The adoption of solar by homeowners in New Mexico has nearly tripled over the last three years, but the rate that commercial buildings are going solar has remained relatively low.
PNM, the largest utility in New Mexico, interconnected 3,500 solar arrays in 2017. Only twenty-six of the solar arrays were for commercial customers, and Affordable Solar installed around half of those. Although there are fewer commercial properties than homes in New Mexico, the reasons for the difference in the rate of solar adoption extends beyond the quantity of qualifying buildings.
The benefits of putting a solar array on your home are straightforward and relatively well-known.
As a homeowner, you can finance your new solar array with a solar loan through New Mexico based credit union Nusenda. Most of our customers end up paying less for their solar loan than they were previously paying for electricity. Once the loan is repaid, you have free solar energy powering your home. Residential customers can also take advantage of a 30% federal tax credit. Last—but not to be underestimated—the decision makers usually live under the same roof.
The decision to put solar on commercial real estate is more complicated.
The decision-making process is different from organization to organization; ownership structure can impact the financial structure of an investment, and non-owner-occupied properties require additional consideration around the tenant(s). Beyond that, business owners are constantly assailed with the daily challenges of running their company and often put property investments on the backburner. While these factors have slowed the adoption of solar in the commercial sector, the benefits are significant enough to merit consideration.
A business or a building owner who decides to invest in solar for their building not only has access to the same 30% federal tax credit that homeowners do, they also can depreciate 85% of the value of the system in year one. This often works out to a 20–30% additional tax benefit in the first year, thanks to bonus depreciation. Typically, the out-of-pocket expense for a commercial system is less than half of the original cost of the system after year one. This means business owners can use solar to significantly reduce tax liability while paying a reduced cost for a major property improvement.
Depending on their utility rate schedule, commercial real estate owners will achieve maximum financial benefit from either a pure solar project or a solar + storage project.
When we work with commercial customers, we can typically help good commercial solar candidates achieve an IRR of between 10-20%. There are not many business investments that yield equivalent or greater returns.
In 2016, Affordable Solar and Roadrunner Food Bank partnered together to put a solar + storage system on the food bank’s Albuquerque facility, at no cost to the food bank.
The food bank serves about 70,000 New Mexicans a week and was paying over $180,000 a year on their electricity costs. The system that was built for them saves them about $30,000 a year in the electricity costs and will save them $1.2 million over the warranted life of the system, all without any capital outlay. These energy savings allow Roadrunner Food Bank to provide an additional 150,000 meals for hungry families annually.
There is an incredible opportunity for financial savings for commercial property owners in New Mexico.
We have the best solar resource in the country, favorable solar policy, low-interest rates, and are experienced in helping business owners take advantage of all the available financial incentives. The opportunity has never been better to invest in solar for your commercial property.