New MexicoNew Mexico isn’t just home for aliens and secret government research into the extraterrestrial (allegedly), or home to the world’s first nuclear tests.

It’s also the home of abundant solar resources, in fact, with the overwhelming majority of New Mexico getting more than 6 kilowatt hours per square meter of direct sunlight a day, the state is eclipsed only by Arizona in terms of sunniest states. This makes the New Mexico rife with opportunity for installing both photovoltaics (PVs) and solar thermal energy projects. The state noted that it has “the potential to provide 1,000 times more energy than Public Service Company of New Mexico’s current demand.” In addition, new transmission in the “state would allow the export of large quantities of clean energy.”

To help encourage residents to install solar power on their homes, the state offers some incentives to reduce costs of systems and installation. Among these are a strong net-metering program, various tax credits, property-assessed clean energy (PACE) financing, rebate programs for installing clean energy.

In this sun-drenched, desert state with limited water resources and greatly varying temperatures, energy-efficiency and water conservation are paramount and the state has many incentives for residents and businesses that undertake energy efficiency projects and for practicing sustainable building techniques—including installing renewable energy.

New Mexico has a renewable portfolio standard (RPS) that requires investor-owned utilities in the state—i.e., companies like Xcel Energy—to get at least 20 percent of the electricity sold to retail customers from renewable sources by 2020. In addition, the utilities must offer customers the option to purchase energy generated from renewable resources.

The RPS has incremental steps, one of which requires utilities to get 10 percent of power generated for their retail customers to come from renewable sources by 2011. As utilities work to meet these goals, it is becoming important for them to sign customer-generators to distributed-generation contracts, particularly because 3 percent of investor-owned utility’s RPS must come from distributed generation (like home and building owners) by 2015. Of all the renewable power the utilities must include in their portfolio, at least 20 percent must come from solar, another 20 percent from wind, and 10 percent from other renewable technologies. Rural electric cooperatives must get or generate 10 percent of their electricity from renewable sources by 2020 under the law.

Utilities prove compliance with the renewable energy requirements through renewable energy credits (RECs) that are registered with the Western Renewable Energy Generation Information System (WREGIS). Such unused energy credits have a four-year lifespan. Customer-generators entering into net-metering arrangements and performance-based incentive programs with their utility company automatically sell their renewable energy credits to their utility under New Mexico law.

New Mexico is just starting to catch up with its potential. The state started off behind, ranked 22nd in terms of installed solar capacity in 2010. But in 2011, the state installed 116 megawatts and rose to fourth place, according to the Solar Energy Industries Association.