July 30, 2020

‘New Mexico is leading the nation’: Renewables set to replace coal-fired San Juan Generating Station

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The San Juan Generating Station, flanked by its surface coal mines on the desert north of the San Juan River west of Farmington, New Mexico. Flickr cc

With a unanimous vote Wednesday morning, the New Mexico Public Regulation Commission (PRC) ended one piece of a year-long debate on the future of coal in the Four Corners region. The utility PNM, which is slated to exit the San Juan Generating Station in 2022, will now need to rely on 100 percent renewable energy and battery storage to replace the power generated at the coal-fired plant. 

Commissioners were faced with the tough decision of weighing the economic future of the Four Corners area with the climate goals of the landmark Energy Transition Act (ETA), a 2019 law which mandates the state move to 100 percent carbon-free electricity generation by 2050. 

“With all the facts put on the table, and all the facts that our hearing examiners worked on, we’re moving New Mexico forward,” said PRC chairperson Theresa Becenti-Aguilar during the meeting. “And the changing energy economy in the communities of the San Juan station—it’s happening, it’s moving today.”

The decision was lauded by a multitude of clean energy advocacy, environmental and grassroots community groups that called on the commission to approve the replacement power scenario proposed by the Coalition for Clean Affordable Energy.

The proposal includes 650 MW of solar resources and 300 MW of battery storage resources, with 430 MW of solar and $447 million worth of capital investments located within the Central Consolidated School District in San Juan County. Another 520 MW of renewable energy and roughly $500 million of capital investment would be located in McKinley County and the Jicarilla Apache reservation in Rio Arriba County.

“It was an epic decision,” said Mike Eisenfeld, energy and climate program manager at the San Juan Citizens Alliance, a group that was involved in both the drafting of the ETA and in the PRC’s proceedings. “We’re really happy about the fact that the local tax base will benefit, the local school district will benefit, and that gives us an opportunity to be on the cutting edge of innovation of solar and storage, and other, more sustainable ways of creating electricity and diversifying the economy.”

Moving New Mexico towards renewables

Proponents of the ETA hailed the outcome and said the PRC’s decision will make New Mexico a pioneer in decarbonization. 

“This is New Mexico leading the nation,” Camilla Feibelman, director of the Rio Grande Chapter of the Sierra Club, told NM Political Report. “We were one of the first states to pass a 100 percent carbon free legislation through the Energy Transition Act, we saved ratepayers money through the refinancing concept, we’re able to pay $40 million of community and worker recovery, and we prioritized replacement energy in the school district.”

“It really does a lot for everyone,” Feibelman added. “It’s a billion dollars of investment in the Four Corner, it’s renewables, it’s battery storage, it’s efficiency. This was an example of a huge diversity of stakeholders having their interests represented.”

But not everyone agrees that the decision is a win-win. 

“I wouldn’t call it a win-win, it’s probably a win-lose,” said Commissioner Jefferson Byrd, who voted in favor of the proposal with an audible sigh. “But I do believe this is the best bad idea we have.”

“This was a tough decision,” Byrd added after the vote. “I don’t believe there’s a win-win-win in any of these scenarios. They’re all going to add new challenges and problems that we’re going to be facing in the future.”

RELATED: Natural gas will play a big role in state’s energy transition

Reliability of the grid is one such challenge, according to PNM. The utility would have preferred a mix of renewables and natural gas. PNM spokesperson Ray Sandoval previously told NM Political Report that natural gas is a necessary component of its transition to renewables because it offers backup reliability to help protect against grid failures when renewables may not be able to perform. 

Sandoval told NM Political Report the utility is “reviewing all options to implement this decision while maintaining reliable power for our more than 530,000 customers.”

“PNM is focused on strengthening our infrastructure to support the company’s transformation to a 100 percent clean energy portfolio. We are continuing to examine all options to optimize our future energy mix and invest in our infrastructure to ensure the reliability of new energy resources we integrate into our grid,” Sandoval said. 

A ‘new dawn’ for Four Corners region

All the major owners of the San Juan coal plant have announced plans to exit the facility as they move away from coal generation. An impending closure could wreak havoc economically on the communities in the Four Corners area and the surrounding counties that have been reliant on coal as a main economic driver for decades. Those livelihoods have been a chief concern among local and state leaders since the ETA was signed into law in 2019.

“The Four Corners region really is in a difficult place, where they are having to think about some form of replacement,” Robyn Jackson, climate and energy outreach coordinator at Diné CARE, told NM Political Report. “With the way things are currently, the fossil fuel industry, the coal market, they’re not doing well, and they are in decline. That’s the reality. These facilities are closing. What’s the community going to do that’s been heavily reliant on that?”

Shutting down the coal plant and installing the solar and battery projects could provide new jobs in the short-term, said Tony Skrelunas, team leader at the economic development organisation Tribe Awaken. Skrelunas told NM Political Report he’s been working on community transitions for years, and he also worked on the Just Transition Fund’s National Economic Transition platform.

“There’s a lot of work in reclamation, a lot of work in decommissioning,” Skrelunas said. “You have a lot of options, battery storage, utility-scale solar array. But what I hear from communities is they want not only to be involved in planning a solar project, but they’d sure like to have equity. There ought to be a way for them to have equity in those projects.”

RELATED: Power switch: As New Mexico swaps coal for renewables, San Juan County struggles to chart a new future

The closure of the plant will also offer a host of new opportunities for San Juan County and the City of Farmington to begin diversifying its economy. 

“The City of Farmington is trying to rebrand itself as a destination for recreation tourism and retirement. These coal plants have had a hugely detrimental effect on our ability to compete because of our pollution here,” Eisenfeld said. “Finally, we have an opportunity to clean up and bring people here for a different economic experience. I’d say there’s huge value in that.” 

“There’s a new dawn,” he added. 

Door still open for Enchant Energy

Some community leaders are hopeful that, despite the PRC’s decision, the coal plant may keep running for a few more years while simultaneously reducing carbon emissions.

Enchant Energy’s carbon capture proposal offers some low-hanging economic fruit for the community. The company wants to keep the power plant running on coal, but hopes to utilize carbon capture and sequestration technology to capture the carbon emissions and store it underground. Under Enchant’s plan, the plant workers and coal miners could keep their jobs, and the school district could continue to receive funding, all while helping the state reach its decarbonization goals. 

Enchant Energy did not respond to requests for comment. 

Critics argue the technology needed for the project is still unproven and will take years to retrofit the coal plant, while clean energy advocates bristle at the thought of carbon capture offering a “clean” energy source.

RELATED: Enchant Energy disputes criticisms of carbon capture proposal for coal plant

But leaders in San Juan County are willing to give the proposal a try. The City of Farmington entered into an agreement with Enchant Energy to acquire 95 percent of the San Juan plant for the carbon capture proposal, while the San Juan College announced it would develop workforce development programs to support the coal plant and carbon capture and sequestration.

Becenti-Aguilar said the PRC’s decision on PNM’s replacement power did not discount a future scenario in which PNM could acquire energy generated using carbon capture at the San Juan plant.

“If they would like to pursue the carbon capture project, they left the door open and that’s the part that I like the most,” said Becenti-Aguilar. “My constituents need to have a paycheck.”

State Rep. Anthony Allison, a Democrat who represents part of San Juan County, said he too was happy to learn the carbon capture proposal was still on the table.

“I was always supportive of the Energy Transition Act, I think it’s good that we’re going to renewables, especially if we’re still going to have revenue coming into the Central Consolidated School District,” Allison said. “And if there’s going to be room for improvement [at San Juan Generating Station], I’m supportive of that, I’m glad that they left that open.”