PNM resource plan outlines replacing San Juan coal capacity

PNM Resources unit Public Service Co. of New Mexico on July 1 filed its 2014 Integrated Resource Plan with the New Mexico Public Regulation Commission.

The plan covers a 20-year planning horizon and includes specific recommendations for the next four years. In addition, PNM’s resource plan is consistent with the company’s five-year capital investment plan, according to GenerationHub.

To create the plan, PNM said it analyzed thousands of potential energy resource combinations to identify the best possible mix of generation sources. PNM considered future changes in the cost and reliability of each resource mix over time. Based on the results of the analysis, the company expects to add significant renewable energy resources to its power portfolio in the coming years.

Since the previous Integrated Resource Plan filing in 2011, PNM has made a $269 million commitment to solar energy, will add more wind generation in 2015, is using energy from the state’s first geothermal plant and worked with the U.S. Environmental Protection Agency and the State of New Mexico to begin taking steps toward closing down two coal units at the San Juan Generating Station. These initiatives are consistent with PNM’s focus on maintaining a balanced fuels portfolio.

While it is unclear exactly how the EPA’s newly proposed carbon rules will affect PNM’s power sources in the future, the company said it considered carbon regulation in the modeling.

Highlights of the specific four-year elements of the PNM plan include:

·      Close two units of the coal-fired San Juan plant by 2018 to meet federal regional haze requirements, reduce greenhouse gas emissions and cut water usage. The company plans to replace the retired power by adding more solar and natural gas facilities and using energy from an existing nuclear plant.

·      Participate in developing New Mexico’s statewide plan to comply with newly proposed federal rules to reduce carbon emissions at existing power plants.

·      Create new energy-saving programs to meet the 2020 requirement of 658 gigawatt-hours saved. PNM is on track to meet a requirement of 411 gigawatt-hours of energy savings this year.

·      Monitor and evaluate emerging technologies, particularly battery storage, for use in the future.

The most cost-effective combination of resources to replace the San Juan capacity is:

·      Install 40 MW of new single axis tracking solar photovoltaic (solar PV) capacity. PNM needs additional Renewable Energy Certificates (RECs) to meet the New Mexico Renewable Portfolio Standard (RPS) in 2016. The additional solar PV capacity will provide the required RECs and also is an element of the most cost-effective portfolio identified in the IRP. PNM filed for approval of this resource on June 2.

·      Receive commission approval to make PNM’s 134 MW ownership in Unit 3 of the Palo Verde Nuclear Generating Station (Palo Verde) as a jurisdictional resource to serve PNM’s retail customers prior to 2018. This resource is a component of the most cost-effective replacement portfolio and its addition to PNM’s jurisdictional portfolio decreases CO2 emission rates. PNM filed for approval to make this plant a jurisdictional resource in December 2013.

·      Install additional gas peaking capacity prior to the 2018 summer peak as part of the most cost-effective replacement portfolio identified in the IRP process. Additional gas peaking capacity is necessary for system reliability, with a solicitation for this capacity to be issued within the next nine months so it can be on-line by the summer of 2018.

The San Juan Generating Station (SJGS) consists of four units. PNM has an overall ownership share of 783 MW. SJGS is located in Waterflow, New Mexico, near Farmington. PNM is the majority owner of the plant as well as the plant operator. PNM’s ownership share of Unit 3 represents its largest single resource (248 MW). SJGS is PNM’s primary source of baseload generation. The plan is to shut Units 2 and 3 by the end of 2017 and to retrofit Units 1 and 4 with needed NOx controls.

The Four Corners plant in Fruitland, N.M., consists of two coal-fired units (Units 4 and 5) that are operated by Arizona Public Service (APS). PNM’s 13 percent share of these units amounts to a total of 200 MW of baseload capacity. The coal supply for Four Corners has been supplied by the adjacent surface mine through a contract with BHP Navajo Coal Co. PNM assumes that the Four Corners plant is an available resource that can meet loads through the 2033 timeframe.

PNM Resources is an energy holding company based in Albuquerque, N.M. Through its regulated utilities PNM Resources has about 2,572 MW of generation capacity and serves electricity to more than 746,000 homes and businesses in New Mexico and Texas.

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Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy's Coal Report. He was formerly with Coal Outlook for 15 years as the publication's editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor's degree from Central Michigan University.

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