First off, Governor Bill Richardson recently signed Senate Bill 269, which
creates a 30 percent tax credit, allowing an individual tax credit of 30
percent of the purchase and installation costs for solar electric and
solar thermal systems, up to $9,000 for each system. The bill provides $3
million for solar electric tax credits and $2 million for solar thermal
tax credits each year. And the credit is available for 10 years.
So where else have we heard about a 30 percent tax credit? At the federal
level, of course, where a much shorter two-year window began this year for
a 30 percent tax credit for individuals. This much-hailed piece of
legislation, included in last year's energy bill, is the first federal
solar tax credit in more than a decade.
New Mexico's new credit is "intelligently designed" to supplement the
federal credit, says Allan Sindelar, President of Positive Energy, a solar
installer based in Santa Fe. He says it accomplished what the federal
credit could not, which is to offer a good credit but for a long term,
offering the type of certainty that helps businesses to confidently make
investments in expansion.
While Sindelar and others are pleased to see how these two credits help
kick up the use of solar in the state, there's also considerable
excitement over a third component that's expected to rev up the industry
in the state.
For more than two years now New Mexico has had a Renewable Portfolio
Standard (RPS) requiring investor-owned utilities to use renewable energy:
5% in 2006, rising to 10% in 2011. One of these utilities, in fact the
biggest one in the state, Public Service of New Mexico (PNM) decided to
address the clean energy mandate partly by supporting residential solar
photovoltaic (PV) systems.
Only recently approved by state regulators, the utility's plan pays a
participating customer with a PV system a credit of 13 cents per kWh,
regardless of whether the juice goes into the home, or is sent back out to
the grid if the home doesn't need the power. In this plan, fixed until
2018, the utility considers each kilowatt from solar as a Renewable Energy
Credit (REC), which they can then aggregate for their RPS requirement. PNM
will still source commercial-scale loads of clean power predominantly from
wind power but will have an added incentive to include solar PV because
lawmakers wrote the RPS rule to value solar at three times the credit.
Regardless of how the utility uses the credit, the 13 cent per kWh credit
given to the consumer is provided on top of a net-metering arrangement,
where extra power from the customer's PV system is sent back out to the
grid at retail prices, currently around 7-8 cents per kWh in most of PNM's
territory. This is accomplished through a two-metered system; one measures
the electricity produced and the other measures whether it's used in the
home or sent back out.
Taken together, this means a total rebate of more than 21 cents on
average, and based entirely on a system's performance, a method
increasingly seen in other states as the way forward for solar policy.
Experts say this is an unique approach among state policies supporting
solar energy and a rather progressive one at that.
"That's pretty innovative stuff," said Sindelar. "It blows me away that
happened here in New Mexico."
Ben Luce, President of the Coalition for Clean and Affordable Energy (CFCAE),
who was instrumental in pushing for solar incentives in the states, says
the utility rebate of around 21 cents per kWh could pay off as much as 45
percent of a typical solar PV system. And coupled with the existing 30
percent Federal tax credit and the new state-based 30 percent tax credit,
Luce says this is a break-even profile that effectively pays for the
entirety of the solar system.
The reality is that utilities like PNM don't offer solar incentives out of
the kindness and progressiveness of their collective cooperate hearts.
Once utilities are mandated, as PNM was, they follow through with varying
degrees of commitment and enthusiasm. Experts, however, say PNM is quite
pleased with the plan -- particularly its long-term nature.
"PNM is pretty gung-ho," said John Curl, Utility Division Director of the
New Mexico Public Regulation Commission. "They seem to like this approach,
and we're not getting any pushbacks on it."
Curl attributes this new mix of policies to promote renewable energy and
solar to widespread and bipartisan political support.
"I have never seen this level of interest," Curl said. "The legislature
and the Governor are all very keen on renewable energy in general, and
solar in particular."
Executives at Unirac, which focuses solely on designing and manufacturing
mounting structures for PV modules and arrays, say the combination of the
tax credits and PNM's rebate will boost the industry in New Mexico but
have only a marginal impact on the entire U.S. solar market. Unirac is
based in Albuquerque but sells most of its equipment out of state and out
of country into stronger solar markets.
"We're going to see a lot of activity now in the state, but this is a
small state with only two million people," said John Liebendorfer, Vice
President of the Albuquerque-based company. He says because of this small
population, the impact will inevitably be limited in scope. It's the big
populous states that could have the most impact, such as Texas.
Liebendorfer said, "When Texas does it, we'll jump."
In spite of that small population, Jeanne Bassett, Executive Director of
the New Mexico Public Interest Research Group, believes the state should
and could lead the nation with the largest per capita generation levels of
solar. And there still can be some bragging rights to that, she says.
"There's no reason New Mexico wouldn't lead the country," Bassett said.
"What we have as an edge are the national labs and the solar resources.
We'll catch up quickly with this new credit, we may be behind the eight
ball but we'll get ahead very fast."
