2023 New Mexico Statutes › Chapter 7 - Taxation › Article 2A - Corporate Income and Franchise Tax › Section 7-2A-19 - Renewable energy production tax credit; limitations; definitions; claiming the credit.

A. The tax credit provided in this section may be referred to as the "renewable energy production tax credit". The tax credit provided in this section may not be claimed with respect to the same electricity production for which the renewable energy production tax credit provided in the Income Tax Act [Chapter 7, Article 2 NMSA 1978] has been claimed.
B. A person is eligible for the renewable energy production tax credit if the person:
(1) holds title to a qualified energy generator that first produced electricity on or before January 1, 2018; or
(2) leases property upon which a qualified energy generator operates from a county or municipality under authority of an industrial revenue bond and if the qualified energy generator first produced electricity on or before January 1, 2018.
C. The amount of the tax credit shall equal one cent ($.01) per kilowatt-hour of the first four hundred thousand megawatt-hours of electricity produced by the qualified energy generator in the taxable year using a wind- or biomass-derived qualified energy resource; provided that the total amount of tax credits claimed by all taxpayers for a single qualified energy generator using a wind- or biomass-derived qualified energy resource shall not exceed one cent ($.01) per kilowatt-hour of the first four hundred thousand megawatt-hours of electricity produced by the qualified energy generator in a taxable year.
D. The amount of the tax credit for electricity produced by a qualified energy generator in the taxable year using a solar-light-derived or solar-heat-derived qualified energy resource shall be at the amounts specified in Paragraphs (1) through (11) of this subsection; provided that the total amount of tax credits claimed by all taxpayers in a taxable year for a single qualified energy generator using a solar-light-derived or solar-heat-derived qualified energy resource shall be limited to the first two hundred thousand megawatt-hours of electricity produced by the qualified energy generator in the taxable year:
(1) one and one-half cents ($.015) per kilowatt-hour in the first taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(2) two cents ($.02) per kilowatt-hour in the second taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(3) two and one-half cents ($.025) per kilowatt-hour in the third taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(4) three cents ($.03) per kilowatt-hour in the fourth taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(5) three and one-half cents ($.035) per kilowatt-hour in the fifth taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(6) four cents ($.04) per kilowatt-hour in the sixth taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(7) three and one-half cents ($.035) per kilowatt-hour in the seventh taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(8) three cents ($.03) per kilowatt-hour in the eighth taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(9) two and one-half cents ($.025) per kilowatt-hour in the ninth taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource;
(10) two cents ($.02) per kilowatt-hour in the tenth taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource; and
(11) one and one-half cents ($.015) per kilowatt-hour in the eleventh taxable year in which the qualified energy generator produces electricity using a solar-light-derived or solar-heat-derived qualified energy resource.
E. A taxpayer eligible for a renewable energy production tax credit pursuant to Subsection B of this section shall be eligible for the renewable energy production tax credit for one hundred twenty consecutive months, beginning on the date the qualified energy generator begins producing electricity.
F. As used in this section:
(1) "biomass" means organic material that is available on a renewable or recurring basis, including:
(a) forest-related materials, including mill residues, logging residues, forest thinnings, slash, brush, low-commercial-value materials or undesirable species, salt cedar and other phreatophyte or woody vegetation removed from river basins or watersheds and woody material harvested for the purpose of forest fire fuel reduction or forest health and watershed improvement;
(b) agricultural-related materials, including orchard trees, vineyard, grain or crop residues, including straws and stover, aquatic plants and agricultural processed co-products and waste products, including fats, oils, greases, whey and lactose;
(c) animal waste, including manure and slaughterhouse and other processing waste;
(d) solid woody waste materials, including landscape or right-of-way tree trimmings, rangeland maintenance residues, waste pallets, crates and manufacturing, construction and demolition wood wastes, excluding pressure-treated, chemically treated or painted wood wastes and wood contaminated with plastic;
(e) crops and trees planted for the purpose of being used to produce energy;
(f) landfill gas, wastewater treatment gas and biosolids, including organic waste byproducts generated during the wastewater treatment process; and
(g) segregated municipal solid waste, excluding tires and medical and hazardous waste;
(2) "qualified energy generator" means an electric generating facility with at least one megawatt generating capacity located in New Mexico that produces electricity using a qualified energy resource and the electricity produced is sold to an unrelated person; and
(3) "qualified energy resource" means a resource that generates electrical energy by means of a fluidized bed technology or similar low-emissions technology or a zero-emissions generation technology that has substantial long-term production potential and that uses only the following energy sources:
(a) solar light;
(b) solar heat;
(c) wind; or
(d) biomass.
G. A person that holds title to a facility generating electricity from a qualified energy resource or a person that leases such a facility from a county or municipality pursuant to an industrial revenue bond may request certification of eligibility for the renewable energy production tax credit from the energy, minerals and natural resources department, which shall determine if the facility is a qualified energy generator. The energy, minerals and natural resources department may certify the eligibility of an energy generator only if the total amount of electricity that may be produced annually by all qualified energy generators that are certified pursuant to this section and pursuant to the Income Tax Act will not exceed a total of two million megawatt-hours plus an additional five hundred thousand megawatt-hours produced by qualified energy generators using a solar-light-derived or solar-heat-derived qualified energy resource. Applications shall be considered in the order received. The energy, minerals and natural resources department may estimate the annual power-generating potential of a generating facility for the purposes of this section. The energy, minerals and natural resources department shall issue a certificate to the applicant stating whether the facility is an eligible qualified energy generator and the estimated annual production potential of the generating facility, which shall be the limit of that facility's energy production eligible for the tax credit for the taxable year. The energy, minerals and natural resources department may issue rules governing the procedure for administering the provisions of this subsection and shall report annually to the appropriate interim legislative committee information that will allow the legislative committee to analyze the effectiveness of the renewable energy production tax credit, including the identity of qualified energy generators, the energy production means used, the amount of energy produced by those qualified energy generators and whether any applications could not be approved due to program limits.
H. A taxpayer may be allocated all or a portion of the right to claim a renewable energy production tax credit without regard to proportional ownership interest if:
(1) the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership;
(2) the business entity:
(a) would qualify for the renewable energy production tax credit pursuant to Paragraph (1) or (2) of Subsection B of this section;
(b) owns an interest in a business entity that is also taxed for federal income tax purposes as a partnership and that would qualify for the renewable energy production tax credit pursuant to Paragraph (1) or (2) of Subsection B of this section; or
(c) owns, through one or more intermediate business entities that are each taxed for federal income tax purposes as a partnership, an interest in the business entity described in Subparagraph (b) of this paragraph;
(3) the taxpayer and all other taxpayers allocated a right to claim the renewable energy production tax credit pursuant to this subsection own collectively at least a five percent interest in a qualified energy generator;
(4) the business entity provides notice of the allocation and the taxpayer's interest to the energy, minerals and natural resources department on forms prescribed by that department for the taxable year to be claimed; and
(5) the energy, minerals and natural resources department certifies the allocation for the taxable year to be claimed in writing to the taxpayer.
I. Upon receipt of notice of an allocation of the right to claim all or a portion of the renewable energy production tax credit, the energy, minerals and natural resources department shall promptly certify the allocation in writing to the recipient of the allocation.
J. A taxpayer may claim the renewable energy production tax credit by submitting to the taxation and revenue department the certificate issued by the energy, minerals and natural resources department, pursuant to Subsection G or H of this section, documentation showing the taxpayer's interest in the facility, documentation of the amount of electricity produced by the facility in the taxable year and any other information the taxation and revenue department may require to determine the amount of the tax credit due the taxpayer.
K. If the requirements of this section have been complied with, the department shall approve payment of the renewable energy production tax credit. The credit may be deducted from a taxpayer's New Mexico corporate income tax liability for the taxable year for which the credit is claimed. If the amount of tax credit exceeds the taxpayer's corporate income tax liability for the taxable year:
(1) the excess may be carried forward for a period of five taxable years; or
(2) if the tax credit was issued with respect to a qualified energy generator that first produced electricity using a qualified energy resource on or after October 1, 2007, the excess shall be refunded to the taxpayer.
L. Once a taxpayer has been granted a renewable energy production tax credit for a given facility, that taxpayer shall be allowed to retain the facility's original date of application for tax credits for that facility until either the facility goes out of production for more than six consecutive months in a year or until the facility's ten-year eligibility has expired.
History:
Laws 2002, ch. 59, § 1; 2003, ch. 419, § 1; 2005, ch. 104, § 7; 2005, ch. 181, § 1; 2007, ch. 204, § 1; 2021, ch. 65, § 7.
ANNOTATIONS
Repeals.
— Laws 2007, ch. 204, § 19 repealed Laws 2005, ch. 104, § 7, effective June 15, 2007.
The 2021 amendment,
effective July 1, 2021, provided that the amount of the renewable energy production tax credit in the eleventh taxable year in which the qualified energy generator produces electricity is one and one-half cents per kilowatt-hour, clarified that a taxpayer eligible for a renewable energy production tax credit shall be eligible for one hundred twenty consecutive months, and revised the definition of "qualified energy generator", as used in this section; in Subsection D, after "Paragraphs (1) through", changed "(10)" to "(11)", and added Paragraph D(11); in Subsection E, after "tax credit for", changed "ten" to "one hundred twenty", and after "consecutive", changed "years" to "months"; in Subsection F, Paragraph F(2), after "means", deleted "a" and added "an electric generating"; and in Subsection H, Paragraph H(4), after "department", added "for the taxable year to be claimed", and in Paragraph H(5), after "allocation", added "for the taxable year to be claimed".
The 2007 amendment,
effective June 15, 2007, provided that the credit may not be claimed with respect to the same electricity production for which the renewable energy production tax credit provided in the Income Tax Act is claimed; provided that a person is eligible for the credit if the qualified energy generator first produces electricity on or before January 1, 2018; added Subsection D and Subparagraphs (a) through (g) of Paragraph (1) of Subsection F; changed the definition of "qualified energy generator" to mean a facility with at least one megawatt generating capacity; provided that an eligible energy generator will not exceed two million megawatt-hours plus an additional five hundred thousand megawatt-hours by solar-light-derived or solar-heat-derived qualified energy resource; required the department to report information to the legislature that will allow the legislature to analyze the effectiveness of the credit; and added Subsection K.
Applicability.
— Laws 2007, ch. 204, § 21 provided that Laws 2007, ch. 204, § 1 apply to taxable years beginning on or after January 1, 2008.
The 2005 amendment,
effective June 17, 2005, in Subsection A, provided that a tax credit provided in this section is the "renewal energy production tax credit"; deleted the former provision of Subsection A, which provide a credit to a taxpayer who owns a qualified energy generator; added Subsection B to provide that a person is eligible for the credit if the person has title to a qualified energy generator or leases property upon which a qualified energy generator operates under authority of a industrial revenue bond; added Subsection C, which provided the amount of the credit; provided in Subsection D that a taxpayer eligible for the credit shall be eligible for the credit for ten years; added Subsection F, which provided that a person who has title to a facility generating electricity from a qualified energy source or that leases a facility pursuant to an industrial revenue bond may request certification of eligibility for the credit; added Subsection G, which provided the criteria by which a taxpayer may be allocated all or a portion of the credit without regard to proportional ownership; added Subsection H, which provided that upon receipt of notice of an allocation of the right to claim all or a portion of the credit, the department shall certify the allocation to the recipient; and in Subsection I, provided that a taxpayer may claim the credit by submitting the certificate issued by the energy, minerals and natural resources department, documentation showing the taxpayer's interest in the facility and the amount of electricity produced to the taxation and revenue department.
The 2003 amendment,
effective June 20, 2003, added Paragraph B(1); redesignated former Paragraphs B(1) and (2) as Paragraphs B(2) and (3); substituted "ten" for "twenty" following "with at least" in present Paragraph B(2); inserted "a fluidized bed technology or similar low-emissions technology or" following "by means of" in Paragraph B(3); added Subparagraph B(3)(d); and substituted "two million" for "eight hundred thousand" following "will not exceed" in Subsection C.