With the clock ticking down to the San Juan Generating Station closing, the one owner trying to keep it open has not finalized plans for replacing the electricity it receives from the plant.
Farmington Electric Utility System receives 47 megawatts of power from the San Juan Generating Station, which is about 20 percent of its generation portfolio.
“If San Juan doesn’t continue, we would be looking to fill that gap,” FEUS Utility Director Hank Adair said. “Of course, our goal is for it to continue. We’re still fighting hard for everything we can. In our recent cost of service study, we’ve seen that if San Juan does not continue, and we have to go to the market for a while, it could raise our rates between six to 10 percent. It was six to eight [percent], but recent market prices for commodities has increased a little bit.”
The city caught national attention when it announced in 2019 a partnership with a startup company to acquire the San Juan Generating Station and retrofit it with carbon capture technology.
Farmington has the right to acquire the shares of the power plant it doesn’t own from the other owners, pending successful negotiations. The city plans to transfer those shares to Enchant Energy. However, transfer negotiations between Farmington and the other owners are still ongoing and Enchant has fallen behind the schedule it publicly presented to community members as well as state lawmakers.
Integrated resource plan
Every few years, FEUS completes an integrated resource plan. This plan essentially shows the current generation assets, looks at future needs and plans for what generation assets need to be added. The plan looks 20 years into the future.
Adair said the utility projects relatively flat load growth in terms of the industrial sector with some small increases in the residential sector and a slight increase in the commercial sector.
It was Public Service Company of New Mexico’s 2017 integrated resource plan that announced plans to close San Juan.
Unlike PNM, FEUS is not regulated by the state’s Public Regulation Commission. Instead, the plan will be presented to the city’s Public Utility Commission and then to the City Council for approval.
Adair said the City Council presentation will likely happen in September. That means any new resources to replace San Juan will not be ready by the time the plant closes at the end of September.
Adair said the city will enter into purchase power agreements to fill that gap and will also buy from the day-to-day market.
Adair said the IRP examines two possibilities: San Juan Generating Station staying open until 2037 with carbon capture and the power plant closing permanently this year.
One option for replacing San Juan uses what Adair described as “a fair amount of” natural gas at first, followed by “a lot of renewables in the later years.”
Another option, he said, would have some solar in the early years as well as new natural gas generation. The solar resources would increase in later years.
But those projects aren’t currently under construction.
Renewables take up real estate, which can be in short supply in San Juan County where only six percent of the land is privately owned. While renewable projects can be built on public land, it requires more permitting and analysis.
Adair said the city has already contracted a consultant engineering firm to do site location studies.
He said it could take one to two years to get the replacement resources online.
“Our plan for our IRP is to build around 90 megawatts of generation or have purchase power agreements…between now and 2025 whether San Juan continues or not,” Adair said.
He said FEUS is trying to reduce the amount of power it purchases from the market.
“We’re in very dynamic times, and we want to reduce the risk for our customers,” he said.
FEUS currently only has two sources of renewable energy—hydropower from Lake Powell and hydropower from Navajo Lake. The future of generation at Lake Powell’s Glen Canyon Dam is currently uncertain as reservoir levels plummet.
As a municipally-owned utility, FEUS is not required to meet the renewable energy requirements set out in the Energy Transition Act.
The main way the ETA will impact FEUS if the city successfully acquires the power plant is by essentially forcing a temporary closure starting in January. Without the carbon capture technology, the San Juan Generating Station will not be able to meet the new emission requirements that will go into effect Jan. 1.
Meanwhile, the Institute for Energy Economics and Financial Analysis, a nonprofit and frequent critic of carbon capture, released another report on Monday further calling into question the Enchant Energy project’s emission reduction goals. Enchant says it will reduce carbon emissions by 95 percent.
“The Enchant project provides a good opportunity to review the effectiveness of carbon capture due to the publicly available data on the production and emissions at both the plant and the mine,” David Schlissel, IEEFA director of resource planning analysis and co-author of the report, said in a press release. “The Enchant project also highlights the limited investor interest in carbon capture with the company already acknowledging that it is seeking $1 billion from the federal government to underwrite the projects.”
The report looks at what the carbon dioxide equivalent emissions from the power plant and its associated mine would be under three scenarios. Under the most favorable scenario—capture of 90 percent of carbon dioxide from the power plant—the carbon dioxide equivalent capture rate would only be 68 percent and the project would continue to emit nearly 3 million tons of carbon dioxide annually.
Another scenario, based on performance of the other two carbon capture coal-fired power plants, looks at Enchant capturing 65 percent of the carbon dioxide from the power plant. In that case, only 49 percent of carbon dioxide equivalent emissions would be captured from the mine and plant. Only one of the coal-fired plants that has been retrofitted with carbon capture remains in operation and it has struggled to meet the capture goals.
The reason behind the discrepancy is in part because natural gas is used to create the amine used to bind to the carbon dioxide as it leaves the power plant. That means methane, a main component of natural gas, will leak into the atmosphere during production and transportation. That would also hold true for projects involving blue hydrogen.
“The findings in this study can reasonably be applied to other carbon capture projects including those from other coal plants, from gas-fired plants and from proposed blue hydrogen projects,” Schlissel said.
The mine also leaks methane into the atmosphere. Following the discovery of a methane hotspot over San Juan County, investigations revealed that the San Juan Mine is one of the large methane emitters.
At the same time, Reuters reported that the U.S. Environmental Protection Agency plans to use new limits on pollutants like ozone and coal ash to encourage retirements of coal-fired power plants. San Juan County is currently pushing the National Ambient Air Quality Standards for ozone.