New Mexico’s Net Metering Policies by Utility Company
While many factors come into play when determining whether going solar is right for you, some of these factors are more important than others. In particular, net metering is an essential part of installing solar. In this article, we will be covering the four main utilities that are available to New Mexico residents and what their net metering policies are.
Net Metering: A Brief Overview
Net metering refers to the practice of exporting your excess solar energy onto the electric grid in exchange for credits on your power bill. These credits can then cover the money you owe for your energy use at night or during bad weather when your solar panels aren’t generating enough power.
The most favorable net metering ratio for solar homeowners is 1:1, sometimes known as the market rate, or the full retail rate. The full retail rate is when you are credited for the full value of the solar energy you export. Some utilities will pay a .9:1 ratio, for example, where each $1 worth of energy you export, you only get credited for $0.90. This rate is generally unfavorable.
Living in an area with bad net metering policies can be a major problem for a potential solar homeowner. Most parts of New Mexico, however, will usually have good net metering policies. Net metering is mandated by law in New Mexico for all utilities regulated by the Public Regulation Committee. That’s one of the reasons why we consider New Mexico to be one of the best states to go solar.
PNM Resources, Net Metering Policies, and Practices
PNM Resources, most commonly known as just PNM, is the largest electric utility in New Mexico. It services around a quarter of all residents of New Mexico. Its net metering policies are generally favorable to the average solar homeowner.
What You Should Know About Net Metering With PNM
PNM’s net metering policies are generally favorable for the average homeowner. PNM offers net metering at the full market rate, a 1:1 ratio. If you have a sizable solar installation and export as much power during the day as you use at night, that means that you won’t pay any money on your power bill.
The other main advantage of net metering with PNM is that your solar credits roll over. If you end up putting more electricity onto the grid than you use in a month, you’ll be credited for that amount. That amount will then be saved from month to month and can be used during months where you aren’t producing as much electricity.
For example, you may store up a lot of credit during the summer months when the sun is out all day. These credits can then be banked until October or November when the sun isn’t out as much and you might use more energy from the grid than you put onto it.
PNM’s Net Metering Policy Is Good for Going Solar
If you live in an area serviced by PNM, it makes sense to go solar. Their favorable net metering policies, particularly the competitive credit ratio and rollovers, will help you save money in the long run if you install solar. This is particularly true if you have high-quality solar panels.
Xcel Energy’s Net Metering Policies and Practices
Xcel Energy is a national holding company that services multiple states, from Wisconsin to Colorado to New Mexico. It offers net metering in all of the states it services (except one, sorry South Dakota) but its programs differ from state to state. Luckily for New Mexico customers, Xcel Energy’s policies are favorable. Their home page for New Mexico net metering has some basic information.
What You Should Know About Net Metering With Xcel Energy
The first thing to know about Xcel Energy’s net metering program is that it doesn’t roll over indefinitely. Unlike PNM’s net metering program, Xcel Energy will cap your monthly credits at $50. However, you should feel no fear! Once your credits hit $50 or more, they’ll send you a check for the amount and then reset your credit counter. This is paid at the avoided fuel cost rate.
From this cap, you may actually get extra cash in your pocket. That said, you would then have to pay for the extra energy you use during the less sunny months if you don’t have any credit on your account. This could lead to a bit more of a headache from keeping track of your incoming checks and outgoing payments, but it’s nothing the average solar homeowner can’t handle.
Xcel Energy’s Net Metering Policy Is Good for Going Solar
While it might be just a tiny bit more of a hassle than PNM’s net metering program, Xcel Energy’s net metering in New Mexico is a boon for any solar homeowner. The financial benefits are similar to other available incentives and can help subsidize a residential solar PV installation.
El Paso Electric’s Net Metering Policies and Practices
The eponymous El Paso Electric is based in that city in Texas, but it also services southern New Mexico. This utility is the last of the big three electric utility companies in New Mexico and, like the other two, El Paso Electric provides net metering policies for New Mexico solar homeowners.
What You Should Know About Net Metering With El Paso Electric
El Paso Electric caps the size of residential solar installations at 120 percent of your average annual usage. While you can install a larger system, it would be disqualified from net metering. That said, most solar homeowners would not have to worry about installing an array that large, as 120 percent of your average is more than enough.
Unfortunately, net metering with El Paso Electric is not as beneficial as it would be with PNM. While PNM provides a 1:1 exchange rate, El Paso Electric only provides what’s known as an avoided cost rate. This means that they’ll only credit you with the amount of money that it would cost the utility company to produce the electricity — not the full retail rate. The energy you generate and export to the grid is worth less money than the same amount of energy you pull from the grid.
El Paso Electric’s Net Metering Policy Is Still Okay for Going Solar
Because El Paso Electric only provides avoided cost net metering, you will get less value out of your system than you would from other utilities. However, that does not mean that net metering with El Paso Electric is bad. It will still save you money if you choose to net meter with them.
El Paso Electric will also provide other solar incentives that can help make up for its below-par net metering program, such as purchasing the renewable energy certificates that your solar installation generates. If you plan on net metering with El Paso Electric, be sure to look into their REC purchase program.
Net Metering With New Mexico Energy Cooperatives
We have previously written a New Mexico utility overview for solar-curious homeowners, but some of the information bears repeating. New Mexico’s energy cooperatives are required by law to provide their service areas with net metering opportunities. The minimum rate that they must provide is the avoided cost rate, as seen above with El Paso Electric. While not as strong as the market rate that you can get from PNM or Xcel, it is still beneficial for solar homeowners.
Of the three cooperatives closest to Albuquerque and Santa Fe — Central New Mexico Electric, Socorro Electric, and Continental Divide Electric — two provide avoided-cost net metering. Continental Divide, however, provides net metering at its retail rate.
Unfortunately, there are more than a dozen RECs (Renewable Energy Credits) in New Mexico, each with its own net metering policy, which is far too many to cover in this article. Should you have questions about net metering with one of the cooperatives that we did not cover here, we suggest calling the REC’s office and inquiring about their rates.
Using Solar to Maximize Your Net Metering Benefits
Besides the net metering policies of the electric utility companies, there are other things you can do to get the most value out of net metering in New Mexico. The main way is to utilize high-quality products, particularly solar panels and battery backup.
How Solar Panel Efficiency Factors Into Net Metering
Because you have the possibility of canceling out your power bill completely, it pays to have high-quality, efficient solar panels. The more efficient a solar panel is, the more power it can generate from the same amount of sunlight. You will generate extra energy that you can export, reducing your power bill even more. It’s for this reason that Go Solar Group offers German-engineered, high-quality solar panels from Axitec. These panels have a good efficiency rate for the cost, helping you get the most value out of your solar installation and net metering.
The Role Battery Backup Plays in Net Metering
The other main solar product that can help you save money with net metering is battery backup. Battery backup is exactly what it sounds like — batteries (usually lithium-ion) that store excess solar energy generated by your panels. You can then use that energy at night when it’s cloudy or during power outages. When you combine battery backup with efficient solar panels, you’re essentially giving yourself free power for later, when your panels aren’t producing power. If you’re net metering with a company that only provides avoided cost rate, then the energy you store in your batteries is going to be of a higher value to you. Why is that? Buckle yourselves in, we’re about to do some math.
If you’re sending excess energy to a company at the avoided cost rate, then you’re only getting a fraction of the energy’s value. For example, if you purchased $20 worth of electricity from a utility during a month, that same amount of energy that you sold them might only be worth $10. With full-retail net metering, like with PNM or Xcel, that $20 worth of electricity will also be worth $20 when you export it. In the former case, you’re looking at a net loss of $10 when you use power from the grid, but in the latter case, you break even.
With battery backup avoided cost net metering, you’re essentially banking that extra energy at full value. Instead of purchasing your excess electricity from the utility and then applying your lesser value net metering credits to it, you’re giving yourself the full-retail rate on that energy you’re storing. In both full-retail net metering and pulling energy from a battery, you’re breaking even on energy costs.
Your Net Metering Rate Will Help Determine What Kind of Battery Backup You Need
It is for this reason that battery backup is highly recommended for solar homeowners. Go Solar Group offers three levels of battery backup, which are customizable to fit your needs. For those who have full-retail rate net metering, a high-capacity battery backup isn’t necessary. Instead, a Goal Zero Yeti 1500x or Yeti 3000 would be better, as they provide some backup power during grid outages for a cheaper price.
For solar homeowners who have avoided cost net metering, it may be worth looking into a whole-house battery backup option, such as a couple of Tesla Powerwalls. While going truly off-grid can be hard, with the Powerwall you can minimize the amount of energy you need to draw from the grid. We hope this information proves useful in your quest to go solar. Net metering is just one of many factors of why going solar in New Mexico is a good idea. If you’d like to know more, check out our list of 10 Reasons to Go Solar in New Mexico.