New Mexico is doing well for solar.
It currently ranks 18th out of all states for solar energy but this is projected to rise to 13th place in the next five years. In total, 6.45% of the state’s energy comes from solar, which is enough to power 419,068 homes. Pretty good, we say!
The New Mexico government is keen to push solar forward and has introduced several incentives that can significantly reduce the cost of installing solar or make it more beneficial to do so. And, when you add in the federal incentives, getting solar in New Mexico can suddenly become very affordable.
With over 300 days of sunshine each and every year, New Mexico is one of the best places in the US to install solar energy, so if you’ve been sitting on the fence or worried about installation costs, read on to see how much you can save.
In a Nutshell
- The Solar Development Tax Credit is a state tax deduction of 10% of the cost of your solar system, capped at $6,000.
- The Sustainable Building Tax Credit awards up to $6.50 per square foot for meeting certain certifications in sustainable construction (including solar energy installations).
- Residential solar installations are exempt from property tax.
- New Mexico currently has net metering rules in place.
- The US-wide REAP grant can provide up to 50% of the cost of installing solar (farms and agricultural businesses only).
- A federal 30% ITC tax credit is available to New Mexico residents.
New Mexico Solar Incentives
New Mexico has no less than three key solar incentives for its residents to take advantage of. Here’s the detail.
The SMDTC is a pretty exciting incentive managed by the Natural Resources Department of New Mexico. Those who install a solar system can enjoy a state tax deduction of 10% of the cost of your solar system, capped at $6,000.
Things to know:
- Applies to solar systems installed on or after March 1, 2020
- It’s available to all, including residential, agricultural, commercial, and industrial solar systems
- It’s available each year up to and including 2032
- If the credit exceeds your state tax obligation, you will receive the excess as a tax refund that year
- Applications take three to four weeks to process
- The annual budget for this incentive is capped at $12 million and is distributed on a first come first serve basis
We highly recommend getting your application in as early as possible during the calendar year when it’s less likely that the pot will be empty.
To apply for the tax credit, you’re going to need the following documents:
- A current property tax bill or other equivalent proof of ownership
- An itemized invoice of all equipment, materials, and labor costs
- The Building Code Inspection Report, including the permit number and date of successful inspection of the solar system
- The design schematic and technical specification sheet
- A completed Contractor Statement of Understanding signed by the contractor who installed the solar system
Read more and apply for the credit here.
Another incentive from the Natural Resources Department of New Mexico, the SBTC Tax credit is awarded for sustainable new residential construction and commercial renovation that adopts sustainable building practices, including solar energy systems.
To qualify, your sustainable building needs to attain certain certifications as set out by SBTC:
|SBTC Qualification Requirement
|Energy Conserving Products
|Energy Star Certification
|New Residential Construction
|Build Green NM Gold or Emerald or LEED-H Gold or Platinum Certification
|New Commercial Construction
|Energy Star Program compliant
|Large Commercial Renovation
|50% better than ASHRAE Standard
Things to know:
- Applies to solar systems placed in operation on or after January 1st, 2021
- You can gain up to $6.50 tax credit per square foot of sustainable design
- Each project type has an individual annual funding cap with a total annual funding cap of $7,150,000 per calendar year (so get your application in early!)
- Excess credits can be carried forward for up to 7 years
- This is not an incentive just for solar; other sustainable measures are also required to qualify
Apply for the sustainable building tax credit here.
Solar Property Tax Exemption (Residential only)
Although limited to residential properties only, it’s still worth mentioning.
Any home that installs a solar system will have the value of the solar system exempt from property taxes. According to state law, the value of the home cannot increase by greater than 3% of the previous year’s assessment or 6.1% of the assessment from two years ago.
New Mexico Solar Net Metering
Although attempts have been made in recent years to put a stop to net metering, we’re pleased to report that for the time being, it remains available in New Mexico. What you receive depends on your utility provider and the size of your solar system, so be sure to check your utility company to see what they offer.
For solar installations 10 kilowatts (kW) or less in size, utility companies may do one of the following:
- Credit or pay the customer at the utility’s energy rate (i.e., avoided cost rate)
- Credit the customer on a kWh for a kWh basis
Unused credits are carried forward from month to month.
For systems greater than 10kWh, excess energy is purchased by the utility at the utility’s applicable time-of-use or single-period energy rate.
The amount paid or credited depends on the utility, the time of year, and various other factors. Take a look at what the top three utility companies in New Mexico are providing:
- PNM Resources rates can be found here
- Xcel Energy’s rates can be found here
- El Paso Electric Company’s rates can be seen here
Now that you know what’s going on in New Mexico, let’s check out some of the US-wide tax credits and benefits that US citizens can benefit from if they go solar.
This incentive consists of a grant that provides up to 50% of the cost of a solar installation and is capped at $1 million. Additionally, a loan can also be had. Guaranteed by REAP, it can provide up to 75% of the cost of a solar installation.
Developed by the USDA’s Rural Energy for America Program (REAP) and funded by the Inflation Reduction Act, this benefit is exclusively for farmers and rural businesses across the US – including New Mexico.
At 8760 Solar, our clients are all farms and rural businesses and we’re thrilled to say that 100% of those who applied for the grant were successful. We’ll admit that the application process can be a bit slow and frustrating but it’s totally worth it. And, of course, we’re there every step of the way to assist and help you through it.
The REAP grant is an ongoing incentive that is set to continue beyond the 2023 and 2024 application windows noted below. However, the current grant percentage or amount could change.
Right now, to get the REAP grant at its current amount of 50% ($1 million max), the application windows are:
- March 31, 2024
- June 30, 2024
- September 30, 2024
As we already mentioned, this is just for farms and agricultural businesses that also meet the following criteria:
- 50% or more of gross annual income must be generated from agricultural operations
- The 13 CFR 121 business size standards must be met
- Only eligible for businesses located in areas with a population of 50,000 or less
- Business must be classified as:
- A Sole Proprietorship, Partnership, or Corporation
- A tribal corporation or business
- A cooperative
- An electric utility
- Those with outstanding delinquent federal taxes, debt, judgment, or debarments cannot apply
Click here to apply.
The federal solar tax credit is available to both business and residential solar installations.
You get a 30% investment tax credit (ITC), the amount of which is calculated as a percentage of the cost of the installed system.
Here’s what you need to know:
- Available until 2033
- Credits can be backdated up to three years
- Credits can be carried forward up to five years
- Applies to solar installations placed in service in 2022 or later
- For projects that take place in 2033, the construction phase must have started that year
- US-based solar installations only
- Applies to new or limited previous-use equipment only
- The solar system cannot be leased to a tax-exempt entity
For business or commercial solar, additional bonus tax credits can be earned for fulfilling certain criteria:
Complete and attach form 8962 to your tax return and the credit will be applied.
Should I Get Solar if I Live in New Mexico?
New Mexico actually ranks as the second sunniest state, and since sunlight is crucial for solar panels, you’re in one of the best possible spots to get maximum efficiency from your solar installation!
Additionally, the great incentives that New Mexico has in place make going solar an incredibly affordable option. Not only that, you’ll gain up to 96% reduction on your energy bills year after year for at least a couple of decades.
If you’re a farmer or run an agricultural business in New Mexico, the benefits are even greater. On top of all the tax credits and other incentives, you can get up to 50% of the cost via the REAP grant. That means you could potentially get over 100% return on investment in the first year.
Imagine getting practically free energy, for free! We can’t quite believe it ourselves but it’s entirely possible.
If you haven’t heard of us before, allow us to introduce ourselves.
We’re 8760 Solar and we specialize in providing solar installations to farms and agricultural and rural businesses. If that sounds like you, then please do get in touch.
We’re well practiced in helping our clients take full advantage of the incentives on offer and we’re expertly placed to determine what kind of solar energy system you need for your business.
To get a free quote and a full analysis completed on your business and property, text “READY” to 719 470-0254 or get in touch via email: firstname.lastname@example.org and we’ll get back to you straight away.
Frequently Asked Questions
Does New Mexico Offer Solar Incentives?
New Mexico offers three key solar incentives. First is the 10% solar tax credit (capped at $6,000). Second is the tax credit awarded for sustainable building renovations or constructions (up to $6.50 per square foot). And finally, residential solar systems can enjoy a property tax exemption.
What Is the Solar Tax Credit for 2023 in New Mexico?
The New Mexico solar tax credit consists of a 10% credit used to offset your state tax obligations. This is calculated as a percentage of the cost of your solar system and is capped at $6,000. It is available in 2023 and beyond and ends in 2032.
Are Solar Panels Worth It in New Mexico?
New Mexico is the second sunniest state in the USA and has some great solar energy incentives available. Therefore, it is definitely worth getting solar panels if you live or run a business in New Mexico.
How Much Does It Cost to Get Solar Panels in New Mexico?
According to EnergySage, a 5kWh solar system in New Mexico will cost between $13,345 – $18,055. However, the cost can vary considerably depending on the size and type of your solar energy system and where it is installed.
Does New Mexico Have a Solar Program?
New Mexico has the state solar tax credit which can be used to offset your state tax obligations. The tax credit is 10% of the cost of your solar installation and capped at $6,000. There is also a sustainable building tax credit for which a solar energy installation qualifies.
Can I Get Free Solar in New Mexico?
You cannot get free solar panels in New Mexico. Any adverts claiming that you can do so are either a power purchase agreement (PPA), a solar panel leasing company, or a downright scam.