PNM RECs – Fading Fast

There are many benefits associated with generating electricity from rooftop solar. There is the warm and fuzzy feeling associated with the knowledge that electricity is being generated by renewable sunlight and not fossil fuel. There is also the benefit of financial savings, knowing that once the system is paid for completely, that no longer will you have an electric bill to pay. And there is freedom associated with never being victim to uncontrollable rising rates of the monopoly-esque utility companies.

One financial incentive solar customers receive comes in the form of REC payments provided by PNM. RECs are also known as Renewable Energy Certificates. Because the energy generated from a solar system comes from a renewable resource, sunlight, and PNM has an environmental portfolio standard to meet, every kilowatt-hour of energy generated equals one REC. PNM will pay solar customers RECs.

All of the electricity that is generated from a solar array flows directly into the grid, and RECs provide a credit to the homeowner for all amount of electricity that is generated each month. This is all being tracked and recorded by the REC meter installed next to the regular PNM electric meter, which tracks the amount of electricity the household uses. The remaining balance, the unused amount of kWh is what PNM returns to the solar customer in the form of a financial incentive, or a REC.

This has been a really nice incentive for solar customers, an incentive PNM provides in order to help them meet their environmental goals. However, PNM is making adjustments to this program and change is right around the corner.

Currently PNM pays its solar customers a total of 4 cents per every  kWh that is generated by the solar array.  A solar customer uses the solar produced energy free of charge and also benefits from the REC payments.  But that will soon change to 3.5 cents per kWh. And then 3 cents, and so on until it reaches 2.5 cents.

PNM has had this incentive program in place for several years. Initially, the REC payment amount was 13 cents per kWh for systems sized at or under 10kw (most residential systems).  Many PNM customers, especially those at the higher REC levels receive checks from PNM in the months where their usage is low relative to their production. This typically occurs in spring and fall months.

PNM has created this program with tiers of solar electricity capacity, allowing only a certain amount of solar generated electricity onto the grid. When each tier fills up, the payback incentive drops. At this moment, the 4 cents payback is on the verge of slipping into the 3.5 cent payback tier. The current tier, 4 cents, has only 522 kilowatts left from an original amount of over 3,000 kilowatts.   At an average system size of approximately 6.5 kilowatts, that’s about 80 systems left.   That is probably less than one month’s worth of applications.   Once it reaches full capacity, the incentive payback amount will drop to 3.5 cents. The clock is ticking!

We love installing solar arrays on rooftops. But each time we build a system, the incentives from PNM drop. Financial incentives are a big benefit to generating electricity from solar energy. But as we move along, those incentives will become less available. If you sign an interconnection application with PNM today, you would be locked into the current tier for the next 8 years. At the end of the 8th year, the REC payment will end.

There are other great incentives available from federal and state tax credits. Currently a total of 40% (30% federal and 10% state) tax credit off the purchased price of a system is available to new customers through the end of 2016. Who knows what kind of incentives will become available at the end of these offerings. There is no better moment than right now to go solar.

Learn more about available financial incentives by contacting us at 505-944-4220 for a free estimate. Click here to see a REC meter in action!

Example of how PNM REC payments are calculated:

REC Tier Customer Generation (kWh) Customer Usage (kWh) Net Usage for Month (kWh) REC Credit($ to customer less $5 service charge)
4 cent 800 600 -200 $27.00
3.5 cent 800 600 -200 $23.00
3 cent 800 600 -200 $19.00
2.5 cent 800 600 -200 $15.00


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