actually think the national average is too cheap, so we think energy in New Mexico is currently too cheap as well. We know you hate high electric bills, but hear us out.
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 stacks on stacks of money. You can thank us later.
New Mexico Net Metering
New Mexico have lots of sun and strong goals for installing solar, but that doesn't mean much unless there are also strong rules in place to protect solar owners from the shadier side of selling electricity to the utility company. Luckily, New Mexico does a pretty good job with that!
The state's net metering laws are some of the best in the country, but for one thing (which we'll get to in a moment). The rules provide for generators (that's you if you have solar panels) to retain control of any renewable energy credits they earn from their systems, and also to be credited for their excess generation—a credit which is carried over indefinitely.
The one place where the state's rules miss the mark is safe harbor rules for customer-generators. Without those rules, utility companies can impose fees and additional charges on net metering customers, which can make solar much less viable for smaller systems.
New Mexico Interconnection Rules
New Mexico's interconnection rules are nearly ideal for homeowners who want to go solar. The state guarantees net metering, doesn't require additional homeowners' insurance or expensive external disconnect switches, and offers a simplified process for small systems. All that adds up to a really easy, inexpensive process to get your panels connected to the grid and making you money!
Solar Incentives in New Mexico
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 30% 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.
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, and reliable solar power. Even a small solar power rebate can go a long way when New Mexicans know those Solar Renewable Energy Credit (SREC) payments will kick in once the system is up and running!
New Mexico Solar Tax Credits
Sadly, 2016 is the year the New Mexico state government ended its great personal solar tax credit on the purchase and installation of a residential solar power system.
Still, you'll benefit from the 30% Federal Solar Tax Credit. There's no cap on the federal tax credit and fortunately for New Mexico, having no state rebate to deduct means a larger tax credit coming your way.
New Mexico Solar Performance Payments
$0.02/kWh EPEC, $0.0025/kWh PNM
Three New Mexico utility companies currently offer performance payments, called Solar Renewable Energy Credits (SRECs), for the production of solar energy. All three programs are structured identically, but the numbers vary a little bit from utility to utility:
First, El Paso Electric Company’s REC Purchase Program will pay its net-metered customers $0.02/kilowatt-hour (kWh) for the first eight years of systems up to 10kW. 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.
Second, PNM’s Performance-Based Solar PV Program offers an eight year purchase contract at $0.0025/kWh for systems up to 10 kW. Again, REC payments will be applied to your next bill until the credit exceeds $20, at which point the utility cuts you a check for the full amount. Sadly, this only applies if you have a current contract with PNM, as systems under 100 kW (way bigger than home size) are no longer able to subscribe.
Finally Xcel Energy’s Solar Rewards Program used to offer twelve year contracts at $0.08/kWh for PV systems up to 10 kW in size, but the program is fully subscribed. 10 kW is pretty large for a home solar system, but if you have a good deal of land or a really large roof space, you can still get payments of $0.05/kWh.
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!
And, as always, connect with local installers to get expert guidance on how best to go solar in your area.
Property Tax Exemption
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 new solar power system.
New Mexico’s property tax exemption will keep you saving money every year. 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 increase in value, but thanks to this exemption, your property taxes stay the same.
Sales Tax Exemption
In addition to the property tax incentive, you save up-front on solar in New Mexico because the state exempts solar equipment from its gross receipts tax. Businesses that sell solar equipment should be building that tax discount into the price they pass on to you – this saves you money on day one. For more detailed information on this exemption, check out this handy guidance document.
The consensus on New Mexico solar power rebates and incentives
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 incentives are not quite as strong as they could be.
All of the right foundations are in place: a top-notch 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 doing well here, and it would be good to see them enact some more incentives and sustainable building codes.
If you would like some personalized assistance or a quote of your own, simply connect with our network of solar experts. They’ll help sort out all the pricing, get you access to special deals, and they’re super friendly to boot!