Several utility-scale solar, wind and geothermal power projects are ready to be built in New Mexico, but the state’s tax credit to encourage industry growth has a production cap, limiting the number of companies that can apply. Energy producers are hopeful that lawmakers, during their current session, will beef up the incentive and help the state increase its renewable-energy production.
“It’s oversubscribed already,” Sen. George Dodge Jr., D-Santa Rosa, told the House Energy, Environment and Natural Resources Committee on Wednesday as he introduced House Bill 242, which seeks to raise the renewable energy tax credit caps. Dodge’s bill is supported by utilities, rural electric cooperatives and state regulators.
The committee advanced HB 242 without recommendation, but lawmakers told Dodge the bill would need a lot of revisions to make it through its next stop, the House Ways and Means Committee. While it could encourage more energy firms to build projects in New Mexico, HB 242 also would deprive the state of more than $10 million a year in forgone tax revenues, according to an analysis by the Legislative Finance Committee.
The state’s renewable-energy production tax credit gives some money back to producers based on the amount of electricity they generate. But the 2 million megawatt-hour cap on the tax credit for wind and biomass has been reached, according to Dodge and the state Energy, Minerals and Natural Resources Department. The tax credit for solar projects, capped at 500,000 megawatt-hours, has been fully claimed, and companies are awaiting credit approval for 810,337 additional megawatt-hours of solar power.
Dodge’s bill seeks to increase the incentive program’s production cap for wind, biomass and geothermal projects to 3 million megawatt-hours and double the solar energy tax credit cap to 1 million megawatt-hours.
The bill also seeks to make the tax credit available until 2032. Companies that qualify can only claim the tax credit for 10 years. Dodge’s bill also would reduce the tax credit available for solar over time, due to the declining costs of installing solar. If HB 242 passes, all the pending tax credit applications for wind and biomass projects and 16 pending solar projects could be approved for credit, according to officials from Energy, Minerals and Natural Resources.
Attorney Peter Esposito of Infigen Energy, which has solar and wind farms in New Mexico, said the tax credit is an important incentive for companies and investors looking to finance projects in the state. Infigen has 11 solar projects in the works, including two at existing wind farms and several in the remote oil and gas fields to help producers.
Keven Groenewold, director of the New Mexico Rural Electric Cooperative Association, said that by helping energy projects, the bill ultimately will help the group’s member cooperatives meet state-mandated renewable-energy standards, help landowners who lease their property for the wind and solar farms and create much-needed jobs in rural areas.
“This is truly a rural economic development bill,” Groenewold said.
Dodge’s bill is one of several renewable-energy bills lawmakers are considering this session. The House Energy, Environment and Natural Resources Committee also recently endorsed HB 70 to increase the cap on the available tax credit for individuals who install solar photovoltaic or solar thermal home power systems.
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