New Mexico’s new governor, elected Democrat Michelle Lujan Grisham, has proposed a 100% tax credit for solar energy systems designed to produce electricity. In 2016, the state legislature approved the ‘solar renewable energy credit’, which provides investors with a 30% tax exemption on the cost of qualified solar systems purchased and installed between July 1, 2016 and December 31, 2022.
It is hoped that this proposal will encourage more people to consider alternative energy sources and reduce the state’s dependence on fossil fuels. New Mexico is the second most populous state in North America, and the largest one with as much as 129 million people living within its borders. With a large population and many deserts, the state is well-suited for solar power.
On average, New Mexicans use 22.2 billion kWh of electricity each year – about 20% of the country’s total energy consumption. If this trend continues, it will only be a matter of time before renewable energy meets the state’s demands.
How Does It Work?
The New Mexico solar renewable energy credit is available for residential and non-residential properties. To qualify, a system must meet certain requirements, including the capacity to generate at least 1 kw (equivalent to 1,000 watts).
To generate its own electricity, a system will need panels made from crystalline silicon or other equivalent materials, such as cadmium telluride. The installation of photovoltaic solar panels on the roof is typically done with the aid of an electrician, and the average homeowner will need to have the ability to follow simple instructions to ensure success.
It is advisable to work with a licensed, professional electrician who has experience tackling commercial projects to ensure everything is done to code and meet local and national regulations. The installation of the system on the roof will require proper ventilation, and it is also recommended to incorporate thermal reducing devices into the design, such as attic fans or air-to-air heat strips. They help to maintain a constant temperature within the attic area and reduce the strain on the HVAC system caused by extreme heat during the summer months.
Energy Independence
New Mexico’s new governor, Michelle Lujan Grisham, has long been an advocate of renewable energy and climate change. Therefore, it should come as no surprise that she has proposed this new incentive program to reduce the state’s dependence on fossil fuels and promote energy independence.
According to Grisham’s director of energy policy, Carlisle White, the aim is to help ‘level the playing field’ for renewable energy and ensure that it is not disproportionately impacted by government subsidies.
“The reality is that fossil fuels and nuclear energy were heavily subsidized for decades by the federal and state governments. This creates a significant imbalance in the market that makes it more difficult for alternative energy sources to compete on an even playing field,” White said. “If we are serious about combating climate change, then we must phase out subsidies for fossil fuels and nuclear energy.”
Cost Effective
The cost of installing a solar energy system varies depending on multiple factors, including the size of the system, where you live, and the type of roof you have. Even within the same size range, there can be significant differences in cost depending on the roof materials used – asphalt shingles, metal panels, and tile are all much cheaper than timber-frame construction.
It is also important to consider how long the system will last before you need to invest in a new one. Most solar panels have a lifespan of 10 to 15 years, but the efficiency of the panels drops off sharply after just a few. This makes it cheaper to buy new panels every few years than to maintain an existing system.
The upfront costs of setting up a solar system are high, but over the course of a year, this figure can be greatly reduced. The savings made on electricity bills is what ultimately pays for the initial investment – after the first few months, the payback period is around four to six months. This means that, in theory, you could have your money back and then some in just a few years’ time. If you are looking to generate your own electricity, the payback period is much shorter – around three months on average.
Positive Impact
Besides reducing New Mexico’s fossil fuel dependency and helping to combat climate change, the solar energy tax credit has a series of positive environmental and economic impacts.
According to New Mexico’s environmental protection department, from January 1st to May 25th of this year, generators that use alternative energy sources (such as solar) accounted for 10.8% of the state’s total electricity generation. This is compared to 5% from traditional energy sources (such as coal and gas) and 1.8% from renewable energy sources (such as hydro and wind).
There are also significant numbers of New Mexico businesses that can benefit from this economic growth, as the state currently lacks a large number of high-paying jobs. With the majority of its population living below the poverty line, this is a potential economic boost that will help to alleviate some of the state’s social inequalities. Additionally, the installation of photovoltaic towers on the roof is known to increase property values.
Although New Mexico is a rural state with a large amount of green space, over half the population lives in the city of Santa Fe. In such large cities, the use of renewable energy is even more prevalent; in 2020, Santa Fe boasted one of the highest rates of solar adoption in the country. The number of solar systems in the city increased by 69% between 2017 and 2021, while the number of customers jumped by 47%. The city’s population is now 44,600, and with more residents considering solar energy, it is likely that the number of rooftop installations will continue to rise.
These positive factors make the cost-effective investment decision to go solar a very attractive prospect. The opportunity to generate your own electricity and reduce your dependence on fossil fuels is likely to give you and your family a sense of independence and pride – something that is sure to please New Mexico’s new governor, Michelle Lujan Grisham.