NMSA 1978, § 7-2A-19 — 7-2A-19

Renewable energy production tax credit; limitations;
definitions; claiming the credit.

# A.

The tax credit provided in this section may be referred to as the "renewable
energy production tax credit". The tax credit provided in this section may not be claimed
with respect to the same electricity production for which the renewable energy
production tax credit provided in the Income Tax Act [Chapter 7, Article 2 NMSA 1978]
has been claimed.

# B.

A person is eligible for the renewable energy production tax credit if the person:
(1) holds title to a qualified energy generator that first produced electricity on
or before January 1, 2018; or
(2) leases property upon which a qualified energy generator operates from a
county or municipality under authority of an industrial revenue bond and if the qualified
energy generator first produced electricity on or before January 1, 2018.

# C.

The amount of the tax credit shall equal one cent ($.01) per kilowatt-hour of the
first four hundred thousand megawatt-hours of electricity produced by the qualified
energy generator in the taxable year using a wind- or biomass-derived qualified energy
resource; provided that the total amount of tax credits claimed by all taxpayers for a
single qualified energy generator using a wind- or biomass-derived qualified energy
resource shall not exceed one cent ($.01) per kilowatt-hour of the first four hundred
thousand megawatt-hours of electricity produced by the qualified energy generator in a
taxable year.

# D.

The amount of the tax credit for electricity produced by a qualified energy
generator in the taxable year using a solar-light-derived or solar-heat-derived qualified
energy resource shall be at the amounts specified in Paragraphs (1) through (11) of this
subsection; provided that the total amount of tax credits claimed by all taxpayers in a
taxable year for a single qualified energy generator using a solar-light-derived or solar-
heat-derived qualified energy resource shall be limited to the first two hundred thousand
megawatt-hours of electricity produced by the qualified energy generator in the taxable
year:
(1) one and one-half cents ($.015) per kilowatt-hour in the first taxable year in
which the qualified energy generator produces electricity using a solar-light-derived or
solar-heat-derived qualified energy resource;
(2) two cents ($.02) per kilowatt-hour in the second taxable year in which the
qualified energy generator produces electricity using a solar-light-derived or solar-heat-
derived qualified energy resource;
(3) two and one-half cents ($.025) per kilowatt-hour in the third taxable year in
which the qualified energy generator produces electricity using a solar-light-derived or
solar-heat-derived qualified energy resource;
(4) three cents ($.03) per kilowatt-hour in the fourth taxable year in which the
qualified energy generator produces electricity using a solar-light-derived or solar-heat-
derived qualified energy resource;
(5) three and one-half cents ($.035) per kilowatt-hour in the fifth taxable year
in which the qualified energy generator produces electricity using a solar-light-derived or
solar-heat-derived qualified energy resource;
(6) four cents ($.04) per kilowatt-hour in the sixth taxable year in which the
qualified energy generator produces electricity using a solar-light-derived or solar-heat-
derived qualified energy resource;
(7) three and one-half cents ($.035) per kilowatt-hour in the seventh taxable
year in which the qualified energy generator produces electricity using a solar-light-
derived or solar-heat-derived qualified energy resource;
(8) three cents ($.03) per kilowatt-hour in the eighth taxable year in which the
qualified energy generator produces electricity using a solar-light-derived or solar-heat-
derived qualified energy resource;
(9) two and one-half cents ($.025) per kilowatt-hour in the ninth taxable year
in which the qualified energy generator produces electricity using a solar-light-derived or
solar-heat-derived qualified energy resource;
(10) two cents ($.02) per kilowatt-hour in the tenth taxable year in which the
qualified energy generator produces electricity using a solar-light-derived or solar-heat-
derived qualified energy resource; and
(11) one and one-half cents ($.015) per kilowatt-hour in the eleventh taxable
year in which the qualified energy generator produces electricity using a solar-light-
derived or solar-heat-derived qualified energy resource.

# E.

A taxpayer eligible for a renewable energy production tax credit pursuant to
Subsection B of this section shall be eligible for the renewable energy production tax
credit for one hundred twenty consecutive months, beginning on the date the qualified
energy generator begins producing electricity.

# F.

As used in this section:
(1) "biomass" means organic material that is available on a renewable or
recurring basis, including:
(a) forest-related materials, including mill residues, logging residues, forest
thinnings, slash, brush, low-commercial-value materials or undesirable species, salt
cedar and other phreatophyte or woody vegetation removed from river basins or
watersheds and woody material harvested for the purpose of forest fire fuel reduction or
forest health and watershed improvement;
(b) agricultural-related materials, including orchard trees, vineyard, grain or
crop residues, including straws and stover, aquatic plants and agricultural processed
co-products and waste products, including fats, oils, greases, whey and lactose;
(c) animal waste, including manure and slaughterhouse and other processing
waste;
(d) solid woody waste materials, including landscape or right-of-way tree
trimmings, rangeland maintenance residues, waste pallets, crates and manufacturing,
construction and demolition wood wastes, excluding pressure-treated, chemically
treated or painted wood wastes and wood contaminated with plastic;
(e) crops and trees planted for the purpose of being used to produce energy;
(f) landfill gas, wastewater treatment gas and biosolids, including organic
waste byproducts generated during the wastewater treatment process; and
(g) segregated municipal solid waste, excluding tires and medical and
hazardous waste;
(2) "qualified energy generator" means an electric generating facility with at
least one megawatt generating capacity located in New Mexico that produces electricity
using a qualified energy resource and the electricity produced is sold to an unrelated
person; and
(3) "qualified energy resource" means a resource that generates electrical
energy by means of a fluidized bed technology or similar low-emissions technology or a
zero-emissions generation technology that has substantial long-term production
potential and that uses only the following energy sources:
(a) solar light;
(b) solar heat;
(c) wind; or
(d) biomass.

# G.

A person that holds title to a facility generating electricity from a qualified energy
resource or a person that leases such a facility from a county or municipality pursuant to
an industrial revenue bond may request certification of eligibility for the renewable
energy production tax credit from the energy, minerals and natural resources
department, which shall determine if the facility is a qualified energy generator. The
energy, minerals and natural resources department may certify the eligibility of an
energy generator only if the total amount of electricity that may be produced annually by
all qualified energy generators that are certified pursuant to this section and pursuant to
the Income Tax Act will not exceed a total of two million megawatt-hours plus an
additional five hundred thousand megawatt-hours produced by qualified energy
generators using a solar-light-derived or solar-heat-derived qualified energy resource.
Applications shall be considered in the order received. The energy, minerals and
natural resources department may estimate the annual power-generating potential of a
generating facility for the purposes of this section. The energy, minerals and natural
resources department shall issue a certificate to the applicant stating whether the facility
is an eligible qualified energy generator and the estimated annual production potential
of the generating facility, which shall be the limit of that facility's energy production
eligible for the tax credit for the taxable year. The energy, minerals and natural
resources department may issue rules governing the procedure for administering the
provisions of this subsection and shall report annually to the appropriate interim
legislative committee information that will allow the legislative committee to analyze the
effectiveness of the renewable energy production tax credit, including the identity of
qualified energy generators, the energy production means used, the amount of energy
produced by those qualified energy generators and whether any applications could not
be approved due to program limits.

# H.

A taxpayer may be allocated all or a portion of the right to claim a renewable
energy production tax credit without regard to proportional ownership interest if:
(1) the taxpayer owns an interest in a business entity that is taxed for federal
income tax purposes as a partnership;
(2) the business entity:
(a) would qualify for the renewable energy production tax credit pursuant to
Paragraph (1) or (2) of Subsection B of this section;
(b) owns an interest in a business entity that is also taxed for federal income
tax purposes as a partnership and that would qualify for the renewable energy
production tax credit pursuant to Paragraph (1) or (2) of Subsection B of this section; or
(c) owns, through one or more intermediate business entities that are each
taxed for federal income tax purposes as a partnership, an interest in the business
entity described in Subparagraph (b) of this paragraph;
(3) the taxpayer and all other taxpayers allocated a right to claim the
renewable energy production tax credit pursuant to this subsection own collectively at
least a five percent interest in a qualified energy generator;
(4) the business entity provides notice of the allocation and the taxpayer's
interest to the energy, minerals and natural resources department on forms prescribed
by that department for the taxable year to be claimed; and
(5) the energy, minerals and natural resources department certifies the
allocation for the taxable year to be claimed in writing to the taxpayer.

# I.

Upon receipt of notice of an allocation of the right to claim all or a portion of the
renewable energy production tax credit, the energy, minerals and natural resources
department shall promptly certify the allocation in writing to the recipient of the
allocation.

# J.

A taxpayer may claim the renewable energy production tax credit by submitting
to the taxation and revenue department the certificate issued by the energy, minerals
and natural resources department, pursuant to Subsection G or H of this section,
documentation showing the taxpayer's interest in the facility, documentation of the
amount of electricity produced by the facility in the taxable year and any other
information the taxation and revenue department may require to determine the amount
of the tax credit due the taxpayer.

# K.

If the requirements of this section have been complied with, the department shall
approve payment of the renewable energy production tax credit. The credit may be
deducted from a taxpayer's New Mexico corporate income tax liability for the taxable
year for which the credit is claimed. If the amount of tax credit exceeds the taxpayer's
corporate income tax liability for the taxable year:
(1) the excess may be carried forward for a period of five taxable years; or
(2) if the tax credit was issued with respect to a qualified energy generator
that first produced electricity using a qualified energy resource on or after October 1,
2007, the excess shall be refunded to the taxpayer.

# L.

Once a taxpayer has been granted a renewable energy production tax credit for
a given facility, that taxpayer shall be allowed to retain the facility's original date of
application for tax credits for that facility until either the facility goes out of production for
more than six consecutive months in a year or until the facility's ten-year eligibility has
expired.