Although New Mexico has excellent renewable energy resources, its electricity portfolio is dominated by coal and natural gas. However, the use of coal for electricity generation has been dropping, while the use of clean energy is increasing significantly. Wind turbines and solar panels in New Mexico are ramping up thanks to multiple factors, which is excellent news for both solar businesses and the environment.
A state Renewable Portfolio Standard (RPS) requires electric companies in New Mexico to provide 100% carbon-free electricity to customers by 2045. Because New Mexico ranks third in the United States for solar energy potential due to its sunny climate, utility companies are relying heavily on solar power to meet this target. The Community Solar Act was signed into law in April 2021 and will help eliminate hurdles for developing community solar farms. In addition, New Mexico offers net metering programs through electricity companies, a state solar tax credit, and a solar property tax exemption program.
As a result, the New Mexico solar panel industry is growing rapidly. Transitioning to solar power and phasing out the use of fossil fuels creates numerous opportunities for solar energy professionals to help residential and commercial clients dramatically reduce energy bills while reducing their carbon emissions.
Current Use of Solar Panels In New Mexico
As of 2024, New Mexico boasts 2,824 megawatts of installed solar energy capacity, enough to power over 662,000 homes, according to the Solar Energy Industries Association. Solar panels in New Mexico generate approximately 10.2% of the state's electricity, making it a leader in renewable energy adoption.
The residential and utility-scale solar energy markets are driving growth, with projects like the Britton Solar Energy Center and Meta's Encino Solar project showcasing large-scale adoption. However, commercial and community solar markets lag behind. Recent legislation aims to accelerate community solar projects, helping renters and others benefit from New Mexico solar panels.
New Mexico’s solar industry employs over 2,000 workers across 87 companies, with most activity concentrated in Albuquerque and Santa Fe. The state continues to attract investment, with $490 million funneled into solar energy projects in 2023 alone, positioning it as a renewable energy hub.
Considerations For New Mexico Solar Panels
New Mexico’s abundant sunshine makes it an excellent location for solar panels, often leading to shorter payback periods for solar energy systems. However, several factors should be evaluated before installation, including shading, roof age, and the sun number—a metric that measures solar suitability. Properties with heavily shaded roofs may be better suited for community solar programs, which leverage shared solar energy resources while providing cost savings.
The sun number also reflects potential electricity bill savings, influenced by local utility rates, making it essential for determining system value. Also, for commercial customers, installing solar panels in New Mexico can offer the dual benefits of energy savings and improved corporate branding through sustainability and carbon emission reductions. Proper planning ensures both residential and commercial customers maximize the benefits of New Mexico's solar energy potential.
How Much Does It Cost To Install Solar Panels In New Mexico?
The average cost per watt for installing a residential solar panel system in New Mexico is about $3.01 per watt before the federal solar tax credit and other rebates, according to EnergySage. The average cost per watt of commercial solar PV projects is usually lower due to economies of scale. The average payback period for a home solar panel system is 10.2 years, and the lifespan of most solar projects is around 30 years. This means residential solar customers can enjoy a couple of decades of “free” solar power.
Electricity bill rate hikes make installing solar panels in New Mexico more cost-effective, especially when power rates increase more than inflation. The average cost for electricity in New Mexico is 13.3 cents per kilowatt-hour (kWh) for residential customers, which is a bit lower than the national average of 16.1 cents per kWh.
However, residential electricity rates have increased recently in New Mexico and beyond. By contrast, commercial electricity rates have remained constant in New Mexico at an average of 10.3 cents per kWh, but going solar is still an excellent way for businesses to reduce operating costs.
Also, installing solar systems helps residential and commercial customers alike to hedge against rising electricity prices. When electricity costs increase, so do the electricity bill savings.
New Mexico Solar Panel Incentives
Several solar incentives reduce the total cost of installing solar panels. Some of these programs are only available to New Mexico residents or businesses.
Federal Tax Credit for New Mexico Solar Panels
A 30% federal solar tax credit, the investment tax credit (ITC), is available to residential and commercial New Mexico solar panel customers. A tax credit is a dollar-for-dollar reduction in taxes owed to the federal government for qualified customers. The tax credit can be applied to the total system cost, including the solar panels, inverter, labor, permitting, and other installation expenses.
Although it is helpful to explain that there are solar tax credits, beware of giving tax advice because not all solar systems and customers qualify. For example, renters are not eligible for the solar tax credit, and the homeowner or business must own the solar panels. Therefore, customers with solar leases and power purchase agreements (PPAs) aren’t eligible for the tax credit. So, recommend that your customers speak with a tax specialist to ensure they qualify.
Local New Mexico Solar Panel Incentive Programs
Various local solar incentives help New Mexico reach the clean energy goals specified in the Renewable Portfolio Standard. The New Mexico Solar Energy Association is a good source of information on this topic.
The state offers a 10% solar tax credit of up to $6,000 for residential and commercial solar installations. The New Mexico Energy, Minerals, and Natural Resources Department must certify the solar system to qualify for this New Mexico solar panel incentive program.
New Mexico has a solar net metering program, so homeowners and businesses can receive compensation for the surplus solar power they feed to the electric grid. In addition, the state also offers a property tax exemption for residential New Mexico solar panel systems. Therefore, installing a home solar panel system in New Mexico will not cause property taxes to increase, despite the array increasing the property value.
Unlocking New Mexico's Solar Panel Potential
Although New Mexico isn’t a national leader in solar installations, like California, Florida, and Texas, it is poised for significant growth. New Mexico state incentives provide a 10% tax credit, and utility companies must offer net metering programs for grid-tied solar customers. Also, its sunny climate means solar arrays generate plentiful amounts of renewable power, unless the property is shaded.
Because it has an excellent solar market, there are opportunities for solar professionals to grow their businesses and partner with GreenLancer. We assist solar companies in New Mexico and nationally with timely solar permitting, design, interconnection, and engineering services.
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