Though New Mexico had established renewable energy goals in 2019, it was in 2021 that a significant community solar bill passed into law. The Community Solar Act creates a program which allows 100 megawatts (MW) annually for a total of 200 MW of community solar development for New Mexico until 2024. After 2024, the cap will be set by the Public Regulation Commission (PRC) as part of their programmatic review and recommendations. For a state with over three hundred days of sunshine every year, there are few places better suited for community solar development.
The program will begin this year with rulemaking, program administration decisions, and project selection scheduled for completion by the fall. The PRC has selected a third-party administrator of the new program, InClime Inc. InClime will begin another RFP process for selecting community solar projects under the two-year pilot program before October 1st, 2022.
During this time the major utilities, Public Service Company of New Mexico (PNM), Southwestern Public Service (SPS), and El Paso Electric (EPE), will issue tariffs within 60 days of the effective date of the final rule, which is July 12, 2022. These three utilities, listed in order of market size, service the majority of New Mexicans and are the only utilities required to have a voluntary community solar program. (Native communities, also referred to as tribes and pueblos, and other rural electric cooperatives have the option to create community solar programs and are less restricted by the Community Solar Act.)
The projects will be chosen on a points-based system by the yet-to-be announced administrator that will be discussed below. However, there is a significant emphasis in the point system and the program as a whole for Low to Moderate Income (LMI) customers with 30% of the program’s capacity – 60 MW – reserved for LMI customers.
Low Income carveout and eligibility
The PRC will issue guidelines to ensure the low-income carve-out is achieved each year. A total of 30% of the annual statewide program capacity will be reserved for low-income customers and low-income service organizations. A low-income customer is defined as a residential customer of a qualifying utility with an annual household income at or below eighty percent of area median income, or that is enrolled in a low-income program facilitated by the state or a low-income energy assistance program. Low-income subscribers can pre-qualify for the 30% allocated total by being enrolled in one or more of the following programs:
The Commission will then establish a new cap after January 1, 2024 and require 30% of the program annually to be reserved for low-income customers and low-income service organizations.
The RFP for community solar projects will begin in the fall now that the program administrator has been chosen. The Commission provided a set of scoring criteria to qualify the competitive process through which community solar projects will be chosen. The current timeline projects that bids will be evaluated and ranked by October 1st after which an interconnection review will be conducted, and the project can begin to acquire subscribers
Criteria for awarding community solar projects:
Public utility customers are already submitting project proposals, but according to PRC attorney Russel Fisk, submitting an application early will not give the projects an advantage.
Though renewable energy certificates (RECs) will be generated by community solar facilities, it is required that those facilities sell the RECs to the utility to count towards statewide renewable energy goals.
The credit rate has not yet been established but will be based on the total aggregate retail rate (TARR). The utility must calculate the TARR on a per-customer-class basis, minus the commission-approved distribution costs. The utility also must identify all proposed rules, fees, and other charges converted to a kWh rate. (Includes fuel and power cost adjustments, the value of renewable energy attributes, and other charges of a utility’s effective rate schedule applicable to a given customer rate class, but not including charges described on a utility’s rate schedule as minimum monthly charges.)
The utility’s tariff for the bill credit must include a table specifying:
The utility will not subtract any costs of transmission from the solar bill credit rate calculation.
A utility must initially value the environmental attributes of RECs at the utility’s average cost of meeting its renewable portfolio standard requirement.
During the utility’s next base rate case, the PRC will consider whether to use a different methodology to determine the net present value of the environmental attributes of RECs necessary to reach the mandated 80% renewable portfolio standard by 2040.
New Mexico has its highest population density in the central part of state like Albuquerque and its metropolitan region with some other denser cities like Santa Fe. This service territory covers more than half of New Mexico’s population of 2 million is serviced by the state’s largest electric utility, PNM. The other utilities, SPS and EPE, cover eastern New Mexico including Roswell, and southern New Mexico including Las Cruces, respectively. There is an option for the PRC to reallocate unused community solar MW to a different service territory if it is unfilled and there is demand elsewhere.