NM’s solar industry outlook is looking up » Albuquerque Journal
ALBUQUERQUE, NM – Affordable Solar – New Mexico’s largest residential, commercial and utility installation company – doubles on industry-wide bets on spectacular market growth.
The local company is investing $ 7.5 million to nearly double the size of its Albuquerque facilities in preparation for what CEO Ryan Centerwall says will see the domestic solar industry grow by up to 500% over the next decade could.
“Progressive federal, state and local policies combined with widespread corporate and consumer adoption of renewable energy is a huge growth driver for the solar industry,” Centerwall told the Journal. “We could consider a 500% expansion of solar energy in the next 10 years.”
This includes an increase in the demand for battery storage systems that can let the electricity generated by the sun flow when the sun is not shining.
“We aim for 100% growth only in battery storage,” said Centerwall.
In preparation, the expansion of the Affordable facility includes an important step towards battery technology with a new manufacturing facility for the development and assembly of battery systems for all types of solar systems. Plans are in place to renovate a 30,000 square foot building on 3.5 acres of land that it will acquire at 3900 Singer NE along Interstate 25’s northern industrial corridor.
The expansion, backed by $ 625,000 in state and city funding, will allow Affordable to consolidate into a single location the approximately 17,000 square feet it now occupies in three different facilities in the Albuquerque area. The company expects to hire 70 more employees over the next few years and to increase the local workforce from 141 to over 200.
The rise in Affordable reflects an industry-wide boom in solar development in New Mexico and across the country.
The US solar industry installed 19.2 gigawatts of solar power capacity nationwide in 2020 – a 43% increase over 2019, which saw an annual record high in installations in March from the national Solar Energy, according to US Solar Market Insight 2020, a report released in the reporting year Industries Association and the consulting firm Wood MacKenzie
Solar development on a residential and utility scale rose to a record level in the past year. Residential complexes increased 11% and utility-scale installations increased 65%, according to the report. And Wood MacKenzie expects much greater growth over the next decade. It is forecast that 324 GW of new solar capacity will go online nationwide, more than three times the amount of solar installed nationwide in 2020.
This is a more conservative outlook than Centerwall’s 500% growth forecast. However, that suggests broad industry expectation for an outstanding decade, starting with another record year in 2021.
“This is going to be our best year ever,” said Centerwall. “We see continued growth over the next few years. Annual installations in the US will be around 40 to 45 GW per year by 2025.”
Push down from the top
Today’s growth and expectations for a coming, sustained boom are driven by many factors. These include state and federal measures aggressively pursuing renewable energy, rapidly growing markets as solar power is cheaper and widely accepted as a reliable source of electricity, and technological improvements in battery storage that can greatly enhance the benefits of solar systems.
President Joe Biden has made tackling climate change a national top priority, and his administration is pushing for a wide range of new measures to potentially get the country on a carbon-free electricity path by 2035. This could include a new national clean electricity standard – which would require utilities to switch to carbon-free electricity – as well as the option of a carbon tax or cap-and-trade system to encourage all industries to reduce and ultimately eliminate greenhouse gas emissions .
Biden’s infrastructure development plans include hundreds of billions of billions in investments in electric vehicle infrastructure to encourage and support the auto industry in moving to electric vehicles and to build a vast network of electric charging stations across the country.
They are also calling for the retrofitting of existing homes and buildings with energy saving technology and electric heating systems, massive transmission development to open up much more land for the development of solar and other renewable energies, tax incentives to accelerate the use of renewable energies, and huge investments in research and development to improve current renewable technologies and to build new systems.
These initiatives could be pushed back significantly by Republicans in Congress, and it is uncertain what the Biden administration can actually achieve. Much can be done by order of the executive, however, and with the Democrats currently in control of both chambers of Congress, the solar industry expects many aggressive and favorable federal action in the future.
There is bipartisan support for some key initiatives like research and development of non-carbon technologies and at least some tax incentives for the use of more renewable energies across the country.
In December, before former President Donald Trump stepped down, majorities in the bipartisan Congress approved an extension of the existing tax incentives for solar and wind development by two years. And now Biden is trying to expand that into 2030.
Jim DesJardins, executive director of the New Mexico Renewable Energy Industry Association, said the evolving federal plans and guidelines are creating tremendous opportunities for solar and other renewable development in New Mexico and elsewhere.
“There is now a great opportunity to change the way energy is produced in the country, which is having a huge impact on the local and national economies,” DesJardins told the Journal. “… We already have the solar and other renewable technology we need, so it’s all about the will to do this – roll up your sleeves and get it done. The President of the United States sets the tone by saying, “We want to do this,” and that’s great. “
The expansion of federal tax incentives in December is already having a significant impact, said Nick Kadlec, president and CEO of New Mexico Solar Group, a statewide installation company.
The federal tax credit of 30% was phased out since last year and dropped to 26% in January 2020. It should drop to 22% this year and 10% next year, and then disappear completely in 2023.
A 10% state tax credit for New Mexico homeowners and businesses was also eliminated in 2016. However, last year lawmakers reintroduced this tax credit, which went into effect in March 2020 after Governor Michelle Lujan Grisham signed it into law.
Now that the government loan is in place through 2028 and the federal loan is extended by 26% for another two years, the industry is now enjoying a lot more stability, Kadlec said.
“The industry referred to the tax incentives as a ‘solar coaster’, with loans going up and down at the state and federal levels,” Kadlec told the Journal. “Companies had to plan around that. But now we hope the new guidelines will level things out in the future, and there’s a good chance the federal tax credit under Biden will be extended for even more years. “
In addition to the tax extensions, Biden suggests converting the federal incentive from a credit that goes back to their tax bills to solar developers after the installations are completed into a refundable discount that developers can get immediately after the projects are completed. That could stabilize the industry a lot more, Centerwall said.
“Monetizing tax incentives is always a challenge,” Centerwall said. “Creating a refundable credit would be a welcome move.”
State level action
In addition to the reintroduced tax credit of 10%, other government measures are also significantly promoting local industry. In particular, the state’s energy transition law, according to which all public utilities must convert their grids to 50% renewable energy by 2030, to 80% by 2040 and to 100% carbon-free energy by 2045, promotes many more state-scale projects.
New Mexico’s Public Service Co., which currently has 236 megawatts of utility-scale solar power in its grid, expects to add another 100 MW this year and another 300 MW by 2023.
“At least 400 MW of solar power is expected to be operational over the next 24 to 30 months,” said Gary Barnard, PNM director of strategic energy planning and development. “And we have more requests for suggestions, so that’s really just the tip of the iceberg.”
This year lawmakers passed a new Community Solar Bill, which Lujan Grisham signed into law. In this way, private consumers, small businesses, and some public institutions can purchase solar power directly from private developers who build and operate community-scale facilities across the state.
National companies that specialize in municipal solar projects are already setting up operations here to benefit from the new law, such as Pivot Energy from Colorado and Nextamp Inc. from Boston. Local companies are also preparing to enter this market, including New Mexico Solar Group and OE Solar, based in Albuquerque.
“Community Solar offers more opportunities for people in New Mexico, such as renters and low- and middle-income households,” said Kadlec. “We are currently examining our options either to build solar systems for the community ourselves or to win customers for projects from other companies.”
OE Solar, which is currently focused on residential and commercial properties, expects about 15% to 20% of its business to be devoted to community solar development in the future, said company founder and CEO Adam Harper.
“We see a lot of opportunity there, especially as the economy is returning after COVID-19,” Harper told the Journal.
State and federal policies and the general maturation of solar markets and technology are paving the way for accelerated industrial development in New Mexico, Centerwall said.
“We’re fine,” he said. “The provision in residential areas is more robust than ever before, and so is the development on the supply scale. The industry is bigger than ever in New Mexico. “