Solar and Battery Storage
Good News –
While the Federal residential solar tax credit is essentially gone, there is a bill in the 2026 NM Legislature for increasing the state solar tax credit from 10% to 30% with the cap increasing from $6,000 to $15,000. Tell your reps to vote yes!
Signups for Community Solar in New Mexico have begun!
No roof needed. No upfront cost. Renters too! All incomes. 7 projects were energized in 2025. There will be 47 all together.
Check here to see if you are eligible and how much you could save. More info in menu labeled “Community Solar” below.
(Graphic from Coalition of Sustainable Communities, New Mexico)
Solar and Battery Storage
Solar Electric Systems
New Mexico is rated higher than any other state for annual sunlight hours and solar energy potential. Solar works best as distributed power, generated right where it is needed to run your clean, efficient electric appliances. Solar is quiet, doesn’t emit hazardous fumes and doesn’t require huge amounts of water for cooling like fossil fuels power plants do.
Several studies have shown that solar panels increase property values and attract buyers. Luckily, New Mexico exempts residential solar from both property and gross receipts taxes.
Adding battery storage furthers energy independence and safety by supplying power during grid outages. It will also enable you to take advantage of emerging time-of-use rates by running appliances from the battery when utility rates are the highest.
Although prices are coming down and there are tax breaks for them at present, batteries are still fairly expensive. But with state tax credits and the launching of New Mexico’s Community Solar program, low cost solar electricity is in reach. For income-limited folks, signing up for a subscription to a Community Solar project can significantly reduce your utility bill, with no roof or money down required.
Is Solar for You?
According to Energy Sage, a 4.9 kilowatt (kW) solar system would supply enough energy to offset the average New 
Mexican’s monthly electricity bill of $118 for 762 kilowatt-hours (kWh) of energy. Based on real quotes from their New Mexico Solar Marketplace, Energy Sage estimates an average cost of $16,400 for a 5 kW solar system, with a 10.22 year payback time and a savings of $26,600 in utility bills over 20 years (assuming you pay cash up front). After tax credits however, the effective cost would be $9,840, with a payback of 7 years.
Is solar right for you and your house? What will it cost? How long will the payback time be? Try these calculators to find out. Then read about tax credits, rebates and other incentives that might apply to you.
-The New Mexico State Solar Market Development Tax Credit (SMDTC) provides a 10% nonrefundable tax credit up to $6,000 each year to taxpayers who purchase and install a solar thermal or photovoltaic (electric) solar system in residences, businesses or agricultural enterprises through 2031. Tax Credit Users Guide. You may carry over the credit to the next year if it exceeds your tax liability, according to the authorizing Senate Bill. The total amount allocated each year is now capped at $30 million, up from $12M thanks to SB 121 passed in 2024. The certificates are given out on a first come, first served basis. Because the demand has been high, we recommend applying for your certificate as soon as your project is complete and the earlier in the year, the better. Other New Mexico Solar incentives are shown in the table and described more fully in this Energy Sage Overview.
-If you are a low-income resident, the Solar For All program will offer access to solar energy. The State of New Mexico was awarded a $156 million Solar for All grant in April 2024, but it is not clear whether the state will receive this money.
-Installing solar as part of an effort to build a sustainable home could result in a tax credit of up to $6.50 per square foot through the state’s Sustainable Building Tax Credit. Contact the Energy, Minerals, Natural Resources Department for more information.
Getting Started
- Make sure your roof is in good shape to avoid big repairs for the next 20 years.
- You might need to upgrade your electric panel especially if you have an older house built before the 1980s when 200 Amp service first became common.
- While not yet available in this state, meter collar adapters cut down on the time and cost of connecting to solar by adding a connection to solar between your meter and and electrical panel.
- For grid-tied systems, you will still have to continue to pay a service fee every month.
- During an outage, you will not be able to power your house unless you also have storage. If you are considering batteries, it is easiest and least expensive to install solar and storage at the same time. There is a tax credit for storage.
- In New Mexico, companies are constrained by a “120% rule,” which limits how many kilowatts of solar they can install.
This Xcel Energy table estimates how much electrical energy a new home is expected to use. The solar system would have to be designed so it would supply less than the 120% value. El Paso Electric customers who install more than 120% cannot participate in net metering. Ask your installer about workarounds. - Be careful about installing a system over 10 kW. That is the dividing line between small systems and large systems. This can change electricity provider technical requirements and net metering terms, your homeowners insurance and other factors.
- Beyond the equipment and installation fees, project costs include permitting, inspection and installer profit margins, so get several quotes to compare.
- Is your installer accredited? Check here.
- Be wary of strong marketing tactics promising zero-cost solar. Throughly vet companies by checking with the Better Business Bureau and ask if they are a member of Solar Energy Industries Association (SEIA), the national trade association for solar that requires all its members to abide by the SEIA Solar Business Code. Just because a company is national and/or partners with Costco or other national chain does not mean it is a good fit for you. The New Mexico Attorney General sued Vivint Solar for deceptive practices when it was Costco’s partner. Vivint was bought out by Sunrun, which is Costco’s current partner. Sunrun has also been sued for its marketing tactics. Do not be fooled into thinking that system maintenance is an expensive option you need to pay for. There are plenty of home grown solar companies and some national ones with long histories in New Mexico that have great reputations. This Albuquerque Journal series highlights problems with Vivint and other companies, Meraki, as well as tips for not getting burned.
- This Old House advice video on types of solar financing and how to choose companies.
- Be very careful entering into leases and power purchase agreements. (See SEIA’s Consumer Protection webpage for questions to ask and model PPAs and leases). Research a loan with a credit union, or Fannie Mae’s HomeStyle Energy Program, or FHA energy efficient mortgage as alternatives. New Mexico state has applied for a Solar for All grant so hopefully there will be funds available for some low-income households to get rooftop solar in the future.
- To some extent who installs your system is more important than what panel they install. However, you should pay attention to some panel metrics. The more efficient a panel is, the higher its power and the fewer panels you will need to fit on your roof. Ask about efficiency degradation over time as well. Kinds of warranties and their durations are also important. The best panels have 20-25 year warranties. Systems that have microinverters at each panel will also keep working even if one panel goes out or is shaded during the day. This Old House’s The 7 Most Efficient Solar Panels; EcoWatch’s Best Solar Panels; Forbes’s Best Solar Panels.
Other options for going solar
For renters, people with shaded, small or otherwise unsuitable roofs, people who cannot afford solar on their own, and people who want local control of their energy, there are several solutions.
Check out Community Solar in the section above.
Buy clean energy from your energy provider, such as PNM’s Sky Blue® Program and Xcel’s Solar*Connect Community, for an extra charge. (Because of the Energy Transition Act, New Mexico electricity generation is getting greener all the time).
Subscribe to a New Mexico Community Solar program.
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- New Mexico is the 21st state to adopt Community Solar. This program allows homeowners, renters and organizations to subscribe to electricity generated by a megawatt-sized solar facility designed and built through a competitive process. Projects aimed at low-income users and incorporating other economic justice factors are given higher priority. The facility may also be called a solar garden, solar or roofless solar). The first year of this three-year New Mexico pilot program, 200 MW of total solar capacity is split between the state’s three utilities. Rural Electric Coops have to opt in to participate in the program. Awards are expected to be announced in Q2 2023. Click for information on finding a community solar provider.
- Tell El Paso Electric if you are a New Mexico customer who would be interested in them developing a Community Solar Program in New Mexico.
Join a Local Energy Cooperative
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- New Mexico People’s Energy Cooperative has a mission to spread the wealth of the energy transition by educating its members on how they can invest and/or get grants for transitioning their homes and vehicles to run on electricity produced by the sun and wind. This Coop is closing.
- Models in other states: People Power Solar Cooperative in California and Solar United Neighbors has formed Coops (groups of 50-100 neighbors who go solar together) in 12 states, but not New Mexico. Want to start one here? Want to take action for solar?
Solar Plus Storage
New Mexico requires net metering, meaning that if your system is connected to the grid, any excess electricity it generates will be banked by your electricity provider for use at a future time. In a sense the utility is acting like a battery. However, there are reasons you might opt for a real battery to charge up when the sun is plentiful and discharge when the sun is down, rates are expensive, or in emergencies. 
- Off Grid Systems. If you are off-grid, batteries are necessary if you want to use lights or appliances at night.
- Greater energy independence. If your solar system is grid-tied, it will automatically shut off during an outage and will NOT supply electricity to your home. With growing instances of extreme weather exposing the vulnerabilities of our infrastructure, battery options to bank electricity and solar panels are becoming a mainstay for those in outage-prone areas like the Southeast and West Coast. Power outages are increasing in some states, more than New Mexico, but if you have electric medical equipment or live in rural areas or places that might be more vulnerable to outages, you might want to consider having backup. One advantage of a solar/battery system over a diesel generator during a prolonged outage is that solar will charge the battery, whereas you have to worry about stored diesel fuel degrading and gas station pumps not working when there’s no electricity.
- Environmental protection. Solar-plus-storage increases the efficiency of clean energy and reduces reliance on fossil fuels that your electricity provider might still be using to generate power.
- Lower energy bills. Energy prices have been rising, and the U.S. Energy Information Administration predicts that they will continue to rise. Being able to generate and store most or all of your energy is a long term hedge against rising prices.
- Lower energy bills. Batteries can also optimize time-of-use rates as they come on board over the next few year allowing you to store your own cheaply generated electricity for later use when rates are higher.
- Solar panels and batteries operate on DC (direct current) electricity, while most building appliances require AC (alternating current). Boats, vans and RVs use DC. The device that converts electricity from DC to AC is called an inverter.
- How to use batteries in an outage. Unlike a gas-powered backup generator, a solar-powered battery will never run out of fuel during a prolonged grid outage. With a battery backup system, you can chose which essential circuits to power from the battery, for example, the ones that run the refrigerator, medical devices, cooktop, lights, water pump, device charging and mini-splits in your bedroom and living room. If an outage occurs, the fully charged batteries automatically begin to power just those appliances. A smart panel would also allow the resident to monitor and manage how much power to allocate to each appliance.
Battery prices had been falling. According to Rewiring America, an average battery storage installation costs $16,000.
Shopping for Batteries
Ultimately the kind, number and size of the batteries you choose will depend on your budget, where you install them, your existing or planned solar system and what you want your batteries to do for you. Solar United Neighbors’ Battery Storage Guide for Homeowners is an easy-to-understand and comprehensive introduction to the essential factors to consider. This table from Energy Sage may also be useful in guiding your choice.
- Size matters. To cover outage times, you’ll need batteries that can power critical circuits during a 24 hour period (or longer) assuming the solar array will power appliances and recharge the batteries during the day. If you want to cover the whole house (very expensive), calculate your home’s daily energy usage (in kWh), then divide it by different batteries’ capacities to see how many you would have to buy.
- Here are some calculators to help you understand how many batteries you might want.
Estimate the power/energy your essential appliances use
Trojan Renewable Energy Battery Sizing Calculator
Enphase Battery System Calculator
SunPower battery/solar system Calculator
- Kinds of batteries. The two types of batteries usually found in residential systems are sealed lead-acid and lithium ion. While lead-acid batteries are less expensive initially, they have about half the lifetime as lithium, which might be a better long term investment. As demand for EVs and energy storage continues to climb, private sector and government organizations are driving battery R&D and production, with new advances every year and great potential for better energy storage at lower costs.
Lead-Acid. Lead-acid batteries have been used for decades in both industrial and automotive applications. They come in two main types: flooded lead acid batteries, and sealed lead-acid batteries. Flooded lead-acid batteries are the least-complicated and least expensive deep-cycle batteries available but are more onerous to care for and store. Sealed lead-acid batteries (such as Absorbent Glass Mat (AGM) batteries and gel batteries) are lower maintenance and require less storage space. Lead-acid-based battery storage systems have a lower upfront cost of installation, balanced against more maintenance and a shorter life than a lithium ion system. Ongoing research is helping to advance safety and reduce weight, and these batteries can be recycled at a rate of over 99%.
Pros: Affordable, reliable, compatible with most systems, easy recycling.
Cons: Heavier (~15 pounds) and take up more space, can require maintenance, shorter life span (~5 years) and less discharging capacity.
Best for: Backup power during outages, off-grid systems, and keeping installation costs down.
Price range: $200-$800/battery.
Lithium-Ion. Lithium battery technology has been advancing rapidly as EVs and energy storage drive demand. It’s a far newer technology than lead-acid, and offers higher energy density (more energy can be stored in a smaller space), greater efficiency, and a longer lifespan. These batteries are also virtually maintenance-free.The biggest drawback to lithium-ion batteries is the higher cost at installation. Over time, the better performance and lifespan of lithium-ion batteries may make-up for this cost, but real-world testing and documentation are needed. Two types of Lithium Ion are Lithium Nickel Manganese Cobalt Oxide (Li-ion-NMC) is the least expensive and Lithium Iron Phosphate (LiFePo), less prone to thermal runaway.
Pros: Lighter, smaller, longer-lasting (~10 years), with great discharging capabilities.
Cons: Expensive, more difficult to install, risk of thermal runaway when overheated (or overcharged).
Best for: Residential solar installations, supplementing and adding efficiency to a grid-linked system. Price range: $7,000-$14,000 average residential system cost.
Battery Resources
Solar United Neighbors Battery Storage Guide for Homeowners
EcoWatch Best Solar Batteries
Department of Energy Should I Get Battery Storage?
Forbes Home: Everything You Need To Know About Solar Batteries
This Old House: What Are the Main Types of Solar Batteries?