Renewable Energy Production Tax Credit (Corporate)

Summary

Note: The tax credits are fully subscribed. As of July 2016, there were 973 MW (2,148,000 MWh) of projects in the waiting queue for the wind/biomass tax credit and 1,103 MW (2,369,000 MWh) of projects in the waiting queue for the solar tax credit.

Enacted in 2002, the New Mexico Renewable Energy Production Tax Credit provides a tax credit against personal or corporate income tax. To qualify, an energy generator must have a capacity of at least 1 megawatt and be installed before January 2018. 

Amount

The tax credit is $0.01 per kilowatt-hour (kWh) for companies that generate electricity from wind or biomass. Companies that generate electricity from solar energy receive a tax incentive that varies annually according to the following schedule:

• Year 1: $0.015 per kWh
  
• Year 2: $0.02 per kWh
• Year 3: $0.025 per kWh
• Year 4: $0.03 per kWh
• Year 5: $0.035 per kWh
• Year 6: $0.04 per kWh
• Year 7: $0.035 per kWh
• Year 8: $0.03 per kWh
• Year 9: $0.025 per kWh
• Year 10: $0.02 per kWh

According to the Energy, Minerals and Natural Resources Department, this incentive averages $0.027 per kWh annually.

For wind and biomass generators, the credit is applicable only to the first 400,000 megawatt-hours (MWh) of electricity in each of 10 consecutive taxable years. For solar, the credit is applicable only to the first 200,000 MWh of electricity in each taxable year. 

Aggregate Cap

Total generation from both the corporate and personal tax credit programs combined must not exceed 2,000,000 MWh of production annually, plus an additional 500,000 MWh produced by solar energy. Taxpayers cannot claim both the corporate and the personal tax credit for the same renewable energy system.

Excess Tax Credits 

For electricity generated prior to October 1, 2007, excess credit may be carried forward for up to 5 consecutive taxable years. For electricity generated on or after October 1, 2007, excess credit shall be refunded to the taxpayer in order to allow project owners with limited tax liability to fully utilize the credit.