Solar market shining brighter again in New Mexico

BY KEVIN ROBINSON-AVILA / JOURNAL STAFF WRITER

Wednesday, March 4th, 2020 at 8:57pm

Dylan Westerlin of NM Solar Group carries solar panels on the roof of First Presbyterian Church, 215 Locust NE. The state Legislature has approved Senate Bill 29, which offers a 10% state income tax credit for individual solar systems. (Roberto E. Rosales/Albuquerque Journal)

Steven Cordova, left, and Dylan Westerlin, right, both of NM Solar Group, install solar panels on the roof of the First Presbyterian Church in Albuquerque. (Roberto E. Rosales/Albuquerque Journal)

Copyright © 2020 Albuquerque Journal

After nearly a two-year slump in New Mexico’s solar market, business is booming again at Albuquerque-based installation and wholesale firm Affordable Solar.

Company revenue grew by 330% to $140 million in 2019, CEO Ryan Centerwall said. That includes 18% growth in residential installations and robust hikes in commercial and utility-scale activity.

“2019 was a record year for us,” Centerwall told the Journal. “We grew our workforce by about 42% to 128 people.”

After a severe slump in 2016 and 2017 due to the loss of state tax credits, solar companies in New Mexico are experiencing a surge, for several reasons.

The next two years look even better than this year, Centerwall said, because many consumers are rushing to install solar systems before a longtime federal income tax credit goes away.

The credit, which has allowed individuals to receive tax rebates equal to 30% of a photovoltaic system’s cost, helped jump-start the PV market among homeowners and small businesses over the past decade.

But the credit began ratcheting down for the first time this year, dropping to 26% in January. It will decline again to 22% next year and disappear in January 2023.

The scramble to access the credit before it sunsets is helping reverse a two-year decline in demand that buffeted the local solar industry in 2017 and 2018. But it’s only a short-term boost, given the pending cutoff in 2023.

To help sustain industry momentum beyond the loss of federal credits, the governor and legislators pushed in this year’s legislative session to reinstate the 10% state income tax credit that ended in 2016. The Legislature approved the legislation, Senate Bill 29, and Gov. Michelle Lujan Grisham signed it into law Tuesday.

In the short term, the bill could significantly accelerate consumer demand, since the state and federal tax credits together will allow individuals and small businesses in New Mexico to cut more than 30% off the price of a solar system, generating optimism among local installation businesses, such as Affordable Solar, at least for the next three years.

“We believe 2020 will be another record year in residential business, and 2021 as well, given the new state tax credit and the urgency for consumers to get systems in before the federal tax credit goes away,” Centerwall said.

Bill supporters are hoping SB 29 will help boost market momentum in the long term, as well, since the state rebate will remain in effect through 2028, said Louise Martínez, director for energy conservation and management at the Energy, Minerals and Natural Resources Department, which will manage consumer rebate applications.

“It’s the disappearance of the federal credit that made passing the state tax credit this year so important,” Martínez said. “We all see that cliff coming.”

Government officials and industry leaders say loss of the state credit in 2016 contributed significantly to industry decline in 2017 and 2018. The rebate had been in effect for nearly 10 years.

Before the credit ended, the local market was expanding aggressively, with some 60 solar design and installation companies operating around New Mexico. In addition, national firms began canvassing for local customers, including Solar City, Vivant and ZingSolar, all of which offered solar leasing options for the first time for homes and businesses here.

But after the state tax credit disappeared, the market dropped rapidly. The local industry lost a third of its workforce from 2017 to 2019, falling from a peak of about 3,000 employees in 2016 to just 2,000 last year, according to the Washington, D.C.-based Solar Foundation’s latest annual Solar Jobs Census, released in February.

The hemorrhaging included the loss of Solar City, which abandoned New Mexico in 2018, plus cutbacks and company closings among local businesses.

Longtime installer Consolidated Solar Technologies shut its doors in January 2019, and statewide installer Sunpower by Positive Energy closed its Las Cruces office and cut its workforce by about 24%.

Other local and national factors also hurt the industry, including federal imposition of a 30% tariff on photovoltaic imports from China and other countries; market saturation among early, higher-income solar adopters; and fierce competition among solar companies to start signing up less wealthy consumers.

The solar tariffs, combined with new tariffs on imported steel, particularly hurt, said NM Solar Group President and CEO Nick Kadlec. That company managed to grow during the down years by aggressively pursuing new customers in eastern and southern regions of the state where market penetration is still low, but tariffs raised prices, making sales more challenging.

The solar tariffs raised costs for PV panels and the steel tariffs hit prices for the mounting hardware, Kadlec said.

At Affordable Solar, tariffs cut into the utility-scale installation business.

“Without the tariffs, our commercial and utility-scale projects would easily grow by 30% to 40%,” Centerwall said.

For Consolidated Solar, competition from national firms offering leasing options created hardship, said electrical contractor Jerry Mosher, CEO of Mosher Enterprises Inc. and co-founder of Consolidated Solar.

“Leases killed us,” Mosher said. “These guys came in with aggressive marketing of no-money-down deals on immediate installations. They hit neighborhoods everywhere, canvassing them and offering free solar.”

Many of those challenges remain, but market conditions have improved. For one thing, consumers are now purchasing more than leasing systems, in part because buying them outright offers more savings and benefits, and some customers have been hurt by “misleading” lease practices, Kadlec said.

In addition, financing for systems has gotten better, with more lenders, longer loan terms and better interest rates.

“It’s easier to qualify for credit now, even with lower credit scores,” Kadlec said.

And solar tariffs have begun ratcheting down by 5% a year.

Perhaps most importantly, despite tariffs, continual improvements in technology, system efficiency and installation practices, combined with economies of scale, have markedly cut retail prices over the past decade, making PV more affordable for consumers. The average cost nationally for residential solar systems fell from $7.24 per installed watt in 2010 to $2.80 in 2017, according to the National Renewable Energy Laboratory and Barclays Research.

Early-adopter saturation still makes sales challenging, but the overall market remains huge and the new 10% state tax credit will help build demand, Kadlec said.

“We believe the state credit will provide a significant increase in sales over the next two years,” Kadlec said. “And it will mitigate job losses as the federal tax credit goes away.”

EMNRD estimates the new credit will lead to 4,000 more solar installations per year. The program is capped at $8 million in collective payouts annually, with a $6,000 ceiling on individual rebates.

“There’s a lot of backlog demand built up since the tax credit went away in 2016, so we believe we’ll reach the $8 million cap every year,” said SB 29 sponsor Senate Majority Whip Mimi Stewart, D-Albuquerque. “But we lowered the upper limit from $9,000 per system under the previous law to $6,000 now to spread the wealth around and finance more systems.”

Apart from creating jobs, SB 29 will help New Mexico achieve its goal of 50% renewables by 2030, 80% by 2040, and carbon-free generation by 2045, Stewart said.

Indeed, with nearly 20,000 individual solar systems currently connected to Public Service Company of New Mexico’s grid, customer-sited installations now account for about 131 megawatts of power, compared with the 237 MW PNM currently gets from utility-scale solar systems.

Jeff Bezos commits $10B to climate. How should he spend it?

The funding announcement “dwarfs other philanthropy in this realm,” and could go toward anything from an amplified Beyond Carbon campaign, to a mass electric vehicle rollout, stakeholders mused.

Credit: Getty Images

AUTHOR: Catherine Morehouse@cmorehouse10

PUBLISHED

Feb. 19, 2020

Billionaire Jeff Bezos, founder, president and CEO of e-commerce company Amazon, on Monday announced his commitment to providing $10 billion toward fighting climate change. 

Specifics of the plan were sparse — in his Instagram post announcing the funding, he said the Bezos Earth Fund will provide funding for “scientists, activists, NGOs — any effort that offers a real possibility to help preserve and protect the natural world.” He’ll begin issuing grants this summer and said the $10 billion is “to start,” but doesn’t specify how much more he plans to spend or over what time period.

Some speculate the billionaire’s move was timed to deflect attention from FRONTLINE’s release of a documentary that includes criticisms of his technology empire’s carbon footprint and rising pressure from the company’s employees about not doing enough on climate change.

“Clearly this was done quickly … he’s not fleshed out how exactly he wants to spend the money at the moment, it seems it’s going to anybody and everybody,” Aseem Prakash, political science professor at the University of Washington and founding director of the school’s Center for Environmental Politics told Utility Dive.

Despite the uncertainties, it’s clear to most observers that the funding could have huge impacts for fighting climate change.

“It dwarfs other philanthropy in this realm,” Robert Stavins, professor of energy and economic development at Harvard and director of the university’s environmental economics program told Utility Dive. “It sort of rises to the level of government actions in the climate policy or climate realm. So it’s potentially very significant.”

Michael Bloomberg launched a $500 million Beyond Carbon campaign, the largest coordinated climate change plan in the U.S. at the time, according to Bloomberg Philanthropies. The former New York mayor also launched Beyond Coal in 2011, and has invested $100 million since then on the campaign, which credits itself for the early retirement of over half the country’s coal fleet. Bezos and Bill Gates in 2016 also set up a $1 billion venture capital fund to invest in energy startups committed to reducing carbon emissions.

In sum, $10 billion could go a long way.

“It’s an insane scale-up of all the [climate] funding and I think it [is] a genuine question about how is this going to get spent?” Leah Stokes, assistant professor of energy and environmental politics and the University of California, Santa Barbara, told Utility Dive.

How should he spend it?

Some say the funding would be best spent on emerging technologies and scientific research, while others argue targeting policy and advocacy campaigns are the best use of $10 billion. Others say a healthy hybrid is best.

An unwise way to spend the money would be to make repeat investments in climate action that already has funding, thereby freeing up those investments to be spent somewhere else, said Stavins.

Bezos should “ensure that the money does not simply substitute for other money, otherwise there’s no additional action whatsoever,” he said. “What’s most important is for him to, at the very beginning, identify what are the niches that merit support that are not receiving support.”

Movements like Beyond Coal and Beyond Carbon are what need to be amplified, said Stokes — funding policies and movements are the best way to gain leverage and funding advocacy for big federal policies like the Green New Deal could open up trillions in federal dollars that could be used in turn for things like research and development.

“When you’re targeting climate action, you have to think about who is responsible for making different decisions,” she said. “The Beyond Coal campaign is a state-by-state campaign because coal plants are approved and shut down at the state level through public utility commissions. And so that was a really good strategy for a particular part of the climate problem.”

Hypothetically, other campaigns could contribute to more grassroots movements as well, she said, like expanding support for larger transmission buildouts, or incentivizing battery storage, building decarbonization and electric vehicles.

Transportation electrification is becoming increasingly central to decarbonization, and several power sector observers emphasized the need to electrify vehicles in the U.S. — which made up the greatest portion of greenhouse gas emissions in 2017 at 29%, just behind electricity, according to the U.S. Environmental Protection Agency. And though the power sector’s emissions dropped 10% in 2019, according to preliminary results released in January from the Rhodium Group, transportation dropped only slightly and other sector emissions rose, leading to increased urgency to decarbonize other sectors.

“Thinking about the largest source of source of climate pollution in California and nationally, we think that investing some of those funds in electrifying transportation would have a significant impact,” Next 10 founder Noel Perry told Utility Dive. Part of that goes back to policy, he said — “one of the biggest tools in the tool box is public incentives to buy electric vehicles” as well as to build out charging infrastructure.

For that to happen, there needs to be state and wholesale market policy support, Heather O’Neill, president of national business group Advanced Energy Economy told Utility Dive in an email.

“Amazon has taken a leadership step with its order of 100,000 vehicles from Rivian, helping to create a market for electric delivery trucks, but we need a nationwide buildout of charging infrastructure to support a mass market of EVs of all types, and that requires supportive policies at the state and federal level,” she said.

The Amazon factor

Bezos’ company this fall committed to powering its global facilities by 100% renewable energy by 2030, while reaching net-zero carbon emissions by 2040. Included in that pledge is a commitment to add 100,000 electric delivery vehicles on the road by 2030 and install solar panels on 50 rooftops by 2020 — a goal the company has already met.

As part of this commitment, the company has been ramping up its wind and solar power investments and in January partnered with Lime, AT&T and Siemens to accelerate electric vehicle deployments.

But a company of its scale could do far more to combat climate change, according to Prakash.

“Bezos has to think beyond this $10 billion… the leverage he has is not just $10 billion, the leverage he has is Amazon,” he said. “Amazon can utilize its global supply chain network [and make it] an aggressively green supply chain …  Be clear that we will not do business with fossil fuels. I think if Amazon does that, others will follow.”

Decarbonizing its supply chain is a major step in that direction, said Prakash, which includes taking responsibility for the actions of its suppliers, similar to what Walmart has begun to do. Amazon and other tech companies have also been criticized for pitching fossil fuel companies its cloud services to help them find new oil reserves.

“What do you need as a first mover — a person who would say, ‘You know what, I want to take the bet and stop doing business with fossil fuels because I think the time has come where we have to really aggressively look at climate change,'” said Prakash. “And then I wouldn’t be surprised if other cloud computing companies follow suit because there will be public pressure — if Amazon can do it, why can’t you do it?”

Amazon has faced backlash in recent months after it reportedly threatened to fire employees who spoke out about their concerns over the company’s climate policies. A coalition of employees called Amazon Employees for Climate Justice were critical of what they framed as a hypocritical stand.

“We applaud Jeff Bezos’ philanthropy, but one hand cannot give what the other is taking away,” the group said in a statement.

“Why did Amazon threaten to fire employees who were sounding the alarm about Amazon’s role in the climate crisis and our oil and gas business? What this shows is that employees speaking out works — we need more of that right now. Will Jeff Bezos show us true leadership or will he continue to be complicit in the acceleration of the climate crisis, while supposedly trying to help?​”

A Look Back at Solar Milestones of the 2010s

Friday, Jan 03 2020

By SEIA Comms Team

solar panels and transmission wires

The 2010s have come to a close, and what a decade it was for solar energy in the United States. Over the last ten years, our industry grew from niche technology struggling to hit its stride, to a dominant source of new energy that fuels our economy with 242,000 jobs and reliably powers millions of homes and businesses.

As we enter the Solar+ Decade and take on even greater market share, let’s look back at some of the major solar milestones we hit in the 2010s.

(LIST IS CHRONOLOGICAL)
1. Solar costs fall to historic lows; becoming competitive with other fuels

Perhaps the most important solar development in the 2010s is how fast prices have fallen. Costs have fallen by 70% since 2010, making both rooftop and utility-scale solar generation competitive with other forms of electricity generation.

In 2010, it cost $40,000 to install a residential solar system. Today, costs are around $18,000. At the beginning of the decade there were a couple dozen utility-scale solar plants, primarily serving as pilot projects. We are now nearing 3,000 utility projects, with recent prices at $18-35/MWh.

This price decline has had the effect of boosting solar generation 25x over the decade, from 0.1% of total U.S. electricity generation in 2010 to 2.5% today. There’s now enough solar capacity to power to 13.5 million homes, up from 777,000 homes at the beginning of the decade.

solar price declines and deployment growth
2. SunShot Initiative launched; goals met early

In February 2011, the U.S. Department of Energy launched the SunShot Initiative to reduce solar costs and make solar cost competitive with other forms of energy. The industry successfully met the utility-scale cost target three years early in 2017. Despite setbacks from the tariffs, costs continue to decline and we’re inching closer to SunShot’s commercial and residential targets too.

sunshot goals
3. Solar industry reaches 100,000 U.S. workers, doubles to more than 200,000 in same decade

As of August 2011, the U.S. employed an estimated 100,237 solar workers, according to The Solar Foundation’s National Solar Job Census 2011. This was a crowning milestone for the solar industry, and one that we doubled just 4 years later when we reached more than 200,000 workers in 2015. Workers are the backbone of our industry, and the U.S. needs to add hundreds of thousands of new solar jobs in the Solar+ Decade if we want to reach 20% solar by 2030.

solar jobs census graph
4. The first 100+ megawatt solar project is built in the U.S.

The Catalina Solar Project, a 143-megawatt (MW) project built in 2012 in Kern County, California, is the first standalone U.S. solar plant to exceed 100 megawatts of electric generating capacity. This was a historic project that helped to set the stage for a boom in large-scale solar projects across the country.

large scale solar project
5. Burlington, VT becomes first city powered with 100% renewable energy

In September 2014, Burlington, Vermont became the first city in the United States to meet 100% of its electricity demand with renewable energy. A few more have followed, like Aspen, Colorado and Georgetown, Texas, with many others set to join them in the Solar+ Decade.

solar project colorful leaves

Image source: Encore Renewable Energy

6. Solar Investment Tax Credit extended with ramp down

In December of 2015, Congress approved a historic five-year extension of the solar Investment Tax Credit (ITC) with a ramp down schedule through 2022. The ITC has helped drive significant solar development across all market segments and has set the solar industry up for success in the 2020s.

solar itc deployment
7. United States becomes #MillionSolarStrong and #2MillionSolarStrong in the same decade

In May 2016, the U.S. reached 1 million solar installations. It took us 40 years to get to 1 million solar systems around the country, but in just 3 years, we reached our second million. How many millions will we install in the 2020s?

solar installations cumulative
8. California becomes the first state to require new homes are built with solar panels

In May 2018, the California Energy Commission made California the first to require solar panels on new homes built in the state. This historic rule goes into effect this week and will help the nation’s largest solar market continue to create solar jobs and investment.

california new homes with solar
9. SEIA launches #DiversityChallenge initiative for the energy sector

SEIA launched a Diversity Challenge in May of this year to encourage our members and the energy industry more broadly to make diversity and inclusion a core part of their cultural identity. The challenge was launched at a roundtable event in Washington, DC where SEIA unveiled a solar diversity study and best practices guide.

As we enter the Solar+ Decade and create thousands of new American jobs, we must be intentional about ensuring those opportunities are brought to every corner and community in this country. Join us.

10. Solar takes on larger share of annual electricity capacity additions

In 2010, only 4% of all new electric capacity installed was solar. That has changed significantly. Since 2013, nearly a third of all new capacity installed was solar, eclipsing 40% in 2016 and nearing 40% again in 2019. If we keep up this pace, expect to see solar own the largest piece of new electricity capacity throughout the Solar+ Decade and beyond.

residential solar installation

U.S. Solar Market and 15 States See Best Quarter Ever for Residential Solar

SEIA

Thursday, Dec 12 2019

WASHINGTON, D.C. and HOUSTON, TX – The U.S. residential solar market reached record highs in the third quarter of 2019 with 712 megawatts of solar installed, according to the latest U.S. Solar Market Insight report from Wood Mackenzie Power & Renewables and the Solar Energy Industries Association (SEIA). The U.S. solar market added 2.6 gigawatts of solar photovoltaics in the third quarter, swelling total U.S. solar capacity to 71.3 gigawatts.

The increase in residential installations helped the U.S. solar market grow 45% year-over-year and contributed to 15 states having their best quarter ever for residential solar. States with smaller solar markets such as Idaho, Wyoming, New Mexico and Iowa all saw record residential growth due to continued price declines and improvements to the economic competitiveness of solar across the country.

“This positive report makes clear that American families are demanding energy choice and solar, and that our industry is ready to deliver,” said Abigail Ross Hopper, president and CEO of SEIA. “This is the kind of growth and investment we could see going forward if we make smart policy moves, like extending the solar Investment Tax Credit and stopping additional tariffs. Failure to make these policy moves will limit deployment potential and cost jobs.”

California continues to be the largest residential solar market, installing nearly 300 megawatts in the third quarter of 2019, breaking its own quarterly record.

“While California has always led the country in solar deployment, the drivers behind that growth have shifted,” said Austin Perea, senior solar analyst for Wood Mackenzie. “This is primarily due to new-build solar demand and increased consumer interest in solar + storage solutions as a result of public safety power shutoffs that have left hundreds of thousands of utility customers in the dark.”

According to the report, power shutoffs in California and national coverage of these issues has renewed demand for solar + storage solutions in California and other states across the country.

Wood Mackenzie is forecasting that the total amount of solar installed in the U.S. in 2019 will reach 13 gigawatts, representing 23% annual growth.

Key findings from the report include:

  • In Q3 2019, the U.S. solar market installed 2.6 GWdc of solar PV, representing a 45% increase from Q3 2018 and a 25% increase from Q2 2019.
  • The U.S. saw record-setting residential solar capacity added in Q3 with more than 700 MW installed.
  • A total of 21.3 GWdc of new utility PV projects were announced from Q1 to the end of Q3, bringing the contracted utility PV pipeline to a record high of 45.5 GWdc.
  • Non-residential PV saw 445 MWdc installed as policy shifts in states including California, Massachusetts and Minnesota continue to slow growth.
  • Wood Mackenzie forecasts 23% year-over-year growth in 2019, with 13 GWdc of installations expected. In total, more than 9 GW were added to the five-year forecast since last quarter to account for new utility-scale procurement.
  • Total installed U.S. PV capacity will more than double over the next five years, with annual installations reaching 20.1 GWdc in 2021 prior to the expiration of the federal Investment Tax Credit for residential systems and a drop in the commercial credit to 10% (under the current version of the law).

Carbon-capture gambit: San Juan carbon capture project gains momentum

BY KEVIN ROBINSON-AVILA / ALBUQUERQUE JOURNAL STAFF WRITER

MONDAY, DECEMBER 9TH, 2019 AT 12:02AM

Copyright © 2019 Albuquerque Journal

The San Juan Generation Station near Farmington. Three of four stacks with the coal used to fire the plant, from the top of a unit. (Albuquerque Journal /Richard Pipes)

Farmington and Enchant Energy Corp. are aggressively pursuing a plan to convert the coal-fired San Juan Generating Station into the world’s largest carbon-capture and sequestration facility, despite broad skepticism about the project’s feasibility and benefits.

The city signed an agreement in August with Enchant Energy for it to take over ownership of the power plant and retrofit it after Farmington acquires the facility from Public Service Company of New Mexico and three other co-owners, who plan to abandon San Juan in 2022. Farmington owns a 5% stake in the plant and wants it to remain open to continue consuming electricity from the facility, save nearly 500 jobs at the plant and nearby San Juan Coal Mine, and allow local tax income from plant operations to keep flowing.

Water vapor and carbon dioxide are the main things that come out of the units at the San Juan Generating Station following multiple environmental upgrades over the years. (Hannah Grover/The Daily Times)

Enchant Energy, a new company created this year by an out-of-state investment firm to pursue the project, says it can turn the plant into the nation’s cleanest burning coal-fired facility for $1.3 billion, capturing 6 million tons of carbon emissions annually by 2023. That would allow San Juan to meet state Energy Transition Act mandates that require operators to cut carbon emissions in half that year if the plant isn’t shut down.

Tax credit payoff

Enchant says it could earn back double its investment through tax credits paid by the federal government for every ton of carbon captured and sequestered. It would cover operation and maintenance costs through the sale of carbon to oil and gas producers in the Permian Basin in southeastern New Mexico and West Texas for “enhanced oil recovery,” whereby operators pump CO2 into wells to help push up hydrocarbons from the ground. And it would sell excess electricity from the plant on the wholesale market.

Enchant Energy CEO Jason Selch

Enchant Energy CEO Jason Selch called San Juan the “best site in North America” for converting the nation’s next major coal plant into a carbon-capture and sequestration facility following the 2016 start up of the Petra Nova plant near Houston, which is currently the only such project up and running in the US.

Selch told the Journal’s editorial board in October that Enchant already has deals with a global engineering and construction firm to build the carbon-capture project on time and at a fixed cost, and with a major oil and gas company to buy all the carbon captured at the plant.

It also received approval in September for a $2.7 million grant from the U.S. Department of Energy to conduct an in-depth, front-end engineering and design, or FEED, study to move the project forward.

Funding for studies

Enchant is contributing nearly $800,000 in matching funds for the $3.5 million study, which the company expects to complete over the next six months.

Enchant has yet to name the firms it made deals with because the contracts must still be finalized and signed, but it will soon, Selch said.

“We have a lot of announcements coming,” Selch told the editorial board. “…We expect to close on financing for the project in the second half of 2021, with construction starting early that year for the plant to come online in some part of 2023.”

The coal-fired San Juan Generating Station, near Farmington in northwestern New Mexico.

The company’s claims and the deal signed with Farmington have generated broad debate about the project’s prospects, impacting ongoing hearings at the Public Regulation Commission regarding PNM’s plans to shut San Juan and replace the electricity it provides with a mix of renewable resources and natural gas.

In the hearings, Farmington representatives have proposed the carbon-capture project as an alternative to PNM’s shutdown. Members of the PRC’s utility division staff have also recommended that the commission reject PNM’s current proposals because they didn’t include a cost-benefit analysis for retrofitting the plant with carbon capture to keep it running.

Plan called unrealistic

In response, PNM and environmental groups have filed extensive written testimony in the hearings that questions Farmington and Enchant Energy’s plans as extremely unrealistic, both for PNM to pursue, or for the Farmington-Enchant partnership to undertake independently.

PNM Vice President of Generation Thomas Fallgren said PNM did analyze carbon-capture technology for San Juan in 2010 that showed it was uneconomic and highly risky, leading the utility to discard it in current proposals for San Juan.

This structure at the San Juan plant captures fly ash from the generating process.

And in response to PRC staff concerns, PNM has now run new models for carbon capture that still show converting the plant to low-carbon generation would cost customers a lot more than pursuing the utility’s proposal for shutdown and replacement resources, while deriving much fewer environmental benefits.

In the best-case scenario – assuming most of Enchant’s financial and operation and maintenance projections are accurate – PNM estimates carbon-capture would cost the utility $343 million more than shutting San Juan. That would reduce PNM’s projected $6.87 per month savings for average residential customers based on replacing the plant with cheaper renewable resources, to just 47 cents per month, Fallgren said.

Potential cost escalation

Using more conservative estimates on costs and benefits for carbon capture, which PNM considers much more realistic than Enchant’s projections, carbon capture would cost $1.3 billion more than shutting the plant, adding $10.37 per month to the average residential bill, Fallgren said.

The Petra Nova coal-fired power plant, near Houston, uses carbon capture and storage. A company is proposing to turn the San Juan Generating Station, in northwestern New Mexico, into a similar operation. (Courtesy of NRG Energy)

That’s because, apart from the direct investment to retrofit the plant, the carbon-capture technology would consume nearly 30 percent of the 497 megawatts of electricity that PNM receives from San Juan, meaning PNM would need to procure additional generation to continue meeting customer demand.

And, perhaps most important, PNM considers Enchant’s $1.3 billion retrofit cost projection “wildly” optimistic, Fallgren said. At Petra Nova, the coal plant retrofit came to $1 billion. And at 240 MW, Petra Nova is just one-third the size of San Juan, which produces up to 850 MW.

“At the size of San Juan, installation costs would be two or three times more (than at Petra Nova), up to $3 billion and maybe even $4 billion,” Fallgren said. “In our estimate, Enchant’s initial capital cost projections are wildly optimistic.”

In fact, massive cost overruns and delayed build-outs have, to date, forced nearly every other coal plant retrofit project in the U.S. to shut down.

Apart from unrealistic retrofit and operation costs, PNM says converting a large, aging coal plant like San Juan would pose many technological challenges and reliability risks.

90% capture claim

Enchant projects it could capture 90% of San Juan’s carbon emissions, similar to performance at Petra Nova. That would reduce San Juan carbon emissions from 2,200 pounds per megawatt hour now to 249 per MWh.

Those estimates are based on a pre-feasibility study done for Enchant by Chicago-based engineering consultant Sargent & Lundy.

Petra Nova coal-fired carbon-capture power plant, near Houston, is one of only two operating power plants in the world with carbon capture and storage.

But that capture rate is unproven at a plant of San Juan’s size, and if it doesn’t meet the 90% goal, it would undercut Enchant’s financial returns from federal tax credits. In case of a mechanical failure or underperformance in meeting the 90% goal, the entire carbon-capture unit might have to be taken offline for significant periods, said PNM Director of Integrated Resource Planning Nicholas Phillips.

“The question of a 90% capture rate is questionable,” Phillips said. “…A big part of the uncertainty is how much disruption will result to plant operations after installing the carbon-capture units. Any operating interruption means lost revenues.”

In addition, the carbon captured would be sold for oil enhancement recovery, offsetting the environmental benefits by producing yet another fossil fuel, Fallgren said. And PNM estimates a 60 percent increase in plant water usage because of filtration in the carbon-capture units.

Critical answers needed

Pat O’Connell, a senior policy analyst with Western Resource Advocates, said Enchant’s forthcoming FEED study will have to answer many critical questions.

 “I’m very skeptical whether any investment in this carbon-capture technology makes sense,” O’Connell said. “It’s very risky.”

Selch said many factors significantly reduce the costs for carbon capture at San Juan, such as the plant’s location close to an existing pipeline in Colorado that already runs CO2 to the Permian Basin, plus the facility’s abundant coal supply from the San Juan mine.

“It’s a mine-mouth plant, which lowers costs,” Selch said. “We estimate about $100 million in annual operating costs, which comes out to between $39 and $43 per metric ton of carbon captured. That’s 35% less than the estimated cost at Petra Nova.”

As for initial investment, the company already has a deal with a global firm for an engineering, procurement and construction contract, which would lock that company into a fixed price and on-time delivery of all work, said Enchant’s chief operating officer, Peter Mandelstam.

Turnkey conversion offer

“It’s a lump sum, turnkey contract,” Mandelstam said. “We can’t give the name yet, but we shook hands with the contractor, who said they will guarantee the budget. If not, it’s on them.”

The agreement with Farmington allows Enchant to acquire San Juan at no cost, because it will be turned over to Farmington when the other plant co-owners leave in 2022, although a settlement on liabilities must still be reached before the departing owners approve the transfer.

Enchant must still meet state and federal regulations to operate the plant, and environmentalists will likely oppose them at every turn, possibly foreshadowing difficult public hearings that could slow things down. But Enchant says it needs nothing from state government.

“We’re not seeking nor contemplating a nickel of state money, and we’re not looking for tax breaks,” Mandelstam said. “…There may be concerns from environmentalists, but we want to sit down with them. We believe this is a great environmental project that will help fight climate change and produce low-carbon electricity.”

Still, the company must yet convince investors to provide the $1.3 billion in project costs upfront, based on a promise of earning future returns from federal tax payments.

Energy, Minerals and Natural Resources Cabinet Secretary Sarah Cottrell Propst said it’s too early to voice support or opposition to the project.

“We’re open to all opportunities for Farmington, as long as state and federal environmental laws are met,” Cottrell Propst told the Journal. “We need to know what the economics are and if it’s really viable in the long run…But we don’t have enough information to know that yet.”

U.S. Solar Market and 15 States See Best Quarter Ever for Residential Solar

Thursday, Dec 12 2019

WASHINGTON, D.C. and HOUSTON, TX – The U.S. residential solar market reached record highs in the third quarter of 2019 with 712 megawatts of solar installed, according to the latest U.S. Solar Market Insight report from Wood Mackenzie Power & Renewables and the Solar Energy Industries Association (SEIA). The U.S. solar market added 2.6 gigawatts of solar photovoltaics in the third quarter, swelling total U.S. solar capacity to 71.3 gigawatts.

The increase in residential installations helped the U.S. solar market grow 45% year-over-year and contributed to 15 states having their best quarter ever for residential solar. States with smaller solar markets such as Idaho, Wyoming, New Mexico and Iowa all saw record residential growth due to continued price declines and improvements to the economic competitiveness of solar across the country.

“This positive report makes clear that American families are demanding energy choice and solar, and that our industry is ready to deliver,” said Abigail Ross Hopper, president and CEO of SEIA. “This is the kind of growth and investment we could see going forward if we make smart policy moves, like extending the solar Investment Tax Credit and stopping additional tariffs. Failure to make these policy moves will limit deployment potential and cost jobs.”

California continues to be the largest residential solar market, installing nearly 300 megawatts in the third quarter of 2019, breaking its own quarterly record.

“While California has always led the country in solar deployment, the drivers behind that growth have shifted,” said Austin Perea, senior solar analyst for Wood Mackenzie. “This is primarily due to new-build solar demand and increased consumer interest in solar + storage solutions as a result of public safety power shutoffs that have left hundreds of thousands of utility customers in the dark.”

According to the report, power shutoffs in California and national coverage of these issues has renewed demand for solar + storage solutions in California and other states across the country.

Wood Mackenzie is forecasting that the total amount of solar installed in the U.S. in 2019 will reach 13 gigawatts, representing 23% annual growth.

Key findings from the report include:

In Q3 2019, the U.S. solar market installed 2.6 GWdc of solar PV, representing a 45% increase from Q3 2018 and a 25% increase from Q2 2019.

The U.S. saw record-setting residential solar capacity added in Q3 with more than 700 MW installed.

A total of 21.3 GWdc of new utility PV projects were announced from Q1 to the end of Q3, bringing the contracted utility PV pipeline to a record high of 45.5 GWdc.

Non-residential PV saw 445 MWdc installed as policy shifts in states including California, Massachusetts and Minnesota continue to slow growth.

Wood Mackenzie forecasts 23% year-over-year growth in 2019, with 13 GWdc of installations expected. In total, more than 9 GW were added to the five-year forecast since last quarter to account for new utility-scale procurement.

California continues to be the largest residential solar market, installing nearly 300 megawatts in the third quarter of 2019, breaking its own quarterly record.

“While California has always led the country in solar deployment, the drivers behind that growth have shifted,” said Austin Perea, senior solar analyst for Wood Mackenzie. “This is primarily due to new-build solar demand and increased consumer interest in solar + storage solutions as a result of public safety power shutoffs that have left hundreds of thousands of utility customers in the dark.”

According to the report, power shutoffs in California and national coverage of these issues has renewed demand for solar + storage solutions in California and other states across the country.

Wood Mackenzie is forecasting that the total amount of solar installed in the U.S. in 2019 will reach 13 gigawatts, representing 23% annual growth.

Key findings from the report include:

  • In Q3 2019, the U.S. solar market installed 2.6 GWdc of solar PV, representing a 45% increase from Q3 2018 and a 25% increase from Q2 2019.
  • The U.S. saw record-setting residential solar capacity added in Q3 with more than 700 MW installed.
  • A total of 21.3 GWdc of new utility PV projects were announced from Q1 to the end of Q3, bringing the contracted utility PV pipeline to a record high of 45.5 GWdc.
  • Non-residential PV saw 445 MWdc installed as policy shifts in states including California, Massachusetts and Minnesota continue to slow growth.
  • Wood Mackenzie forecasts 23% year-over-year growth in 2019, with 13 GWdc of installations expected. In total, more than 9 GW were added to the five-year forecast since last quarter to account for new utility-scale procurement.
  • Total installed U.S. PV capacity will more than double over the next five years, with annual installations reaching 20.1 GWdc in 2021 prior to the expiration of the federal Investment Tax Credit for residential systems and a drop in the commercial credit to 10% (under the current version of the law).

Press Release

SEIA.org