Making the switch to solar energy in New Mexico is not only an environmentally conscious choice but also a smart financial decision. The state’s sunny climate offers abundant solar power potential and various financing options make solar installations more accessible than ever. If you’re interested in solar energy but unsure how to cover the upfront costs, this guide will walk you through the best solar financing options available in New Mexico to help you make an informed decision.

Financing Options for Solar Panel Installation

Solar energy systems come with significant upfront costs, but there are multiple financing methods that reduce or eliminate the initial investment, allowing homeowners and businesses to enjoy the long-term benefits of solar power. Below are the primary financing options available:

Solar Loans (Highly Recommended)

This option is the best and most popular way to finance solar panel installations. With this option, you borrow money from a lender to pay for your system, and then repay the loan in monthly installments, like a home or auto loan. Check out SunState Solar’s financing partners here.

Key Features: Solar loans allow you to own the system, which means you benefit from tax credits and other incentives. Payments can be spread over several years (e.g., 10-20 years) and may be structured with fixed or variable interest rates.
Maintenance: Since you own the system, you are responsible for any maintenance or repairs, however there is very little maintenance, and many things are covered under warranty.
Benefits: You can take advantage of the federal solar investment tax credit (ITC) and other state-level incentives in New Mexico. Once the loan is paid off, you’ll enjoy nearly free electricity for the system’s lifetime (typically 25+ years).
Considerations: You’ll need to qualify for the loan based on your credit score and income. Be sure to compare interest rates to ensure you’re getting a good deal.

Leasing Options (We don’t offer leasing)

Leasing a solar system allows you to access the benefits of solar energy without owning the system. However, it’s important to note that at SunState Solar, we believe in OWNERSHIP thus we do NOT recommend leasing a solar power system for the following key reasons:

You Don’t Own the System: Since you don’t own the system, you won’t be able to benefit from incentives, tax credits, or rebates that are available to solar owners.
Potential for Lower Long-Term Savings: While leasing can lower upfront costs, the long-term savings may be lower compared to purchasing a system outright, especially if your lease payments are close to or higher than your energy bill.
Lease Payments May Increase: Some solar lease agreements include escalators, meaning your monthly payments can increase over time. This could offset some of the energy savings.
Impact on Home Sale: If you sell your home before the lease ends, you may need to transfer the lease to the new homeowner. This can complicate the sale, as potential buyers may not want to take on the lease.
No Equity in the System: At the end of the lease, you won’t own the solar panels unless you purchase them, so you won’t have an asset to sell or continue using without payments.
Limited Control Over the System: Since the leasing company owns the system, you may have limited say in system upgrades or modifications.
Eligibility Requirements: Leasing companies may have strict credit score requirements, so not everyone may qualify for a lease.

Power Purchase Agreements (PPAs) (We don’t offer PPA’s)

A Power Purchase Agreement (PPA) is another way to go solar without an initial investment. With a PPA, a solar provider installs and owns the solar panels on your property, and you agree to purchase the electricity generated by the system at a rate lower than what you would typically pay to the utility company.

Again (and similar to the leasing option), SunState Solar does NOT recommend using a PPA for purchasing a solar power system for many of the reasons stated above as well as:

Potential for Escalating Rates: Some PPAs include an annual price escalator, which increases the rate you pay for electricity over time. If the escalator rate outpaces utility rates, your savings could diminish.
Less Flexibility with Usage: The system is sized by the solar provider based on projected usage. If your energy needs change significantly, you may not be able to adjust the system size or capacity easily.

Maintenance, Terms, and Key Considerations

Choosing the right solar financing option involves considering several factors:

Ownership vs. Leasing: If you opt to own the system (through a loan or cash purchase), you’re responsible for maintenance but get to benefit from all available tax incentives. Leasing or entering into a PPA puts maintenance in the hands of the solar provider but means missing out on ownership perks.
Length of Agreement: Loan terms can range from 5 to 20 years, while leasing agreements and PPAs typically last 20-25 years. Review the length of the agreement and any early termination fees to avoid surprises.
Escalator Clauses: With leases and PPAs, some contracts include escalator clauses that increase your payments slightly over time (typically 2-3% per year). Ensure you understand how much your payments will change throughout the contract.
Maintenance Requirements: Solar panels are generally low maintenance, but ownership of the system means you’ll need to budget for occasional repairs or replacements (e.g., inverter replacement after 10-15 years). Many things are covered under the manufacturer’s warranty

Tax Incentives and Solar Rebates in New Mexico

Going solar in New Mexico comes with a variety of financial incentives:

Federal Solar Investment Tax Credit (ITC): Homeowners who purchase their solar systems (either with cash or through a loan) are eligible for a 30% federal tax credit on the cost of their installation through the ITC.
New Mexico State Incentives: The state offers additional incentives such as property tax exemptions for solar installations, ensuring that your home’s value increases without raising property taxes.
Local Utility Rebates: Depending on your utility provider, you may be eligible for rebates or incentives for going solar. For example, Public Service Company of New Mexico (PNM) offers a solar incentive program that provides cash rebates to customers who install qualifying solar systems.

Net Metering and Utility Savings

New Mexico offers net metering, a billing mechanism that allows you to earn credits for any excess solar energy your system produces. These credits can be used to offset your future electricity usage, reducing your utility bill.

When your solar panels produce more electricity than you consume, the excess energy is sent to the grid. In exchange, your utility company provides you with energy credits. During times when your solar system isn’t generating enough energy (like at night), you can use these credits to lower your electric bill. Over time, this can lead to significant savings, especially when utility rates rise.

Long-Term Financial Benefits of Going Solar

Installing solar panels not only helps you save on energy bills but also protects you from future rate increases. Over the system’s 25+ year lifespan, you can expect to see a significant return on investment (ROI). For homeowners who finance their solar system with a loan, the long-term savings often outweigh the cost of the loan.

Additionally, by going solar in the fall or before the year-end, you can take full advantage of tax credits and incentives, giving you a financial boost before the new year.

Conclusion

With various financing options available, going solar in New Mexico is more affordable than ever. SunState Solar is here to help you navigate your solar journey, ensuring you find the best solution to meet your energy needs and financial goals. Reach out to us today to learn more about your solar financing options and start saving!