New Mexico utility to replace coal plant with four solar and battery projects

Another major US public electricity utility, in this case in New Mexico, has unveiled plans to replace an ageing coal power plant with solar and storage, via four projects totalling nearly 1GW of new renewable energy capacity.

The Public Service Company of New Mexico gained regulatory approval in April to abandon any efforts to extend the life of its majority-owned (66.3%) coal-fired San Juan Generating Station (SJGS), which is due to shut down in June 2022.

And in a filing in late September to the New Mexico Public Regulation Commission, PNM details how it will replace the coal plant’s capacity with four solar and battery projects, including: Arroyo Solar – 300MW plus 150MW/600MWh; San Juan Solar 1 – 200MW plus 100MW/400MWh); 201LC 8me – 100MW plus 30MW/120MWh, and; Jicarilla Solar 1 – 50MW and 20MW/80MWh).

“Our customers, communities, and environment will benefit as we move to exit all of our coal-fired generation and replace it with lower-cost, cleaner energy resources,” PNM Chairman, President and CEO Pat Vincent-Collawn said in a statement.

In an analyst note on the proposal published this week, IEEFA’s Karl Cates said that PNM’s plan was in line with New Mexico’s Energy Transition Act, which calls for 50 per cent of the state’s electricity to come from renewables by 2030 and 80% by 2040.

Furthermore, he noted, it would drastically undermines the “long-shot success” of a carbon capture retrofit that had been proposed by a company called Enchant Energy, that was hoping to keep the San Juan plant online after its closure.

“Enchant is essentially being beaten to the punch by PNM, which aims to have its replacement solar farms in place at least a year before Enchant executives says its retrofit – under a very optimistic and unlikely timetable – would begin to operate,” the note says.

The IEEFA brief highlights several direct benefits of the PNM solar buildout, including the creation of around 500 jobs a month during construction, $US74.7 million in property-tax revenues over the 20-year terms of the deals, and more than $US1 billion in total capital expenditures.

On top of this, all of the solar and battery projects are proposed for construction within the boundaries of the Central Consolidated School District, in order to replace local public tax revenues that would otherwise be lost to the closure of the coal plant.

“The PNM initiative puts the utility in step with the ongoing transition in U.S. electricity-generation markets while also meeting state expectations around reinvestment in the communities most directly affected by the transition away from coal-fired power,” the brief says.

“Because PNM is one of the largest electricity market players in the region, its shift will influence other electricity providers in the West and the Southwest, many of whom are facing the same market and policy pressures as PNM.”

According to the PNM solar and storage plan, said Cates, there would be “steel in the ground” as soon as January 2021. “It will be seen industry wide as a fresh indication – on top of many others – of where regional and national energy markets are quickly moving,” he said.

This trend has certainly been evident in California, where 8minute Solar Energy last month announced plans to partner with Clean Power Alliance to develop a massive new solar and storage project, measuring in at 400MW in solar capacity with 180MW/540MWh of energy storage.

And in May, Australia-founded global energy investment outfit Quinbrook Infrastructure Partners announced the launch of a spin-off company that would specialise in the “critically important” development and operation of large-scale solar and battery storage projects across North America.

The California-based company, Primergy Solar, would kick off with Quinbrook’s massive $1.1 billion, 690MW Gemini solar and battery project being developed in Clark County, Nevada.

And in Hawaii, Hawaiian Electric last month submitted contracts for new solar and storage projects that it said would end the use of coal on the Islands and represent 300MW of solar energy and almost 2GWh of energy storage.