A new program offered by PNM could help move solar energy in New Mexico into the future
by Christie Chisholm, Weekly Alibi, January 12, 2006
Ken Lienemann is no stranger to energy. With a Bachelor's degree in Mechanical Engineering and a Masters in Remote Sensing, he certainly understands the technical elements involved in the process of heating and cooling. As an employee with the New Mexico Environment Department, he also grasps the ecological implications of how we chose to fuel our homes, our cars and our lives. And as an Albuquerque homeowner who's spent the last four years revamping his abode to increase energy efficiency, it's fairly obvious that to Mr. Lienemann, energy is quite personal.
But Lienemann's relationship with energy is about to get much more intimate, because, after a good many years of consideration, he's finally decided to take the big plunge. He recently purchased a photovoltaic (PV), or solar, system for his home, a considerable investment costing thousands of dollars, which this summer will be erected over his roof at the optimum angle for year-round light.
Yet Lienemann's new purchase may signal something more significant in New Mexico's renewable energy industry. Motivated to buy the system because of a new solar incentive program offered by PNM, Lienemann may be the first of many in the state to catch onto the new program, and therefore start producing his own light.
On Dec. 27, solar energy advocates around the state were given an opportunity to grin. A new PNM program that offers to buy “renewable energy credits” (RECs) from customers who produce their own energy with PV systems was approved by the Public Regulation Commission (PRC). Before you get confused, here's some background.
In 2004, the State Legislature passed the Renewable Portfolio Standard, which outlined a number of measures that the state was required to act on to increase renewable energy use. One of those measures required that 5 percent of all the energy PNM produces come from renewable resources by 2006. By 2011, the number increases to 10 percent.
The new PNM program seems like a win-win situation. PNM gets to buy the “renewable energy credits” created from their customers' PV systems, which then go toward their 5 percent marker. PNM customers get paid for the energy they produce, even if they use all that energy.
It's a progressive incentive that few states have caught onto, and it could be a crucial step in making solar power more affordable to homeowners and small businesses. The program has been approved through 2018, with a guarantee that customers who sign onto it will be paid the same price for the energy they produce throughout the whole 12 years (so there's no fear of the program terminating suddenly or the price plummeting).
Here's how the program works: You own a PV system. Your PV system produces energy from the sun. For every kilowatt-hour of energy your system produces, PNM pays you 13 cents. The program applies to all PV systems connected to the grid that are rated at 10 kilowatts or less, including those owned by businesses.
A kilowatt-hour (kWh) refers to the energy obtained from a power of 1,000 watts operating over one hour of time. In other words, it's approximately the amount of energy you need to fuel a hairdryer for an hour. According to Ben Luce, chair and policy director of the Coalition for Clean Affordable Energy (CCAE), who was a key player in working with PNM to craft the program and get it passed by the PRC, the average New Mexico home uses about 500 kWh a month. To translate all that into dollars and cents, it means if the average New Mexico homeowner has a PV system that creates all the energy for that household, the homeowner gains about $65 a month off the system, or $780 in a year. Ultimately, if someone participates in the program for all 12 years, they could gain over $9,300—an option that makes buying a PV system much more affordable.
The program is different from the net metering incentive PNM already offers, which has been in place for years and will continue to exist. With net metering, customers with PV systems who produce more energy than they can use sell their extra energy to PNM. That program is still in place, but is now supplemented by the PV buyback program, in which customers are paid for all the energy they produce, whether or not they use it themselves or feed it back into the grid.
Currently, there are only 60 households in the state with PV systems connected to the PNM grid, which services over 413,000 customers. However, both PNM and CCAE estimate that, with the new program, there will likely be around 45 new PV systems added every year for the next few years. “We're going to see [the results of this program] right away, the solar installation industry [in New Mexico] is going to increase fivefold almost immediately,” said Luce.
The new program will be in effect March 1, at which point PNM will begin taking applications. To find out more, visit pnm.com/customers/pv_rec.htm.
The Deeper Meaning
The solar energy program is the direct result of years' worth of legislation that has been aimed at trying to make renewable energy more widespread and affordable in the state. CCAE has been a pivotal player in the legislation, starting in 1998 when they campaigned to include renewables content in that year's deregulation legislation. Since then, they fought for the Renewable Portfolio Standard and created the legal basis for today's program, with Luce going before the PRC in 2004 proposing the rules needed to accommodate such an incentive.
Now, with this next step taken, Luce and others are optimistic about the future of renewables in New Mexico, but say the state must continue to act quickly if we want to meet both environmental and economic needs.
“Environmentally, we need huge cuts in greenhouse gas emissions as quickly as possible in the next few decades, and we're simply not going to get those unless we ramp up in renewable energy quickly,” said Luce. “And even with these incentives now, it's going to take a lot to get it up to the scale that it needs to be at, so we can't afford any delay. On the economic side, solar really is beginning to take off, and if New Mexico wants a piece of the pie, from an economic development perspective, it makes sense to get in as early as possible, and we're already behind states like California and New Jersey.”
Jeff Buell, spokesperson for PNM, said the company agrees with such sentiments. “We need to be looking at renewable resources, not just as a company, but as a nation. How are we going to provide electricity for the future? We need to take steps now, and we're looking for innovative ways to make that happen. [Through solar energy] we can take advantage of an untapped resource—a way to start doing that is to get customers involved in the production of electricity and the harnessing of that resource.”
Yet Buell admitted that the program, despite its obvious economic incentives, isn't set up for customers to make a profit, but rather to help offset the cost of going solar. “People who participate aren't going to be doing it to make money; they're going to do it because it's the right thing to do.”
It's All About Teamwork
By itself, the PV buyback program makes a significant difference to those wanting to invest in solar energy, but it can't cover the cost of solar technology on its own. Most PV systems cost between $9,000 to $30,000 upfront, a price tag most folks can't afford. And, even with incentives such as PV buyback and net metering, where customers make money back off the system over time, coming up with the initial cost for a system is too intimidating a feat for many homeowners and small businesses.
Luckily, there are other incentives. Last year, the Federal Energy Bill contained a tax rebate, which offers up to $2,000 to those who install PV systems. Unfortunately, the incentive is only available for the next two years. There is another bill, however, that will be looked at by the state this upcoming Legislative Session, starting Jan. 17. The Solar Tax Credit Bill would offer a similar rebate to New Mexicans who install PV systems, only the amount they could get back would be much higher. The credit would cover 30 percent of the cost of the installed system, minus any applicable federal solar credit, for a maximum credit of $9,000. Currently, the bill proposes making credits available for the next 10 years.
If the bill passes, it could have dramatic implications for making solar energy more affordable to those in the state, which would increase the market and ultimately aid in lowering the price of solar energy even more, said Luce. “With all of these [incentives] together, it will make solar break even for people.”
If that goal is achieved, Lienemann's purchase might have a higher significance—it could mark the beginning of a statewide trend toward a renewable industry.
For more information on solar systems, visit alibi.com for a web exclusive.
Want to Go Solar?
If you're interested in finding out more about photovoltaic (PV) systems, but don't know where to begin, look no further. Here's a list of websites that should help you in your journey.
Want to Buy and Install a PV System?
Get general questions about buying a solar system answered at www.nmccae.org/Dowloads/Buying_Solar_Systems.pdf.
Find a reference for all solar energy services and sustainable technology services in general at the New Mexico Solar Energy Association's website at www.nmsea.org/Professionals_Directory_Listing.htm.
Want to Know More About the Solar Tax Credit Bill?
That's easy. Visit www.nmccae.org/Solar_Tax_Credit/Solar_Tax_Campaign.htm.
Want to Find Out What Other States Are Doing?
You're in luck, someone created a website devoted to exactly that at dsireusa.org.