A bill reinstating a tax credit for homeowners who install solar panels is headed to the governor’s desk for her signature.
The House voted 51-19 to approve Senate Bill 29, introduced by Sen. Mimi Stewart, D-Albuquerque, and Rep. Matthew McQueen, D-Galisteo. The Senate approved the measure last week on a vote of 33-6.
Tripp Stelnicki, a spokesman for Gov. Michelle Lujan Grisham, said she will sign the bill.
In an effort to encourage more homeowners to install solar power, the bill offers a 10 percent income tax break on the cost of solar equipment and installation, with a cap of $6,000 per project.
The law has a provision calling for it to expire in eight years, and the distribution is limited to $8 million a year, McQueen told the House.
“We expect an uptick in [solar energy] activity because of the financial incentive,” McQueen said.
New Mexico offered a similar deal for solar projects from 2008-16.
House Republicans argued the incentive was too generous and one of many tax credits that could hurt the state in times of financial stress.
“I see all these fantastic tax credits, and we just generally don’t have enough money to do them,” said Rep. R.J. Strickler, R-Farmington. He said the bill will “tie the hand of future legislators if we hit a downturn [in the economy].”
Other Republican lawmakers questioned whether the state needs to offer an incentive to further push solar energy initiatives at a time when they already are gaining popularity.
The Legislative Finance Committee’s fiscal impact report on the bill said it is difficult to determine the volume of residential solar installations in New Mexico because the previous solar tax credit expired in 2016.
According to the U.S. Energy Information Administration, more than 16,000 New Mexicans were using solar power as a source of electricity by the end of 2017.
Santa Fe-based Positive Energy Solar reported in January it had installed “some 300 residential solar systems in Santa Fe and about the same number in Albuquerque” in 2019.
Using data from the state Energy, Minerals and Natural Resources Department, the fiscal impact report says the average cost of a solar power system between 2010 and 2014 was $28,000, with an average credit of $2,764.
McQueen said the average cost now is about $20,000.