New Mexico Solar Panels

New Mexico’s Solar Market Development Tax Credit (SMDTC) gives homeowners a refundable state income tax credit equal to 10% of the total cost of purchasing and installing a solar photovoltaic or solar thermal system, up to a maximum of $6,000. Because the credit is refundable, if the credit amount exceeds what you owe in state taxes, the New Mexico Taxation and Revenue Department will send you the difference as a direct refund. Any unused portion can also be carried forward for up to five years.

To claim the credit, you must apply through the Energy, Minerals and Natural Resources Department (EMNRD) within one calendar year of your installation. You’ll need to gather supporting documents from your installer, submit an electronic application to EMNRD, receive a certificate of eligibility, and then file the credit with the NM Taxation and Revenue Department. Processing typically takes 3–4 weeks. Certificates are distributed on a first-come, first-served basis from an annual statewide pool of $30 million (raised from $12M by SB 121 in 2024), so applying early in the year is strongly recommended.

Eligibility extends to individual New Mexico taxpayers, corporations, and agricultural enterprises who own the property where the solar system is installed. Federally recognized Indian nations, tribes, or pueblos that hold property in leasehold also qualify. The applicant must not be a dependent of another individual. There is currently no scheduled expiration date for this program.

New Mexico’s gross receipts tax (GRT) — the state’s equivalent of a sales tax — does not apply to the purchase and installation of qualifying solar energy systems. Depending on your local tax jurisdiction, GRT rates range from approximately 5% to 8.813%, meaning this exemption can save homeowners roughly $1,000–$2,800 on a typical residential solar installation. The exemption covers both equipment and labor costs.

As of July 1, 2024, the Legislature expanded this exemption to also cover energy storage equipment (battery storage) used to store energy generated from solar or wind sources. This battery storage exemption is in effect through July 1, 2034, making paired solar-plus-storage systems fully eligible for the GRT exemption. This is currently the only active state-level incentive specifically targeting battery storage in New Mexico.

There is no separate application process for homeowners — the benefit is applied automatically by your installer at the time of purchase. Simply ensure your installer is aware of the exemption and is applying it correctly on your final contract and invoice. The legal basis for this exemption is found in NMSA 1978 § 7-9-112.

When you install a solar energy system in New Mexico, the increased value it adds to your home is completely excluded from property tax assessment. Studies consistently show that solar panels increase a home’s resale value by 3–4% — on a $400,000 home, that could be $12,000–$16,000 in added value. Without this exemption, that increase could raise your annual property tax bill by $120–$240 or more each year. With the exemption, you keep all of that benefit tax-free.

The exemption is automatic and permanent — no application is required. When your county assessor reviews your property, solar energy systems are excluded from the valuation by law under NMSA 1978 § 7-9-112. This applies to both residential and commercial solar installations and remains in effect for as long as you own the system.

This incentive works quietly in the background but delivers real, ongoing savings year after year. Combined with the GRT exemption and the state tax credit, New Mexico’s property tax exemption is one of three state-level financial benefits that make going solar in New Mexico especially attractive.

New Mexico state policy requires all regulated investor-owned utilities (IOUs) — including PNM, El Paso Electric, and Xcel Energy (Southwestern Public Service) — to offer net metering to customers with solar energy systems. Under net metering, when your solar panels produce more electricity than your home uses, the excess is sent to the grid and your utility credits your account. When you need to draw power from the grid (at night or on cloudy days), those credits offset what you owe, often dramatically reducing or eliminating your monthly electric bill.

PNM (Albuquerque area) customers with systems under 10 kW receive full 1:1 retail-rate credits that roll over month to month indefinitely, with any remaining annual surplus cashed out at a reduced wholesale rate. El Paso Electric (Las Cruces, Deming area) credits excess generation at retail rates within the same month, with end-of-month surplus credited at a lower purchased power rate. Xcel Energy (SPS) customers in northeastern New Mexico receive 1:1 monthly credits, with excess valued at the FPPCAC rate. Many rural electric cooperatives — including Socorro Electric, Jemez Mountains Electric, and Continental Divide Electric — also offer net metering; contact your cooperative directly for their specific terms.

There is no statewide cap on aggregate net-metered capacity, and the program is available for qualifying systems up to 80 MW. Net metering is one of the most financially impactful solar incentives available in New Mexico, as it ensures you receive full value for every kilowatt-hour your system produces. Contact your specific utility or the New Mexico Public Regulation Commission (PRC) for the most current rate and program details.

Public Service Company of New Mexico (PNM) offers a performance-based Solar Renewable Energy Credit (SREC) purchase program exclusively for its residential and small commercial solar customers. For every kilowatt-hour (kWh) of electricity your solar system produces, you earn one SREC. PNM will purchase those SRECs from you at a rate of $0.0025 (one-quarter cent) per kWh for a period of eight years from the date your contract is executed.

While the per-kWh rate is modest, the program provides a guaranteed, long-term revenue stream on top of your net metering credits. Payouts are issued once your accumulated credits exceed $20. There is an application fee of $150 if you sell SRECs directly to PNM, or $50 if you retain and register your SRECs through the Western Renewable Energy Generation Information System (WREGIS) platform.

This program is exclusively available to PNM customers — it is not a statewide program and is not offered by El Paso Electric, Xcel Energy, or rural cooperatives. If you are a PNM customer, enrolling in this program at the time of installation is a straightforward way to maximize the financial return from your solar investment over the first eight years of system operation.

Established by the Community Solar Act (SB 84) signed in April 2021, the New Mexico Community Solar Program allows residential and small commercial customers of PNM, El Paso Electric, and Xcel Energy (SPS) to subscribe to a portion of a larger, off-site solar facility. The electricity generated by your subscribed share is credited directly to your monthly utility bill, providing ongoing savings without the need to own a roof or install any equipment. Subscribers receive a guaranteed 10% savings on their utility bills.

The program is open to all income levels with no upfront costs, making it an excellent option for renters, condo owners, and anyone whose roof is unsuitable for solar panels. Income-qualified households — those at or below 80% of Area Median Income (AMI), or enrolled in programs like SNAP or LIHEAP — may be eligible for deeper savings of 15–28% annually. New Mexico law requires that a minimum of 30% of the energy from each community solar project serve low-income household subscriptions.

The program is actively expanding: 7 projects were energized in 2025, with approximately 47 total projects planned. The New Mexico Public Regulation Commission (PRC) oversees the program. For current availability and enrollment information, contact the program administrator at (877) 794-0109 or [email protected].