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Solar Energy in New Mexico
PRC Commissioner Jason Marks
A few months after the enormous BP oil spill in the Gulf of Mexico last year, the head of the solar energy industry had his own announcement to make: “There was a major spill of solar energy yesterday,” he solemnly told attendees at an energy conference, before concluding, “Everyone agreed it was a beautiful day.” This bon mot plays on the widespread (and accurate) perception that solar energy is a safe and clean source of power. But is solar energy a serious source of power that can displace fossil fuels on a large scale and at a reasonable cost? This article discusses how we can use solar power and other renewable energy technologies to reach the dramatic reductions in greenhouse gas emissions needed to avoid catastrophic climatic disruption.
New Mexico is blessed with substantial raw natural resources of wind and solar power. During the past decade, renewable energy development focused on wind energy, both in our state and nationally. Between 2000 and 2010, the amount of installed wind generation capacity in the U.S. increased from around 2,000 megawatts (MW) to over 40,000 MW. New Mexico saw 700 MW of wind capacity installed during this period, enough to supply the power needs of more than 200,000 homes, assuming optimal wind conditions. Wind power’s leading role in the renewable world is largely due to its relatively low costs, comparable at times to the costs of fossil fuel (natural gas) generated electricity. So, the more we can do with wind, the lower the impact to our pocketbooks when we substitute a portfolio of renewable energy for fossil fuels.
But wind energy suffers from being an intermittent source whose availability often does not coincide with the times when we use the most electricity. For example, production of electricity from PNM’s wind farm near Santa Rosa generally peaks during the nighttime hours in winter and spring months, while coming in close to zero on hot summer afternoons when electricity demand is highest. The good news is that when engineers from General Electric, working with the National Renewable Energy Laboratory in Boulder, Colo., modeled hour-by-hour wind availability across the western U.S., electricity demand and existing generation and transmission lines, they concluded that we could fairly easily rely on wind power for up to 30% of our annual average electricity needs. This is a very significant target—and something we need to work towards—but it leaves us short of where we need to be in order to reduce our fossil fuel emissions to safe levels.
That’s where solar comes in. The technical potential of the solar resource in New Mexico alone is enormous: enough to produce more electricity than the entire country uses. Solar energy naturally coincides to an extent with our patterns of electric demand, peaking at mid-day and during the summer months. It can be cost-effectively matched to energy storage (more on this below). And, for the desert Southwest states, solar is a “load-side” resource that can be developed close to population and industrial centers, without the need for long, expensive transmission lines. In fact, solar is so load-side, it can be deployed in the midst of our cities, on buildings, parking structures, and so on. Despite these advantages, solar energy development lagged due to high costs and lack of sufficient investment on the part of our utilities. In 2007, Ben R. Lujan and I enacted PRC rules requiring New Mexico utilities to deploy utility-scale solar projects and to support customer-sited solar-distributed generation. Back then, we had about 200 kilowatts (KW) of solar electricity in the state, powering about 100 homes. Today, we are seeing the results of our solar rules. Over 2,000 homeowners and business participate in solar “REC” (renewable energy certificate) incentive programs mandated by the PRC, producing their own clean energy in the Albuquerque area, Las Cruces, Santa Fe, and even eastern N.M. This adds up to over 17 MW of customer-sited distributed solar generation. On the utility side, we have 150 MW of solar generation in operation, under construction, or contracted for construction during 2012. (No Solyndras here, these projects are all “nailed down.”) Together, this is enough solar electricity to fully supply 55,000 homes.
Recent solar development in NM has focused on photovoltaic (PV) technology, the now-familiar panels that convert photons, carrying solar energy directly into electricity without any moving parts. The less well-known form of solar technology is solar thermal (also known as concentrating solar power or CSP). Most solar thermal power plants use mirrors to concentrate the sun’s heat and then use the heat to make steam that can turn a power-generating turbine. This technology was pioneered at Sandia Labs in the 1970s, leading to commercial-scale demonstrations in California’s Mojave Desert in the 1980s that operate with outstanding reliability to this day. Over the past decade, the hub of solar thermal activity has been in southern Spain, with one of the main goals being the development of energy storage that can turn solar energy into a dispatchable (it’s there when you need it) source of electricity.
The newly constructed Gemasolar plant near Seville stores solar heat it collects from 2,650 mirrors focused on a central power tower in a large tank containing tons of molten potassium salts. Operators then extract the heat as needed to make steam and electricity. With 15 hours of storage capability, Gemasolar produces a constant output of 19 MW of electricity from its steam turbine 24 hours a day during summer months. During winter months, the operators plan to match output to the shape of electric demand; for example, shutting down in the dead of night and spooling up in the early morning hours.
Solar thermal power, with its storage capabilities, is an essential element of our future clean energy portfolio. It’s hard for me to see how to make renewable energy our majority power source, truly displacing today’s fossil-fuel electric fleet, without developing large amounts of solar thermal storage. Storing large amounts of energy from wind or solar PV does not appear to be economically feasible with current technologies (although there are significant opportunities to use batteries onboard or even retired from electric vehicles for grid storage and balancing). Biomass and geothermal power plants are capable of producing renewable-sourced electricity around the clock, but these sources are not available in sufficient quantities to supply a major portion of our energy demands.
Construction is moving forward on three large solar thermal plants in the U.S., including the 280 MW Solana project in Arizona, designed with six hours of storage to serve the summer afternoon/early evening demand peak. But many other planned solar thermal projects have stalled or been cancelled, including a 90 MW plant that was to be built near Las Cruces to serve NM customers of El Paso Electric Co.
Ironically, one of the main factors in the cancellation of solar thermal projects has been the market success of solar PV. Prices for large-scale PV systems have dropped by more than half over the past five years. Factoring in the effect of solar tax credits, costs to the power purchaser are down even more. PV went from being a more expensive solar option for utilities to being the lower-cost and more flexible option. Current bids for utility-scale PV projects are in the range of 10 to 12 cents per kilowatt-hour, versus 14 to 17 cents for solar thermal. PV is also easier to site and finance, and can be cost-effectively deployed at moderate scale; e.g., 5-20 MW, if desired. (Several of the cancelled solar thermal projects were reengineered as PV projects, including the one planned for southern N.M., which turned into a 20 MW PV project that recently went online.)
The dramatic price drops for solar PV, along with PRC-directed incentive programs, have made it possible for over 2,000 New Mexico households, businesses, schools, and other electric customers to invest in their own distributed solar systems. PV prices will continue to decline as technological advances continue to come online and the markets continue to evolve. When I first heard about “grid-parity,” the levelized cost of a PV system for an electric customer reaching the cost of buying power from the utility, I was skeptical. But it’s a reality today in places with unusually high electricity prices like Hawaii, and within reach elsewhere for larger commercial customers, possibly as soon as five years or so.
In addition to moving us down the road toward a more environmentally sustainable energy supply, PRC policies supporting customer-sited distributed solar generation have also led to the development of a vibrant solar installation industry in the state, with many good-paying jobs. Competition between these companies, in turn, furthers our goals of continuing to bring down prices.
Individuals who follow the solar industry in NM know that since last year, the PRC has implemented mechanisms to reduce the per-kwh REC incentive rates for new customer-sited solar systems. (An important principle I have worked to sustain is that the economics should be locked in for existing systems once the owner has signed an REC contract with the utility.) Declining incentive rates are in recognition of the declining prices for new systems, and allow the Commission to incentivize more systems and more kilowatts for the same amount of money.
It’s also important to remember that the money for REC incentives, as well as for utility-sponsored renewable projects, comes out of electric rates charged to all customers. Thus far, we’ve been able to significantly advance solar in the state with an extremely modest impact on rates, which will begin showing up on bills in the next year or so at around 2%. Because we have been careful in calibrating solar REC incentives and other renewable-energy program expenditures, we’ve been able to support an aggressive rate of growth without creating a superheated, unsustainable situation. Over the next few years, we will still have headroom in terms of what New Mexicans are willing to invest to get a cleaner energy supply. We need to continue to support the dual tracks of customer-sited distributed generation and utility-scale renewable energy projects, including some new utility wind energy projects and some biomass and geothermal.
From time to time, I run in to people who believe the future should be entirely rooftop,-distributed solar —clean, locally controlled energy at lower costs because we’ve cut out the utility company. While I understand the ideals behind this vision, it’s frankly not realistic. To begin with, we are not going convince Americans to change their lifestyles so that we do all our TV watching, data processing and websurfing, washing, heating, cooling and every other energy intensive activity between the hours of 9 a.m. and 4 p.m., and then only on sunny days! Customer-sited PV is a seamless solution because it is tied to the grid, with power being able to flow both ways, depending on production and consumption. Secondly, while the costs of using renewable energy and other strategies to reduce greenhouse gas emissions to safe levels is not anywhere near as high as the partisan opponents of clean energy claim, we need to be honest that cleaning things up will increase our energy bills. In order to keep the cost impacts manageable, we need the economies of scale that utility-sized renewable energy projects bring. We also need utility-based projects in order to ensure that everyone is using clean energy, not just those who are willing and able to make their own investments. And, as discussed above, the solar thermal technologies with storage that we will most likely need if we want to take renewable energy from a side dish to our main energy course, are only practical at a large scale.
Of course, I could be wrong on this. Our long-term clean-energy solution could look different from what I envision. For the past six years, as a PRC commissioner, I’ve tried to chart a course to foster the technologies and industries that we are likely to need to transition away from fossil fuel dependency. My colleagues in many state legislatures, governors’ offices and utility commissions across the country have tried to do the same, with renewable portfolio standards and various technology preferences, like NM’s solar set-asides. These policies have successfully given us tens of thousands of megawatts of clean energy generation, advanced the technologies and reduced the costs and created green industries and green jobs.
But we need to move faster and in different ways in order to have a hope of mitigating the impending greenhouse gas-caused climate catastrophe. I’m convinced it’s time to put a price on greenhouse gas emissions and allow markets to find the best mix of solutions. This has to be done at an economy-wide level. My personal belief is that we’re better off with a simple tax-and-rebate approach, rather than a complex “cap and trade” system, with numerous loopholes and opportunities for financial traders to turn emissions trading into another Wall Street casino.
Because our problems are serious and urgent, we need to make the constraints on carbon dioxide and other greenhouse gas emissions stringent enough to dramatically accelerate the deployment of GHG-free energy sources like solar, while forcing our nation’s fleet of conventional coal plants into retirement. I am confident that once the U.S. begins to capture the real costs of dirty fossil-fuel energy production, our abundant New Mexico solar and wind resources will be perfectly positioned to play a leading role in an environmentally sustainable and economically prosperous future.
Jason Marks is in his second term on the New Mexico Public Regulation Commission, where he has played a leading role in the implementation of the state’s renewable energy laws, as well as protecting consumers from millions of dollars in unjustified utility and telecom rate increases. Marks has a bachelor’s degree from Reed College and a law degree from the University of New Mexico.
About the author
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