What a difference a couple of years makes. In 2015 the New Mexico utility PNM created a subsidiary to buy a coal mine that supplies its San Juan Generating Station. Now all of a sudden PNM has announced a new energy plan that shuts down part of the power plant in just a few months, with the remaining units following those into the dustbin by 2022.
The utility will also disentangle itself from a coal supply agreement at another plant that runs out in 2031, with the end result that the vast majority — and possibly all — of electricity customers in the state will be coal-free.
“Our number-one responsibility is to act in the best interests of our customers…”
The new Integrated Resource Plan is available in draft version on the PNM website. It’s a 20-year assessment of future energy needs for the state, which the company is required to update every three years.
For those of you on the go, the press release announcing the new plan outlines the main points. Front and center is a comment from PNM president and CEO Pat Vincent-Collawn, in which he pulls the rug out from under President Trump’s pro-coal messaging:
“Our number-one responsibility is to act in the best interests of our customers…Market forces are driving a rapid evolution of energy resources, and the current data clearly shows that replacing the coal in our current portfolio with a cleaner energy mix that includes more renewables and natural gas is the best, most economical path to a strong energy future for New Mexico.”
Ouch! Trump may claim he can bring back coal jobs, but in reality the force of the market is overwhelming, and the market in New Mexico doesn’t care about coal jobs in Appalachia.
With that in mind, PNM has identified the “most significant finding” of the new plan: ditching the San Juan power plant will result in a “long-term cost savings” for its customers.
Easing out of its share in the Four Corners Power Plant will result in additional savings after 2031.
Aside from PNM, the other utility in the state is the Central New Mexico Electric Cooperative, which serves only 13,000 members.
CNMEC distributes electricity from the Tri-State Generation and Transmission Association, which still includes coal in its portfolio. However, in 2014 Tri-State won a “Wind Co-Op of the Year” award and projected 25% renewables by 2016.
What’s Replacing All That Coal?
As with many other power generators, PNM makes it clear that natural gas is currently the main factor driving coal out of the market.
The “cleaner” energy mix also includes the Palo Verde Nuclear Generating Station that PNM recently leased. According to PNM, the nuclear facility is aimed partly at hedging against a potential rise in natural gas prices.
The continued reliance on natural gas and nuclear energy is something of a downer for renewable energy fans, but PNM points out that adding more wind to its portfolio will be difficult over the near term:
…the best wind conditions are in Eastern New Mexico, and transmission lines from that area are nearing maximum capacity. Only a limited amount of new wind energy can added to serve PNM’s customers until new transmission capacity is developed.
On the other hand, PNM appears to be hoping that economical energy storage solutions will play a role in its future mix, which could open the door to additional solar in the near term.
The utility is also looking at the benefits of joining the California Energy Imbalance Market. That initiative launched in 2014 to enable grid operators to “buy and sell the final few megawatts of power to satisfy demand within the hour it’s needed.”
The aim is to integrate more renewables into the regional grid, so there’s that.
PNM already has a running start on solar integration. Here’s the rundown as of 2016:
PNM has invested $270 million on large scale solar energy centers in New Mexico and we have more than 1 million solar panels at 15 different solar sites to provide clean energy for our state. These solar centers are capable of providing power to more than 40,000 average homes for a year.
As of last year, PNM had 16% renewables in its portfolio, double what it had in 2015.
The share of coal in PNM’s portfolio was already down to 37% last year, equaling the natural gas share of 37%.
Just one year earlier, in 2015, the mix was balanced heavily in favor of coal at 55%, with natural gas at only 13%.
The end of coal is complicated
The new report describes a series of contractual entanglements that will continue to engage PNM in coal until 2031, and that’s only one set of factors that can complicate the demise of coal.
Another one is the natural gas angle. Just last year, the PNM ditched plans for a controversial new gas pipeline in San Juan County near the Navajo Nation. With an increased reliance on natural gas, PNM could potentially start eyeballing new pipeline plans again.
Meanwhile, PNM may not care about coal jobs in Appalachia but it has acknowledged that closure of the San Juan power plant will eliminate hundreds of good paying jobs in the region. Earlier this year, rumors of the impending shutdown prompted this statement by Navajo President Russell Begaye:
“We understand we are in challenging times where natural gas is impacting the numbers and ongoing operations for all coal-powered power plants. The four corners region will be severely impacted by the closure…We are asking the Industry, should they close, to assist employees in finding other jobs.”
It looks like President Trump won’t be much help. Despite all the coal references during his presidential campaign, the first 100 days of the Trump Administration have not yielded any significant action to create new coal jobs.
For that matter, key members of the Trump cabinet are a climate hawk, a global-scale natural gas marketer, and a wind energy fan.
With that in mind, it’s little wonder that Trump’s own Energy Department has been pumping out one story after another highlighting progress on renewables, including foundational research and a major global solar forecast, as well as a rural community solar toolkit and other boots-on-the-ground programs.
The Navajo Nation is already dipping its toes in the solar field and it looks like PNM will eyeball the plethora of renewable energy activity in other western states for new job creation inspiration.
Image (screenshot): via PNM.
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