New Mexico regulators have released a draft rule that would set CO2 emission limits for coal-fired power plants, restrictions that raise questions about the future of the San Juan Generating Station.
The New Mexico Environment Department (NMED) released the draft rule on June 15 and opened an informal comment period that runs through June 29.
The proposed rule would set a limit for CO2 emissions of 1,100 pounds per MWh on a 12-month rolling average basis. Owners or operators would be required to develop a monitoring plan, install emissions monitoring systems and submit electronic reports each quarter.
The rule would take effect on Jan. 1, 2023. Comments may be submitted here under Energy Transition Act rulemaking.
SJGS Implications
Currently, the rule would apply to only one facility in the state: the San Juan Generating Station (SJGS).
The other coal-fired plant still operating in New Mexico is the Four Corners Generating Station, which Arizona Public Service runs. The facility is on tribal land, where NMED and the state Environmental Improvement Board don’t have jurisdiction.
NMED isn’t aware of any plans to build a coal-fired plant in the state, department spokesman Matthew Maez told NetZero Insider.
Public Service Company of New Mexico (PNM) plans to retire SJGS at the end of this summer. (See Solar Supply Chain Issues Dog PNM Coal Plant Replacement Plan.) But that’s not the end of the road for SJGS.
The city of Farmington and Enchant Energy are partnering to acquire the facility and keep it running as a coal-fired power plant, using carbon capture and storage technology to reduce emissions.
But how soon the carbon capture technology would be in place is unclear. And Enchant might want to operate the coal plant without carbon capture for a while.
“The options for how to operate the plant for a period of time upon ownership transfer are being worked through,” Enchant Energy CEO Cindy Crane said in a written statement provided to NetZero Insider. “Enchant will be working closely with the New Mexico Environmental Department to ensure compliance obligations are met.”
The company originally planned to start construction at SJGS in early 2021 and have the plant running with carbon capture in place by January 2023, according to a hearing brief prepared for the New Mexico Legislative Finance Committee last year. But the project had fallen behind schedule at that time and it’s not clear when construction might start.
Enchant also said previously that it planned to operate the plant without carbon capture for two-and-a-half years, according to the brief, written by a fiscal analyst for the legislative committee.
Transitioning from Coal
NMED’s proposed rule is a mandate of the Energy Transition Act, or Senate Bill 489, which Gov. Michelle Lujan Grisham signed into law in 2019. The act sets statewide renewable energy standards and establishes a pathway for a transition away from coal.
The act requires the Environmental Improvement Board to promulgate a regulation limiting coal plant CO2 emissions to 1,100 pounds per MWh starting Jan. 1, 2023. A fiscal impact report for the Energy Transition Act states that the emissions limit “effectively ensures that [SJGS] could not operate as a coal-fired generation facility after 2023.”
Crane at Enchant said SJGS will be fully compliant with the standards when the carbon capture project is finished.
And before then: “Enchant Energy is working on a transition plan for interim compliance as the carbon capture facility is being built with the New Mexico Environment Department,” Crane said.
SJGS would be the first project for Enchant. The company says on its website that its technology would capture 95% of carbon emissions, making SJGS the lowest-emitting coal plant in the world.
Enchant’s partners on the project include Mitsubishi Heavy Industries America, Sargent & Lundy, and Kiewit Power Constructors Co.
Project Timeline
Crane provided an update on the timeline for the project. She said a front-end engineering and design (FEED) study is being finalized and will be filed with the DOE by the end of this month.
After working with DOE to answer questions, Enchant and its partners will file a final FEED report by Sept. 30. The company is aiming to have an engineering, procurement and construction contract and an execution schedule in place by the end of this year.
Enchant expects to be in discussions with financing parties in the fourth quarter of 2022.
Also yet to be finalized are the financial terms between Enchant and the city of Farmington for the SJGS. The city, which has a 5% stake in the facility, will acquire the remainder after PNM wraps up operations on Sept. 30.
The city then plans to transfer 95% ownership to Enchant. Crane said terms of the transaction are still being worked out and are currently confidential.
Following the ownership transfer, Enchant plans to invest about $150 million for deferred maintenance and replacement of a cooling tower, Crane said.