July 19, 2023

PNM takes steps to demolish the San Juan Generating Station

Hannah Grover/NM Political Report

The San Juan Generating Station is seen in May 2023.

Steps are underway to demolish the San Juan Generating Station in northwest New Mexico.

The coal-fired power plant closed last year and Laura Sanchez, executive director of government and public affairs for the Public Service Company of New Mexico, says the utility recently identified a demolition contractor who will oversee the work. 

Sanchez presented details to the Legislative Finance Committee on Tuesday about the power plant and the projects that are underway to replace the electricity the state’s largest utility received from it.

Now that a contractor has been identified, the process of demolishing the plant can begin, she said.

PNM expects that the coal stacks will be demolished in 2024. It will take another year to complete the demolition. The majority of the work should conclude by the end of 2025.

The closure of the power plant comes as PNM works toward replacing its fossil fuel generation sources. This move is predicated by various factors including economics, public perception of fossil fuels and state policies aimed at reducing emissions in light of climate change.

The state policies include the Energy Transition Act, which PNM had a hand in drafting. This law, enacted in 2019, paved the way for the closure of the San Juan Generating Station several years after PNM announced plans to retire the facility. 

The ETA provided securitization as a mechanism for the utility to refinance its past investments into the coal-fired power plant. In exchange, some of the bond proceeds would go to helping impacted communities and workers.

Sanchez said PNM is focused on building its clean energy portfolio and believes that by 2040 all of the electricity the more than 540,000 customers receive will come from emissions free sources. That is five years ahead of the goalposts outlined in state law.

While those efforts are underway, PNM has been cleaning up the power plant site. Sanchez said crews are removing coal from the coal yard and gathering residual coal ash to transport to the neighboring San Juan Mine, where it will be buried.

She said 18 of the larger transformers at the power plant have undergone demolition work.

Replacement power resources will begin coming online this month as the first projects reach completion following delays.

The first of the replacement projects to reach completion will be the Arroyo Solar Project. That facility was originally supposed to come online in June 2022 to provide power as the San Juan Generating Station closed. But, like all of the replacement projects, the Arroyo Solar Project faced delays. It is now supposed to be partially online by the end of this month and fully online by the end of the year.

The Jicarilla Solar Project will likely follow and is anticipated to be fully completed by the end of August.

Construction began on the San Juan Solar project this month and Sanchez said PNM expects this project to be completed in May 2024.

This project consists of 200 megawatts of solar capacity and 100 megawatts of battery storage.

The ETA required that some of the replacement power be located within the same school district as the San Juan Generating Station—Central Consolidated School District. This was to decrease impacts to property tax.

San Juan County Manager Mike Stark said the San Juan Solar project is a great way to offset the loss of tax base from the closure of the San Juan Generating Station, but cannot offset the jobs that are lost because it only creates a handful of permanent jobs.

There was one other replacement power project located in San Juan County, but that project defaulted.

All of the replacement solar projects include battery storage.

Sanchez said the battery storage components of the replacement resources are all four-hour duration batteries. She said that is where the industry currently is and that eight-hour duration batteries are still developing. However, Sanchez said PNM is willing to consider projects that utilize longer duration batteries.

Reclamation work is also ongoing at the San Juan Mine, which provided coal to the neighboring power plant through September 2022. 

The state Energy Minerals and Natural Resources Department Secretary Sarah Cottrell Propst said the mine’s owner is in compliance with its permit requirements for reclamation at the site.