David Van Winkle
There is no question that the window to address climate change is closing and that the need for emissions reductions and the shift to renewables is urgent. Given the recent appointments by the incoming administration, it is clear that climate justice work will have to shift to the state and local levels. The good news is that New Mexico is in a position to lead the transition to a just and sustainable energy future—both because our abundant solar and wind resources make it technically viable to do so and because growing awareness and public demand combined with recent victories and upcoming opportunities for state offices make it politically possible.
Our first opportunity to advance this transition is in the electricity sector. Seven hundred megawatts (MW) of solar and 1750 MW of wind can meet the demand needs of the 500,000 New Mexican customers served by the state’s largest utility, Public Service Company of New Mexico (PNM), within 20 years. Not only is this renewables-based resource portfolio feasible and cost-effective, it will cost less than PNM’s current plan to continue its heavy dependence upon coal and nuclear generation. It will be cleaner, emitting essentially no pollution. It will provide jobs in New Mexico to build and operate these utility-scale solar and wind generating facilites.
In simple terms, to achieve high levels of renewable energy, 1) the utility (PNM) needs to ramp down and stop using coal and nuclear to generate electricity and 2) replace it with clean energy sources.
The key steps to make the first 10 years of this roadmap happen are technically and financially feasible today. PNM could be producing more than 50 percent of our energy from renewable energy and eliminate coal-produced electricity, reducing it from 50 percent to zero in 10 years. Economic storage will certainly be available within 15 years and will support 80 percent renewable energy, and in 20 years, by 2035: 100 percent renewable energy.
The transition looks like this:
The key steps in this process are:
· Retire all the remaining units of the coal-fired, San Juan Generating Station at the end of the current coal contract, mid-2022.
· Retire 200 MW of the coal-fired Four Corners Power Plant by 2025.
· Withdraw from PNM’s share, 402 MW of capacity, at Palo Verde Nuclear Generating Station by 2030.
· Add solar and wind capacity, 1200 MW in the next 10 years, and another 1200 MW in the following 10 years.
· Utilize cost-effective storage by 2030 or earlier.
Will this roadmap be cost effective for customers?
Yes, already wind and solar costs per kilowatt-hour (kWh) are significantly less than coal- and nuclear-produced energy. PNM received quotes for wind and solar energy in early 2016 that clearly demonstrate this fact. Wind quotes were 3.3 cents/kWh and solar cost 4.2 cents/kWh. Also, Facebook and PNM recently agreed to a price cap of 4.7 cents/kWh for solar. At the same time, coal and nuclear costs are 6-8 cents/kWh.
Much of the solar energy added should be “rooftop” solar to provide local jobs and reduce the need for transmission costs.
The Transition Will Only Take Place with Public Demand and Political Will
Currently, more than 80 percent of the energy produced by PNM comes from coal and nuclear. PNM, and utilities in general, prefer investments in large facilities such as coal and nuclear because they require significant ongoing capital expenditures each year to maintain these large thermal units to keep them operational and meet pollution and safety requirements. These ongoing capital expenditures increase the rate base asset each year and thus increase PNM’s profits without adding new capacity. Additional costs associated with these large facilities include decommissioning, coalmine reclamation, stranded assets, litigation risk, health and the environment. Both coal and nuclear power plants require huge amounts of water. Each of the coal and nuclear plants mentioned consumes multiples of the water used by Santa Fe.
The reality is that PNM’s dependence on coal and nuclear has led to a steady increase in rates—which we can expect to climb even higher in the coming years. Since early 2008, the cost of electricity/kWh provided by PNM to its retail customers has increased by approximately 50 percent, while New Mexico’s real median household incomes have declined by 6.4 percent since 2008. (Further, on Dec. 7, 2016, PNM requested another rate increase of $99 million, or another 11 percent.) Meanwhile, PNM’s ongoing earnings have increased by 461 percent from 2008 to 2014. When actual 2014 residential rates are compared to the PNM’s regional peers (investor-owned major utilities in New Mexico, Colorado, Utah and Arizona), it shows that PNM’s residential rates were the highest in the region, and above the U.S. average. PNM residential rates were 37 percent higher than Southwestern Public Service and 41 percent higher than Farmington municipal utility.
In addition to the financial cost, the environmental cost of coal and nuclear is no longer something we can afford.
By comparison, renewable energy sources such as wind and solar have very little ongoing capital expenditure needs (as well has very little maintenance and no fuel costs). With 700 MW of solar and 1750 MW of wind, New Mexicans can power our homes, businesses and communities while drastically cutting our state’s emissions, protecting and preserving our water supplies and reducing air, water and soil pollution. The transition will require steady investment in new infrastructure, which will create an economic surge in our poor state as well as a new, sustainable base for our economy. Solar and wind jobs are family-supporting jobs that New Mexico’s young people are already preparing to fill and that experienced engineers and technicians can be re-trained to assume.
David Van Winkle was an executive with Texas Instruments for 30 years, leading large business units and analyzing complex business and technical challenges. For the past eight years, Van Winkle has analyzed multiple renewable-resource plans of New Mexico utilities and has led the development of strategies for organizations including the New Energy Economy, Sierra Club and the Coalition for Clean Affordable Energy (CCAE). He has testified on numerous occasions before the New Mexico Public Regulation Commission as a financial and energy expert. He is the chair of the Board of Directors of New Energy Economy. www.NewEnergyEconomy.org