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Solar Panels in New Mexico: Cost and Savings

As solar power becomes an increasingly important part of the nation’s energy production, more states have started embracing it. New Mexico is one of those states, already receiving more than 5% of its electricity from solar power, with new residential solar installations growing each year.

If you live in New Mexico, you may be wondering if solar is worth it. The good news is for a sunny state like New Mexico is that the benefits and cost savings can be incredible. Sustainability, convenience, and savings are just a few of the pros of solar energy in New Mexico. 

Keep reading to learn how residential solar power works and how you can get started with solar energy in New Mexico.

Cost of solar panels in New Mexico

The total cost of your solar panels is determined by the components of your system, how many solar panels you need, plus any labor and permitting costs incurred. In general, residential solar systems cost between $15,000 and $25,000 (or $3—$5 per watt). This estimated cost is before tax credits and other rebates, meaning your final out-of-pocket cost is likely to be lower.

Solar panel setup

One of the factors that determine the cost of your residential solar system is the components included. Here are a few of the pieces you’re most likely to find in a home solar setup:

  • Solar panels: The essential part of your system is the solar panels themselves. Panels can be monocrystalline, polycrystalline, or thin-film. Each panel type has its own advantages and price tag.
  • Solar cell: A solar cell converts sunlight into electricity. This term is sometimes used interchangeably with solar panels. 
  • Inverter: Your home appliances and outlets are powered by alternating current (AC) power. Your inverter takes the direct current (DC) power from the solar cell and converts it into usable AC power.
  • Battery: If you create excess electricity, you can store it in your batteries to either power your home when there’s no sunlight or sell it back to the electricity grid.

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Solar incentives and rebates in New Mexico

Solar panels are an investment in your home, and several tax credits and other financial incentives help make them more affordable.

  • Solar panel tax credit: The federal government offers a 26% solar panel tax credit that allows you to recover thousands of dollars of your initial investment on your tax refund. The credit will decrease in 2022 and expire in 2024. As a result, you may want to take advantage of it sooner rather than later.
  • New Mexico net metering: The state has a net metering policy that credits you for the excess electricity your solar panels create. 
  • New Mexico tax credit: NM has a tax credit for residents who install solar panels as a part of sustainable building efforts on your home. There’s also a 10% solar panel credit available to New Mexico homeowners. 
  • New Mexico property tax exemption: The state has a property tax exemption to help prevent your property tax bill from increasing when installing solar panels.

Solar energy in New Mexico may help lower your electric bills

Solar panels in New Mexico can provide excellent financial savings. How? When your home runs on solar energy, you don’t have to pay for traditional electricity. Depending on your electricity rate, solar could save you more than a thousand dollars per year. And that’s before accounting for the 26% federal solar tax credit and 10% New Mexico state tax credit.

Let’s take a look at the numbers. Say you spend $15,000 on a solar system. You’ll be eligible for up to $3,900 for the federal solar tax credit and $1,500 for the state solar tax credit. Then, let’s estimate that your solar panels save $100 per month ($1,200 per year) in electricity. 

Given these figures, it would take you just eight years to recover your initial investment (ROI), as shown in this table below:

Energy independence in New Mexico can help you

Another significant benefit of solar panels on your home is achieving energy independence. Energy independence means you aren’t reliant on the traditional energy grid to power your home. 

Energy independence means:

  • You aren’t vulnerable to electricity price hikes. You see, when electricity demand is high, the price tends to go up. But when you power your home with solar, you don’t have to worry about those price increases. 
  • You can sell your excess electricity back to the grid to save even more.
  • You don’t have to worry about power outages. When all of your neighbors lose power from a storm or downed power line, you can use solar energy to power your home.

Your home is powered by green energy instead of traditional electricity, which requires the emission of greenhouse gasses to generate. As a result, you reduce your home’s carbon footprint.

How to buy solar panels in New Mexico

Are you ready to buy solar panels for your New Mexico home? Before you get started, it’s essential to do plenty of research. Choose Energy’s solar resources will help you find the best solar providers and ensure that solar is the right choice for your home. 

When considering solar for your home, be sure that your home is a good candidate for solar panels. Is your roof of good quality? Does it get a lot of sunlight? What is the slope of your roof?

It’s also vital to consider neighborhood factors. Some homeowners’ associations may require approval before you install solar panels on your home or have restrictions about the size of your solar setup.

To pay for your solar array, you can finance to own your solar system, lease your solar panels, or sign a solar power purchase agreement (PPA).

The future of energy is solar in New Mexico

New Mexico began implementing policies to encourage solar power back in the 1970s and 80s. As with many states, solar took a while to take off. Luckily, the state has been swiftly increasing its solar installations and shows no signs of slowing down.

In 2021, New Mexico ranked in the top 15 states for solar generation. The state gets roughly 6.14% of its electricity from solar power, which is enough to power 287,628 homes. The solar energy industry also creates more than 1,800 jobs at about 72 different solar companies in the state.

New Mexico has also seen increased residential and commercial solar installations, which places the state among the best-ranked states for solar industry growth.

Solar energy FAQs

Do solar panels save you money in New Mexico?

Yes. Solar panels in New Mexico can reduce or eliminate your electricity bill. Solar panels also increase the value of your home, which can help you recover your investment if and when you sell your home.

Are there disadvantages to using solar energy in New Mexico? 

Drawbacks to solar include cost and availability. Solar panels can be costly; however, solar tax credits and other incentives help reduce the cost. Additionally, they’re only really effective in areas that get a lot of sunlight. Luckily, New Mexico receives plenty of sun.

How does solar power help the environment?

Traditional energy generation emits greenhouse gasses that contribute to climate change and pollute the air and water. Since solar is a form of green energy, it doesn’t have those same harmful effects.

Is it better to buy or lease solar panels?

Buying solar panels allows you to save the most money in the long run. But since buying isn’t a feasible option for everyone, leasing solar panels help make solar more accessible.

What percent of New Mexico energy production is solar?

New Mexico currently gets more than 6% of its electricity from solar power, enough to power nearly 300,000 homes.

[Blend Images – Michael DeYoung]/Getty Images