PNM awaits New Mexico decision on 40 MW of new solar

Pending at the New Mexico Public Regulation Commission is a stipulated settlement between Public Service Co. of New Mexico and various parties over the utility’s plans for new solar capacity in 2015.

Public Service Co. of New Mexico (PNM) on June 2 filed this Renewable Energy Portfolio Procurement Plan for 2015 in compliance with the state’s Renewable Energy Act. To comply with the Renewable Portfolio Standard (RPS) in 2016, PNM is requesting commission approval of renewable energy procurements in 2015:

  • New Solar Procurement – The construction under a turnkey contract in 2015 of 40 MW of PNM-owned solar photovoltaic (PV) facilities at sites within PNM’s service area. In addition, PNM requests a Certificate of Public Convenience and Necessity (CCN) for these facilities, to the extent that the commission determines that a CCN is required.
  • Distributed Generation Capacity Reservation – PNM requests commission approval to set a 2015 capacity reservation of 2 MW (ac) at a price of $0.02 per kWh REC for systems sized over 100 kW (ac) and up to 1 MW (ac). PNM requests a variance from the final order in a 2011 case to implement the $0.02 per kWh REC price.
  • Revised Geothermal Procurement – In a 2012 case, the commission approved the procurement of energy and renewable energy credits (RECs) from a proposed 10-MW geothermal generating facility under a purchased power agreement (PPA) with Lightning Dock LLC. The facility went into service in January 2014 and as of the June 2 application has a capacity of about 4 MW. PNM and Lightning Dock are in the process of revising the PPA to reduce PNM’s maximum purchase obligation from the total output of a 10 MW facility to 60,000 MWh annually, which is approximately equivalent to an 8 MW facility. PNM will have an option to purchase additional energy up to the equivalent of 10 MW and a right of first refusal for energy from any expansion beyond 10 MW. The reduced purchase obligation more closely matches PNM’s currently estimated need for RECs in the “other” renewable resource category and the production history of the facility to date.

PNM over the past few years has added several other solar facilities:

  • 22.5 MW Solar Facilities – In 2011, PNM acquired, under a turnkey construction contract, 22 MW of solar PV facilities located at five sites within PNM’s New Mexico service area. PNM also completed a demonstration project consisting of 500 kW of solar PV generation with battery storage. PNM estimates that these facilities will produce 53,363 MWh of energy and RECs during 2015 and 53,092 MWh of energy and RECs during 2016.
  • 20 MW Solar Facilities – In 2013, PNM completed the construction of an additional 21.5 MW of solar PV facilities located at four sites (i.e., two in Los Lunas, one in Alamogordo, and one in Deming), which were approved by the commission. Under a commission order, 1.5 MW of these solar facilities are dedicated to supply the PNM Sky Blue program, and, therefore, the RECs generated from these 1.5 MW are not projected to be used for RPS compliance purposes. The projected amount of energy and RECs from the 20 MW of solar facilities which can be used for RPS compliance during 2015 and 2016 is 48,228 MWh and 47,986 MWh, respectively.
  • 23 MW Solar Facilities – Under construction currently are facilities in four different locations in PNM’s service area that are expected to be in-service by December 2014. Projected generation from these solar facilities is expected to be 64,500 MWh in 2015 and 64,178 MWh in 2016.
  • 30 kW Facilities – PNM owns solar PV facilities at its Aztec building (5 kW) and at Algodones (25 kW). RECs from these facilities have a grandfathered 3-to-1 weighting for RPS purposes. Generation at these facilities is projected to result in 145 MWh of RECs for RPS compliance purposes in 2015 and 144 MWh in 2016.

New solar to be obtained under two deals

As for the 40 MW of solar to be added in 2015, PNM requests approval to acquire these solar PV facilities that will be built under turnkey construction contracts with: ASI/GGS, a joint venture between Affordable Solar Inc. and Grupo Gransolar S.A.; and with Juwi Solar Inc. These facilities will be constructed during 2015 at four sites within PNM’s service area and are expected to go into service during the fourth quarter of 2015 as construction is completed. The facilities will use polycrystalline solar PV modules and single-axis tracking. Construction and related costs for the 40 MW facilities are projected at about $79.3m. In 2016, the output from these facilities is projected to be 116,276 MWh.

The pending stipulated settlement, filed Sept. 25 with the commission, is with the New Mexico Public Regulation Commission Utility Staff, the New Mexico Attorney General, New Mexico Industrial Energy Consumers, Western Resource Advocates and the Coalition for Clean Affordable Energy. The deal recommends that PNM should be granted a CCN for the construction and operation of 40 MW of solar PV facilities, as proposed in the June 2 plan, at an installed Certificated Cost not to exceed $79.3m, before jurisdictional allocation.

The agreement also said that the commission should approve the modifications to the procurement of energy and RECs from the Lightning Dock geothermal facility as described in the testimony of PNM witness Patrick O’Connell.

This settlement will be up for hearing at the commission on Oct. 27.

PNM said Oct. 2 that the 40 MW of new solar capacity is one of two power resources proposed by the company that partially make up for the power generation lost with the shutdown by the end of 2017 of the coal-fired San Juan Unit 2 (340 MW) and Unit 3 (496 MW). The other proposed generation source is a $189m, 177-MW gas peaking facility that will be constructed at the San Juan plant site. An application for a CCN for that gas project will likely be filed next year.

About Barry Cassell 20414 Articles
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.