Federal income tax credits will cover 30% of the cost of installing a PV system. The credit covers materials, installation, and interconnection, and there is no maximum amount for this benefit. If the tax credit exceeds your tax liability, it may be carried forward until used up.

A New Mexico state tax credit is available for an additional 10% of the cost. This credit is capped at $9,000, meaning that it will apply to an investment up to $90,000. This well-crafted tax credit includes consumer protection standards to protect your investment. These include requirements for contractor licensure, permitting, and inspection, and system designs are reviewed for assurance that they meet performance and quality standards.

All solar installations in New Mexico are also exempt from Gross Receipts Tax. This exemption includes all equipment, labor, and other costs directly associated with the installation of a PV system. This will save you between 5-8% on the cost of your PV system, depending on your location.

All utilities in New Mexico are regulated by the Public Regulation Commission (NMPRC), except municipal utilities such as the city utilities of Los Alamos and Farmington. The NMPRC has ruled that all regulated utilities must offer retail net metering for small solar power systems. This means that utilities must pay you the same rate for your clean energy as they charge you for their energy.

Public Service Company of New Mexico (PNM) offers net metering to its interconnected customers and rolls over any net excess energy produced to the next billing period, as a kWh credit.

In PNM and EPE (El Paso Electric) territories, in addition to net metering, the utilities will buy Renewable Energy Credits (called RECs) for 13 cents per kilowatt-hour from interconnected solar photovoltaic systems that are under ten kilowatts. PNM will also purchase RECs from large PV systems (over 10 kilowatts) for 15 cents per kilowatt-hour. The utility will pay customers for every kilowatt-hour generated for 12 years if it is a small PV system and 20 years if it is a large system. After 12 years, there is likely to be another REC program in place. Large systems, however, do not have the same net metering benefit as small systems.

RECs are equivalent to green tags or carbon offsets, but are presently worth much more. The NMPRC requires that utilities must obtain a percentage of their electricity from clean renewable energy, including a portion from residential solar systems. This is called a Renewable Portfolio Standard (RPS), and about 30 states have some sort of RPS standard. As a result, these larger New Mexico utilities have set up incentives to encourage solar PV installations. They are not buying electricity when they purchase your RECs. Rather, they are buying the right to claim the carbon offset created when you produce electricity from the sun versus generating electricity from non-renewable sources.

What this means is that if you use either of these utilities, you receive about 22 cents for each kilowatt-hour of clean electricity that you produce, whether you send the power back into the lines or use it yourself, while you pay about nine cents per kilowatt-hour for energy you buy from the utility. You can actually receive a monthly check back from the utility! Over time, this REC payment adds up to about 30% of the total system cost if you buy a system in 2009.

Here is an example of how both of these programs work. Let’s assume that your home in PNM territory uses on average 600 kilowatt-hours (kWh) of electricity per month. This means that you pay about $60 per month. You decide to install a two kilowatt (kW) solar electric system in 2009. A 2 kW system generates an average of about 260 kWh per month, which reduces the monthly billing by about $26 per month (260 kWh x $0.10 per kWh) under the net-metering law. The bill will only show 340 kWh of consumption from the utility. The regular revenue meter acts like a bank account, tracking the ins and outs and "netting" the solar electricity. With the REC program, a second meter is installed that tracks all of the solar electricity generated. In this case, the 260 kWh per month generated by solar at $0.13 per kWh results in a $33.80 credit that will show up separately on the bill (and generate a check from PNM to you). Combining the net metering benefit with the REC program benefit, the average total monthly bill will be reduced by $59.80 per month. In this example the net cost of your electricity from PNM is twenty cents plus base charges.

Please contact us for information about utility incentives if you are outside of PNM or EPE territories.