Apr. 19—ALBUQUERQUE, N.M. — Affordable Solar — New Mexico's largest residential, commercial and utility-scale installation company — is doubling down on industry-wide bets of spectacular market growth ahead.
The homegrown company is investing $7.5 million to nearly double the size of its Albuquerque facilities in preparation for what company CEO Ryan Centerwall says could be up to 500% growth in the domestic solar industry over the next decade.
"Progressive federal, state and local policies, combined with broad corporate and consumer acceptance of renewable energy, is driving major growth in the solar industry," Centerwall told the Journal. "We may be looking at 500% expansion in solar over the next 10 years."
That includes a surge of demand for battery storage systems that can keep solar-generated electricity flowing when the sun isn't shining.
"We're looking at 100% growth just in battery storage," Centerwall said.
To prepare, Affordable's facility expansion includes a major thrust into battery technology with a new manufacturing operation to design and assemble battery systems for all types of solar installations. It plans to renovate a 30,000-square-foot building on 3.5 acres of land it's acquiring at 3900 Singer NE along the north Interstate 25 industrial corridor.
The expansion, backed by $625,000 in Local Economic Development Act funding from the state and city, will allow Affordable to consolidate about 17,000 square feet of space it now occupies in three different facilities around Albuquerque into a single location. And the company expects to hire 70 more employees over the next few years, growing its local workforce from 141 now to more than 200.
The ramp up by Affordable reflects an industry-wide boom in solar development in New Mexico and across the country.
The U.S. solar industry installed 19.2 gigawatts of solar generating capacity around the country in 2020 — a 43% jump over 2019 that set an all-time annual record in installations, according to U.S. Solar Market Insight 2020, a year-in-review report released in March by the national Solar Energy Industries Association and consulting firm Wood MacKenzie
Residential and utility-scale solar development both surged last year to record levels, with residential up 11% and utility-scale installations jumping by 65%, according to the report. And Wood MacKenzie expects a lot more growth over the next decade, with 324 GW of new solar capacity projected to come online nationwide, representing more than three times the total amount of solar installed across the country as of 2020.
That's a more conservative outlook than Centerwall's 500% growth projection. But it indicates broad industry expectation for a stellar decade ahead, beginning with another record year in 2021.
"This is already shaping up to be our best year ever," Centerwall said. "We see continuous growth in the next few years, with annual installations in the U.S. reaching about 40 to 45 GW per year by 2025."
Today's growth and the expectations for a coming, prolonged boom are driven by many factors. That includes state and federal policies to aggressively pursue renewable energy, rapidly-growing markets as solar generation becomes cheaper and more widely accepted as a dependable source of electricity, and technology improvement in things like battery storage that can greatly enhance the benefits of solar systems.
President Joe Biden has made combatting climate change a top national priority, and his administration is pushing a broad range of new policies to potentially set the country on a path to non-carbon electric generation by 2035. That could include a new, national clean electricity standard — which would require utility companies to transition to carbon-free electricity — plus the possibility of a carbon tax, or cap-and-trade system, to encourage all industries to reduce and eventually eliminate greenhouse gas emissions.
Biden's infrastructure development plans call for hundreds of billions of investment in electrical vehicle infrastructure, both to encourage and assist the auto industry in moving to electric vehicles, and to build a massive network of electric charging stations around the country.
They also call for retrofitting existing homes and buildings with energy-saving technology and electric-based heating systems, massive transmission development to open up a lot more land for solar and other renewable development, tax incentives to speed renewable energy deployment, and huge investments in research and development to improve current renewable technologies and build new systems.
Those initiatives could encounter significant pushback by Republicans in Congress, and it's uncertain what the Biden administration can actually achieve. But much can be done by executive order, and with Democrats currently in control of both congressional chambers, the solar industry expects many aggressive, favorable federal policies going forward.
Bipartisan support does exist for some key initiatives, such as research and development of non-carbon technologies, and at least some tax incentives to deploy more renewables across the country.
In December, before former President Donald Trump left office, bipartisan congressional majorities approved a two-year extension of existing tax incentives for solar and wind development. And now, Biden is seeking to extend that out to 2030.
Jim DesJardins, executive director of New Mexico's Renewable Energy Industry Association, said the evolving federal plans and policies create huge opportunities for solar and other renewable development in New Mexico and elsewhere.
"There's a big opportunity now to change how energy is produced in the country, with huge impacts on the local and national economies," DesJardins told the Journal. "... We already have the needed solar and other renewable technology, so it's all about the will to do it — to roll up our sleeves and get it done. The president of the U.S. is setting the tone by saying 'we want to do this,' and that's big."
The extension of federal tax incentives in December is already having a major impact, said Nick Kadlec, president and CEO of New Mexico Solar Group, a statewide installation company.
The 30% federal tax credit had been phasing out since last year, dropping to 26% in January 2020. It was scheduled to decline to 22% this year, to 10% next year, and then disappear entirely in 2023.
And a state-level 10% tax credit for New Mexico homeowners and businesses also went away in 2016. But last year, the Legislature re-instated that credit, which took effect in March 2020 after Gov. Michelle Lujan Grisham signed it into law.
Now, with the state credit in effect through 2028, plus the federal 26% credit extended another two years, the industry is enjoying a lot more stability, Kadlec said.
"The industry took to calling the tax incentives a 'solarcoaster' with the credits going up and down at the state and federal levels," Kadlec told the Journal. "Companies had to plan around it. But now, we're hoping the new policies will even things out going forward, and there's a decent chance the federal tax credit will be extended by even more years under Biden."
In addition to the tax extensions, Biden is proposing to convert the federal incentive from a credit — which goes back to solar developers on their tax bills after completing installations — into a refundable rebate that developers can immediately receive when they finish projects. That could stabilize the industry a lot more, Centerwall said.
"Monetizing the tax incentives is always challenging," Centerwall said. "Creating a refundable credit would be a welcome move."
In addition to the reinstated 10% tax credit, other state policies are also significantly boosting the local industry. In particular, the state's Energy Transition Act — which requires all public utilities to convert their grids to 50% renewables by 2030, 80% by 2040 and 100% carbon-free generation by 2045 — is encouraging a lot more utility-scale projects around the state.
Public Service Co. of New Mexico, which currently has 236 megawatts of utility-scale solar on its grid, expects to add another 100 MW this year, plus 300 MW more by 2023.
"There's at least 400 MW of solar generation contracted to come online in the next 24 to 30 months," said Gary Barnard, PNM director of strategic energy planning and development. "And we have more requests for proposals out there, so that's really just the tip of the iceberg."
This year, the Legislature approved a new Community Solar Act that Lujan Grisham signed into law. That will 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.
National companies that specialize in community solar projects are already setting up operations here to take advantage of the new law, such as Colorado-based Pivot Energy and Boston-based Nextamp Inc. And local companies are preparing to enter that market as well, including New Mexico Solar Group and Albuquerque-based OE Solar.
"Community solar will provide more opportunities for people in New Mexico, such as renters or low- and moderate-income households," Kadlec said. "We're exploring our options now, either to build community solar arrays ourselves, or to help sign up customers for projects built by other companies."
OE Solar, which is focused on residential and commercial installations now, expects to dedicate about 15% to 20% of its business to community solar development in the future, said company founder and CEO Adam Harper.
"We see a lot of opportunity there, especially as the economy comes back after COVID-19," Harper told the Journal.
State and federal policies, plus the overall maturation in solar markets and solar technology, are paving the way for accelerated industry development in New Mexico, Centerwall said.
"We're doing great," he said. "Residential deployment is as robust as it's ever been, and utility-scale development as well. The industry as a whole is as large as it's ever been in New Mexico."