There is new movement on the solar policy front out of New Mexico. The state legislature has moved a solar tax credit bill out of its first committee after being blocked 5 times since 2016.
Senate majority whip Mimi Stewart’s bill creates a 10% tax credit which lasts until 2030, capped at $6,000 for anyone who installs solar panels in the state.
An average 8kW home solar panel system in New Mexico sells for $2.50 a watt, or $20,000. The 10% tax credit in this case would be worth $2,000.
Add that amount to the $5,200 a homeowner would receive for the 26% federal investment tax credit, and there would be a more substantial sum of up front savings to explore for going solar here.
With the added 10% tax credit, we estimate solar would pay for itself here in 7 years instead of 8 years:
That difference may not sound like a lot, but in our experience, states which make policy tweaks which successfully bring the solar payback timeframe to the 7 years and below attract much more attention from solar lenders and financiers who can offer expanded offerings like zero down financing those considering solar, since their risk is reduced and the rewards are greater.
Indeed, when the tax credit went off the books in 2016, Senate majority whip Mimi Stewart noted a 25% reduction in solar jobs in the state.
A similar bill was in effect in 2008 and expired in 2016, which capped the solar tax credit at $9,000. Extensions were vetoed by then governor Susana Martinez in 2015 and 2018.
While it’s certainly an added advantage for those with enough state tax appetite to qualify for the tax credit, we’d like to see the state legislature to focus on other areas of policy which allow more residents to benefit from solar investment incentives.
Updating the state’s small scale solar carve out from 0.6% by 2020 to something more ambitious like 5% by 2030 would be a good start. Currently the other 3.4% of the solar renewable standard is allotted to larger developer financed, utility scale solar installs.
Legislators could take a closer consideration the strong solar policy coming out of Virginia earlier this month which sets a stronger target for small scale generation than larger scale solar farms.
Such a move would offer multiple advantages. Grid resilience would be bolstered by creating demand for more electricity production closer to where it is being used, and utility companies here would be more compelled to offer additional solar incentives to their customers which ignore how much income their ratepayers make. This is the case in strong solar states like Massachusetts, Colorado, and Minnesota.
Last modified: February 18, 2020