ENERGY

In New Mexico, solar installers are adjusting to a harsh new market reality

The repeal of a 30% federal tax credit for residential rooftop solar systems has some installers changing the way they pitch solar to homeowners

Solar panel installers in New Mexico are grappling with a sharp contraction in New Mexico’s residential solar market in the first three months of the year following the Dec. 31 expiration of a 30% federal tax credit.

The federal Residential Clean Energy Credit covered 30% of the cost of a solar system. But President Donald Trump’s One Big Beautiful Bill Act, signed into law July 4, repealed that tax credit for residential rooftop solar systems. 

Facing a harsher market, some installers in New Mexico are changing their pitches to residents. Others are not.

Christopher Fortson, marketing director for Positive Energy Solar, said the company, which has sold systems in New Mexico since 1997, is now offering a prepaid leasing option. While Trump’s bill repealed the residential tax credit, it did not repeal a credit for third-party ownership. 

Under Positive Energy Solar’s prepaid lease, Positive Energy Solar will own a customer’s rooftop solar system for six years. That allows Positive Energy, a “third-party,” to take advantage of the 30% tax credit and pass on the savings to customers, who take ownership of the systems after that period.

Fortson, citing data from HomeAnalytics, said the number of residential rooftop solar permits handed out in New Mexico has grown from 20% to 30% in recent years. But in 2026, those figures have shrunk by 22%, he said. In January, year-over-year residential solar permits fell by 40%, Fortson said. 

“It’s a pretty substantial retraction in the market,” Fortson said.

A Wood Mackenzie report prepared for the Solar Energy Industries Association in March said that nationally, homeowners installed 4,647 megawatts of solar in 2025, a 2% decrease from the previous year. The report said it anticipates a market contraction of 19% in 2026 with the expiration of the federal tax credit

Continued third-party ownership will help “cushion that decline and support a recovery beginning in 2027.” But, the report added, consumers will continue to purchase solar panels as equipment costs fall and energy costs rise. 

Wood Mackenzie forecasts that the residential solar segment in the U.S. will add more than 60 gigawatts of rooftop power over the next decade. 

The New Mexico Solar Market Development tax credit offers a state tax credit against a resident’s income tax for the purchase of a solar energy system on residences, businesses and agricultural enterprises. The credits require certification from the New Mexico Energy, Minerals and Natural Resources Department. The credit provides up to 10% of purchase and installation costs. But it cannot exceed $6,000 per year. 

Sen. Mimi Stewart, an Albuquerque Democrat, in the 2026 legislative session proposed a bill with others that would increase the tax credit to 30% of system and installation costs. The bill also proposed increasing the credit’s limit to $15,000. The bill passed in the Senate on a 26-10 vote. But it never received a vote on the House floor. The bill would have allowed for $30 million in tax credits annually, unchanged from the 2024 cap. 

In 2024, the Legislature increased the department’s budget for the tax credit to $30 million from $12 million. Demand for the tax credit had exceeded its $12 million from 2020 to 2023. 

Fortson had said Positive Energy Solar was tracking state legislation. 

“With both the double whammy of the federal tax credit going away and New Mexico not being able to pass the increase in the state tax credit, it kind of left homeowners wondering how they could potentially go solar and what options they have available to them,” Fortson said. 

Other local solar installers are also feeling the pain.

Tom Poulin, co-owner of Poulin Solar Pro, said “there’s been a noticeable decrease in business.” 

“I think a lot of it is driven by the federal tax credit going away,” Poulin said. “But it’s also coupled with a period of super high demand.”

The store, which sells solar panels in Albuquerque, experienced three record months last year as customers raced to install solar systems before the tax credit expired, he said.

Competition has shrunk, too, he said. There are fewer sellers in the market than national companies “who rushed into our market selling at the lowest price — they’re all out of business now.” 

Despite the slowdown, Poulin said the company, in its decade selling solar panels, never made sales pitches centered around the federal tax credit, although customers did notice it. There’s still no state tax on solar, no property tax, and a system can increase home values up to 4%, Poulin said. 

“We’re seeing that the customers want to go solar,” Poulin said. “They understand that it’s still cheaper to go solar than it is to buy their power from PNM, and they can do it at a fixed cost. And they can build an asset of their own.”

Justin Horwath covers tech and energy for the Journal. You can reach him at jhorwath@abqjournal.com.