The New Year is looking bright for solar energy in New Mexico. At the end of December, the New Mexico Public Service Commission released a decision that will make it possible for the state’s utilities to continue to invest in solar energy.

The Commission agreed with Vote Solar’s recommendation to maintain the solar carve-out within the state’s renewable portfolio standard (RPS) and our proposal to require the utilities to use a progressive methodology for pricing out renewable energy projects used to meet the RPS.

The methodology forces the utilities to take into account the benefits solar brings to the grid. Essentially, it requires the utilities to look at the net cost of solar and other renewable energy resources (i.e. the costs minus the benefits).

If you want to get into the weeds of the decision, read on.

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Vote Solar participated in a hearing at the New Mexico Public Regulation Commission today that was the culmination of several months of work by the electric utilities, the Commission staff, customers, the solar industry, and others to address some of the basic renewable energy policies the Commission has had in place for a number of years.

The purpose of the hearing was to present testimony on, and discuss, the “RCT” or reasonable cost threshold (NM’s version of a rate impact cap). The RCT acts, effectively, as a cap on renewable progress. For 2011, it was 2% of all customers’ aggregated overall annual electric charges, increasing by 0.25% per year until Jan 1, 2015, at which time it will be 3%. Vote Solar is advocating for a methodology that would require the benefits of solar to be considered, thus expanding the amount of solar development in the state. It may not be hugely sexy . . . but trust us, it’s very important!

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We’re helping our compadres in New Mexico fight two critical battles for a strong, diverse solar market in the state.

Issue number one: New Mexico’s largest utility, PNM, recently proposed slashing its rebate program for customers that want to go solar. Instead the utility wants to maintain its monopoly hold on energy production – using panels and solar thermal plants that it owns & operates to meet the state’s renewable energy targets.

So what’s the big deal if the solar system is owned by a utility rather than a Wal-Mart or your Aunt Josephine? Isn’t a solar electron a solar electron? Not exactly.

Customer ownership allows residents, schools and businesses to reduce their monthly electricity bills by going solar. It fosters green job growth in a new energy market. It reduces the utility’s need for investment in expensive grid infrastructure. And it inserts a critical dose of competition that drives the cost of solar down for all. By and large, a utility-ownership model does not.

Utilities should not own the sun. It’s exciting to see PNM embrace solar, but not at the cost of electricity customers who want to invest their own dollars in advancing our clean energy economy. And we’re working to make sure the New Mexico’s regulators hear that message loud and clear.

And issue number two: The Commission is also deliberating on whether to allow companies – rather than utilities – to sell power in the state. Sounds arcane, but the decision would potentially throw the doors wide open on New Mexico’s solar market.

Often called a power purchase agreement or PPA, the model in question has proven to be a very popular way to go solar in the states where it’s allowed, like Colorado, California and New Jersey.  Rather than expecting a potential solar customer to cover the upfront cost of a new solar electricity system, a solar company installs, owns and operates a system on a customer’s roof and simply sells the electricity generated to the customer under a predictable, long-term contract. The customer gets affordable clean power from a system that is cash flow positive from its first day of operation–without the high up-front costs. It’s also the only way that non-taxpaying organizations  – such as cities and schools – can take advantage of the federal solar incentive, a 30% tax credit for solar installations.  Through a PPA, the solar company would take the tax credit and pass the savings on to the city in the form of lower electricity bills. All good stuff for overcoming the cost-barrier to going solar.

Want to see PPAs in New Mexico? If you’re a resident of the Land of Enchantment, let your Commissioners know.

Posted by Annie Carmichael

State Legislation

Maryland, New Mexico and Virginia just joined the municipal-tax assessment solar financing party (a trend I wrote about in February). We haven’t figured out a catchy acronym yet, but trust me, this policy is hot.  The state legislators we are working with consistently tell me that this is their ‘favorite clean energy policy.’

Why so popular this legislative session? Frankly, it’s well suited for these troubled economic times. It’s meaningful solar policy that doesn’t add more red to strapped state budgets. It’s a fiscally painless way that legislators can help constituents go solar without breaking the bank. And it shows the feds that they’re taking the new green economy seriously.

State and Local Interplay
In most cases, local jurisdictions need authorization from statewide legislation before they can create property tax financing districts. Once statewide legislation is passed, cities can start programs that help property owners go solar without any daunting upfront costs. Instead, those home or business owners can choose to get a loan from the city to cover system costs and then pay it back over 20 years through a little bump in their property taxes.

Already this year we’ve seen Virginia, New Mexico and Maryland join California and Colorado in passing enabling legislation. And there are still several pending bills across the country: Nevada, New York, Oregon, Texas, Vermont, and Wisconsin could all join the party in the few remaining weeks of this legislative session. We will keep you posted.

Considering the popularity of these programs in cities where they’re already up and running, this legislative trend spells exciting times ahead for solar all across the U.S. Take a look:

• Berkeley, California was the first out of the gate last year when it passed an ordinance to enable residents to spread out the cost of renewable energy systems and energy efficiency upgrades into a 20-year increased assessment on their property taxes.  The FIRST program is still in the pilot project phase, with 40 homes participating, and $1.5 million budgeted.

• Boulder, Colorado held its first application period in early April with 519 properties signed up in one week. Their program’s first bond will be for $9.55 million to finance solar PV, solar thermal, and energy efficiency projects.

• San Francisco, California plans to disburse $20 million to $30 million in loans to home and business owners by the end of 2009.