Solar Subsidy Slated to Sunset

In six months, New Mexico’s hideously complicated tax code will get just a little bit simpler.

As the Santa Fe New Mexican reported earlier this week, the state’s solar tax credit, which “pays as much as 10 percent (up to $9,000) for solar photovoltaic or solar thermal systems,” expires at the end of 2016.

Not surprisingly, subsidy-seekers are signing up a rapid clip, in advance of the credit’s impending sunset. And “greens” are whining that the disappearance of the perk will spell doom for the solar “industry” in the Land of Enchantment.

Time will tell. But one thing we know for sure. In New Mexico, the fourth-sunniest state, solar has been a bit of a bust. Despite massive subsidization at the federal and state levels, and more sunshine than 45 other states, the Land of Enchantment is no solar star. The chart below, of “distributed solar PV installed capacity,” shows where we stand.


Source: U.S. Energy Information Administration

Cloudy, misty, foggy, rainy, and snowy, Maryland, New Jersey, Pennsylvania, Connecticut, New York, and Massachusetts make the top ten list. But not New Mexico.

For fans of Econ 101, this is good news. Crony capitalism considerations aside, as legislators James Strickler, James Townsend, and Larry Scott wrote in an Albuquerque Journal op-ed last year, “nightfall, the low efficiency of the panels when the sun is low on the horizon and occasional rainy days” make the (unsubsidized) “cost of a rooftop solar system installation … approximately seven times the cost per kilowatt of the most efficient power generating technology.”

The end of New Mexico’s tax perk for solar is a good thing. Now let’s get to work on the other giveaways that infest state’s tax code.