A typical residential solar panel system costs $14,664 in New Mexico before incentives.
Jump to insightNew Mexico’s solar tax credit covers 10% of eligible system costs, up to $6,000.
Jump to insightQualifying residential solar systems are valued at $0 for property tax purposes, and solar equipment may qualify for a gross receipts tax deduction that can lower installation costs.
Jump to insightNet metering is available, but how excess electricity is credited depends on your utility and system size.
Jump to insightResidential solar incentives in New Mexico
New Mexico does not offer one single upfront rebate for every homeowner, but its tax credits and exemptions can still reduce the overall cost of going solar.
Solar Market Development Tax Credit
New Mexico homeowners who purchase and install a qualifying solar system can receive a refundable state income tax credit equal to 10% of eligible costs, up to $6,000.
Eligible expenses can include:
- Solar panels and other equipment
- Materials and installation labor
- Design fees
- Permits and inspections
- Utility interconnection costs
Because the credit is refundable, you may receive the unused portion as a refund if it is larger than the state income tax you owe.
To claim it, you must first apply to the New Mexico Energy, Minerals and Natural Resources Department for certification. You generally need proof of property ownership, a successful inspection, an itemized invoice and technical information about the system. Complete applications must be submitted within the required filing window.
Pro tip
Start gathering your invoices, inspection records and system diagrams as soon as installation is complete.
Residential solar property tax exemption
Solar storage batteries cost $7,000 to $18,000.
Qualifying residential solar systems are valued at $0 for New Mexico property tax purposes. This means the value your panels add to your home generally won’t increase your property tax bill.
The rule applies to property valuations made on or after Jan. 1, 2025. It covers qualifying panels, battery storage, mounting equipment, monitoring systems and other parts of the solar installation.
Solar gross receipts tax deduction
New Mexico uses a gross receipts tax instead of a traditional state sales tax. Businesses normally pay this tax and may pass the expense on to customers.
However, receipts from selling and installing qualifying solar systems may be deducted from the installer’s taxable gross receipts. This can keep the tax from being added to eligible solar equipment and installation costs. The installer or seller claims the deduction, not the homeowner.
Pro tip
Ask your installer whether the quote already includes the solar gross receipts tax deduction.
Sustainable Building Tax Credit
The Sustainable Building Tax Credit covers certain energy-efficient products in existing homes, as well as qualifying new construction and commercial renovations. It is not a second general tax credit for a standard rooftop solar installation.
If you claim the Solar Market Development Tax Credit, you generally cannot also count that solar system toward the building certification or energy-reduction requirements for the Sustainable Building Tax Credit.
What to know about net metering in New Mexico
Net metering lets your solar panels offset electricity you draw from the grid. When your system produces more power than your home uses, the excess is either saved as a bill credit or purchased by the utility.
New Mexico requires regulated utilities to offer net metering options, but the exact rates and rules vary by provider.
PNM customers
PNM handles excess solar electricity differently depending on the size of the system:
- Systems of 10 kW AC or less: Excess electricity is saved as kilowatt-hour credits and applied to future bills. The credits do not expire while the account remains open.
- Systems larger than 10 kW AC: PNM pays for excess electricity each month using its approved purchase rate.
If you close the account, PNM pays for any remaining banked credits using its applicable purchase rate.
El Paso Electric customers
Excess electricity sent back to the grid is credited at El Paso Electric’s applicable Rate 16 purchased-power rate. This rate can change monthly and is generally lower than the full retail electricity rate.
Electric cooperatives and municipal utilities may use different rates and billing rules. Before estimating your solar savings, ask your utility:
- Will my excess power be banked or paid out?
- What rate will I receive?
- Do unused credits expire?
- Are there additional meter or interconnection fees?
- Is there a limit based on my past electricity use?
How much are solar panels in New Mexico?
Solar panel costs in New Mexico typically range from $14,082 to $28,164, though individual costs vary. System size is one of the biggest cost factors. As you can see below, the difference between a 6-kilowatt system and a 7-kilowatt system is thousands of dollars.
Average solar panel cost by system size in New Mexico
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Statewide | $14,082 | $16,898 | $19,715 | $22,531 | $25,348 | $28,164 |
| Albuquerque | $14,424 | $17,308 | $20,193 | $23,078 | $25,962 | $28,847 |
How can I pay for solar panels?
You can pay upfront, but most people finance solar panels through a solar loan. Since you pay it back over time with interest, it will cost more than paying upfront. You can also consider a lease or PPA (power purchase agreement).
» SOLAR PANELS: Lease vs. buy
Federal solar loan programs
New Mexico homeowners may still qualify for other federal programs that support home energy upgrades. These work alongside, not instead of, New Mexico’s own state-level solar incentives listed above.
- Energy Efficient Mortgages: FHA-insured Energy Efficient Mortgages let homebuyers and homeowners finance the cost of solar panels and other qualifying energy improvements into their home loan, without separately qualifying for that portion of the loan.
- Fannie Mae Green Financing: Fannie Mae offers green financing options with preferential pricing and added loan proceeds for multifamily properties that invest in solar and other efficiency upgrades; this is less relevant to single-family homeowners but may apply to larger residential developments.
Find solar companies in New Mexico
A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for the top solar companies in New Mexico to learn more.
| Company | Customer rating | Professional installation | Payment options | Year founded | |
|---|---|---|---|---|---|
 Project Solar | Learn More | 4.0 |  | Cash, loan | 2020 |
 Green Home Systems | Learn More | 1.0 | | Cash, loan | 2017 |
 Sunrun | Learn More | 4.3 | | Cash, loan, lease | 2007 |
 ShopSolar | Learn More | 4.4 |  | Cash, loan | 2018 |
FAQ
Can I get solar panels for free in New Mexico?
New Mexico does not currently have a statewide program that guarantees free rooftop solar panels to homeowners. Its income-qualified Solar for All program is paused, although some residents may eventually benefit from community, tribal or other targeted solar projects. Leases and PPAs can also have little or no upfront cost, but they are not free.
» FREE SOLAR PANELS: Are they really free?
How much can I save with solar panels in New Mexico?
Over 25 years, New Mexico homeowners with solar panels avoid $22,365 in utility costs on average. Even if you don’t generate 100% of your energy needs, you can still save a lot of money compared with paying traditional utility bills.
Knowing your average energy consumption helps determine the size and capacity of the solar system you need. Once you know this, you can figure out potential savings and how long it should take for your solar installation to pay for itself.
On average, solar panels usually pay for themselves within 14.41 years in New Mexico.
Is my HOA allowed to restrict solar panels?
New Mexico law generally prevents HOAs and deed restrictions from effectively prohibiting solar panels. However, reasonable placement requirements may still apply, and local governments may regulate solar installations in historic districts.
Does New Mexico have renewable energy certificates?
New Mexico utilities previously offered additional payments for the renewable energy certificates, or RECs, generated by residential solar systems.
That incentive program closed to new customers on Dec. 31, 2022. Homeowners who enrolled before the deadline should check their existing contract for payment rates and expiration dates.
How do I know if my house is a good candidate for solar?
It’s best to have plenty of unshaded roof space that faces south or west for optimal sun exposure. It’s also smart to upgrade any old, inefficient appliances first. Reducing your electrical loads now means you can get a smaller system, which will be cheaper.
The condition of your roof matters too — if it needs replacement soon, do that before installing solar panels. Installing solar panels on an old roof might mean you have to remove the panels, replace your roof and then reinstall the panels. This will cost around $5,000 for a 19-panel setup.
What has New Mexico’s solar investment been so far?
Total solar investments in the state equal $6.9 billion, according to the Solar Energy Industries Association.
Bottom line
Buying solar panels is a big upfront investment, but it turns out that it’s worth it for many homeowners, particularly in New Mexico. The ConsumerAffairs Research Team conducted an in-depth analysis to determine how much solar energy costs in New Mexico and the average solar cost in other states.
Solar panel costs: New Mexico vs. nearby states
| 6 kW system cost (before incentives) | 10 kW system cost (before incentives) | Typical system size needed* | Average cost per watt | Total utility power cost savings** | |
|---|---|---|---|---|---|
| Arizona | $12,823 | $21,372 | 7 kW | $2.14 | $42,844 |
| Colorado | $16,729 | $27,882 | 4.9 kW | $2.79 | $31,582 |
| New Mexico | $16,898 | $28,164 | 5.2 kW | $2.82 | $22,365 |
| Oklahoma | $14,154 | $23,589 | 7 kW | $2.36 | $29,807 |
| Texas | $13,148 | $21,914 | 7.1 kW | $2.19 | $80,284 |
| Utah | $18,120 | $30,200 | 5.8 kW | $3.02 | $31,768 |
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- DSIRE, “New Mexico Programs.” Accessed July 20, 2026.
- New Mexico Energy, Minerals and Natural Resources Department, “Tax Credit Programs.” Accessed July 22, 2026.
- New Mexico Energy, Minerals and Natural Resources Department, “Solar Market Development Tax Credit (SMDTC).” Accessed July 22, 2026.
- New Mexico Energy, Minerals and Natural Resources Department, “Sustainable Building Tax Credit (SBTC).” Accessed July 22, 2026.
- New Mexico Energy, Minerals and Natural Resources Department, “Renewable Energy Production Tax Credit (REPTC).” Accessed July 22, 2026.
- New Mexico Energy, Minerals and Natural Resources Department, “Agricultural Biomass Income Tax Credit.” Accessed July 22, 2026.
- New Mexico Public Regulation Commission, “New Mexico Incentives for Customer-Owned Solar Photovoltaic Systems.” Accessed July 20, 2026.
- PNM, “PNM Customer Solar Energy Program.” Accessed July 20, 2026.
- El Paso Electric, “New Mexico - Interconnection of Facilities Less Than 25 kW.” Accessed July 20, 2026.
- New Mexico Compilation Commission, “ARTICLE 3 Solar Rights.” Accessed July 20, 2026.
- Solar Energy Industries Association, “New Mexico Solar.” Accessed July 20, 2026.
