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Released March 08, 2022 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Located in the Four Corners region of northwest New Mexico, the coal-burning San Juan Generating Station is on its last legs.
Public Service Company of New Mexico (PNM), a unit of PNM Resources (NYSE:PNM) (Albuquerque, New Mexico), had planned to completely shut down the facility on June 30, but the power station, one of the largest coal-fired power plants in the U.S. Southwest, may have one last gasp. The power utility now wants to keep one unit operating until September 30, as a stopgap measure to maintain adequate power reserves during the summer.
At least in part, the power plant is a casualty of New Mexico's move toward renewable power sources. The state's Energy Transmission Act sets a renewable energy standard of 50% by 2030 for New Mexico investor-owned utilities and rural electric cooperatives, and a goal of 80% by 2040. It also sets zero-carbon resources standards for investor-owned utilities by 2045 and rural electric cooperatives by 2050.
But the sought-for summer extension at San Juan points to situations that can occur during the big energy transition to renewables.
PNM laid out its plan to "keep the lights on" this summer to the New Mexico Public Regulation Commission on February 17.
New Mexico's Energy Transition Act set the state on a "responsible path to transition our energy to cleaner sources and ensure that no one was left behind," PNM said in a press release. It added: "Not surprisingly, there have been bumps in the road because of the perfect storm of regulatory challenges, global supply-driven problems, and lengthier periods of unseasonably hot weather driven by climate change."
PNM said when all four non-utility developers chosen by the commission to build solar energy centers to replace coal-fired power "began defaulting," PNM made it known "that these non-utility projects would not be finished in time to meet customer needs for the 2022 peak."
Under its current plan, PNM would shut down San Juan's 369-megawatt (MW) Unit 1 on June 30 and extend the use of the 555-MW Unit 4 until September 30.
"Keeping Unit 4 in service and available, if we need it, will take us from a negative 3.4% reserve margin to a positive 9.8% reserve margin," PNM said.
"We continue to watch California struggle with their approach to clean energy transition," PNM said, adding, "As has been demonstrated, we know that depending on neighboring states for electricity and relying on customers to curb their electricity usage during the hottest months through voluntary programs will fail to support New Mexicans' energy needs. Add in a global supply-chain problem, and the threat of rolling blackouts increases this summer."
In response, the New Mexico Public Regulation Commission said PNM already had legal leeway to extend operations at San Juan, and did not require the commission's approval. The commission indicated it can review and act on the cost recovery associated with the extension at a later date. One commissioner accused PNM of "fear mongering" by raising the possibility of rolling blackouts.
A New Lease on Life?
There still is a possibility that the San Juan power station could remain operating for years to come under a proposal to overhaul the facility for carbon capture and storage (CCS), in order to meet state air emission requirements. PNM would hand the plant to the City of Farmington, which now has a 5% stake in the facility, which then would turn it over to Enchant Energy Corporation (Farmington, New Mexico) for conversion to CCS.
Enchant Energy is working with Mitsubishi Heavy Industries Limited (Tokyo, Japan) and Sargent & Lundy (Chicago, Illinois) on the project, which has an estimated $1.3 billion price tag. In 2019, the U.S. Department of Energy awarded a $17.5 million grant to the New Mexico Institute of Mining and Technology to study the potential for carbon captured at San Juan to be sequestered in saline reservoirs in the Four Corners area, according to the Albuquerque Journal.
Enchant Energy's plan would extend the life of the plant by 15 years, but the facility would be operated as a conventional plant for another two and a half years before the carbon-capture operations kicked in.
Project delays and an apparent inability to draw enough private investments have cast doubt on the development.
In a radio interview last year, Enchant Energy Chief Executive Officer Cindy Crane stressed the role of San Juan as a reliable source of clean power.
"There is a clear message in the marketplace that people need low emissions, but (also) reliable power and economical power," she said. "There is just a tremendously growing concern in the western United States with the transmission not having enough reliable power when the sun doesn't shine and the wind doesn't blow."
So far, neither the state nor PNM have committed to the project. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a detailed project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on LinkedIn.
Public Service Company of New Mexico (PNM), a unit of PNM Resources (NYSE:PNM) (Albuquerque, New Mexico), had planned to completely shut down the facility on June 30, but the power station, one of the largest coal-fired power plants in the U.S. Southwest, may have one last gasp. The power utility now wants to keep one unit operating until September 30, as a stopgap measure to maintain adequate power reserves during the summer.
At least in part, the power plant is a casualty of New Mexico's move toward renewable power sources. The state's Energy Transmission Act sets a renewable energy standard of 50% by 2030 for New Mexico investor-owned utilities and rural electric cooperatives, and a goal of 80% by 2040. It also sets zero-carbon resources standards for investor-owned utilities by 2045 and rural electric cooperatives by 2050.
But the sought-for summer extension at San Juan points to situations that can occur during the big energy transition to renewables.
PNM laid out its plan to "keep the lights on" this summer to the New Mexico Public Regulation Commission on February 17.
New Mexico's Energy Transition Act set the state on a "responsible path to transition our energy to cleaner sources and ensure that no one was left behind," PNM said in a press release. It added: "Not surprisingly, there have been bumps in the road because of the perfect storm of regulatory challenges, global supply-driven problems, and lengthier periods of unseasonably hot weather driven by climate change."
PNM said when all four non-utility developers chosen by the commission to build solar energy centers to replace coal-fired power "began defaulting," PNM made it known "that these non-utility projects would not be finished in time to meet customer needs for the 2022 peak."
Under its current plan, PNM would shut down San Juan's 369-megawatt (MW) Unit 1 on June 30 and extend the use of the 555-MW Unit 4 until September 30.
"Keeping Unit 4 in service and available, if we need it, will take us from a negative 3.4% reserve margin to a positive 9.8% reserve margin," PNM said.
"We continue to watch California struggle with their approach to clean energy transition," PNM said, adding, "As has been demonstrated, we know that depending on neighboring states for electricity and relying on customers to curb their electricity usage during the hottest months through voluntary programs will fail to support New Mexicans' energy needs. Add in a global supply-chain problem, and the threat of rolling blackouts increases this summer."
In response, the New Mexico Public Regulation Commission said PNM already had legal leeway to extend operations at San Juan, and did not require the commission's approval. The commission indicated it can review and act on the cost recovery associated with the extension at a later date. One commissioner accused PNM of "fear mongering" by raising the possibility of rolling blackouts.
A New Lease on Life?
There still is a possibility that the San Juan power station could remain operating for years to come under a proposal to overhaul the facility for carbon capture and storage (CCS), in order to meet state air emission requirements. PNM would hand the plant to the City of Farmington, which now has a 5% stake in the facility, which then would turn it over to Enchant Energy Corporation (Farmington, New Mexico) for conversion to CCS.
Enchant Energy is working with Mitsubishi Heavy Industries Limited (Tokyo, Japan) and Sargent & Lundy (Chicago, Illinois) on the project, which has an estimated $1.3 billion price tag. In 2019, the U.S. Department of Energy awarded a $17.5 million grant to the New Mexico Institute of Mining and Technology to study the potential for carbon captured at San Juan to be sequestered in saline reservoirs in the Four Corners area, according to the Albuquerque Journal.
Enchant Energy's plan would extend the life of the plant by 15 years, but the facility would be operated as a conventional plant for another two and a half years before the carbon-capture operations kicked in.
Project delays and an apparent inability to draw enough private investments have cast doubt on the development.
In a radio interview last year, Enchant Energy Chief Executive Officer Cindy Crane stressed the role of San Juan as a reliable source of clean power.
"There is a clear message in the marketplace that people need low emissions, but (also) reliable power and economical power," she said. "There is just a tremendously growing concern in the western United States with the transmission not having enough reliable power when the sun doesn't shine and the wind doesn't blow."
So far, neither the state nor PNM have committed to the project. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for a detailed project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on LinkedIn.
