Big, bold state renewable goals are impressive at first glance, but a closer look is necessary to see if they’ll benefit all sectors of solar — or mostly just utilities.
New Mexico Gov. Michelle Lujan Grisham signed the Energy Transition Act (ETA) that aimed to position the state as a national leader in renewables in March 2019. The bill set a goal for investor-owned utilities and rural electric cooperatives to use 50% renewable energy by 2030 and 80% by 2040, established guidelines for retiring uneconomic coal plants and carved out funds to help workers affected by fossil fuel plant closures. The state currently has three active coal plants — Escalante, San Juan and Four Corners, according to Greentech Media. All three are on track to close by 2031, with the first two scheduled to shut down in 2020 and 2022, respectively.
Innovative requirements in the ETA led to a first-of-its-kind energy transition for one of the coal plants. Since the San Juan Generating Station was to close, its power generation had to be replaced. The New Mexico Public Regulation Commission provided all stakeholders access to the modeling platforms showcasing the replacement options.
“This is something that was really kind of unique in my understanding, that it did allow a lot more participation in what the replacement resources would be,” said Stephanie Dzur, attorney at law for the Coalition for Clean Affordable Energy, a group involved in the replacement case.
“It really created an opportunity for interveners to dig below the [bids] that the utility selected and proposed and say, ‘Well, look at this other, second tier of bids, and let’s model those,’” said Cydney Beadles, senior staff attorney for Western Resource Advocates, another group involved in the case.
The ETA requires the prioritization of coal replacement resources that have the lowest capital-to-fuel ratio and are sited in the affected community where coal plants are closed to keep tax dollars in the area, according to Pat O’Connell, senior policy analyst for Western Resource Advocates.
After considering those factors, the winning replacement combination for the San Juan plant was solar + storage. The commission unanimously approved an all-renewable plan to replace the coal plant, and paved the way for the local utility to sign PPAs with solar providers to build 650 MW of solar paired with 300 MW of storage, according to the Albuquerque Journal. That massive solar investment will double the amount of renewable energy on the grid in New Mexico, Dzur said.
One local utility-scale installer vying for a piece of the replacement portfolio is Affordable Solar.
“The ETA provides a great mechanism for the advancement of utility-scale solar in the state, with very specific targets that are both aggressive and obtainable,” said Ryan Centerwall, CEO of Affordable Solar. “We expect to see a lot of development over the next few years.”
The increase in solar projects will mean a need for more workers, so the ETA carved out funds for solar workforce development to be distributed by state agencies. Affordable Solar is already separately working on plans to train workers needed to get these jobs done.
“We see there being a tremendous requirement for training in order to fulfill the Energy Transition Act and the projects that would come with it because it is going to result in a significantly larger workforce requirement for utility-scale solar,” Centerwall said.
Although Affordable Solar hasn’t applied for ETA funds yet, the company is building a four-year solar technician apprenticeship program that will prepare workers to get involved in the utility-scale solar installation and O&M fields. Centerwall said he’s hoping to collaborate with local technical colleges on the curriculum that will be a combination of classroom and on-the-job training.
Centerwall hopes San Juan’s renewable replacement will catch the attention of other states that are looking at retiring coal plants soon.
“I hope that the states see that and say, ‘Well, let’s at least go through the exercise and figure out what this type of mechanism could look like for our portfolio of resources, and see if we can provide savings or even a break-even or small impact to ratepayers, while achieving a cleaner portfolio,’” he said.
Where’s the DG love?
While New Mexico’s renewable expansion is great for the state’s RPS and utility-scale solar installers, the ETA doesn’t include any explicit benefits for the distributed generation sector. That’s left one installer with a bad impression of the bill.
“Honestly, it’s kind of made it harder for us to get interconnections through the utilities, because they’re trying to install more solar in their utility scale. So that way, they’re trying to push back on the residential and the distributed generation,” said Galina Kofchock, CFO of OE Solar, which installs primarily commercial and some residential solar projects. “Overall, the Energy Transition Act really hasn’t seen anything good for us on the smaller end, it’s just really been more of a battle with utilities for interconnections.”
Kofchock said it seems like every time state solar policy is handed down, it benefits utilities while pushing distributed solar to the side. Now with increased utility-scale solar procurement brought on by the ETA, she feels it’s a race against time until the utilities say their transmission lines can’t handle any more solar — and ask for money from solar companies to foot the bill for expensive upgrades. If that scenario does happen, she said distributed solar installers like OE Solar would pivot to pushing battery sales to keep solar power behind the meter.
“The worst part about solar is that we have to constantly be worried about legislation. If you were just a regular electrical contractor installing electrical, everyone needs electrical and they could pass five million different bills and you’re going to still have your business at the end of the day,” Kofchock said. “With solar, and from month to month or year to year or governor to governor, you’re worried about, ‘Is my business going to still be able to thrive?’”
Energy Grid Modernization Roadmap to the rescue
Chris Fortson, marketing manager for residential installer Positive Energy Solar, said he was glad to see more utility-scale solar planned in the ETA, but agreed the other sectors shouldn’t be left out.
“We just want to see a healthy mix of some [solar] that is utility-owned but also the opportunity for communities and individuals to have a stake in that as well,” he said.
Fortson said another bill passed recently was just as important as the ETA to the state’s renewable energy future. The Energy Grid Modernization Roadmap bill set in motion strategic planning to make necessary updates to the grid to accommodate more renewables. It also established a competitive grant program to support implementation of the updates.
“Utilities coming up with ambitious goals for renewable energy or carbon-free energy production, that stuff is great, but there really does need to be a focus as well on the grid itself,” Fortson said.
New Mexico’s solar journey shows sometimes one bill can’t serve the whole industry. But together, the ETA’s boost for utility-scale solar and the Energy Grid Modernization Roadmap’s help in bringing utility lines up to date could benefit all sectors of the solar industry, from a small kilowatt-sized rooftop system to a massive megawatt utility solar project.