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New Mexico – Becoming the Solar State!

With the New Mexico Legislature passing the Solar Market Development Act, which was signed by Governor Bill Richardson on March 3, New Mexico now has perhaps the best tax incentive program in the nation for residents and businesses to install new photovoltaic and solar thermal systems.

Although the Legislature did not pass a number of other renewable energy bills in its 30-day session, the solar tax credit bill was the centerpiece of efforts by the governor and citizen organizations, led by the Coalition for Clean Affordable Energy (CCAE), to continue moving New Mexico to being one of the nation’s leading renewable energy states. The law is expected to be an effective means of promoting use of solar systems by businesses and residents, and an economic development measure to stimulate solar power manufacturing and installation.

Solar energy is especially important as a companion to the burgeoning wind energy industry in the state. New Mexico’s renewable energy portfolio standard (RPS) requires utilities to provide five percent of their electricity generation from renewable energy sources this year and ten percent of such generation by 2011. As a result, New Mexico has gone from having no wind farms to becoming the nation’s sixth leading wind power state with 407 megawatts (MW) of installed capacity. As of December 31, 2005, the states with more installed wind capacity are California (2,150 MW), Texas (1,995 MW), Iowa (836 MW), Minnesota (744 MW), and Oklahoma (475 MW).

The new solar law, Senate Bill 269, provides a tax credit equal to 30 percent of the installed cost minus any applicable federal tax credits, up to a maximum of $9,000 in credits per system. Credits are available for ten years. Commercial and residential photovoltaic systems, active solar hot water or air systems, and agricultural photovoltaic water pumping systems are eligible for the credits. Hot tub/swimming pool collectors are not eligible. All eligible systems must be certified by the New Mexico Energy, Minerals, and Natural Resources Department.

Two other New Mexico programs also provide incentives for solar energy. Under the Net-metering program, a photovoltaic system tied to the electricity grid can recoup 45 percent or more of its initial cost in avoided electricity bills over approximately 25 years. With net-metering, the ratepayers electric meter can “spin backwards” as electricity produced by the photovoltaic system runs through the meter in excess of any electricity that is coming into the meter through the transmission grid. Further, Public Service Company of New Mexico (PNM) customers who own net-metering systems can also sell the “renewable energy credits” from their system for 13 cents per kilowatt-hour through 2018. PNM applies the credits to meeting the RPS requirements.

A number of renewable energy bills did not pass. The Renewable Energy Transmission Authority would have created a state entity to plan, fund, and acquire land for electricity transmission and storage projects associated with renewable energy development. Without new transmission lines, wind energy development will be curtailed because existing transmission lines are operating close to capacity. The Renewable Energy Protection Tax Credit Rate would have modified the existing credits to support mid-scale (one to ten MW) wind turbines for on-site generation and provided a one-cent per kilowatt-hour larger credit for Concentrating Solar Projects. The Advanced Energy Production Tax Credit Act would have provided a five percent tax credit for manufacturing of renewable energy and fuel cell products. CCAE also supported an Expanded Home Weatherization Program for low-income people to reduce their energy use.

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For more information:
Coalition for Clean Affordable Energy - http://www.nmccae.org
American Wind Energy Association - http://www.awea.org