South Valley, New Mexico, is an unincorporated region in the Albuquerque metro area. The population is about 40,000, and the residents overwhelmingly rejected incorporation in 2010. The area can claim some fame in the hit TV series Breaking Bad, with parts of the series filmed there.
One of the best things about South Valley, though, is that it lies in a very sunny area of the United States. With over 3,400 hours of sunshine per year, averaged over 1981-2010, and 77% of possible sunshine hours actually providing sunshine, the area is absolutely great for installing a solar energy capture system.
The sun creates energy by fusing atoms together. We are trying to find out how to do this on Earth, but we won’t be able to do it on the scale of the sun. The sun sends more energy to the surface of the Earth in a couple hours than the whole world uses in an entire year. We need more energy every year, and the sun can provide a lot of it for no charge. The solar roof has been around for a while, but it has recently become feasible for individual homeowners. The entrepreneur who started such futuristic ventures as Tesla Motors and SpaceX, Elon Musk, claims he can produce solar roofs for less than what a regular roof would cost.
This is the result of the Swanson Effect (see above graph): the more solar panels sell, the cheaper they will be. The idea is that as companies take in more revenue, they will be able to put more money into research and new competitors will enter the markets. The new technological breakthroughs and the increased competition forces prices down. Just to show the effect, from just 2008 to 2012, the price of solar panels crashed 67%.
Not only can you produce your own energy, you can help save the planet at the same time. We owe it to future Earthlings to take care of our planet, and implementing solar is one way – even possibility a lucrative way – for you to participate.
It will cost about $20,000 to install a new, 5kWh system into your home. That is a substantial amount of investment the average individual household, but there are various ways to finance the project. There are also incentives, with the federal government allowing a 30% tax credit for a solar system installed before 2020 – after this you will get progressively lower credits. That puts the price at $14,000. That money does not simply disappear, either.
With solar panels New Mexico, you can claim the $20,000 in your home’s equity if you decide to put it up for sale, but you will not have to pay the property taxes associated with that addition. This is known as the Renewable Energy Systems Property Tax Exemption. However, the installation cannot increase the property’s assessment by more than 3% of the previous year, so you can’t install a massive system and get it all taken off your tax bill.
South Valley can get quite warm in the summer, requiring air conditioning. You may also have a small business that requires energy. This can all be powered by a home solar system, and you will eventually reap the benefits of the not having to rely on fossil fuel power generated by a company that is far away in both space and interests. What exactly is your ROI? That depends on how you finance your system, with the three methods of financing being cash, credit, or lease. Don’t let the price tag discourage you, because you get help.
Cash is the best way to finance the project. You will need to invest the $20,000 directly yourself. If you have this amount of capital at your disposal and are willing to park it in a long term investment, you should consider solar. There are no interest payments and you will start saving immediately. The best part is you own the equipment from the outset. If you save $1000/year on energy costs, you could start to see your panels pay for themselves in just a little over 10 years. Any house that uses a lot of energy, or even a small business that runs from a household, will see a better time to payout, since you will be saving even more.
If you have it, cash is the most financially optimal route.
Leasing is the financial act of exchanging money for the use of some equipment. You do not own the equipment and must return it at the end of the lease. You may also renegotiate the terms if you want to stay on. One positive aspect is that you will not have to perform maintenance, as most companies will offer maintenance services along with the lease. However, note that you cannot get any of the tax incentives if you go through leasing, as you do not own the equipment.
Credit Perhaps you don’t have that much cash or you simply want to keep your cash in more liquid assets. Maybe you don’t like the idea of tying that much capital up in a decades-long investment. A loan may be best for you. You will need to talk to your preferred bank, but throughout New Mexico you can find banks specializing in loans for home systems. Check out EnergySage to find said banks. You may already even be a customer there.
The government encourages this option by allowing you to write off your interest payments from your tax bill. You will eventually own the equipment, too.
The Renewable Portfolio Standard (RPS) is a state’s quantified commitment to bringing renewable energy sources into the infrastructure. This measure gives an idea of how serious the state government is in helping its citizens implement renewables and phase out fossil fuels. The higher the number, the better – it gives you more opportunities to finance your solar project.
New Mexico’s RPS is one of the best in the country (coming in the top 10). The state will require 30% of energy to come from renewables by 2020, with 20% of that portfolio coming from solar. Furthermore, New Mexico offers net metering, which means you can sell power back to the utility company. If you make less than $50, the credit is rolled over to your next electric bill (which is hopefully zero), but if you make more, you will be paid by the utility company.
New Mexico is the second sunniest state in the Union, with only Arizona coming out with more sunshine. Particularly in South Valley, the average solar energy hitting the surface of the Earth is more than 6.5kWh per square meter per day. Even if you only have a few square meters of roof, you will be able to generate quite a bit of energy just by living in South Valley.
The state even boasts being in the fourth spot for installed solar generation, which says a lot for a state so sparsely populated. And while the cost of electricity in New Mexico is not quite as high as in states like California, the government provides significant incentives to install solar on your own property.
There are several non-financial benefits to installing a home solar system. First, you will generate your own electricity, so you will be independent of an energy company that can raise its prices unexpectedly. That seems financial, but you can also see it as a way to remain free from outside control. And while you will be independent of human energy production, long-term trends show South Valley to have substantial sunshine, and the sun is estimated to power itself for another few billion years. You won’t have to worry about the sun shutting itself off.
Another consideration is the storage of energy for when you cannot produce it yourself. Heating and cooling are both very energy intensive processes, and you can power both through solar systems. Heating water especially is a good way to store energy, because it is easy to store way in insulated containers. The high specific heat of water also means you won’t need a huge volume for relatively high amounts of energy storage. Battery technology is also charging forward and you will likely be able to buy batteries in the near future to power your home. Charge during the day and expend the battery at night.
The only person who can make the final decision is you. You will need to calculate how much energy you use, how much you can save from your current electric provider, how much you can afford to invest in solar, and if you want to have such an installation on your property.
If you live in South Valley, your state provides great reasons to go solar. You have a high RPS and can even make some extra money off your installation, which is highly likely if you have a large area. The very high sunshine percentage and kWh production capacity lend themselves to making you energy independent and even generating some cash. You have good tax exemptions and net metering laws, and you can take advantage of the high solar percentage utilities will be required to achieve and maintain.
Again, the cost of electricity in South Valley may make the installation of a home solar system less attractive, but you can also sell your power back to the electric company. Albuquerque still needs more power than it can generate for itself right now, so you can take advantage of the imbalance in the market and run your own little power company.