As the USA reverses its energy policies, the rest of the world is doubling down its efforts on coal free power generation. Forgetting the environment, air pollution and global warming, relying on a diminishing resource does not make for good economic and future planning. I am not anti USA, I just feel it is making some seriously bad decisions that may bite when it comes to the legacy left for the next generation. Countries using renewable, cheap energy resources will have huge economic and manufacturing advantages to those countries that do not. Energy will become the most expensive part of manufacturing in years to come. With the coming EV revolution an opportunity is available to cut fossil fuel imports to a minimum for transportation needs.
Late last month, the Public Service Company of New Mexico (PNM) issued a landmark finding. After conducting a routine assessment of future power supply scenarios, the utility made an anything-but-routine conclusion: the best version of its future self, PNM declared, was entirely coal-free.
For a utility that’s been powering its customers with coal for half a century—and which has aggressively defended its need for coal to regulators as recently as a year ago—the finding marks a major step in the right direction, and should be celebrated for the gains it promises New Mexicans in the areas of public health, affordability, and the environment.
Still, there’s more work to be done. PNM’s vision of the future leaves viable renewable resources and energy efficiency opportunities on the table, and leans too heavily on natural gas—a path that puts customers at risk of bearing the high costs of overreliance.
PNM must prioritize resources that will best serve the people of New Mexico now and in the future, which means winding down coal alongside natural gas, all while doubling down on its commitment to energy efficiency and renewables.
What is a ‘Integrated Resource Plan?’
PNM reported this coal-free finding in its recently released draft Integrated Resource Plan, or IRP. The utility is required to issue an IRP every three years, in which it examines a wide range of future scenarios and determines the power supply portfolio that most cost-effectively meets its expected needs over the next 20 years. Or in other words, PNM takes a look at the future and checks to see if it’s on track.
The utility’s findings are informed by stakeholder engagement processes, but they receive final buy-in from the Public Regulation Commission of New Mexico (PRC). If the PRC approves the proposed IRP, then PNM moves forward in accordance with the approved plan, including a required four-year action plan intended to steer near-term decision-making in line with the longer-term views.
IRPs are required in many states around the country. When done well, they provide a valuable opportunity for cooperative engagement on long term planning, allowing the utility, stakeholders, and regulators to all take part in establishing a shared vision. When done poorly, IRPs provide cover for utilities to use inputs and assumptions that support approaches that tend to best serve the utility, not the customers. The risk of manipulation of an IRP makes stakeholder engagement, utility oversight, and modeling transparency absolutely critical components of a robust process.
The good: PNM gets comfortable with the idea of a portfolio without coal
There’s a lot to like in PNM’s draft IRP. For starters, the utility discusses a future without coal with an ease and confidence not previously seen (and frankly, nearly impossible to imagine even recently). PNM now proposes following the planned retirement of San Juan Generating Station (SJGS) Units 2 and 3 at the end of 2017 with the closure of the remaining Units 1 and 4 in 2022, and the abandonment of their share of capacity at the Four Corners Power Plant in 2031, all following the expiration of current fuel supply contracts.
In return, the utility proposes adding more renewables, continuing to pursue energy efficiency, and adding natural gas peaking units.
In discussing the proposed most cost-effective portfolio (MCEP), PNM highlights the improved flexibility of the system, which the utility states will leave it better prepared to support future uses of the grid. This is in contrast with an alternative portfolio that considered the continued use of coal as a baseload resource. In that case, PNM warns that “as PNM and PNM’s customers add more renewable energy, there will be less need for traditional generation year over year,” thereby progressively lessening the need for large-scale, continuously operating coal plants.
Further, PNM notes that “continuing SJGS also subjects PNM customers to risks of higher costs associated with possible future environmental regulations given the continued reliance on coal-fired generation.” These risks include future climate, air, water, and waste environmental regulations, all of which are reduced in the coal-free scenario as compared with the continued-coal case.
Finally, as part of its four-year action plan, PNM flagged the need to add transmission capacity that would allow the delivery of wind power from the resource-abundant eastern part of the state to the load-heavy central and western parts of the state. Given the low cost and incredible abundance of wind power in eastern New Mexico, it is critical that PNM secure the ability to provide its customers with access to these benefits.