lessed with ample sunlight and stellar incentives, New Mexico stands as an ideal spot to harness the sun’s energy.
Solar Panels New Mexico: A Glimpse into the Solar Trend in the State
The evidence is clear: over 1,600 MW of solar is already installed and a substantial 6.04% of the state's electricity is sourced from the sun. And that's just the beginning! According to SEIA, plans are underway to more than triple the solar capacity by adding a staggering 4168 MW over the next five years.
What does this boom mean for you as a homeowner? Is it time for you to jump on board and reap the benefits of solar power? Let's dig deeper and find out.
Why Consider Solar Power in New Mexico
When considering the transition to solar power, the financial aspect naturally becomes a central point of discussion. Especially in New Mexico, where the cost of electricity is notably lower compared to most parts of the country, one may wonder if embracing solar power makes financial sense. In May 2023, the average residential monthly electricity bill for New Mexico residents stood at a mere $95.79, marking the 2nd lowest rate nationwide. This figure is substantially below the national average of $148.06, raising valid questions about the economic wisdom of going solar.
However, a deeper look into the matter reveals compelling reasons why the sun’s energy is still a financially viable and attractive option for homeowners in the Land of Enchantment.
State and Federal Solar Incentives
New Mexico offers an array of incentives that can significantly offset the initial costs of solar photovoltaic (PV) installation. From tax credits to rebates and favorable net metering policies, these incentives can make solar power surprisingly affordable, bridging the gap between New Mexico's low electricity rates and the higher costs of transition.
Abundant Solar Potential
It's no secret that New Mexico basks in sunshine for most of the year. With an average of 293 sunny days annually and an impressive 6.77 hours of sun per day (compared to the US average of around 4 hours), the state's advantages are hard to overlook. Ranking third in the nation in solar energy potential, after Nevada and Arizona, New Mexico's climate provides an optimal environment for PV power generation. This translates into a stable and abundant source of electricity for homeowners, offering long-term savings that can outpace the relatively low traditional energy costs in the state.
Increase in Property Value with Solar Panels
Investing in photovoltaics doesn't only mean savings on your electricity bill. There is also tangible evidence that solar panels New Mexico add value to a property. On average, homes with PV power systems see a 4% increase in their property values. This enhancement can make the home more appealing to potential buyers, adding another layer to the financial incentives.
Investing in Solar Panels: Costs & Financing Opportunities in New Mexico
Upfront Costs Involved in Solar Panel Setup
If you're considering solar panels New Mexico, the first step is to get a handle on the upfront expenses. As of August 2023, the average price of PV panels in the state hovered around $3.28 per watt (W).
Now, let's put this into perspective by looking at a typical setup size of 6 kilowatts (kW). With this system size in mind, the total cost of getting your own power station up and running can range from approximately $16,700 if you're aiming for the more budget-friendly end, to about $22,600 if you're opting for a slightly more expensive setup. By averaging these numbers, the total cost of installing solar panels New Mexico centers around $19,700.
It's important to remember that these figures encapsulate more than just the cost of the panels themselves. They encompass various components such as inverters, mounting equipment, wiring, and the labor required for installation. Additionally, prices can fluctuate based on factors like the complexity of the installation, the type of panels chosen, and any additional features integrated into the system.
NM Solar Financing and Leasing Options
The high upfront cost of PV panel installation might raise concerns for some homeowners. However, the good news is that there are various financing and leasing options available to make the transition to solar more manageable.
Securing a loan allows you to spread out the upfront cost over time. With this option, you can benefit from clean power immediately while making manageable monthly payments. Many financial institutions offer solar specific loans with attractive interest rates, making it an appealing choice for those who prefer ownership.
Leasing and Power Purchase Agreements (PPAs)are alternative routes to access solar energy without owning the panels outright. With a lease, you essentially rent the panels, paying a fixed monthly amount. PPAs, on the other hand, involve purchasing the energy produced by the system at a predetermined rate. These options are particularly attractive for individuals who want to reduce their electricity bills without committing to the upfront costs or maintenance responsibilities.
Solar Incentives and Tax Credits in New Mexico
New Mexico's abundant sunshine makes it a hotspot for photovoltaics, but the appeal doesn't stop there. The state government has also introduced various financial incentives to motivate homeowners to adopt this renewable energy source. Let's take a closer look at what's on offer.
Federal Solar Tax Credit
The Federal Solar Tax Credit, also referred to as the Investment Tax Credit (ITC), offers you the chance to subtract up to 30% of your energy system's cost from your federal tax bill. There's no cap on the maximum amount you can claim as a tax credit for your setup: as long as your federal tax liability is enough to cover the credit, you can receive the full 30%, regardless of the size of your installation.
Moreover, if your total savings from the credit in the year of your PV installation are more than what you owe in taxes, you can actually carry over any extra credits to the following year. This way, you can ensure you don't lose the value of those credits.
Solar Market Development Tax Credit
Administered by the Natural Resources Department, New Mexico's Solar Market Development Tax Credit (SMDTC) enables you to claim 10% of your project costs as a state tax deduction, capped at $6,000. Applicable to residential, commercial, industrial, and agricultural setups, this NM solar incentive is in effect until 2032.
Solar Energy Gross Receipts Tax Deduction
The Solar Energy Gross Receipts Tax Deduction primarily aids solar retailers, but the benefits extend to customers. By passing the savings along, this deduction reduces costs. Given the state's 5.0% sales tax exemption for clean energy tech, such as photovoltaic systems, your wallet stands to save around $1000 from the average $20,000 solar expense.
Property Tax Exemption
In New Mexico, homeowners benefit from a property tax exemption tied to residential photovoltaic systems. This means that any increase in home value due to solar installations won't trigger higher property taxes.
Net Metering in New Mexico
New Mexico's net metering, or net energy metering (NEM), is tailored to the size of your setup and your utility provider. For systems up to 10 kW, common for residential use, your electric company has choices on compensating you for extra energy. They can either credit you at their avoided-cost rate, lower than your energy retail rate, or credit the kilowatt-hours produced for future use.
Conclusion: Solar Panels New Mexico – Progress in Motion
With a blend of abundant sunlight and attractive incentives, embracing solar power in New Mexico seems like a bright idea. The favorable economics, coupled with the state's commitment to solar energy, create an opportune environment for homeowners to harness the power of the sun. So, if you're pondering the leap into solar, now is the time to tap into the savings, sustainability, and enhanced property value that solar can bring.