The state’s largest electric utility has signified a drastic shift in energy production for the coming decades, announcing this week that it plans to eliminate all reliance on coal power by late 2031 and transition to solar and wind power for nearly a third of its energy mix by 2025.
Late Thursday, the Public Service Company of New Mexico released a draft resource management plan for public comment, a document that projects a 20-year outlook for energy use. The plan says shutting down the San Juan Generating Station near Farmington after 2022 and leaving the Four Corners Generating Station in 2031 are likely to be the most cost-effective paths forward for the company and its customers. PNM holds a 13 percent stake in the Four Corners plant.
PNM would continue to maintain stable investments in the Palo Verde Nuclear Generating Station in Arizona, while adding solar capacity, building new transmission lines to move wind power from Eastern New Mexico, and significantly increasing its reliance on natural gas, according to the plan.
“This is is a pretty big deal,” said Ray Sandoval, a spokesman for PNM. The transition away from coal “is being driven by a lot of different factors that are economic in nature,” he said.
The company is responding to a fundamentally different landscape of electricity production, Sandoval said, one that relies less on fossil fuel.
Customer energy use has declined because of conservation behaviors, such as using low-voltage light bulbs, and because of residential solar panels, Sandoval said.
“There is less demand,” he said. “… All of these things have led to a different environment.”
PNM currently relies on coal for nearly 60 percent of its energy generation, followed by 34 percent from nuclear power, 6 percent from natural gas and roughly 11 percent from wind and solar combined.
Under the new plan, the company would drop to just 12 percent coal reliance by 2025, with nuclear remaining stable and natural gas rising to 23 percent. The company would depend on 16 percent of its power from wind and 14 percent from solar. Six years later, the plan says, the company would go coal-free.
Planning documents show that divesting coal interests would bring PNM’s carbon-dioxide emissions down from just under 6 million tons per year, its current output, to under 2 million tons by 2031.
PNM first indicated in March that it might retire the San Juan Generating Station. The coal-fired plant would join a number of others in the Southwest and across the nation that are closing down. The Navajo Generating Station in Arizona has said it may begin shutting down as soon as July, and the Four Corners Generating Station, near Fruitland, has already shut down three of its five units.
According to a study published Friday by the Institute for Energy Economics & Financial Analysis, 46 coal-burning units at 25 power plants across 16 states will close or significantly reduce production by 2018, resulting in a 30 million-ton decrease in demand for coal.
Seth Feaster, a data analyst who authored the study, said these estimates are conservative.
“These kind of announcements [of coal retirements] have been coming at a rapid clip all across the country,” he said. “There is a lot of momentum toward closing coal plants because they are not economical.”
Feaster said this swift transition of electricity generation for utilities has little to do with environmental regulations. It is more connected to the declining costs of producing energy from natural gas and wind power, he said, largely because of horizontal drilling, or fracking, and the rapid development of new, more affordable, renewable energy technology.
“There are a lot of coal plants that are like the walking dead out there,” he said. “There is an extraordinary drum beat to these closures.”
Camilla Feibelman, director of the Rio Grande Chapter of the Sierra Club, said in a statement that PNM’s plan is “a clear demonstration that coal is no longer economically sustainable.”
“We must take this economic shift seriously and examine how we can support workers and the communities that have lived in the shadow of pollution,” she said.
Until recently, PNM had maintained that the San Juan plant provided a stable and affordable energy source.
Pat O’Connell, PNM’s director of resource planning, said that outlook has shifted and that cutting ties with coal is likely to save customers more money over the next two decades than continuing to operate the coal power plant.
O’Connell said electricity bills will go up temporarily during to the plant’s shutdown. “Certainly, the long-term cost saving will come with a short-term cost increase. We don’t know how much that is going to be,” he said.
A final draft of the plan will be released in July.
Mariel Nanasi, director of the nonprofit New Energy Economy, a renewable energy advocacy group that has been critical of PNM, said, “PNM has finally conceded that continuing to invest in San Juan coal is not economic — but they are asking us to take their word that another 14 years of Four Corners coal is prudent.
“Fourteen more years of burning climate-altering deadly coal is unacceptable,” she said. “PNM should retire all coal as soon as possible.”
Contact Rebecca Moss at 505-986-3011 or firstname.lastname@example.org.