If you were an early adopter of solar in New Mexico with the state's largest utility, the Public Service Company of New Mexico (PNM), you may be accustomed to receiving a check from PNM in addition to not having an electric bill. This was part of a legacy program that paid for Renewable Energy Certificates (RECs) from the clean energy a solar system produced and put onto the grid. Many of these agreements are reaching their end of term, and solar owners are beginning to receive notifications about their expiration.
What is a Renewable Energy Certificate (REC)?
A Renewable Energy Certificate (REC) acts as an accounting or tracking mechanism for solar (or other green energies) as they flow into the power grid and is a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation. Simply put, utilities like PNM would pay you for the clean energy your system produces because they could claim it on their portfolio as green energy production–similar to carbon offsets. Each REC represents one kilowatt-hour (kWh) of renewable energy.
What is changing with PNM’s Small Solar REC program?
Older contracts that have expired or will expire soon would typically have an 8 to 12-year lifespan and paid consumers between $.08 and $.13 cents per kWh, significantly more than today’s rate of $0.0025 (1/4 cent) per kWh. Solar energy producers were paid the agreed rate per kWh of clean energy production; receiving a monthly check in addition to other benefits like net metering.
For example, a customer generating 600 kWh in a given month with an older $.08 REC agreement would be eligible for a REC credit of $48, which could potentially cover all fees on an electric bill and even have a credit left over which can be paid out. That same 600 kWh with current REC rate of $0.0025 would be $1.25.
Though these payments will no longer be received, net metering will remain in place. With that, if the solar energy system is producing enough to cover your energy needs, you will be left with the standard $8.00 connectivity bill that solar consumers already pay.
If the solar energy system is not producing enough to cover your energy usage, you will see a slight increase in your utility since the REC Purchase Program contract has expired.
Keep in mind that—while utilities like PNM may not be paying the higher rates for REC as they have done in the past—the cost of solar has come down significantly over the past 10 years, Federal and State tax incentives help lower the upfront costs to install solar, and electricity costs continue to increase. Solar remains an environmentally and economically prudent investment.
If you would like to consult one of our Solar Advisors about solar for your home or business, contact us! Our no-pressure consultations are always free.