NREL is a national laboratory of the U.S. Department of Energy, 

Office of Energy Efficiency & Renewable Energy, operated by the 

Alliance for Sustainable Energy, LLC.

Contract No. DE-AC36-08GO28308

Feasibility Study of Economics 

and Performance of Solar 

Photovoltaics at the Peru Mill 

Industrial Park in the City of 

Deming, New Mexico

A Study Prepared in Partnership with the 

Environmental Protection Agency for the 

RE-Powering America’s Land Initiative: 

Siting Renewable Energy on Potentially 

Contaminated Land and Mine Sites

Kosol Kiatreungwattana, Jesse Geiger, 

Victoria Healey, and Gail Mosey

Produced under direction of the U.S. Environmental Protection 

Agency (EPA) by the National Renewable Energy Laboratory (NREL) 

under Interagency Agreement IAG-08-0719 and Task No. 

WFD3.1001.

Technical Report

NREL/TP-7A30-58368

April 2013
NREL is a national laboratory of the U.S. Department of Energy, Office of Energy 

Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Contract No. DE-AC36-08GO28308

National Renewable Energy Laboratory

15013 Denver West Parkway

Golden, CO 80401

303-275-3000 • www.nrel.gov

Feasibility Study of Economics 

and Performance of Solar 

Photovoltaics at the Peru Mill 

Industrial Park in the City of 

Deming, New Mexico 

A Study Prepared in Partnership with the 

Environmental Protection Agency for the 

RE-Powering America’s Land Initiative: 

Siting Renewable Energy on Potentially 

Contaminated Land and Mine Sites

Kosol Kiatreungwattana, Jesse Geiger, 

Victoria Healey, and Gail Mosey

Prepared under Task No. WFD3.1001

Technical Report

NREL/TP-7A30-58368

April 2013
NOTICE

This manuscript has been authored by employees of the Alliance for Sustainable Energy, LLC (“Alliance”) under 

Contract No. DE-AC36-08GO28308 with the U.S. Department of Energy (“DOE”).

This report was prepared as an account of work sponsored by an agency of the United States government. 

Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, 

express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of 

any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately 

owned rights. Reference herein to any specific commercial product, process, or service by trade name, 

trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, 

or favoring by the United States government or any agency thereof. The views and opinions of authors expressed 

herein do not necessarily state or reflect those of the United States government or any agency thereof.

Cover Photos: (left to right) PIX 16416, PIX 17423, PIX 16560, PIX 17613, PIX 17436, PIX 17721

Printed on paper containing at least 50% wastepaper, including 10% post consumer waste. 
iv

Acknowledgments

The National Renewable Energy Laboratory (NREL) thanks the U.S. Environmental Protection 

Agency (EPA) for its interest in securing NREL’s technical expertise. In particular, NREL and 

the assessment team for this project are grateful to the managers, engineers, and operators at the 

Peru Mill Industrial Park facility for their generous assistance and cooperation. 

Special thanks go to Jessica Trice, Lura Matthews, Shea Jones, and Petra Sanchez from the EPA; 

Katie Brown, AAAS Science & Technology Policy fellow hosted by the EPA; Kurt Vollbrecht 

from New Mexico Environment Department for his input on environmental considerations; and

Wesley Hooper and Aaron Sera from the City of Deming for hosting and facilitating the 

site visit.
v 

Executive Summary

The U.S. Environmental Protection Agency (EPA), in accordance with the RE-Powering 

America’s Land initiative, selected the Peru Mill Industrial Park site in the City of Deming, New 

Mexico, for a feasibility study of renewable energy production. The National Renewable Energy 

Laboratory (NREL) provided technical assistance for this project. The purpose of this report is to 

assess the site for a possible photovoltaic (PV) system installation and estimate the cost, 

performance, and site impacts of different PV options. In addition, the report recommends 

financing options that could assist in the implementation of a PV system at the site. This study 

did not assess environmental conditions at the site. 

The Peru Mill Industrial Park is located north of Interstate Highway 10 in Deming, which is in 

Luna County, New Mexico. The industrial park is fairly close to several U.S. metropolitan areas, 

such as Las Cruces (60 miles), El Paso (102 miles), and Tucson (215 miles). On average, 

Deming has 330 days of sunshine each year. The area from Deming to Lordsburg has the highest 

rating of solar insulation in New Mexico and excellent potential for solar energy. 

The site has a history of heavy industry from 1928 to 1985. The City of Deming purchased the 

site and has spent a lot of time and money to clean up the site. Demolition of all remaining 

structures was completed. Soil was scraped to the recommended depths and incorporated into the 

tailings piles. The remediation efforts included groundwater contamination remediation, soils 

and asbestos investigations, development of a closure/remediation plan, and development of a 

remedial cap system. When the remediation of the site was completed, the City of Deming added 

the property into the city limits and zoned it for industrial use. These activities were completed in 

early 2007. The environmental easement consists of two sites: one is 54.1 acres and the other is

5.18 acres. 

The feasibility of a PV system installed is highly impacted by the available area for an array, the 

solar resource, distance to transmission lines, and distance to major roads. The closest potential 

electrical tie-in locations are at the substation east of the sites or at the 345-kV El Paso Electric 

power line south of the sites. Having a substation on site makes it an ideal location for a PV 

system to tie into. A detailed interconnection study is recommended and will have to be 

performed through the local electric utility, Public Service of New Mexico (PNM), to determine 

the feasibility of utilizing the on-site substation as a tie-in point for a PV system. The Peru Mill 

Industrial Park site is suitable for a large-scale PV system because it is nearly flat; has excellent 

rail, road, and solar access; is zoned industrial uses; and has extensive electrical distribution to 

the whole site. Additional considerations could be associated with designing, installing, and 

operating the PV system to maintain the integrity and effectiveness of the remediation solution or 

cap on the reclaimed tailings. There are three proposed sites for the Peru Mill Industrial Park. 

Area for each site, estimated PV capacity, and distance to utility tie-in at the substation east of 

the sites are presented in Table ES-1. 
vi 

Table ES-1. Estimated Electricity Production for Each Site

Site

Estimated PV 

Capacity

(MW)

Annual Electricity Production

(MWh/yr)

Annual Energy Value

($)

Site 1 0.9 1,540 169,400

Site 2 9.4 16,092 1,770,120

Site 3 26.1 44,683 4,915,130

Total 36.4 62,316 6,854,760

The economic performance of a PV system installed on the site is evaluated using a combination 

of the assumptions and background information discussed previously, as well as a number of 

industry-specific inputs determined by other studies. Using varied inputs and the assumptions 

summarized in the Economics and Performance section of this report, NREL’s System Advisor 

Model (SAM) tool predicts net present value (NPV), power purchase agreement (PPA), and 

levelized cost of energy (LCOE), among other economic indicators. 

To evaluate the employment and economic impacts of the project, the NREL Jobs and Economic 

Development Impact (JEDI) model is used. JEDI estimates the economic impacts associated 

with the construction and operation of distributed generation power plants. It is a flexible inputoutput tool that estimates, but does not precisely predict, the number of jobs and economic 

impacts that can be reasonably supported by the proposed facility. 

There are three scenarios for the analysis. All detailed assumptions and results for the analysis 

can be found in the appendices. 

Case 1—Investor owned/PPA with 36.4 MW 

This case assumes a third-party investor for the PV system. All generated electricity from case 1 

is assumed to be sold. The results of this case are to estimate the minimum electricity rate as a 

PPA price to get an acceptable return on investment (15% internal rate of return). 

Case 2—Municipally owned/PPA with 36.4 MW 

This case assumes the City of Deming owns the PV system. All electricity will be sold to the 

grid at $0.055/kWh. 

Case 3—Municipally owned/virtual net metering with 36.4 MW 

Virtual net metering is currently not available in New Mexico. Case 3 is to demonstrate the 

potential economic benefits for this option. This case assumes the City of Deming owns the PV 

system. All electricity would be virtual net metering to generate credits at the retail electricity 

rate that can be used to offset charges at one or more other locations within the same geographic 

boundary. The retail electricity rate of $0.11/kWh is used to value electricity production in

this analysis.
vii 

Results

Three scenarios were run for the Peru Mill Industrial Park to encompass the options available to 

this site. The independent variables include third-party developer versus existing site ownership. 

There are multiple factors that go into choosing which scenario to pursue beyond NPV, PPA, and 

LCOE. Table ES-2 shows the modeled results from the different scenarios. 

Case 1—Investor owned/PPA with 36.4 MW will work if the investor can sell the electric

production at $0.0923/kWh to either PNM or El Paso Electric. Although the retail electricity rate 

is $0.11/kWh, which is slightly higher than the PPA, PNM’s purchase rate is estimated to be 

only $0.055/kWh. Therefore, a solar investor may be unlikely to invest given current conditions. 

Case 2—Municipally owned/PPA has negative NPV and shows the low LCOE of $0.0573/kWh. 

LCOE is slightly higher than the PNM purchase price of $0.055/kWh. Although the case is not 

economically preferable based on negative NPV, further analysis shows that this case (case 2a) 

would be economically viable with a NPV of $968,724 and a payback of 13.7 years if the utility 

purchase price is at $0.07/kWh or higher. Therefore, based on assumptions, the project can be 

viable if the utility purchase rate or developer-negotiated PPA rate is increased to $0.07/kWh 

or higher. 

Case 3—Municipally owned/virtual net metering shows a positive NPV and feasible payback of 

8.6 years. This case presents the best economic scenario. However, virtual net metering is not 

available for New Mexico. A virtual net metering arrangement can be pursued with the public 

utility commission (PUC) or through legislative action. 

A very large PV capacity can potentially be developed at the Peru Mill Industrial Park sites. Key 

to the solar project development would be finding a potential buyer of the generated electricity 

through a PPA. Based on the analysis, the municipally owned PV project becomes feasible with 

a PPA at the rate of $0.07/kWh and above. Alternatively, a third-party ownership PPA can also 

be the feasible way for a system to be financed and installed on this site. Virtual net metering 

would also be a good option to sell the excess electricity if the state allows. It is recommended 

that the City of Deming further pursue opportunities of developing the PV project at the Peru 

Mill Industrial Park site. For future work, a request for proposal shall be developed, issued, and 

sent out to third-party investors/developers. Any environmental considerations shall be included 

in the request for proposals during project development. 

Results of the JEDI model analysis show that the total proposed system of 36.4 MW is estimated 

to support 1,107 direct and indirect jobs per year for the duration of the procurement and 

construction period. Total wages paid to workers during the construction period are estimated to 

be $42,336,800, and total economic output is estimated to be $99,410,200. The annual O&M of 

the new PV system is estimated to support 13.5 full-time employees per year for the life of the 

system. The jobs and associated spending are projected to account for approximately $695,900 in 

earnings and $1,124,300 in economic activity each year for the next 25 years. 
viii

Table ES-2. PV System Summary

Investor-Owned Cases

Capacity 

(MW)

LCOE 

($/kWh)

NPV 

($)

PPA 

($/kWh)

Payback 

(yr)

Case 1—Investor owned/PPA 36.4 0.1041 $3,074,030 0.0923 N/A

Case 2—Developer owned/PPA 36.4 0.0573 ($6,757,385) - 18

Case 2a—Developer owned/PPA at 

$0.07/kWh utility purchase price 36.4 0.0573 $968,724 - 14

Case 3—Developer owned/virtual net

metering 36.4 0.0573 $21,571,681 - 8.6

Table ES-3. Potential Jobs

System Type PV System Sizea Array Tilt

Annual 

Output

Number of 

Houses Poweredb

Jobs 

Createdc

Jobs 

Sustainedd

(MW) (deg) (MWh/year) (job-year) (job-year)

Fixed-tilt Ballasted PV System with Crystalline Panels 36.4 20 62,317 5,645 1,107 14

System Type System Cost

Fixed-tilt Ballasted PV System with Crystalline Panels $ 127,036,000 

a

 Data assume a maximum usable area of 2,000 acres.

b

 Number of average American households that could hypothetically be powered by the PV system assuming 11,040 

kWh/year/household.

d

 Jobs (direct, indirect, and induced) sustained as a result of operations and maintenance (O&M) of the system.

c

 Job-years created as a result of project capital investment including direct, indirect, and induced jobs.
ix

Table of Contents

1 Study and Site Background................................................................................................................. 1

2 Development of a PV System on Brownfields................................................................................... 3

3 PV Systems ........................................................................................................................................... 5

3.1 PV Overview .................................................................................................................................... 5

3.2 Major System Components .............................................................................................................. 6

3.2.1 PV Module .......................................................................................................................... 6

3.2.2 Inverter ................................................................................................................................ 8

3.2.3 Balance-of-System Components ......................................................................................... 9

3.2.4 Operation and Maintenance .............................................................................................. 11

3.3 Siting Considerations ..................................................................................................................... 11

4 Proposed Installation Location Information .................................................................................... 12

4.1 Peru Mill Industrial Park Site PV System ...................................................................................... 12

4.2 Utility-Resource Considerations .................................................................................................... 14

4.3 Useable Acreage for PV System Installation ................................................................................. 15

4.4 PV Site Solar Resource .................................................................................................................. 15

4.5 Peru Mill Industrial Park Energy Usage ........................................................................................ 17

4.5.1 Net Metering ..................................................................................................................... 17

4.5.2 Virtual Net Metering ......................................................................................................... 17

5 Economics and Performance............................................................................................................ 18

5.1 Assumptions and Input Data for Analysis ..................................................................................... 18

5.2 SAM-Forecasted Economic Performance ...................................................................................... 20

5.2.1 Results ............................................................................................................................... 21

5.3 Job Analysis and Impact ................................................................................................................ 22

5.4 Financing Opportunities................................................................................................................. 23

5.4.1 Owner and Operator Financing ......................................................................................... 23

5.4.2 Third-Party Developers with Power Purchase Agreements .............................................. 24

5.4.3 Third-Party “Flip” Agreements......................................................................................... 24

5.4.4 Hybrid Financial Structures .............................................................................................. 25

5.4.5 Solar Services Agreement and Operating Lease ............................................................... 25

5.4.6 Sales/Leaseback ................................................................................................................ 25

5.4.7 Community Solar/Solar Gardens ...................................................................................... 26

6 Conclusions and Recommendations ............................................................................................... 27

Appendix A. Assessment and Calculations Assumptions ................................................................... 29

Appendix B. Solar Access Measurements ............................................................................................. 30

Appendix C. Results of the Jobs and Economic Development Impact Model ................................... 31

Appendix D. Assumptions and Results of the System Advisor Model ............................................... 34

Case 3 Results ...................................................................................................................................... 34

Assumptions for Inputs (for case 3, as the best economic results) ....................................................... 36
x 

List of Figures

Figure 1. Generation of electricity from a PV cell ...........................................................................5

Figure 2. Ground-mounted array diagram .......................................................................................6

Figure 3. Mono- and multi-crystalline solar panels .........................................................................7

Figure 4. Thin-film solar panels installed on (left) solar energy cover and (middle and right) 

fixed-tilt mounting system .........................................................................................................8

Figure 5. String inverter ...................................................................................................................9

Figure 6. Aerial view of Peru Mill Industrial sites ........................................................................12

Figure 7. Views of the feasible area for PV at site 1 of the Peru Mill Industrial Park ..................13

Figure 8. Views of the feasible area for PV at site 2 of the Peru Mill Industrial Park ..................14

Figure 9. Electrical tie-in point for the PV system at the 345-kV line or the substation ...............15

Figure B-1. Solar access measurements for Peru Mill Industrial Park PV site .............................30

Figure D-1. PV system output .......................................................................................................35

Figure D-2. Levelized cost of energy ............................................................................................35

Figure D-3. After-tax cash flow .....................................................................................................36

Figure D-4. Climate input ..............................................................................................................36

Figure D-5. Utility rate assumptions ..............................................................................................37

Figure D-6. Financing assumptions ...............................................................................................37

Figure D-7. Tax credit incentives assumptions..............................................................................38

Figure D-8. Payment incentives assumptions ................................................................................38

Figure D-9. Annual performance assumptions ..............................................................................39

Figure D-10. PV system costs ........................................................................................................39

Figure D-11. PVWatts solar array assumptions .............................................................................40

Figure D-12. Electrical loads assumptions ....................................................................................41

List of Tables

Table ES-1. Estimated Electricity Production for Each Site ......................................................... vi

Table ES-2. PV System Summary ............................................................................................... viii

Table ES-3. Potential Jobs ........................................................................................................... viii

Table 1. Energy Density by Panel and System ..............................................................................10

Table 2. Area for Each Site, Estimated PV Capacity, and Distance to Utility Tie-In ...................13

Table 3. Fee for Preliminary Interconnection System Impact Study (PISIS) ................................14

Table 4. Site Identification Information and Specifications ..........................................................16

Table 5. Performance Results for 20-Degree Fixed-Tilt PV .........................................................16

Table 6. Estimated Electricity Production for Each Site ...............................................................17

Table 7. Installed System Cost Assumptions .................................................................................19

Table 8. Summary of Incentives Evaluated ...................................................................................20

Table 9. PV System Summary .......................................................................................................22

Table 10. Potential Energy Production and Economic Impacts on Created Jobs ..........................22

Table 11. JEDI Analysis Assumptions ..........................................................................................23

Table A-1. Cost, System, and Other Assessment Assumptions ....................................................29

Table D-1. Case 3 Results ..............................................................................................................34
1 

1 Study and Site Background

The U.S. Environmental Protection Agency (EPA), in accordance with the RE-Powering 

America’s Land initiative, selected the Peru Mill Industrial Park site in the City of 

Deming, New Mexico, for a feasibility study of renewable energy production. The 

National Renewable Energy Laboratory (NREL) provided technical assistance for this 

project. The purpose of this report is to assess the site for a possible photovoltaic (PV) 

system installation and estimate the cost, performance, and site impacts of different PV 

options. In addition, this report recommends financing options that could assist in the 

implementation of a PV system at the site. This study did not assess environmental 

conditions at the site. 

The Peru Mill Industrial Park is located north of Interstate Highway 10 in Deming, which 

is in Luna County, New Mexico. The interstate serves as a major route for truck

transport, as well as travelers and tourists. The industrial park is fairly close to several 

U.S. metropolitan areas, such as Las Cruces (60 miles), El Paso (102 miles), and Tucson 

(215 miles). Deming is the largest community in southwest New Mexico and has a 

population of 14,963 as of the 2011 census. The climate is dry, hot, and breezy. Deming

has an average high temperature in January of 57.4°F and an average high of 94.5°F in 

July. The average low temperature in January is 26.2°F, whereas the average low 

temperature in July is 64.9°F. Average total precipitation is 9.35 inches (23.75 cm) per 

year. Most precipitation occurs as thunderstorms and showers during July through 

September. On average, Deming has 330 days of sunshine each year. The area from 

Deming to Lordsburg has the highest rating of solar insulation in New Mexico and 

excellent potential for solar energy. Public Service of New Mexico (PNM) is the utility 

that provides electricity to Peru Mill Industrial Park. It is a regulated utility.

Peru Mill Industrial Park consists of 1,512 acres of city-owned land and is ready for 

reuse. Zoned industrial, it is well-suited for a number of manufacturing and industrial 

activities, including those that need rail services.

The site has a history of heavy industry. Peru Mining Company, a subsidiary of Illinois 

Zinc Company, constructed the mill in 1928 and operated it until 1967. The mill was then 

purchased by Barite of America (BOA) in 1979. BOA operated it for production of barite 

intermittently under three different names until 1985. When BOA filed for bankruptcy, 

Barite Limited retained title to the property, although the company had been delinquent in 

tax payments since 1982, according to Luna County assessment records. Subsequent to 

that, ownership passed through bankruptcy to SMS Financial, a financial title holding 

company. Luna County and the City of Deming have since negotiated an agreement for 

acquisition. 

Since the City of Deming purchased the site, there has been a lot of time and money 

invested in the area to clean up the site. The City of Deming began implementation of the 

recommendations made in the confirmatory sampling report, including demolition of all 

remaining structures in the mill area with the exception of the ball mill building. Once 

demolition of these structures was completed, soil was scraped to the recommended 

depths and incorporated into the tailings piles. These activities were completed in early 

2007. The environmental easement consists of two sites: one is 54.1 acres and the other is 
2 

5.18 acres. The Peru Mill Industrial Park site requires large-scale environmental 

remediation efforts to clean up a 265-acre contamination area. The city contracted with 

Zia Engineering to assist them, and the EPA and the New Mexico Voluntary Remediation 

and Brownfields Program to provide technical support for the site assessment, 

remediation, and closure. The remediation efforts included groundwater contamination 

remediation, soils and asbestos investigations, development of a closure/remediation 

plan, and development of a remedial cap system. When the remediation of the site was 

complete, the city added the property into the city limits and zoned it for industrial use. 

Feasibility assessment team members from NREL, the City of Deming, and EPA 

conducted a site visit on March 5, 2012, to gather information integral to this feasibility 

study. The team considered information, such as solar resource, transmission availability, 

community acceptance, and ground conditions. 
3 

2 Development of a PV System on Brownfields Through the RE-Powering America’s Lands initiative, EPA has identified several 

benefits for siting solar PV facilities on brownfields, noting that they: 

• Can be developed in place of limited greenfields, preserving the land carbon sink 

• Could have environmental conditions that are not well-suited for commercial or 

residential redevelopment and might be adequately zoned for renewable energy

• Generally are located near existing roads, and energy transmission or distribution 

infrastructure 

• Could provide an economically viable reuse for sites that may have significant 

cleanup costs or low real estate development demand 

• Can provide job opportunities in urban and rural communities 

• Can advance cleaner and more cost-effective energy technologies and reduce the 

environmental impacts of energy systems (e.g., reduce greenhouse gas emissions). 

By taking advantage of these potential benefits, PV can provide a viable, beneficial reuse, 

and in many cases, generate significant revenue on a site that would otherwise go unused. 

The City of Deming is interested in the development of renewable energy projects and 

potential revenue flows on the Peru Mill Industrial Park site. The local community has 

significant interest in the redevelopment of the site, and community engagement is 

critical to match future reuse options to the community’s vision for the site. 

Understanding opportunities studied and realized by other similar sites demonstrates the 

potential for PV system development. The site is cleared, flat, and located where there is 

a need for locally produced power. The contamination on the site is primarily 

groundwater related, which potentially limits building development, and remediation is at 

a stage to allow for installation of a PV system. PV development that provides 

community energy and jobs could be the highest and best use of the site.1

 

There are considerations for the installation of a solar PV system on tailing 

impoundments. The considerations include: potential impacts to the remediation cover 

system, erosion, stormwater management, compaction, construction, and vegetation. In 

addition, financial assurance would be required to remove the solar facility and 

reconstruct the cover system, including revegetation, at the end of the project life. These 

considerations shall be included in the request for proposals (RFP) during project 

development. 

Recently, El Paso Electric signed a 20-year agreement to buy power from a large solar 

plant to be built near Deming, New Mexico, next year. The project can produce enough 

energy for 18,000 homes. The power will be used in New Mexico and Texas. 

 

1 For more information on similar projects, see the RE-Powering America’s Lands website: 

www.epa.gov/oswercpa/.
4 

As an industrial site, the subject site has potential to be used for other functions beyond 

the solar PV systems proposed in this report. Any potential use should align with the 

community vision for the site and should work to enhance the overall utility of 

the property. 

Beyond the financial benefits of installing a large-scale PV system, additional 

nonfinancial benefits of renewable energy deployment exist. Property owners can 

consider many additional compelling reasons for moving toward renewable energy 

sources for power generation instead of fossil fuels, including: 

• Renewable energy sources offer a sustainable energy option in the broader 

energy portfolio 

• Renewable energy can have a net positive effect on human health and the 

environment 

• Deployment of renewable energy bolsters national energy independence and 

increases domestic energy security 

• Fluctuating electric costs can be mitigated by locking in electricity rates 

through long-term power purchase agreements linked to renewable 

energy systems 

• Generating energy without harmful emissions or waste products can be 

accomplished through renewable energy sources. 
5 

3 PV Systems

3.1 PV Overview

Solar PV technology converts energy from solar radiation directly into electricity. Solar 

PV cells are the electricity-generating component of a solar energy system. When 

sunlight (photons) strikes a PV cell, an electric current is produced by stimulating 

electrons (negative charges) in a layer in the cell designed to give up electrons easily. The 

existing electric field in the solar cell pulls these electrons to another layer. By 

connecting the cell to an external load, this current (movement of charges) can then be 

used to power the load (e.g., a light bulb). 

Figure 1. Generation of electricity from a PV cell

Source: EPA

PV cells are assembled into a PV panel or module. PV modules are then connected to 

create an array. The modules are connected in series, and then in parallel as needed to 

reach the specific voltage and current requirements for the array. The direct current (DC) 

electricity generated by the array is then converted by an inverter to useable alternating 

current (AC) that can be consumed by adjoining buildings and facilities or exported to the 

electricity grid. PV system size varies from small residential (2–10 kW), to commercial 

(100–500 kW), to large utility scale (10+ MW). Central distribution plants are also 

currently being built in the 100+ MW scale. Electricity from utility-scale systems is 

commonly sold back to the electricity grid. 

(-)

(+)

-

- -

-

Electron

Current flow

-

Solar cell

- - -

Load
6 

3.2 Major System Components

Figure 2. Ground-mounted array diagram

Source: NREL

A typical PV system is made up of several key components, including: 

• PV modules 

• Inverter

• Balance-of-system (BOS) components. 

These, along with other PV system components, are discussed in turn below. 

3.2.1 PV Module

Module technologies are differentiated by the type of PV material used, resulting in a 

range of conversion efficiencies from light energy to electrical energy. The module 

efficiency is a measure of the percentage of solar energy converted into electricity. 

Two common PV technologies that have been widely used for commercial- and utilityscale projects are crystalline silicon and thin film. 

3.2.1.1 Crystalline Silicon

Traditional solar cells are made from silicon. Silicon is quite abundant and nontoxic. It 

builds on a strong industry on both the supply (silicon industry) and product side. This 

technology has been demonstrated for consistency and high efficiency for over 30 years 

in the field. The performance degradation, a reduction in power generation due to long-
7 

term exposure, is under 1% per year. Silicon modules have a lifespan in the range of 25–

30 years but can keep producing energy beyond this range. 

Typical overall efficiency of silicon solar panels is between 12% and 18%. However, 

some manufacturers of mono-crystalline panels claim an overall efficiency nearing 20%. 

This range of efficiencies represents significant variation among the crystalline silicon 

technologies available. The technology is generally divided into mono- and multicrystalline technologies, which indicates the presence of grain-boundaries (i.e., multiple 

crystals) in the cell materials and is controlled by raw material selection and 

manufacturing technique. Crystalline silicon panels are widely used based on 

deployments worldwide. 

Figure 3 shows two examples of crystalline solar panels: mono- and multi-silicon 

installed on tracking mounting systems.

Figure 3. Mono- and multi-crystalline solar panels. Photos from (left) SunPower 

Corporation, NREL 23816 and (right) SunPower, NREL 13823

3.2.1.2 Thin Film

Thin-film PV cells are made from amorphous silicon (a-Si) or nonsilicon materials, such 

as cadmium telluride (CdTe). Thin-film cells use layers of semiconductor materials only 

a few micrometers thick. Due to the unique nature of thin films, some thin-film cells are 

constructed into flexible modules, enabling such applications as solar energy covers for 

landfills, such as a geomembrane system. Other thin-film modules are assembled into 

rigid constructions that can be used in fixed tilt or, in some cases, tracking system 

configurations. 

The efficiency of thin-film solar cells is generally lower than for crystalline cells. Current 

overall efficiency of a thin-film panel is between 6% and 8% for a-Si and 11% and 12% 

for CdTe. Figure 4 shows thin-film solar panels. 
8 

Figure 4. Thin-film solar panels installed on (left) solar energy cover and (middle and right) 

fixed-tilt mounting system. Pictures from (left) Republic Services, Inc., NREL 23817; 

(middle) Beck Energy, NREL 14726; and (right) U.S. Coast Guard Petaluma site, NREL 

17395

Industry standard warranties of both crystalline and thin-film PV panels typically 

guarantee system performance of 80% of the rated power output for 25 years. After 

25 years, they will continue producing electricity but at a lower performance level.

3.2.2 Inverter

Inverters convert DC electricity from the PV array into AC and can connect seamlessly to 

the electricity grid. Inverter efficiencies can be as high as 98.5%. 

Inverters also sense the utility power frequency and synchronize the PV-produced power 

to that frequency. When utility power is not present, the inverter will stop producing AC 

power to prevent “islanding,” or putting power into the grid while utility workers are 

trying to fix what they assume is a de-energized distribution system. This safety feature is 

built into all grid-connected inverters in the market. Electricity produced from the system 

could be fed to a step-up transformer to increase the voltage to match the grid. 

There are two primary types of inverters for grid-connected systems: string and microinverters. Each type has strengths and weaknesses and could be recommended for 

different types of installations.

String inverters are most common and typically range in size from 1.5 kW to 1,000 kW. 

These inverters tend to be cheaper on a capacity basis, as well as are highly efficient and 

have lower operation and maintenance (O&M) costs. String inverters offer various sizes 

and capacities to handle a large range of voltage output. For larger systems, string 

inverters are combined in parallel to produce a single point of interconnection with the 

grid. Warranties typically run between 5 and 10 years, with 10 years being the current 

industry standard. On larger units, extended warranties up to 20 years are possible. Given 

that the expected life of the PV panels is 25–30 years, an operator can expect to replace a 

string inverter at least one time during the life of the PV system. 

Micro-inverters are dedicated to the conversion of a single PV module’s power output. 

The AC output from each module is connected in parallel to create the array. This 

technology is relatively new to the market and in limited use in larger systems due to 

potential increase in O&M associated with significantly increasing the number of 

inverters in a given array. Current micro-inverters range in size between 175 W and 

380 W. These inverters can be the most expensive option per watt of capacity. Warranties 
9 

range from 10–20 years. Small projects with irregular modules and shading issues 

typically benefit from micro-inverters. 

With string inverters, small amounts of shading on a solar panel will significantly affect 

the entire array production. Instead, it impacts only that shaded panel if micro-inverters 

are used. Figure 5 shows a string inverter. 

Figure 5. String inverter. Photo by Warren Gretz, NREL 07985

3.2.3 Balance-of-System Components

In addition to the solar modules and inverter, a solar PV system consists of other parts 

called BOS components, which include: 

• Mounting racks and hardware for the panels

• Wiring for electrical connections. 

3.2.3.1 Mounting Systems

The array has to be secured and oriented optimally to maximize system output. The 

structure holding the modules is referred to as the mounting system. 

3.2.3.1.1 Ground-Mounted Systems

For ground-mounted systems, the mounting system can be either directly anchored into 

the ground (via driven piers or concrete footers) or ballasted on the surface without 

ground penetration. Mounting systems must withstand local wind loads, which range 

from 90–120 mph for most areas or 130 mph or more for areas with hurricane potential. 

Depending on the region, snow and ice loads must also be a design consideration for the 

mounting system. For reclaimed mine site applications, mounting system designs will be 

primarily driven by these considerations coupled with settlement concerns. 

Typical ground-mounted systems can be categorized as fixed tilt or tracking. Fixed-tilt 

mounting structures consist of panels installed at a set angle, typically based on site 

latitude and wind conditions, to increase exposure to solar radiation throughout the year. 

Fixed-tilt systems are used at many reclaimed mine sites. Fixed-tilt systems have lower 

maintenance costs but generate less energy (kWh) per unit power (kW) of capacity than 

tracking systems. 

Tracking systems rotate the PV modules so they are following the sun as it moves across 

the sky. This increases energy output but also increases maintenance and equipment costs 

slightly. Single-axis tracking, in which PV is rotated on a single axis, can increase energy 
10 

output up to 25% or more. With dual-axis tracking, PV is able to directly face the sun all 

day, potentially increasing output up to 35% or more. Depending on underlying soiling 

conditions, single- and dual-axis trackers might not be suitable due to potential settlement 

effects, which can interfere with the alignment requirements of such systems. 

Table 1. Energy Density by Panel and System

System Type Fixed-Tilt Energy Density 

(DC-Watts/ft2

) 

Single-Axis Tracking 

Energy Density

(DC-Watts/ft2

) 

Crystalline Silicon 4.0 3.3

Thin Film 3.3 2.7

Hybrid High 

Efficiency

4.8 3.9

The selection of mounting type is dependent on many factors, including installation size, 

electricity rates, government incentives, land constraints, latitude, and local weather. 

Contaminated land applications could raise additional design considerations due to site 

conditions, including differential settlement. 

Selection of the mounting system is also heavily dependent on anchoring or foundation 

selection. The mounting system design will also need to meet applicable local building 

code requirements with respect to snow, wind, and seismic zones. Selection of mounting 

types should also consider frost protection needs, especially in cold regions, such as 

New England. 

3.2.3.2 Wiring for Electrical Connections

Electrical connections, including wiring, disconnect switches, fuses, and breakers, are 

required to meet electrical code (e.g., NEC Article 690) for both safety and 

equipment protection. 

In most traditional applications, wiring from (1) the arrays to inverters and (2) inverters 

to point of interconnection is generally run as direct burial through trenches. In a 

reclaimed mine site, this wiring might be required to run through above-ground conduit 

due to restrictions with cap penetration or other concerns. Therefore, developers should 

consider noting any such restrictions, if applicable, in requests for proposals in order to 

improve overall bid accuracy. Similarly, it is recommended that PV system vendors 

reflect these costs in the quote when costing out the overall system. 

3.2.3.3 PV System Monitoring 

Monitoring PV systems can be essential for reliable functioning and maximum yield of a 

system. It can be as simple as reading values, such as produced AC power, daily kilowatthours, and cumulative kilowatt-hours locally on an LCD display on the inverter. For 

more sophisticated monitoring and control purposes, environmental data, such as module 

temperature, ambient temperature, solar radiation, and wind speed, can be collected. 

Remote control and monitoring can be performed by various remote connections. 
11 

Systems can send alerts and status messages to the control center or user. Data can be 

stored in the inverter’s memory or in external data loggers for further system analysis. 

Collection of this basic information is standard for solar systems and not unique to 

landfill applications.

Weather stations are typically installed in large-scale systems. Weather data, such as solar 

radiation and temperature, can be used to predict energy production, enabling comparison 

of the target and actual system output and performance, and identification of underperforming arrays. Operators can also use this data to identify required maintenance, 

shade on panels, and accumulating dirt on panels, for example. Monitoring system data 

can also be used for outreach and education. This can be achieved with publicly 

available, online displays, wall-mounted systems, or even smartphone applications. 

3.2.4 Operation and Maintenance

PV panels typically have a 25-year performance warranty. Inverters, which come 

standard with a 5-year or 10-year warranty (extended warranties available), would be 

expected to last 10–15 years. System performance should be verified on a vendorprovided website. Wire and rack connections should be checked annually. This economic 

analysis uses an annual O&M cost computed as $20/kW/yr, which is based on the 

historical O&M costs of installed fixed-axis grid-tied PV systems. In addition, the system 

should expect a replacement of system inverters in year 15 at a cost of $0.25/W. 

3.3 Siting Considerations

PV modules are very sensitive to shading. When shaded (either partially or fully), the 

panel is unable to optimally collect the high-energy beam radiation from the sun. As 

explained above, PV modules are made up of many individual cells that all produce a 

small amount of current and voltage. These individual cells are connected in series to 

produce a larger current. If an individual cell is shaded, it acts as resistance to the whole 

series circuit, impeding current flow and dissipating power rather than producing it. 

The NREL solar assessment team uses a Solmetric SunEye solar path calculator to assess 

shading at particular locations by analyzing the sky view where solar panels will be 

located. By finding the solar access, the NREL team can determine if the area is 

appropriate for solar panels.

Following the successful collection of solar resource data using the Solmetric SunEye 

tool and determination that the site is adequate for a solar installation, an analysis to 

determine the ideal system size must be conducted. System size depends highly on the 

average energy use of the facilities on the site, power purchase agreements (PPAs), 

incentives available, and utility policy. 
12 

4 Proposed Installation Location Information

This section summarizes the findings of the NREL solar assessment site visit on 

March 5, 2012.

4.1 Peru Mill Industrial Park Site PV System

As discussed in Section 1, the Peru Mill Industrial Park site is suitable for PV because it 

is nearly flat; has excellent road, rail, and solar access; is zoned for industrial uses; has

extensive electrical distribution nearby; and can potentially sell electricity to PNM and 

El Paso Electric. 

In order to get the most out of the ground area available, it is important to consider 

whether the site layout can be improved to better incorporate a solar system. If there are 

unused structures, fences, or electrical poles that can be removed, the unshaded area can 

be increased to incorporate more PV panels. Figure 6 shows an aerial view of the Peru 

Mill Industrial Park sites. The feasible areas for PV are outlined in orange, and the 

electrical tie-in point for the PV system is shown. 

Figure 6. Aerial view of Peru Mill Industrial sites

Image created using Google Earth

There are three proposed sites for Peru Mill Industrial Park. Area for each site, estimated 

PV capacity, and distance to utility tie-in at the substation to the east of the sites are

presented in Table 2. 
13 

Table 2. Area for Each Site, Estimated PV Capacity, and Distance to Utility Tie-In 

Site Acreage

Estimated PV Capacity

(MW)

Distance to Utility Tie-In 

(ft)

Site 1 5.2 0.9 8,000

Site 2 54.1 9.4 6,500

Site 3 150.0 26.1 5,000

The total Peru Mill Industrial Park area for this study is approximately 209 acres, divided 

into three major sites. Sites 1, 2, and 3 are approximately 5, 54, and 150 acres, 

respectively. The areas are relatively flat and unshaded, which makes them suitable 

candidates for a PV system. Additional considerations might be associated with 

designing, installing, and operating the PV system in order to maintain the integrity and 

effectiveness of the remediation solution or cap on the reclaimed tailings. The PV 

capacities of fixed-tilt ballasted systems estimated for sites 1, 2, and 3 are 0.9 MW, 

9.4 MW, and 26.1 MW, respectively. Estimated total PV capacity of Peru Mill Industrial

Park based on maximum available land area for this study is 36.4 MW.

PV systems are very well-suited to the Deming, New Mexico, area, where the average 

global horizontal annual solar resource—the total solar radiation on a horizontal plane for 

a given location, including direct, diffuse, and ground-reflected radiation—is

6.41 kWh/m2

/day. Figure 7 and Figure 8 show various views of the Peru Mill Industrial 

Park site. 

Figure 7. Views of the feasible area for PV at site 1 of the Peru Mill Industrial Park. Photos 

by Kosol Kiatreungwattana, NREL
14 

Figure 8. Views of the feasible area for PV at site 2 of the Peru Mill Industrial Park. Photos 

by Kosol Kiatreungwattana, NREL

4.2 Utility-Resource Considerations

The expected electrical tie-in point for the PV system at the Peru Mill Industrial Park is 

located at the substation on the east side of site 3. Another option for a tie-in point is to 

the 345-kV El Paso Electric power line. Sites and line location are showed in Figure 9. 

Per conversation with City of Deming personnel, the 345-kV line and the substation near 

Peru Mill Industrial Park shall have adequate capacity to accommodate a large, utility-PV 

system. A technical analysis, performed in a Preliminary Interconnection System Impact 

Study (PISIS) cluster study, is required with PNM. The additional fee for a PISIS cluster 

study is presented in Table 3. PNM requires each applicant to submit an application for 

interconnection. For a large system (10 kW to 10 MW), the fee is $100 plus $1 for every 

kilowatt over 100 kW.2

 

Table 3. Fee for Preliminary Interconnection System Impact Study (PISIS)

System Capacity Fee ($)

Less than 50 MW 75,000

Greater than 50 MW but less than 200 MW 150,000

200 MW and greater 250,000

 

2 For more details, see www.pnm.com/customers/pdf/ic_app_large.pdf.
15 

Figure 9. Electrical tie-in point for the PV system at the 345-kV line or the substation. 

Photos by Kosol Kiatreungwattana, NREL

4.3 Useable Acreage for PV System Installation 

Typically, a minimum of 2 useable acres is recommended to site PV systems. Useable 

acreage is typically characterized as "flat to gently sloping" southern exposures that are 

free from obstructions and get full sun for at least a 6-hour period each day. For example, 

eligible space for PV includes underutilized or unoccupied land, vacant lots, and/or 

unused paved area (e.g., a parking lot or industrial site space) as well as existing building 

rooftops. The total 209 acres (site 1—5.2 acres, site 2—54.1 acres, and site 3—

150.0 acres) are flat and free of all major shading obstructions.

4.4 PV Site Solar Resource

The Peru Mill Industrial Park site has been evaluated to determine the adequacy of the 

solar resource available using both on-site data and industry tools. 

The assessment team for this feasibility study collected multiple Solmetric SunEye data 

points and found a solar access of 95% or higher. All data gathered using this tool is 

available in Appendix B.

The predicted array performance was calculated using PVWatts Version 23 for Deming, 

New Mexico. Table 4 shows the station identification information, PV system 

specifications, and energy specifications for the site. 

 

3 For more information about PVWatts Version 2, see http://www.nrel.gov/rredc/pvwatts/. 
16 

Table 4. Site Identification Information and Specifications

Station Identification

Cell ID 0192378

State New Mexico

Latitude 32.9° N

Longitude 108.4° W

PV System Specifications

DC Rating 1.00 kW

DC to AC Derate Factor 0.8 

AC Rating 0.8 kW

Array Type Fixed Tilt 

Array Tilt 20°

Array Azimuth 180°

Energy Specifications

Cost of Electricity (retail) $0.11/kWh

Array performance is based on a hypothetical system that is 20-degree fixed tilt and 1 kW 

in capacity. Resulting performance can be scaled linearly to match the proposed system 

size. Table 5 shows the performance results in Deming, New Mexico, as calculated by 

PVWatts. Estimated electricity production and value of the energy for each system at 

each site is presented in Table 6. 

Table 5. Performance Results for 20-Degree Fixed-Tilt PV

Month Solar Radiation

(kWh/m2

/day)

AC Energy

(kWh)

Energy Value

($)

1 4.97 120 13.20 

2 5.68 122 13.42

3 6.81 161 17.71

4 7.61 167 18.37

5 7.59 170 18.70 

6 7.62 159 17.49

7 7.12 153 16.83

8 6.68 145 15.95

9 6.51 137 15.07

10 6.21 141 15.51 

11 5.41 123 13.53

12 4.67 114 12.54 

Year 6.41 1,712 188.32
17 

Table 6. Estimated Electricity Production for Each Site 

Site

Estimated PV 

Capacity 

(MW)

Annual Electricity Production 

(MWh/yr)

Annual Energy Value 

($)

Site 1 0.9 1,540 169,400

Site 2 9.4 16,092 1,770,120

Site 3 26.1 44,683 4,915,130

Total 36.4 62,316 6,854,760

4.5 Peru Mill Industrial Park Energy Usage

The Peru Mill Industrial Park site currently has small on-site energy use from a small 

welding shop. It is assumed that energy produced by PV will be net metered, and the 

excess electricity, which will be the majority of production, can be sold to the utility grid. 

4.5.1 Net Metering

Net metering is an electricity policy for consumers who own renewable energy facilities. 

In this context, "net" is used to mean "what remains after deductions"—in this case, the 

deduction of any energy outflows from metered energy inflows. Under net metering, a 

system owner receives retail credit for at least a portion of the electricity it generates. As 

part of the Energy Policy Act of 2005, under Sec. 1251, all public electric utilities are 

required upon request to make net metering available to their customers:

(11) NET METERING.—Each electric utility shall make available upon 

request net metering service to any electric consumer that the electric 

utility serves. For purposes of this paragraph, the term ‘net metering 

service’ means service to an electric consumer under which electric energy 

generated by that electric consumer from an eligible on-site generating 

facility and delivered to the local distribution facilities may be used to 

offset electric energy provided by the electric utility to the electric 

consumer during the applicable billing period. 

The on-site energy consumption at Peru Mill Industrial Park is relatively small. However, 

future industrial development on the site could create high on-site energy consumption, 

so net metering can be an option for this PV project. 

4.5.2 Virtual Net Metering

Some states and utilities allow for virtual net metering (VNM). This arrangement can 

allow certain entities, such as a local government, to install renewable generation of up to 

1 MW at one location within its geographic boundary and to generate credits that can be 

used to offset charges at one or more other locations within the same geographic 

boundary. Many businesses and large electricity consumers in Deming could be 

interested in buying electricity from the Peru Mill Industrial Park PV system. 

Unfortunately, New Mexico currently does not offer VNM to PV generators. 
18 

5 Economics and Performance

The economic performance of a PV system installed on the site is evaluated using a 

combination of the assumptions and background information discussed previously, as 

well as a number of industry-specific inputs determined by other studies. In particular, 

this study uses the NREL System Advisor Model (SAM).4 

SAM is a performance and economic model designed to facilitate decision making for 

people involved in the renewable energy industry, ranging from project managers and 

engineers to incentive program designers, technology developers, and researchers. 

SAM makes performance predictions for grid-connected solar, solar water heating, wind, 

and geothermal power systems and makes economic calculations for both projects that 

buy and sell power at retail rates and power projects that sell power through a PPA. 

SAM consists of a performance model and financial model. The performance model 

calculates a system's energy output on an hourly basis (sub-hourly simulations are 

available for some technologies). The financial model calculates annual project cash 

flows over a period of years for a range of financing structures for residential, 

commercial, and utility projects. 

SAM calculates the cost of generating electricity based on information provided about a 

project's location, installation and operating costs, type of financing, applicable tax 

credits and incentives, and system specifications. 

5.1 Assumptions and Input Data for Analysis

Cost of a PV system depends on the system size and other factors, such as geographic 

location, mounting structure, and type of PV module. Based on the significant cost 

reductions seen in 2011, the average cost for utility-scale ground-mounted systems has

declined from $4.80/W in the first quarter of 2010 to $2.79/W in the first quarter of 2012. 

With an increasing demand and supply, the potential of further cost reduction is expected 

as market conditions evolve. 

An installed cost of fixed-tilt ground-mounted systems was assumed to be $2.79/W. We 

assumed a crystalline PV panel for this analysis. Additional considerations may be 

associated with designing, installing, and operating the PV system to maintain the 

integrity and effectiveness of the remediation solution or cap on the reclaimed tailings. 

The estimated increase in cost from this baseline for a ballasted system is 25% 

(recommended for this site). This increased cost is due to limitations placed on design 

and construction methods because of the ground conditions at the site. Such limitations 

include restrictions on stormwater runoff, weight loading of construction equipment, 

inability to trench for utility lines, additional engineering costs, permitting issues, and 

nonstandard ballasted racking systems. The installed system cost assumptions are 

summarized in Table 7. 

 

4 For additional information on the NREL System Advisor Model, see https://sam.nrel.gov/cost. 
19 

Table 7. Installed System Cost Assumptions

System Type Fixed-Tilt

($/Wp)

Baseline system 2.79

With ballast 0.70

Total installed cost 3.49

These prices include the PV array and the BOS components for each system, including 

the inverter and electrical equipment, as well as the installation cost. This includes 

estimated taxes and a national-average labor rate but does not include land cost. The 

economics of grid-tied PV depend on incentives, the cost of electricity, the solar resource, 

and panel tilt and orientation. Currently, a solar incentive is only available for systems up 

to 1 MW in capacity. Larger systems (over 1 MW) are required to go through an RFP 

process with PNM, and the buy-back rate is negotiated on a case-by-case basis. For this 

analysis, the retail utility rate is $0.11/kWh, and the buyback rate of the electricity was 

assumed to be $0.055/kWh [based on available information for systems up to 1 MW with

an incentive of $0.02/kWh renewable energy certificate (REC) price plus $0.035/kWh 

Cogeneration and Small Power Production Facilities, Rate 12]. 

It was assumed for this analysis that relevant federal incentives are received for taxable 

entities. It is important to consider all applicable incentives or grants to make PV as costeffective as possible. If the PV system is owned by a private tax-paying entity, this entity 

could qualify for federal tax credits and accelerated depreciation on the PV system, which 

can be worth about 30% of the initial capital investment. The total potential tax benefits 

to the tax-paying entity can be as high as 45% of the initial system cost. Because state 

and federal governments do not pay taxes, private ownership of the PV system would be 

required to capture tax incentives. 

For the purposes of this analysis, the project is expected to have a 25-year life, although 

the systems can be reasonably expected to continue operation past this point. Inflation is 

assumed to be 1.5%, the real discount rate to be 6%, and financing secured via a 25-year 

loan at a 7% interest rate and 80% debt fraction. The panels are assumed to have a 1% 

per year degradation in performance. The O&M expenses are estimated to be $20/kW/yr 

for the life of the system. In addition, it is expected that there will be a $250/kW charge 

to O&M in year 15 to replace the inverters associated with the system. A system derating 

factor of 80% was assumed. This includes losses in the inverter, wire losses, and PV 

module losses. PVWatts Version 2 was used to calculate expected energy performance

for the system. The PNM purchase price for REC price and generated electricity is their 

avoided generation price of $0.055/kWh. For the net-metering and VNM case, the retail 

price was modeled as $0.11/kWh. The full list of incentives used in this study can be 

found in Table 8. 
20 

Table 8. Summary of Incentives Evaluated

Incentive Title Modeled Value Expected End 

Federal Investment Tax Credit 30% of total investment 2016

Advanced Energy Tax Credit (Corporate) 6% of total investment $60 million

Renewable Energy Production Tax Credit 

(Corporate) $0.027/kWh (average) 

Statewide cap: 

2,500 GWh 

Advanced Energy Gross Receipts Tax 

Deduction 100% of sales tax $60 million

Energy Efficiency & Renewable Energy 

Bond Program

Government bonds for 

government buildings $20 million

Net Metering Available Up to site loads

Only municipalities can take advantage of the Energy Efficiency & Renewable Energy 

Bond Program. This was modeled as a 0.5% interest loan over the life of the project to 

simulate the actual stipulations of the program. The program allows for repayment to 

occur through recouping 90% of energy savings in order to not affect the local 

general fund. 

5.2 SAM-Forecasted Economic Performance

Using varied inputs and the assumptions summarized in Section 5.1, the SAM tool 

predicts net present value (NPV), PPA, and levelized cost of energy (LCOE), among 

other economic indicators. 

The LCOE in cents per kilowatt-hour accounts for a project's installation, financing, tax, 

operating costs, and the quantity of electricity it produces over its life. The LCOE makes

it possible to compare alternatives with different project lifetimes and performance 

characteristics. Analysts can use the LCOE to compare the option of installing a 

residential or commercial project to purchasing electricity from an electric service 

provider or to compare utility and commercial PPA projects with investments in energy 

efficiency, other renewable energy projects, or conventional fossil fuel projects. The 

LCOE captures the trade-off between typically higher capital-cost, lower operating-cost 

renewable energy projects and lower capital-cost, higher operating-cost fossil-fuel-based 

projects.

The PPA price is the first-year price that electricity could be sold to the property owner, 

allowing the developer to own a certain internal rate of return. For this analysis, the 

required internal rate of return used was 15%, and the first-year PPA price escalates at 

1.5% per year. 

There are three scenarios for the analysis. All detailed assumptions and results for the 

analysis can be found in the appendices. 
21 

Case 1—Investor owned/PPA with 36.4 MW

This case assumes a third-party investor for the PV system. All generated electricity from 

Case 1 is assumed to be sold to the utility. The results of this case are to estimate the 

electricity rate as a PPA to receive an acceptable return on investment (15% internal rate 

of return). 

Case 2—Municipally owned/PPA with 36.4 MW

This case assumes the City of Deming owns the PV system. All electricity will be sold to 

the grid at $0.055/kWh. 

Case 3—Municipally owned/virtual net metering with 36.4 MW

VNM is currently not available in New Mexico. Case 3 is to demonstrate the potential 

economic benefits for this option. This case assumes the City of Deming owns the PV 

system. All electricity would be VNM to generate credits at retail electricity rate that can 

be used to offset charges at one or more other locations within the same geographic 

boundary. A retail electricity rate at $0.11/kWh is used for this analysis. 

5.2.1 Results

Three scenarios were run for the Peru Mill Industrial Park to encompass the options 

available to this site. The independent variables include: third-party developer versus 

existing site ownership. There are multiple factors that go into choosing which scenario 

to pursue beyond NPV, PPA, and LCOE. Table 9 shows the modeled results from the 

different scenarios. The entire results and summary of inputs to the SAM are available in 

Appendix D. 

• Case 1—Investor owned/PPA with 36.4 MW will work if the investor can sell the 

electricity of the PPA at $0.0923/kWh, either to PNM or El Paso Electric. 

Although the retail electricity rate is $0.11/kWh, which is slightly higher than the 

PPA, the PNM’s purchase rate is estimated to be approximately only $0.055/kWh. 

Therefore, a solar investor might be unlikely to invest given current conditions. 

• Case 2—Municipally owned/PPA has negative NPV when electricity production 

is valued at $0.055/kWh and shows the low LCOE of $0.0573/kWh. LCOE is 

slightly higher than the PNM purchase price of $0.055/kWh. Although the case is 

not economically preferable based on negative NPV, further analysis shows that 

this case (Case 2a) would be economically viable with a NPV of $968,724 and a 

payback of 13.7 years if the utility purchase price is $0.07/kWh or higher. 

• Case 3—Municipally owned/VNM shows a positive NPV and feasible payback 

of 8.6 years. Therefore, this case presents the best economic scenario. However, 

VNM is not available for New Mexico. A VNM arrangement can be pursued with 

the public utility commission (PUC) or through legislative action.
22 

 Table 9. PV System Summary 

Investor-Owned Cases

Capacity 

(MW)

LCOE 

($/kWh)

NPV 

($)

PPA 

($/kWh)

Payback 

(yr)

Case 1—Investor owned/PPA 36.4 0.1041 $3,074,030 0.0923 N/A

Case 2—Developer owned/PPA 36.4 0.0573 ($6,757,385) - 18

Case 2a—Developer owned/PPA at 

$0.07/kWh utility purchase price 36.4 0.0573 $968,724 - 14

Case 3—Developer owned/virtual net 

metering 36.4 0.0573 $21,571,681 - 8.6

Table 10. Potential Energy Production and Economic Impacts on Created Jobs

5.3 Job Analysis and Impact

To evaluate the employment and economic impacts of the PV project associated with this 

analysis, the NREL Jobs and Economic Development Impact (JEDI) models are used.5

JEDI estimates the economic impacts associated with the construction and operation of 

distributed-generation power plants. JEDI is a flexible input-output tool that estimates, 

but does not precisely predict, the number of jobs and economic impacts that can be 

reasonably supported by the proposed facility. 

JEDI represents the entire economy, including cross-industry or cross-company impacts. 

For example, JEDI estimates the impact the installation of a distributed-generation 

facility would have on not only the manufacturers of PV modules and inverters but also 

the associated construction materials, metal fabrication industry, project management 

support, transportation, and other industries that are required to enable the procurement 

and installation of the complete system. 

 

5

 The JEDI models have been used by the U.S. Department of Energy, the U.S. Department of Agriculture, 

NREL, and the Lawrence Berkeley National Laboratory, as well as a number of universities. For 

information on the NREL Jobs and Economic Development Impact tool, see 

http://www.nrel.gov/analysis/jedi/about_jedi.html.

System Type PV System Sizea Array Tilt

Annual 

Output

Number of 

Houses Poweredb

Jobs 

Createdc

Jobs 

Sustainedd

(MW) (deg) (MWh/year) (job-year) (job-year)

Fixed-tilt Ballasted PV System with Crystalline Panels 36.4 20 62,317 5,645 1,107 14

System Type System Cost

Fixed-tilt Ballasted PV System with Crystalline Panels $ 127,036,000 

a Data assume a maximum usable area of 2,000 acres.

b

 Number of average American households that could hypothetically be powered by the PV system assuming 11,040 

kWh/year/household.

d

 Jobs (direct, indirect, and induced) sustained as a result of operations and maintenance (O&M) of the system.

c

 Job-years created as a result of project capital investment including direct, indirect, and induced jobs.
23 

For this analysis, inputs, including the estimated installed project cost ($/kW), targeted 

year of construction, system capacity (kW), O&M costs ($/kW), and location, were 

entered into the model to predict the jobs and economic impact. It is important to note 

that JEDI does not predict or incorporate any displacement of related economic activity 

or alternative jobs due to the implementation of the proposed project. As such, the JEDI 

results are considered gross estimates as opposed to net estimates. 

For the Peru Mill Industrial Park site, the values in Table 11 were assumed for the netmetering system. 

Table 11. JEDI Analysis Assumptions

Input Assumed Value

Capacity 36.4 MW 

Placed In Service Year 2013

Installed System Cost $127,036,000

Location Deming, New Mexico

Using these inputs, JEDI estimates the gross direct and indirect jobs, associated earnings, 

and total economic impact supported by the construction and continued operation of the 

proposed PV system. 

The estimates of jobs associated with this project are presented as either constructionperiod jobs or sustained-operations jobs. Each job is expressed as a whole, or fraction, 

full-time equivalent (FTE) position. An FTE is defined as 40 hours per week for one 

person for the duration of a year. Construction-period jobs are considered short-term 

positions that exist only during the procurement and construction periods. 

As indicated in the results of the JEDI analysis provided in Appendix C, the total 

proposed system of 36.4 MW is estimated to support 1,107 direct and indirect jobs per 

year for the duration of the procurement and construction period. Total wages paid to 

workers during the construction period are estimated to be $42,336,800, and total 

economic output is estimated to be $99,410,200. The annual O&M of the new PV system 

is estimated to support 13.5 FTEs per year for the life of the system. The jobs and 

associated spending are projected to account for approximately $695,900 in earnings and 

$1,124,300 in economic activity each year for the next 25 years. 

5.4 Financing Opportunities

The procurement, development, construction, and management of a successful utilityscale distributed-generation facility can be owned and financed a number of different 

ways. The most common ownership and financing structures are described below. 

5.4.1 Owner and Operator Financing

The owner/operator financing structure is characterized by a single entity with the 

financial strength to fund all of the solar project costs and, if a private entity, sufficient 
24 

tax appetite to utilize all of the project’s tax benefits. Private owners/operators typically 

establish a special purpose entity (SPE) that solely owns the assets of the project. An 

initial equity investment into the SPE is funded by the private entity using existing funds, 

and all of the project’s cash flows and tax benefits are utilized by the entity. This equity 

investment is typically matched with debt financing for the majority of the project costs. 

Project debt is typically issued as a loan based on each owner’s/operator’s assets and 

equity in the project. In addition, private entities can utilize any of federal tax 

credits offered. 

For public entities that choose to finance, own, and operate a solar project, funding can be 

raised as part of a larger, general obligation bond; as a standalone tax credit bond; 

through a tax-exempt lease structure, bank financing, grant and incentive programs, or 

internal cash; or some combination of the above. Certain structures are more common 

than others, and grant programs for solar programs are on the decline. Regardless, as taxexempt entities, public entities are unable to benefit directly from the various tax-creditbased incentives available to private companies. This has given way to the now common 

use of third-party financing structures, such as the PPA. 

5.4.2 Third-Party Developers with Power Purchase Agreements

Because many project site hosts do not have the financial or technical capabilities to 

develop a capital-intensive project, many times they turn to third-party developers (and/or 

their investors). In exchange for access to a site through a lease or easement arrangement, 

third-party developers will finance, develop, own, and operate solar projects utilizing 

their own expertise and sources of tax-equity financing and debt capital. Once the system 

is installed, the third-party developer will sell the electricity to the site host or local utility 

via a PPA—a contract to sell electricity at a negotiated rate over a fixed period of time. 

The PPA typically will be between the third-party developer and the site host if it is a 

retail “behind-the-meter” transaction or directly with an electric utility if it is a 

wholesale transaction. 

Site hosts benefit by either receiving competitively priced electricity from the project via 

the PPA or land-lease revenues for making the site available to the solar developer via a 

lease payment. This lease payment can take on the form of either a revenue-sharing 

agreement or an annual lease payment. In addition, third-party developers are able to 

utilize federal tax credits. For public entities, this arrangement allows them to utilize the 

benefits of the tax credits (low PPA price, higher lease payment) while not directly 

receiving them. The term of a PPA typically varies from 20–25 years.

5.4.3 Third-Party “Flip” Agreements 

The most common use of the third-party “flip” agreement is a site host working with a 

third-party developer who then partners with a tax-motivated investor in an SPE that 

would own and operate the project. Initially, most of the equity provided to the SPE 

would come from the tax investor, and most of the benefit would flow to the tax investor 

(as much as 99%). When the tax investor has fully monetized the tax benefits and 

achieved an agreed-upon rate of return, the allocation of benefits and majority ownership 

(95%) would flip to the site host (but not within the first 5 years). After the flip, the site 
25 

host would have the option to buy out all or most of the tax investor’s interest in the 

project at the fair market value of the tax investor’s remaining interest. 

A flip agreement can also be signed between a developer and investors within an SPE, 

where the investor would begin with the majority ownership. Eventually, the ownership 

would flip to the developer once each investor’s return is met.

5.4.4 Hybrid Financial Structures

As the solar market evolves, hybrid financial solutions have been developed in certain 

instances to finance solar projects. A particular structure, nicknamed “The Morris Model” 

after Morris County, New Jersey, combines highly rated public debt, a capital lease, and a 

PPA. Low-interest public debt replaces more costly financing available to the solar 

developer and contributes to a very attractive PPA price for the site hosts. New markets 

tax credits have been combined with PPAs and public debt in other locations, such as 

Denver and Salt Lake City. 

5.4.5 Solar Services Agreement and Operating Lease

The solar services agreement (SSA) and operating lease business models have been 

predominately used in the municipal and cooperative utility markets due their treatment 

of tax benefits and the rules limiting federal tax benefit transfers from nonprofit to forprofit companies. Under IRS guidelines, municipalities cannot enter capital leases with 

for-profit entities when the for-profit entities capture tax incentives. As a result, a number 

of business models have emerged as a work-around to this issue. One model is the SSA,

wherein a private party sells “solar services” (i.e., energy and RECs) to a municipality 

over a specified contract period (typically long enough for the private party to accrue the 

tax credits). The nonprofit utility typically purchases the solar services with either a onetime up-front payment equal to the turn-key system cost minus the 30% federal tax credit 

or can purchase the services in annual installments. The municipality can buy out the 

system once the third party has accrued the tax credits, but due to IRS regulations, the 

buyout of the plant cannot be included as part of the SSA (i.e., the SSA cannot be used as 

a vehicle for a sale and must be a separate transaction).

Similar to the SSA, there are a variety of lease options that are available to municipalities 

that allow the capture of tax benefits by third-party owners, which result in a lower cost 

to the municipality. These include an operating lease for solar services (as opposed to an 

equipment capital lease) and a complex business model called a “sales/leaseback.” Under 

the sales/leaseback model, the municipality develops the project and sells it to a thirdparty tax equity investor who then leases the project back to the municipality under an 

operating lease. At the end of the lease period, and after the tax benefits have been 

absorbed by the tax equity investor, the municipality could purchase the solar project at 

fair market value.

5.4.6 Sales/Leaseback

In the widely accepted sales/leaseback model, the public or private entity would install 

the PV system, sell it to a tax investor, and then lease it back. As the lessee, they would 

be responsible for operating and maintaining the solar system, as well as have the right to 

sell or use the power. In exchange for use of the solar system, the public or private entity 
26 

would make lease payments to the tax investor (the lessor). The tax investor would have 

rights to federal tax benefits generated by the project and the lease payments. Sometimes, 

the entity is allowed to buy back the project at 100% fair market value after the tax 

benefits are exhausted. 

5.4.7 Community Solar/Solar Gardens

The concept of “community solar” is one in which the costs and benefits of one large 

solar project are shared by a number of participants. A site owner may be able to make 

the land available for a large solar project, which can be the basis for a community solar 

project. Ownership structures for these projects vary, but the large projects are typically 

owned or sponsored by a local utility. Community solar gardens are distributed solar 

projects wherein utility customers have a stake via a prorated share of the project’s 

energy output. This business model is targeted to meet demand for solar projects by 

customers who rent/lease their homes or businesses, do not have good solar access at 

their site, or do not want to install solar system on their facilities. Customer prorated 

shares of solar projects are acquired through a long-term transferrable lease of one or 

more panels, or they subscribe to a share of the project in terms of a specific level of 

energy output or the energy output of a set amount of capacity. Under the customer lease 

option, the customer receives a billing credit for the number of kilowatt-hours their 

prorated share of the solar project produces each month; this is also known as VNM. 

Under the customer subscription option, customers typically pay a set price for a block of 

solar energy (i.e., 100 kWh per-month blocks) from the community solar project. Other 

models include monthly energy outputs from a specific investment dollar amount or a 

specific number of panels. 

Community solar garden and customer subscription-based projects can be owned solely 

by the utility, owned solely by third-party developers with facilitation of billing provided 

by the utility, or be a joint venture between the utility and a third-party developer, leading 

to eventual ownership by the utility after the tax benefits have been absorbed by the thirdparty developer. 

There are some states that offer solar incentives for community solar projects, including 

Washington State (production incentive) and Utah (state income tax credit). Community 

solar is also known as solar gardens, depending on the location (e.g., Colorado). 

However, New Mexico currently does not allow community solar or VNM. In the future, 

it would be a great opportunity to develop policy in community solar gardens or VNM so 

that a nearby community or town can take advantage of the solar PV project. 
27 

6 Conclusions and Recommendations 

The feasibility of a PV system installed is highly impacted by the available area for an 

array, solar resource, distance to transmission lines, and distance to major roads. The 

potential closest electrical tie-in location is at the Hurley substation. Having a substation 

on site makes it an ideal location for a PV system interconnection. A detailed 

interconnection study is recommended and will have to be performed through the local 

electric utility, PNM, or a third party to determine the feasibility of utilizing the on-site 

substation as a tie-in point for the PV system. Peru Mill Industrial Park site is suitable for 

a large-scale PV system because it is nearly flat, has adequate road and solar access, is 

zoned for industrial uses, and has extensive electrical distribution to the whole site. 

From the SAM analysis: 

• Case 1—Investor owned/PPA with 36.4 MW will work if the investor can sell the 

electricity of the PPA at $0.0923/kWh either to PNM or El Paso Electric. Because 

the retail electricity rate at $0.075/kWh is lower than the PPA and PNM’s 

purchase rate is estimated to be approximately $0.055/kWh, a solar investor may 

be unlikely to invest given current conditions. 

• Case 2—Municipally owned/PPA has negative NPV and shows the low LCOE of 

$0.0573/kWh. The LCOE is slightly higher than the PNM purchase price of 

$0.055/kWh. Although the case is not economically preferable based on negative 

NPV, further analysis shows that this case (case 2a) would be economically viable 

with a NPV of $968,724 and a payback of 13.7 years if the utility purchase price 

is $0.07/kWh or higher. Therefore, the project can be viable if the purchase rate is 

increased or the developer can negotiate for that rate under a PPA.

• Case 3—Municipally owned/VNM shows a positive NPV and feasible payback 

of 8.6 years. This case has the best economic scenario. However, VNM is not 

available for New Mexico. The VNM arrangement should be pursued with the 

PUC in the future. 

A very large PV capacity can potentially be developed at the Peru Mill Industrial Park 

sites. Key to the solar project development would be finding a potential buyer of the 

generated electricity through a PPA. Based on the analysis, the municipally owned PV 

project becomes feasible with a PPA at the rate of $0.07/kWh and above. Alternatively, a 

third-party ownership PPA can also be the feasible way for a system to be financed and 

installed on this site. VNM would also be a good option to sell the excess electricity if the 

state allows. It is recommended that the City of Deming further pursue opportunities of 

developing the PV project at the Peru Mill Industrial Park site. For future work, an RFP

shall be developed, issued, and sent out to third-party investors/developers. Any 

environmental considerations shall be included in the request for proposals during 

project development. 

Results of the JEDI analysis show that the total proposed system of 36.4 MW is estimated 

to support 1,107 direct and indirect jobs per year for the duration of the procurement and 

construction period. Total wages paid to workers during the construction period are 
28 

estimated to be $42,336,800, and total economic output is estimated to be $99,410,200. 

The annual O&M of the new PV system is estimated to support 13.5 full-time employees

per year for the life of the system. The jobs and associated spending are projected to 

account for approximately $695,900 in earnings and $1,124,300 in economic activity 

each year for the next 25 years.
29 

Appendix A. Assessment and Calculations 

Assumptions

Table A-1. Cost, System, and Other Assessment Assumptions

Cost Assumptions

Variable Quantity of 

Variable

Unit of Variable

Cost of Site Electricity (buyback/retail) 0.055/0.11 $/kWh

Annual O&M (fixed) 20 $/kW/year

System Assumptions

System Type Annual energy 

kWh/kW

Installed Cost 

($/W)

Energy Density 

(W/sq. ft.) 

Fixed-Tilt Ballasted System 1,712 $3.49 4.0

Other Assumptions

1 acre 43,560 ft2

1 MW 1,000,000 W

Ground utilization 90% of available 

area
30 

Appendix B. Solar Access Measurements

Figure B-1. Solar access measurements for Peru Mill Industrial Park PV site
31 

Appendix C. Results of the Jobs and Economic 

Development Impact Model

Project Descriptive Data 

 Project Location New Mexico

 Population (only required for county/region analysis)

 Year of Construction or Installation 2013

 System Application Utility

 Solar Cell/Module Material Crystalline Silicon

 System Tracking Fixed Mount

 Average System Size—DC Nameplate Capacity (kW) 36,400.0

 Number of Systems Installed 1.0

 Total Project Size—DC Nameplate Capacity (kW) 36,400.0 

 

 Base Installed System Cost ($/kWDC) $3,490

 Annual Direct Operation and Maintenance Cost ($/kW) $25.00

 Money Value (Dollar Year) 2012

Local Economic Impacts—Summary Results 

 Jobs Earnings Output

During Construction and Installation period $000 (2012) $000 (2012)

 Project Development and On-Site Labor Impacts 

 Construction and Installation Labor 178.7 $11,575.3 

 Construction and Installation Related Services 318.9 $9,901.1 

 Subtotal 497.7 $21,476.3 $35,286.1

 Module and Supply Chain Impacts 

 Manufacturing Impacts 0.0 $0.0 $0.0

 Trade (wholesale and retail) 53.2 $2,230.2 $6,660.0

 Finance, Insurance, and Real Estate 0.0 $0.0 $0.0

 Professional Services 64.3 $2,214.1 $7,289.6

 Other Services 88.3 $6,535.5 $22,694.1

 Other Sectors 203.6 $3,736.3 $6,743.9

 Subtotal 409.5 $14,716.1 $43,387.5

 Induced Impacts 200.4 $6,144.4 $20,736.5

 Total Impacts 1,107.5 $42,336.8 $99,410.2
32 

 Annual Annual

 Annual Earnings Output

During Operating Years Jobs $000 (2012) $000 (2012)

 On-Site Labor Impacts 

 PV Project Labor Only 8.4 $507.1 $507.1

 Local Revenue and Supply Chain Impacts 3.2 $130.3 $419.6

 Induced Impacts 1.9 $58.5 $197.6

 Total Impacts 13.5 $695.9 $1,124.3

Notes: Earnings and output values are thousands of dollars in year 2012 dollars. Construction and

operating period jobs are full-time equivalent for one year (1 FTE = 2,080 hours). Economic impacts "during 

operating years" represent impacts that occur from system/plant operations/expenditures. Totals may not 

add up due to independent rounding.

 

Detailed PV Project Data Costs (New Mexico) 

 

Purchased

Locally (%)

Manufactured

Locally (Y or 

Installation Costs Cost N)

Materials and Equipment 

 Mounting (rails, clamps, fittings, etc.) $4,632,721 100% N 

 Modules $50,878,640 100% N 

 Electrical (wire, connectors, breakers, etc.) $5,282,090 100% N 

 Inverter $7,566,567 100% N 

 Subtotal $68,360,019 

Labor 

 Installation $11,575,290 100% 

 Subtotal $11,575,290 

Subtotal $79,935,309 

Other Costs 

 Permitting $534,879 100% 

 Other Costs $11,820,816 100% 

 Business Overhead $34,744,997 100% 

 Subtotal $47,100,691 

Subtotal $127,036,000 

Sales Tax (Materials & Equipment Purchases) $3,503,451 100% 

Total $130,539,451 

 
33 

PV System Annual Operating and Maintenance Costs Manufactured

Locally (Y or 

 Cost Local Share N)

Labor 

 Technicians $546,000 100% 

 Subtotal $546,000 

Materials and Services 

 Materials and Equipment $364,000 100% N 

 Services $0 100% 

 Subtotal $364,000 

Sales Tax (Materials and Equipment Purchases) $18,655 100% 

Average Annual Payment (Interest and Principal) $14,736,176 0% 

Property Taxes $0 100% 

Total $15,664,831 

 

Other Parameters 

Financial Parameters 

Debt Financing 

 Percentage financed 80% 0% 

 Years Financed (term) 10 

 Interest Rate 10% 

Tax Parameters 

 Local Property Tax (percent of taxable value) 0% 

 Assessed Value (percent of construction cost) 0% 

 Taxable Value (percent of assessed value) 0% 

 Taxable Value $0 

 Property Tax Exemption (percent of local taxes) 0% 

 Local Property Taxes $0 100% 

 Local Sales Tax Rate 5.13% 100% 

 Sales Tax Exemption (percent of local taxes) 0% 

Payroll Parameters Wage per hour Employer payroll overhead

 Construction and Installation Labor 

 Construction Workers/Installers $21.39 45.6% 

 O&M Labor 

 Technicians $21.39 45.6% 
34 

Appendix D. Assumptions and Results of the 

System Advisor Model

Case 1: Investor owned/PPA with 36.4 MW

This case assumes a third-party investor for the PV system. All generated electricity from 

case 1 is assumed to be sold. The results of this case are to estimate the electricity rate as 

a PPA to receive an acceptable return on investment (15% internal rate of return). 

Case 2: Developer owned/PPA with 36.4 MW

This case assumes the City of Deming owns the PV system. All electricity will be sold to 

the grid at $0.055/kWh. 

Case 3: Developer owned/virtual net metering with 36.4 MW

VNM is currently not available in New Mexico. Case 3 is to demonstrate the potential 

economic benefits for this option. This case assumes the City of Deming owns the PV 

system. All electricity would be VNM to generate credits at the retail electricity rate that 

can be used to offset charges at one or more other locations within the same geographic 

boundary. Retail electricity rate at $0.11/kWh is used for this analysis. 

Case 3 Results

Table D-1. Case 3 Results
35 

Figure D-1. PV system output

Figure D-2. Levelized cost of energy
36 

Figure D-3. After-tax cash flow

Assumptions for Inputs (for case 3, as the best economic 

results)

Figure D-4. Climate input
37 

Figure D-5. Utility rate assumptions

Figure D-6. Financing assumptions
38 

Figure D-7. Tax credit incentives assumptions

Figure D-8. Payment incentives assumptions
39 

Figure D-9. Annual performance assumptions

Figure D-10. PV system costs
40 

Figure D-11. PVWatts solar array assumptions
41 

Figure D-12. Electrical loads assumptions