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New Mexico Community Solar Policy Guide for Asset Owners & Developers

Everything you need to know about New Mexico’s current community solar legislation, eligibility rules, crediting mechanism and other important market details, created by Perch’s internal policy team. We help asset owners navigate the growth of community solar in markets across the country, and as new laws are considered and passed, Perch will provide updates and perspective on how it impacts your business.

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1. New Mexico’s Community Solar Program

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.

2. Low-Income Eligibility Rules and Project Specifications

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:

  • Medicaid
  • Supplemental Nutrition Assistance Program (SNAP)
  • Low-Income Home Energy Assistance Program (LIHEAP)
  • First-time homeowner programs and housing rehabilitation programs living in a low-income/affordable housing facility
  • State and federal income tax credit 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.

Project Specifications

  • Maximum capacity of 5 MW
  • Minimum of 10 subscribers
  • No subscriber can own more than 40% of a facility’s capacity
  • The project and its subscribers must be in the same utility territory
  • 40% of the capacity of each facility is reserved for subscriptions sized to 25 kW or less

3. Project Selection Scoring Criteria

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:

  • 15 points maximum for being fully permitted (holding all non-ministerial permits)
  • 3 points for a bidder with partners/principals with experience in subscriber recruiting and subscription management
  • 3 points for a bidder with partners/principals with experience in building and operating facilities shall be awarded 3 points
  • 4 points for a bidder with partners/principals with experience in working directly with low-income communities
  • 10 points maximum for fully secured financing
  • 5 points maximum for proximity and minimum voltage connection to utility interconnection
  • 2 points per extra 5% commitment above the 30% LMI minimum for a commitment to a 50% LMI level for the proposed project (up to a maximum of 8 points)
  • 8 points for a commitment to 40% subscription level to direct-bill LMI customers
  • 2 points to provide no up-front costs, no early termination fees, and no credit check for LMI subscribers
  • 7 points maximum for a commitment to supplement the community solar bill credit for any low-income subscriber, for a minimum period of five years a credit from the subscriber organization to the subscriber in the amount of an additional 20 to 30 percent of the utility solar bill credit
  • 6 points for a commitment to offer workforce training or educational opportunities to disproportionately impacted communities
  • 6 points for a commitment to contract for materials, supplies, or services only with businesses owned or operated by minorities, women, veterans, or Native Americans
  • 2 points for a commitment for the proposed facility to be owned by local community members
  • 6 points for bids with an existing and continuing partnership with a tribe, pueblo, local community, or non-profit community organization
  • 2 points for a bid for a project to be sited on a brownfield, built environment, or rooftop
  • 1 point for a project to be sited on municipal, county, or state land
  • 2 points for a project that has received a favorable analysis from the department of cultural affairs
  • 5 points to be awarded at the discretion of the administrator for any innovative benefit the project might have for the community, subscribers, or program overall

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.

4. RECs, Rates, and Tariffs

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 components of the TARR
  • The value of the renewable energy attributes
  • The distribution costs to be subtracted.

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.

5. Market Analysis

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.

New Mexico utilities

  • Public Service Company of New Mexico (PNM) - 125 MW allotted - Albuquerque based, with over 530,000 customers
  • Southwestern Public Service – 45 MW allotted - Based in eastern NM, a subsidiary of Xcel, with about 119,000 customers
  • El Paso Electric (EPE) - 30 MW allotted - Southern New Mexico, with service to west Texas, 95,000 customers

6. Appendix

Other considerations

  • Colocation
    • The commission will consider, on a case-by-case basis, allowing more than one community solar facility to be served by the same substation.
    • As long as a community solar facility is not served by the same substation as another community solar facility, it shall not be considered co-located with another community solar facility.
    • Facilities have the option to be co-located with other energy resources, but not other community solar facilities.
  • RECs that are not used, sold, or otherwise transferred may be carried for up to 4 years
  • A community solar project will have a separate bill from the utility
  • Unsubscribed Energy may be rolled forward for up to one year from its month of generation on the community solar facility account and can be allocated to subscribers during that period. At the end of that period, any undistributed bill credits will be removed and purchased by its respective utility at its applicable avoided cost of energy rate.
  • Important dates/deadlines
    • On April 1, 2023, and April 1, 2024, utilities and subscriber organizations must provide information to the PRC relevant to the report to the legislature due on November 1, 2024. The PRC will issue specific information requests no later than 45 days before each April deadline.
    • The 2-year pilot program will run until Nov 1, 2024, and then the statewide program will begin.
    • 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.
  • Electric utility service map
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