Bills to reinstate New Mexico's solar tax credit move ahead

Markets Associated Press

Bipartisan efforts are making headway in the New Mexico House and Senate to reinstate a tax credit that spurred nearly a quarter-billion dollars of investment in roof-top solar and related jobs in the nation's second sunniest state before expiring last year.

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A Senate panel on Tuesday endorsed a bill that calls for renewing the credit for an additional eight years. A House committee took action Monday on a similar bill.

The credit expired in 2016 despite attempts during the previous legislative session to extend the program. The chief concern was the $5 million it would cost the state annually to continue the program.

While lawmakers are grappling with a budget crisis, supporters of the solar credit reiterated during a hearing before the Senate Conservation Committee that the return on investment outweighs the cost and the legislation should be seen as an economic development bill.

"This is one of the few bright spots in New Mexico's economic landscape," Dan Lorimer of the Sierra Club told the panel of lawmakers.

A record number of solar panels went up in 2015 and job growth within the industry jumped by more than 18 percent, signaling new economic opportunities for the struggling state. In 2016, the state was flooded with applications for the tax credit program and met the cap midway through the year.

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Regina Wheeler, chief executive of installer Positive Energy Solar, acknowledged a slowdown now that the credit has ended. She said her company was awarded state job-training funds for new positions but was unable to hire more workers.

With the 10 percent tax credit expiring at the end of 2016, New Mexico joined other states where solar credits and other incentives have started to disappear. Federal incentives for residential roof-top solar projects also are set to evaporate from the current 30 percent to zero after 2021.

Some have argued that the incentives are no longer needed by the industry and that continuing the subsidies would be unfair for those electric customers who still cannot afford to invest in solar panels.

Wheeler told lawmakers the industry has been working hard to lower prices.

The Solar Energy Industries Association says installation costs have dropped by more than 60 percent over the past decade.

In New Mexico, data compiled by state energy officials show the price for systems installed under the tax credit program have dropped from $9 per watt in 2009 to $4.52 in 2016.

The data also show nearly $40 million has been spent on labor to install systems over the past eight years.

"New Mexico is known for its abundant sunshine, yet Arizona and Colorado have more solar-related businesses, jobs and installation capacity than we do," said Republican Rep. Sarah Maestas Barnes, a sponsor of the legislation. "New Mexico needs this incentive to support the solar industry's growth in our state."

Under the New Mexico legislation, the tax credit would gradually be reduced from 10 percent to 5 percent for projects completed before 2025.