New Mexico Solar Rebates for Homeowners
New Mexico has a slate of incentives available for solar homeowners. The incentives in New Mexico are a key factor for solar being so affordable for residents of the Land of Enchantment. Some of these incentives come from the federal government, others from the state government, and still others from your local utility company.
There are two main incentive types that are available to New Mexico residents. The most common form are tax credits or abatements, where income, property, and sales taxes owed to the state and the federal government are covered by the credit. The other main incentive rebates, where an organization gives you money directly.
Let’s dive into more detail about these two types of incentives, their similarities, and how they differ.
Tax Incentives vs. Rebates: Compare and Contrast
Both tax credits and rebates are strong incentives for New Mexico homeowners. However, they are not interchangeable. Each form has its own pros and cons.
New Mexico Solar Tax Credits
Solar tax credits are applied to certain taxes associated with solar purchases. In New Mexico, there are three types of credits you can get: income, property, and sales.
New Mexico Solar Income Tax Credit
The state-level solar income tax credit might be the strongest state-level incentive in New Mexico. The income tax credit is worth $6,000 or 10 percent of the cost of your array, whichever is lower. This credit is potentially worth thousands of dollars and is applied to your state income tax.
New Mexico Property and Sales Tax Abatements
Alongside income tax credits, New Mexico also offers property and sales tax abatements. The property tax incentive will waive any property tax increases that result from your solar installation. The sales tax abatement will cover any sales taxes resulting from the purchase and installation of solar products.
While neither of these incentives will save as much as the income tax credit, they are still valuable tools for bringing down the cost of your solar installation.
New Mexico Solar Rebates
Solar rebates in New Mexico almost always come from your local utility. For most New Mexico residents, this means PNM. The solar rebates available through PNM are based on New Mexico’s renewable energy portfolio. The portfolio requires the state to offer renewable energy certificates to residential solar homeowners, which can then be sold for cash. Unlike a credit or abatement, the rebates can go directly into your account.
How Renewable Energy Certificates Save Money
A renewable energy certificate (REC) is produced by your residential solar system for each kilowatt hour of solar electricity you generate. Larger systems will produce more RECs, which can make a full-sized solar installation very attractive. However, some systems might be too small to produce enough certificates to match the sign up cost.
System Size Matters for REC Generation
Applying for the REC program with PNM costs $150 or $450, depending on the size of your system. Systems of a certain size will produce enough RECs to pay off the application fee and get you money as well, but other systems might run afoul of the classification scheme and end up costing you money.
Which System Sizes To Avoid for RECs
Homeowners should avoid solar installations which fall into two main ranges:
- Below 650 kWh. These systems will not produce enough certificates to break even with the reduced application fee. They are simply too small and won’t be worth it unless you expand them.
- Between 840 kWh and 1900 kWh. Systems in this range will need to pay the $450 application fee. However, anything less than 1900 kWh will not generate enough RECs to compensate for the larger fee.
Systems between 650 kWh and 840 kWh, along with installations above 1900 kWh, will break even or make you money through RECs. If your solar installation does not fall into one of these two categories, you should consider net metering through your local utility.