“Community solar” projects are coming to New Mexico for the first time under new enabling legislation that Gov. Michelle Lujan Grisham signed into law Monday afternoon.
The state Legislature approved the Community Solar Act, Senate Bill 84, in this year’s session to allow residential consumers, small businesses and some public institutions to directly purchase solar-generated electricity from private developers who will build and operate community-scale facilities around the state.
A broad coalition of clean energy advocates supported the bill to provide renters, low-income households, and commercial and government entities that lack capacity for rooftop installations to tap into solar generation.
“This represents a momentous advance to provide equitable access to solar energy,” said Beth Beloff, executive director of the Coalition of Sustainable Communities New Mexico. “It will help accelerate the state’s transition to renewable energy.”
Some of the state’s public utilities opposed the bill during the session because utility customers not connected to new solar installations might end up subsidizing those who are connected.
That’s because community solar customers don’t directly consume electricity from a solar project. Rather, project developers connect their facilities to a public utility’s existing grid for distribution among all utility ratepayers.
The developers charge customers who participate in the solar projects for their share of electricity produced. Those customers then receive a credit on their monthly bills from the public utility.
But as utilities lose revenue from solar-connected customers, non-solar consumers could pick up more of the fixed costs for operating transmission and distribution systems.
And if large commercial, industrial and government customers join community solar projects, the utilities fear revenue loss could be substantial.
Legislators significantly amended the bill to address those concerns. If cross-subsidization does occur, for example, the state Public Regulation Commission can now intervene to limit the impact, said Ben Shelton of Conservation Voters New Mexico.
“Cross-subsidization will only be allowed if the increase is less than 3% on any non-solar customer’s bill,” Shelton said.
In addition, for at least three years after the law takes effect, large commercial, industrial and state-owned entities will not be allowed to participate in community solar projects. And total community solar generation permitted across the state will be capped at 200 megawatts for three years, after which the PRC will re-evaluate those provisions and review the overall impact of community solar development, Beloff said.
“It’s kind of a pilot, or trial, of sorts because in three years the PRC will look at everything to evaluate the effectiveness and fairness of the program and make recommendations to modify it if needed,” Beloff said.
Advocates believe the new law will encourage a lot more solar investment across the state.
Indeed, Boston-based Nexamp Inc. — which operates community solar in 15 states — is now establishing operations in New Mexico, said Senior Vice President of Business Development Chris Clark.
“We’re already teeing up,” Clark told the Journal. “We’re working now with landowners around the state on long-term lease agreements to build community solar projects. We’re bullish about the local market.”