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, batteries are still fairly expensive. But with federal and state tax credits and the launching of New Mexico’s Community Solar program, low cost solar electricity is in reach of more and more New Mexicans.
Community Solar. The 2021 New Mexico Community Solar Act creates a 3-year pilot program for groups to build 5 MW solar infrastructure that will supply low-cost solar electricity through a subscription model to residents, small businesses, non-profits, tribes, pueblos and others up to 200 MW total.
Efficiency. Efficiency is the amount of solar energy that the solar panel or cell is able to convert into electricity.
Energy. The amount of energy produced by a solar cell is measured in watt-hours. It is the power generated over a given amount of time. Interconnection. This is the process of getting your system electrically connected to the grid. Inverter. Solar panels generate Direct Current electricity while most of your appliances run on Alternating Current. An inverter converts DC to AC. Optimized, microinverters are the state of the art, converting DC to AC right at each panel so if one panel gets shaded or goes out the others will continue to function. String inverts convert electricity from multiple panels. More on inverters including storage. Kilowatt (kW). A unit of power — the rate of electrical energy that your system can generate under ideal conditions. A kilowatt is 1,000 watts. It is used to describe the size of solar systems. Most residential systems are between 4 – 8 kW. Kilowatt-hour(kWh). A unit of electrical energy. A 1 kW system generating electricity for one hour under ideal conditions, produces 1kWh of electrical energy. J-Box. A junction box, found on the back of the solar panel, encloses and protects all the electrical connections to the solar panel. Microgrid. A microgrid is a self-sufficient, small, local energy system that generates and delivers power to a distinct geographic area such as a neighborhood or campus. Mono-crystalline versus Poly-crystalline solar cells. Mono- and poly-crystalline reflect the way the semiconductor solar cell was grown. Higher performing and more expensive mono cells are one single crystal, grown under more careful conditions. Poly contain a patchwork of crystals. Net Energy Metering. When your solar system produces more electricity than you are using, the excess goes back to the grid and is credited to your account by your electricity provider. The meter measures the flow of electricity in both directions. Photovoltaic (PV). A photovoltaic material turns light (photons) into electricity (voltage). Most commercial PV solar cells are made from a semiconductor material called silicon, which is also used in computer microchips. Power. Power is the amount of energy generated or used per time. It is measured in watts. KiloWatts (kW) are 1000 watts; MegaWatts (MW) are a million watts. A toaster uses about 1 kW. Solar panels are typically rated between 250 and 450 watts. Power Purchase Agreement (PPA). PPAs and leases enable you to receive (and pay) for solar energy from a system on a roof you do not own. With a PPA, you pay a fixed price per KWh for power generated, which changes every month. With a lease you pay a set amount each month to rent the system regardless of how much it produces. You are not entitled to tax credits or other financial incentives that system owners receive, and it can make selling your house more difficult and costly. Before signing a lease or PPA, explore solar loans or refinancing. See more on PPAs below.
Renewable Energy Credits (REC). One REC is equal to 1 megawatt-hour (MWh) of energy generated and delivered to the grid by a renewable source. RECs are essentially a market-based legal tender used to account for, track and assign ownership to renewable electricity generation and consumption. A business that buys an REC, for example, can claim that the 1 MWh of electricity it has drawn from the grid is all renewable. Solar renewable energy certificates further specify that the electricity came from solar panels. Renewable Portfolio Standard. The New Mexico Renewable Energy Act (S.B. 43) and later SB 489, created a state renewable portfolio standard (RPS), requiring utilities and rural electric coops to generate 20% of total retail sales from renewable energy resources by 2020, increasing to 40% by 2025, and 50% by 2030. One way to comply with this statute is to purchase Renewable Energy Credits from customers who generate excess solar electricity. Solar Array. A group of solar panels wired together to produce electricity. An array can be on your roof or on the ground. Solar Thermal. Solar thermal systems capture infrared heat from the sun. In homes, they most often serve as hot water heaters or as heat storage via Trombe walls or other materials.
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.
To best estimate your system size, it helps if you have two years of electrical use history. For PNM customers, that information is available on their website by setting up an online account. Of course, if you plan on switching to electric appliances from gas, add their anticipated energy use too! Or ask your installer what would be involved in adding more solar later.
PVWatts Calculator from the National Renewable Energy Lab uses your address and other inputs to estimate how much AC energy different-sized systems could produce each month.
Energy Sageestimates payback periods, cash vs $0-Down Loan scenarios, and can provide online quotes from pre-screened installers.
SUNNUMBERconsiders your roof type and shading, regional solar radiation, local cost of solar installations and electricity rates to see if installing solar makes sense for you. (asks for phone and email).
Google Project Sunroofestimates your roof size, hours of usable sunlight, estimated savings over 20 years, environmental impact, recommend solar installation size and cost under different financing scenarios.
Energy Sage PV Solar Case Studies is a link to people’s stories who have gone solar. But there are few in New Mexico.
For people who owe taxes, the price of a solar system can be lowered by a federal credit that reduces income taxes by 30% of the installation and equipment costs and by a state credit of 10% up to $6,000. For the $16,400 system above, the federal credit was $4,920 ($16,400 x 0.30) and the state credit was $1,640 ($16,400 x 0.10). Tax credit and other incentive details are below.
The federal Solar Investment Tax Credit Section 25 D (residential) is an uncapped 30% tax credit for a Solar Installation available through 2032. (It will decrease to 26% in 2033 and to 22% in 2034.) As a nonrefundable credit, you only receive the credit if you owe taxes. If you don’t owe enough tax to cover the full credit amount after your installation, you can carry over the amount for five years. After that you lose any unused credit. This Department of Energy Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics is a great resource for how the tax credit is applied. For example:
A renter cannot claim the credit, but a tenant-stockholder at a cooperative housing corporation and members of condominiums are eligible if they contribute to the costs of an eligible solar PV system.
Solar PV systems do not necessarily have to be installed on your primary residence for you to claim the tax credit (e.g., can go on a vacation home). However, the residential federal solar tax credit cannot be claimed when you put a solar PV system on a rental unit you own, though it may be eligible for the business Investment Tax Credit under IRC Section 48. See 26 U.S.C. § 25D(d), which specifies that eligible solar electric property expenditures must be “for use at a dwelling unit located in the United States and used as a residence by the taxpayer” (emphasis added).
The New Mexico StateSolar 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. 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 capped ($12 million), and the certificates are given out on a first come, first served basis. Because the demand has been high, we recommend applyingfor your certificate as soon as your project is complete and the earlier in the year, the better. The credit expires January 1, 2028. Other New Mexico Solar incentives are shown in the table and described more fully in this Energy Sage Overview.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’sSustainable Building Tax Credit. Contact the Energy, Minerals, Natural Resources Department for more information.USDA. For small businesses and agriculture producers in Rural Areas, grants and loans for solar energy and other energy and energy-efficiency projects are available from the U.S. Department of Agriculture REAP. REAP grants cover over 25% of a total solar system cost. Often solar companies take care of the paperwork. Online Marketplace. In exchange for paying a small fee to appear in the Energy Sage Marketplace, solar companies are supposed to offer consumers lower prices in their competitive bids. Manufacturer Rebates. Some manufacturers periodically offer rebates either directly via online deals or through installers. Once you’ve gotten quotes from installers and found out what panels they install, search the internet or social media for rebates from the manufacturers. Also look for offers from different organizations that might hold promotions with solar companies. For example Sierra Club members occasionally receive a $1,000 discount on Positive Energy Solar installations. City of Santa Fe Residents.Solarize Santa Fe helps residents save money by negotiating a group discount and consumer protections on solar installations with high quality, pre-vetted installers to make going solar easy and affordable. It also has special offers to make rooftop solar accessible to low-and-moderate income residents. Funds do run out each year so apply early. Loans.If you need a loan to purchase a system (not lease it), consider (1) government-backed mortgage programs for solar and energy efficiency improvements (such as Fannie Mae’s HomeStyle Energy Program, or FHA energy efficient mortgage), (2) home equity loan (fixed interest rate) or a line of credit (adjustable rate) for which you may be able to take a tax deduction for the interest, or (3) clean energy loans from institutions such as Nusenda: Solar and Energy-Efficient Loans and Solar Partners and Clean Energy Credit Union Solar Electric System Loans. The latter has discounted loans for low-income and minority borrowers. Typically you need a credit score of around 720 to qualify (Nusenda requires a score of 650) and a solar loan makes the most sense if your electric bill is over $65/month. Some but not all lenders (not Nusenda; we haven’t asked CECU) may require a Uniform Commercial Code financing statement (UCC-1) to be filed. This legal notice says that the lender has a right to repossess the solar system should you default on the loan. Be aware that should you need a title search done on your house, a buyer’s mortgage lender, who is not familiar with solar loans, may think this means there is a lien on your house. This is not true. With a loan you own the system. An alternative is to sign a Lease or Power Purchase Agreement, which is more like leasing a car – you do not own the equipment, don’t qualify for tax credits or other incentives, and it may cause difficulties if you want to sell the house. Energy Sage PPA vs. Lease. See SEIA’s Consumer Protection webpage for questions to ask and model PPAs and leases. In other states we have heard of companies that work with underserved communities like PosiGen doing home efficiency upgrades for free with their solar leases. PPA Guide for Organizations and Businesses. Net Metering and RECs. The NM Public Regulation Commission Renewable Energy Website is a great place to get information on net metering and Renewable Energy Credits or RECs. By law, NM utilities and rural coops are required to generate a growing percentage of their electricity from renewable sources by different dates. One way to do that is to buy excess renewable power generated by their customers. The proof that this energy came from renewables is called a REC. A decade ago, utilities were paying a lot for RECs, but now prices have dropped.
Check the price with your electricity provider, but it is usually more advantageous to use net-metering to bank your excess energy with the provider for your future use rather than sell it it to them. Here are some programs: Xcel Energy ‘s Solar*Rewards program buys RECs at Locational Marginal Price, which is a wholesale rate. PNM’s REC rate is for large systems (10 kW-100kW) and is $0.0025/kWh, but net metering is also available.
Energy Sage How to Go Solar includes: Are You a Good Fit for Solar in NM, Get Quotes, How to Choose an Installer, How to Pay for Solar, Solar 101.
Solar United Neighbors is an excellent source of information on solar, battery storage, HOA Solar Action, EV Charging, Rural Business, energy democracy and equity, consumer protection and much more.
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.
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.
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.
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.
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).
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 potential subscriber information.
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.
For Community Solar Developers. There is also a federal Section 48 Investment Tax Credit for developers of Community Solar, including utilities, nonprofits, coops and local governments. Community solar and leased rooftop solar developers may get an additional 10% or 20% for projects in and serving low-income and energy communities, according to Rewiring America.
Join a Local Energy Cooperative
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.
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.
What you should know before you begin
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, but they are still expensive. The most cost effective way to add batteries is to bundle them with a solar system install. Luckily, there is a federal Investment Tax Credit 25D (residential) for 30% of the total installation cost of Battery Storagewith no cap through 2032. It will decline to 26% in 2033, 22% in 2034 and then expire. It is a non-refundable tax credit (you are able to receive an amount up to what you owe in taxes), but if the 30% is greater than your tax liability you can file for the rest of the cost on your taxes the following year. According to Rewiring America, an average battery storage installation costs $16,000, or $11,200 after the rebate.
Capacity or Size. This is the amount of energy a battery can hold. It is measured in kilowatt-hours (kWh) or amp-hours (Ah). An amp is a measure of electric current – the number of electrons moving through an area in a given amount of time. Cycle Life. The number of times the battery can charge/discharge before it loses a specified rated capacity percentage. Depth of Discharge (DoD). How much of the battery’s stored energy can be safely drained before the battery needs to be recharged. To preserve battery lifespan you should avoid discharging below the manufacturer’s specified DoD. For example if a 10 kWh battery has a DoD of 90% (90%-100% is typical for lithium ion), it should not fall below 1 kWh in capacity before recharging. The DoD for lead-acid batteries is usually 50%. Energy. Energy is measured in watt-hours or kilowatt-hours (kWh). It is the power used for a given amount of time, and it is what you pay for on your utility bill. Islanding. This is the ability of a battery system to recharge from your solar system when the grid goes down. Lifespan: Lead-acid batteries last from 1-10 years depending on usage. Lithium-ion lifespans range from 7-15 years. Power. Power is the rate that electrical energy is generated (energy/time). It is measured in watts. KiloWatts (kW) are 1000 watts. A toaster uses about 1 kW. Power Rating. This refers to how much power the battery can continuously provide. It is measured in kilowatts (kW). The more power, the more appliances it can run. But if it has a low energy capacity it would only last a few hours. Round-trip Efficiency. This is the ratio of energy released by the battery divided by the input energy.
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.
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.Nickel-cadmium. Nickel-cadmium (Ni-Cd) batteries are designed for commercial-sale solar installations, and are not currently suited for home solar systems. Testing is underway, however, and this could change in the future.These batteries can discharge most of their capacity and do it through many cycles. They’re low maintenance and work well in extreme temperatures. The technology involved contains toxic materials which must be disposed of properly, and have been banned by several countries and American states.Pros: Excellent life span, discharge capabilities, and low maintenance performance in even extreme temperatures.Cons: Toxic components, less ability to retain stored power, and lack of availability to home systems.Best for: Commercial solar production. Flow Batteries. Another emerging technology, not currently available to residential systems. Flow batteries store and release energy via the flow of water-based electrites between two internal chambers, or tanks. Excellent discharge capabilities and efficiency are offset by heavy, expensive, high-maintenance tanks. They have great potential for the future as a safe, nontoxic, and efficient battery with a long lifespan, but are not there yet.Pros: Highly efficient and long life span, nontoxic and nonflammable. Cons: High maintenance, tanks are large and heavy, and not available for residential use.Best for: Large-scale solar systems.