Policies, market boost solar industry prospects
federal plans and policies create huge opportunities for solar and other renewable development in New Mexico and elsewhere.
“There’s a big opportunity now to change how energy is produced in the country, with huge impacts on the local and national economies,” DesJardins told the Journal. “... We already have the needed solar and other renewable technology, so it’s all about the will to do it — to roll up our sleeves and get it done. The president of the U.S. is setting the tone by saying ‘we want to do this,’ and that’s big.”
Incentive ‘solarcoaster’
The extension of federal tax incentives in December is already having a major impact, said Nick Kadlec, president and CEO of New Mexico Solar Group, a statewide installation company.
The 30% federal tax credit had been phasing out since last year, dropping to 26% in January 2020. It was scheduled to decline to 22% this year, to 10% next year, and then disappear entirely in 2023.
And a state-level 10% tax credit for New Mexico homeowners and businesses also went away in 2016. But last year, the Legislature re-instated that credit, which took effect in March 2020 after Gov. Michelle Lujan Grisham signed it into law.
Now, with the state credit in effect through 2028, plus the federal 26% credit extended another two years, the industry is enjoying a lot more stability, Kadlec said.
“The industry took to calling the tax incentives a ‘solarcoaster’ with the credits going up and down at the state and federal levels,” Kadlec told the Journal. “Companies had to plan around it. But now, we’re hoping the new policies will even things out going forward, and there’s a decent chance the federal tax credit will be extended by even more years under Biden.”
In addition to the tax extensions, Biden is proposing to convert the federal incentive from a credit — which goes back to solar developers on their tax bills after completing installations — into a refundable rebate that developers can immediately receive when they finish projects. That could stabilize the industry a lot more,
Centerwall said.
“Monetizing the tax incentives is always challenging,” Centerwall said. “Creating a refundable credit would be a welcome move.”
State-level action
In addition to the reinstated 10% tax credit, other state policies are also significantly boosting the local industry. In particular, the state’s Energy Transition Act — which requires all public utilities to convert their grids to 50% renewables by 2030, 80% by 2040 and 100% carbon-free generation by 2045 — is encouraging a lot more utilityscale projects around the state.
Public Service Co. of New Mexico, which currently has 236 megawatts of utility-scale solar on its grid, expects to add another 100 MW this year, plus 300 MW more by 2023.
“There’s at least 400 MW of solar generation contracted to come online in the next 24 to 30 months,” said Gary Barnard, PNM director of strategic energy planning and development. “And we have more requests for proposals out there, so that’s really just the tip of the iceberg.”
This year, the Legislature approved a new Community Solar Act that Lujan Grisham signed into law. That will allow residential consumers, small businesses and some public institutions to directly purchase solargenerated electricity from private developers who will build and operate communityscale facilities around the state.
National companies that specialize in community solar projects are already setting up operations here to take advantage of the new law, such as Colorado-based Pivot Energy and Boston-based Nextamp Inc. And local companies are preparing to enter that market as well, including New Mexico Solar Group and Albuquerquebased OE Solar.
“Community solar will provide more opportunities for people in New Mexico, such as renters or low- and moderate-income households,” Kadlec said. “We’re exploring our options now, either to build community solar arrays ourselves, or to help sign up customers for projects built by other companies.”
OE Solar, which is focused on residential and commercial installations now, expects to dedicate about 15% to 20% of its business to community solar development in the future, said company founder and CEO Adam Harper.
“We see a lot of opportunity there, especially as the economy comes back after COVID-19,” Harper told the Journal.
State and federal policies, plus the overall maturation in solar markets and solar technology, are paving the way for accelerated industry development in New Mexico, Centerwall said.
“We’re doing great,” he said. “Residential deployment is as robust as it’s ever been, and utility-scale development as well. The industry as a whole is as large as it’s ever been in New Mexico.”