Financial Incentives

In New Mexico, the answers to the three questions below will determine the financial incentives for your grid-tied solar system:

1.       Is the system for your Residence or Business, or are you a government agency or not-for-profit? (PV systems for rental units are considered commercial.)

2.       Who is your Utility Provider (PNM, EPE, Xcel, Rural Electric Coop, Publicly-owned utility)

3.       What is the Size of your System (0-10 kW, 10.1-100kW, 100.1-250 kW, 250.1 kW+)

Here are the basics of the financial incentives available:

1.       30% Federal Income Tax Credit / Homeowners and business owners can get the credits
30% of your system’s cost will be returned to you in the form of a federal income tax credit. There is no limit on the total tax credit. All costs related to the installation of the system are eligible. Businesses can opt to take the income tax credit as a rebate instead

2.       10% State of NM Income Tax Credit / Homeowners and business owners can get the credits. 
10% of your system’s cost will be returned to you in the form of a state income tax credit. The upper limit that can be received is $9000 per system. All costs related to the installation of the system are eligible.

3.       No Gross Receipts Tax / All systems qualify
Your PV system is exempt from New Mexico Gross Receipts Tax (GRT).  This includes all equipment, labor and other costs related to the installation.

4.       Depreciation Benefit / Business Owners Only
A business can depreciate 85% of the cost of a solar system in as little as 1-5 years.  This results in an income tax credit based on the tax bracket of the business or owners of the business.

5.       Net Metering / All systems qualify although programs differ according to utility
Your solar system will be interconnected with the utility’s grid.  When you generate clean electricity onsite, and use it simultaneously, your electricity does not pass through the utility meter and is therefore, free.  When you are producing more that you are using at any given time, the electricity will flow “backwards” onto the grid, spinning your utility meter backwards. 

Net metering is required by the state for Investor-owned utilities and electric coops.  The utility must compensate the generator, at a minimum, the avoided cost (which may be less than ½ of the retail rate) for the electricity that is sent on to the grid.  PNM Small Array net metering means that you are trading one kWh now from your PV system, for one kWh later from the utility grid.  “Later” can mean later that day, later next year, or later 3 years from now.  If your system is over 10 kW, the net metering benefit will be different.

EPE Small Array net metering is “trued-up” monthly, which means that you can trade kWh for kWh for a given billing  period, but at the end of the billing period, you will be compensated the avoided cost for any excess electricity sent on to the grid.

6.       Solar “REC” Program (income for electricity production) / Available to PNM and EPE customers. 
In 2015, a REC program will also be available to all Rural Electric Cooperative clients.  There is no state requirement for the availability of REC programs in publicly-owned utility areas.
When we’re talking about solar electricity, REC stands for Renewable Energy Certificate.  (We’ll use “Coop Members” to refer to Rural Electric Cooperative members.) Here’s the typical definition of a solar REC:
A Renewable Energy Certificate (REC) can also be known as a Tradable Renewable Certificate (TRC) or a "green tag".  It represents the environmental, social, and other positive attributes of power generated by renewable resources.  In New Mexico, one REC is created with each kWh of renewable electricity generation.  A REC shall only have one owner at any point in time. The REC will contain all its original environmental attributes.
If you’re system is under 10 kW and in PNM or EPE territory, the utility will purchase all the RECs generated by your system on a monthly basis.  You will be compensated 13 cents for the REC for every clean kWh that is produced on your site.  A separate meter is installed for the solar system that calculates the AC electricity generated.
If you are in PNM territory and have a system over 10 kW, you will be compensated 15 cents per REC.
PNM and EPE customers get the benefit of both net metering and the REC programs.

7.       Solar Rewards production benefit / Available to Xcel Energy customers (Southwestern Public Service Company)
A production benefit program is the same as a REC program.  If you are a customer of Xcel Energy, you will be compensated on the AC electricity production of your new solar PV system at the following rates:
        System Size (dc)          Payment per kWh (ac)       Contract Period
        .5 – 10   kW                         $.20                                        14 years
         10.1 - 100 kW                     $.20                                        10 years
         100.1 – 2 MW                     competitive                        competitive