Incentives reduce investment costs for homeowners and businesses. To accommodate the growth of solar and stimulate the renewable energy industry, governments have introduced various programs and incentives to help individuals save money.
New Mexico is ideal for solar because of the amount of sunshine that hits the state meaning the potential for solar production is among the highest in the nation. In terms of incentives there are currently 57 incentives. The most important ones include: Renewable Energy Tax Credits, Net Metering, Qualified Energy Conservation Bonds (QECBs), Modified Accelerated Cost-Recovery System(MARCS) & Property Assessed Clean Energy.
Federal Investment Tax Credit (ITC)
The Federal Investment Tax Credit (ITC) allows customers to pay off their annual IRS bills using up to 26% of their solar installation costs. For example, if your PV system costs $20,000, you can reduce your tax liability by $5,200. This tax credit reduces the upfront costs of your PV installation, allowing you to speed up the payback period of your investment. The ITC is applicable for residential and commercial solar projects until Jan 1st, 2023.
Net Metering is a residential and commercial program that allows you to sell back excess solar electricity to PNM in return for credits that can be applied to future electric bills. Another advantage of Net Metering is it removes the need to purchase battery storage for your solar system. Net Metering streamlines owning and generating your own electricity, and is available in New Mexico.
Qualified Energy Conservation Bonds
QECBs, or Qualified Energy Conservation Bonds may be used by state, local and tribal governments to finance certain types of energy projects. Generally speaking this program is geared towards commercial clients. QECBs are qualified tax credit bonds and, in this respect, are similar to Clean Renewable Energy Bonds (CREBs).
The advantage of these bonds is that they are issued with a 0% interest rate, and the Federal government pays all interest costs. New Mexico will receive bonding authority relative to its proportion of the national population (including a special “large city” set-aside for Albuquerque).
Modified Accelerated Cost-Recovery System (MARCS)
Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses and commercial clients may recover investments in certain property through depreciation deductions. A variety of solar-electric and solar-thermal technologies are classified as five-year properties under the MACRS.
Property Assessed Clean Energy (PACE)
Property Assessed Property Assessed Clean Energy (PACE) is a financing mechanism that enables low-cost, long-term funding for energy efficiency, renewable energy projects. PACE financing is repaid as an assessment on the property’s regular tax bill, and is processed the same way as other local public benefit assessments have been for decades. Depending on local legislation, PACE can be used for commercial, multifamily, nonprofit and residential properties.
Property owners across the US are using PACE financing because it lowers utility bills and may make their buildings more valuable. PACE pays for 100% of a project’s costs and is repaid for up to 20 years with an assessment added to the property’s tax bill.
Rural Energy for America Program (REAP)
Under the USDA Rural Energy for America Program, rural small businesses and agriculture producers are provided guaranteed loan financing and grant funding for the purchase, installation and construction of energy efficiency improvements.
Farmers and rural business owners across the US are lowering their bills and tapping into a more reliable power source by converting to solar. Most of our New Mexico farmer’s solar-electric project costs are covered by these grants and loans for least 25%.