New Mexico’s PNM Solar Incentives
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New Mexico is renowned in the solar world for its wide variety of solar incentives. Some of these are state-level, others local. But one category of solar incentives is not talked about very much — those offered by individual utility companies. Utility incentives are going to vary from company to company, which is why we want to cover the largest utility company in New Mexico, PNM. PNM accounts for roughly a quarter of the state’s population, making it the largest energy utility in New Mexico. We’ll cover the two main customer solar incentives that PNM offers, then we’ll cover one potential drawback of going solar in a PNM dominated area.
The First Incentive PNM Offers for Going Solar: Net Metering
What is net metering, anyway?
Most homes that add solar are still connected to the electrical grid. This is partly because solar homes will still need to pull energy from the grid at night or when it’s cloudy. The exception is homes that add battery backup, but even then truly off-grid homes are rare. Net metering is a simple concept. Your solar installation will likely produce more energy during the day than you will actually use.
If you are not net-metered or have battery backup, that electricity is wasted. You won’t even have access to it when the sun goes down. With net metering, that excess power generated by your photovoltaic system is exported onto the wider electrical grid. The utility company to which your home is connected will then credit you on your energy bill for the electricity that you sent them.Net metering is one of the key incentives for going solar anywhere in the US. Some solar companies will even recommend against going solar in areas with bad net metering policies. This is because net metering accounts for many of the savings associated with going solar.
Net Metering and PNM: What You Need To Know
The rates of net metering vary. The best form for solar homeowners is 1:1 net metering, where the utility credits you with the full market value of the electricity which you sent them. Luckily for New Mexico residents, PNM offers this full value for your excess energy. You will, therefore, only be billed for the electricity you consume in excess of the total amount produced by your solar installation.
Why Your Solar Panels Matter for Net Metering
For those with efficient solar panels, this is a good deal. The more efficient your panels are, the more energy they will produce in a given period of time. The more energy you produce, the more credits you will receive from PNM as part of your net metering agreement. While more efficient, higher quality solar panels may cost more upfront, with net metering they will likely save you more money in the long run.
Battery Backup and Net Metering Go Hand-in-Hand
Along with high-quality solar panels, battery backup is the other chief way of maximizing your savings with net metering. Battery backup is any form of battery that gets charged by your solar panels. While some of these batteries are lead-acid, the majority are lithium-ion — and for good reason. Lithium-ion batteries last longer, store more energy, and are more efficient than lead-acid.
Battery backup helps you regulate how much power you need to pull from the wider grid. With battery backup, some of the power that would be exported is then saved in your batteries. This energy can then be used at night or in bad weather when your solar panels aren’t producing power. With efficient solar panels, not much extra energy will need to be diverted to your solar batteries. You will be filling your batteries while also sending energy onto the grid, building up both your energy savings and your net metering credits. With good battery backup, such as our level 3 battery, the Tesla Powerwall, you can maximize your solar savings and avoid having to pay for electricity from the grid ever again.
The Second Incentive PNM Offers for Going Solar: Renewable Energy Credits
Renewable energy credits (RECs) are certificates that confirm that energy was produced from a source of renewable energy — particularly wind and solar. They represent the rights to the attributes of the energy produced, among other things. A REC is produced after a renewable energy source generates one megawatt-hour of power, which is then put onto the grid. These RECs demonstrate that the energy produced counts towards the renewable energy goals of individual states. Because of this, a thriving market for RECs has grown up in some states. These credits are purchased by energy utility companies and put towards the utility’s renewable energy portfolio.
The Benefits of Selling Your RECs to PNM
Whether it’s worth it for you to sell your RECs to PNM depends on the size of your solar installation. PNM has established a REC purchase program, which a homeowner needs to apply for to benefit. The application fee for small solar installations is $150, but for large systems, it’s $450.
When Is It Worth It To Apply for PNM’s REC Purchase Program?
Not every solar installation will fit the criteria. For some systems, particularly large ones, you would actually lose money by applying for PNM’s REC purchase program. This is because of the way that the REC purchase program is structured. By signing up, you will be part of the program for eight years. During this period, PNM will pay $0.0025, or one-quarter of a cent, for each kilowatt-hour produced by your installation.
For customers who have a system that produces between 650 and 840 kWh per month, or more than 1900, you will end up receiving more money by opting into the program than you spend in your application fee. However, if you produce below 650 kWh, or between 840 and 1900 kWh, then you may actually lose money on the application fee.
It is for this reason that we recommend homeowners with small solar installations or some medium-to-large installations to avoid opting into PNM’s REC purchase program. However, some will be able to make a profit on selling their RECs to PNM. It is worth it to check your monthly solar production before making a decision.
PNM and Updating the Energy Grid
While we believe that most people should go solar in New Mexico, there is one potential roadblock for interested homeowners. The energy grid in New Mexico, particularly that administered by PNM, is set up for fossil fuels, not renewable energy. Normally that wouldn’t be a problem, but it does present an obstacle for those going solar: getting a hookup.
Most solar homes aren’t completely off-grid, as we mentioned above. Staying tied to the grid is a good way to profit from net metering, for example. However, some homes in New Mexico aren’t able to connect their solar PV installations to the grid. PNM has publicly stated that some areas of New Mexico are unable to support additional solar connections “without significant system improvements.”
For homeowners that are in an area administered by PNM, this means that it’s impossible for them to add solar to their roofs. For this reason, we recommend checking with PNM beforehand about the possibility of installing solar in your area before you begin to research their solar incentives further.
However, if your home is in an area that can support additional solar, then we recommend signing up for PNM’s net metering program and checking to see whether the PV system that you would like to install would be the right size for the REC purchase program. PNM solar incentives can be a key part of going solar for New Mexico residents.