Enchant Energy CEO has big plans for San Juan Generating Station

Peter Mandelstam

Peter Mandelstam has decades of experience in renewable energy. He developed the first large-scale wind energy project in Montana. He won the first offshore wind energy power purchase agreement in the United States. And in the early 1990s, he co-founded a solar energy nonprofit that trained solar technicians and installed projects in the U.S. and Latin America.

Now he’s been hired as chief executive officer of Enchant Energy, the company that wants to use a controversial technology called “carbon capture and sequestration” to keep the aging San Juan Generating Station near Farmington producing electricity until at least 2035. That’s more than a decade after Public Service Company of New Mexico, San Juan’s majority owner, plans to shutter the coal-burning plant by 2022.

The city of Farmington plans to stay on with 5 percent ownership. Enchant would assume 95 percent ownership.

The project’s goal, Mandelstam said in an interview, is to “make it the lowest carbon-emitting fossil fuel plant in the United States.”

The San Juan facility and adjacent coal mine constitute a major source of employment in northwestern New Mexico and a critical revenue source for area schools.

“I’ve been in the energy business since 1990,” he said. And he said he’s still an advocate of renewable energy and sincerely hopes wind, solar and battery-storage technology continue to advance.

“I care deeply about the climate crisis,” Mandelstam said. “I have a 21-year-old son. I want to make sure he has a good world to grow up in. I’ve developed solar and on-land and offshore wind. For all of that work … none of it keeps the lights on.”

He argued that renewable energy alone, at least so far, wouldn’t meet consumer demand for electricity during peak times — a claim disputed by many environmentalists.

But the carbon capture technology at San Juan, he said, would keep the lights on while capturing 90 percent of the carbon, or about 6 million tons a year.

He pointed to a feasibility study commissioned by Enchant Energy earlier this year by the Chicago-based Sargent & Lundy engineering firm that concluded the carbon capture plan is technologically and economically feasible, that it would comply with the state’s newly enacted Energy Transition Act, save 400 jobs in northwestern New Mexico and “produce highly reliable, low-priced, low-emissions and low-carbon baseload power at no additional cost to consumers.”

Enchant, which would run the plant until at least 2035, would sell the captured carbon to oil and gas producers in southeastern New Mexico and West Texas by connecting to a pipeline about 20 miles from the power plant.

Mandelstam’s company recently secured a $2.69 milliongrant from the U.S. Department of Energy that will pay for an engineering design study for retrofitting the plant. That’s about 80 percent of the projected cost of the study.

Enchant would contribute an additional $725,000 while the city of Farmington would pay a smaller amount. The study will “determine the technical and economic viability of extending the life of an existing plant using a [carbon capture] system,” according to a news release from Enchant.

An initial study estimated the cost of capturing carbon at the San Juan facility would range from $39 to $43 per metric ton, which would be a significant cost decrease from the last major carbon capture retrofit, which was put into operation in 2017 at the Petra Nova coal-burning plant near Houston.

Petra Nova is the only power plant in the country that uses carbon capture technology. The only other plant in the world using the technology is Boundary Dam in Saskatchewan, Canada.

San Juan would, by far, be the biggest carbon capture plant in the world. Petra Nova produces 240 megawatts of power, while Boundary Dam produces 110 megawatts. San Juan would produce 847 megawatts of electricity.

Mandelstam said the plan is likely to generate $2.5 billion of 45Q tax credits — created by the 2017 tax-cut bill especially for facilities using carbon capture — over the next 12 years

From the start, many environmentalists have been skeptical of claims made by advocates of carbon capture technology — how much carbon it would capture, how much it would cost to retrofit San Juan and other aspects of the plan.

Camilla Feibelman, director of the Sierra Club’s Rio Grande chapter, disputed Mandelstam’s contention that renewable energy and battery storage won’t keep the lights on. Wind, solar and battery technology keep advancing and the cost of renewable energy keeps going down, she said.

She also questioned the idea of selling the captured carbon to the oil industry for fracking.

“To send the carbon to the oil fields to use more carbon just doesn’t make sense,” Feibelman said.

The proposal to use carbon capture to keep San Juan afloat emerged earlier this year when the Legislature was debating the Energy Transition Act — which would greatly increase the state’s renewable energy portfolio and greatly reduce greenhouse gases in the state. During hearings on the bill — which eventually passed and was signed into law by Gov. Michelle Lujan Grisham — Farmington officials announced that the city was negotiating with a New York hedge fund, Acme Equities (Enchant’s parent company), about retrofitting San Juan with carbon capture.

The Energy and Policy Institute — which describes itself as a “Watchdog exposing the attacks on renewable energy and countering misinformation by fossil fuel interests” — published an article in late February calling Acme “a mysterious hedge fund with no experience in the power sector.”

And while Enchant wants to become an energy wholesaler for customers beyond the city of Farmington, PNM officials repeatedly have said the utility is not interested in buying power from a retrofitted San Juan.

Mandelstam seems untroubled by such criticism. And if the San Juan project is successful, the company might look at other power plants in the area, such as Four Corners Generating Station in the Navajo Nation near Fruitland. PNM has announced that it plans to exit that plant when its purchasing contract with Four Corners ends in 2031.

“We want to provide the biggest [carbon capture] plant in the world,” Mandelstam said. “We want to learn how to do this and do it economically. And like any developer, once we’ve done that we’d like to do it again and again and again in other communities. We don’t have any plans beyond making sure we get this first one built and built right. And then we’ll look at other facilities.”

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(2) comments

Bruce Taylor

Carbon capture and sequestration is a very complicated and very sophisticated area of science and engineering. A mixed bag of results. Google it and read for yourself. But the part that is most troubling is the selling of carbon to the oil and gas industry elsewhere in the region. Selling carbon to carbon producers? Nothing about this makes sense to me. And I have seen systems designs that do make sense, just not this one. The fact is that the next era of energy will be primarily renewable, decentralized, widely distributed, smart-grid and blockchain managed. The next era will include the greatly advanced storage systems that are now coming on line. This is all backwards looking to squeeze another decade-plus out of coal. If I had a vote it would be, No!

Chris Mechels

How the heck did they get $2.69 million from the DOE?? Were our Congressional folks involved in this scam??

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