From the Texas Energy and Environment Blog, reports that in New Mexico “solar panels on homes can take as little as seven years to pay for themselves in energy savings.” The post continues:
That’s faster than Texas, where even in the best economic case, solar panels take at least a decade to pay for themselves. New Mexico’s utility, PNM, offers several subsidies to bring down the cost of the installations for homeowners.
New Mexico remains regulated, meaning the government tells PNM how much it may charge customers and how much profit it may make. That means, if regulators want more solar, customers pay for it.
So, PNM offers two incentives. First, it offers so-called net metering. That means, when a solar customer generates more power than he can use, PNM buys that power back at retail rates, rather than wholesale rates. Second, under state law, renewable generators like solar panels get renewable energy credits. PNM buys those credits from solar customers at a price that’s about ten times higher than the market rate.
Ferland said these offers, along with state and federal subsidies, nearly make installing solar panels economic.
In [the Dallas, Texas area], our regulated power line utility, Oncor, offers some subsidies that have made solar panels more affordable. But the Oncor deal isn’t as sweet at he PNM offer.
Still, Oncor promised not to add the cost of those subsidies to customer rates. North Texans might not install as many solar panels as New Mexicans, but ratepayers don’t have to pay for it, either.
So wait a minute. Who is paying for those New Mexico solar panels? From the quoted material it looks like other New Mexico ratepayers and state and federal taxpayers are paying for part of those solar panels.
Of course, federal and New Mexico state policymakers put ratepayers and taxpayers on the hook for a part of the solar panel costs because they believe that purchases of solar panels provide external public benefits.
I wonder how long before those external benefits accumulate in value sufficient to payback the investment made by ratepayers and taxpayers. I don’t think it is reasonable to say that the solar panels have “paid for themselves” until after all of the initial investors – homeowner, utility, ratepayers, and taxpayers – have received a full return on their investment.