PNM wants to delay coal plant closure by 3 months to prevent blackouts

New Mexico's rapid transition to clean energy sources is facing a temporary setback after lengthy regulatory approvals and pandemic-related supply chain problems have delayed the construction of critical solar projects, raising concerns over rolling blackouts during the summer months.

Public Service Co. of New Mexico, the state's largest utility, filed a proposal with state regulators Feb. 17 to extend the life of the San Juan Generating Station's Unit 4 for three months over the summer — a move the company said will help avoid shortages and keep power bills in check.

This would then keep the nearby San Juan coal mine, which fuels the plant, operating past its scheduled closing date of March 26. PNM said it has already locked in the coal prices for the summer months to avoid having to rely on the open wholesale market, where prices can spike with rising demand.

Keeping the 507-MW coal unit in service and ready to operate if needed would boost PNM's power reserve margin from negative 3.4% to positive 9.8%, the company said, urging the New Mexico Public Regulation Commission to act swiftly.

"Not surprisingly, there have been bumps in the road because of the perfect storm of regulatory challenges, global supply chain problems and lengthier periods of unseasonably hot weather driven by climate change," PNM said in a news release. "The energy policy got it right, but the implementation was bumpy."

Replacement capacity ahead

PNM is planning four solar-plus-storage projects to replace power production by the San Juan plant, which had been set to close June 30. However, all projects have been delayed after vendors were unable to deliver on time. The first new solar capacity will not come online until Sept. 1, according to the company's filing with the regulatory commission.

The projects are the 200-MW San Juan Solar Project (Four Corners Solar) with 100 MW energy storage, the 300-MW Arroyo Solar Project with 150 MW storage, the 50-MW Jicarilla I Solar Plus Storage Project with 20 MW storage and the 100-MW Rockmont Solar Project with 30 MW storage.

With the delays, final installation will now be completed in June 2023, PNM said. Under New Mexico's Energy Transition Act, signed into law in 2019, investor-owned utilities operating in the state must be carbon-free by 2045.

Carbon capture project in limbo

Cara Lynch, an attorney for the Santa Fe-based Coalition for Clean Affordable Energy, called PNM's plan a "reasonable short-term solution" to avoid blackouts and high power costs without detracting from the state's overall clean energy goals.

At the same time, prospective developers of a carbon capture project at the San Juan plant continue to pursue alternative plans in hopes of keeping the plant operating for many more years.

Enchant Energy recently responded to the U.S. Department of Energy's call for information about carbon reduction technology demonstration projects funded by the $1.2 trillion bipartisan infrastructure law of 2021. If the carbon capture project is built, Enchant and its partner, City of Farmington, said the plant would continue to operate for several more decades, saving local jobs.

"We remain committed to evaluate and act on the City of Farmington's and Enchant's desire to take ownership of the plant, once we and the other owners are provided with the evidence of financial backing, the appropriate indemnity agreements and proof of transmission rights," Thomas Fallgren, PNM's vice president of generation, said in an emailed statement.

However, PNM officials have been saying that the proponents of the San Juan carbon capture venture have yet to prove the project is viable.