This is the third in a series focusing on the long-term economic and social issues facing Farmington, New Mexico, and surrounding areas. As a region that has rich and diverse opportunities but generally relies on extractive industries economically, the whole area is facing uncertainty as the coal-burning San Juan Coal Generating Station closes its doors and oil jobs are moving to the southeast part of the state to capitalize on the Permian boom happening right now.
In today’s piece, we’ll be looking at complementary legislation that needs to be implemented in the state to ensure areas like Farmington can continue to thrive well into the future. Last week we looked specifically at how securitization could help PNM recoup its costs as it transitions from coal-generated power to renewable sources, while also helping the Four Corners area transition to a new and more diverse economy. The second part of that prospect though is ensuring that utilities like PNM actually DO get their power from renewable sources, like wind and solar, by legislating what is known as a “Renewable Portfolio Standard,” which spells out exactly how much energy must be derived from renewable sources and by when.
A quick aside here on language for this piece: Renewable energy in the broad sense is energy created from clean sources like solar or wind as opposed to energy from fossil fuels like coal, natural gas, or oil. So when discussing Renewable Portfolio Standards (RPS) we’re talking about the percent of the energy that PNM is serving its customers that comes from wind or solar. Additionally, PNM and other utilities or governmental bodies often purchase Renewable Energy Certificates or RECs, which can be counted toward their overall RPS goals. The easiest way to think about RECs is that the utility purchases the REC from the wind or solar producer, such as a home or business owner, or other entity that produces renewable energy, and gets credit toward their RPS requirements through the purchase but not by not producing the renewable energy themselves.
Ok, so why the heck is the Renewable Portfolio Standard so important to the discussion of Farmington’s future and the future of New Mexico as a whole? As PNM moves forward with closing the coal-powered San Juan Generating Station, it will have to find new sources of energy to replace what it is losing. The overall cost per kilowatt produced of renewable sources like wind and solar have now become cheaper than that of natural gas. A dedicated goal set by RPS would require utilities to use this cheaper source. What does that mean? It means that for consumers, the New Mexicans paying their electric bill every month, the cheapest energy available would actually come from power generated by wind and solar.
The current RPS expires in 2020. Advocates are seeking a new RPS to would mandate that utilities source 50 percent of their electricity from wind and solar by 2030, and 80 percent by 2040.
But for areas like Farmington, and other fossil fuel dependent areas around the state, the opportunity to invest now in large-scale renewable projects is paramount. The infrastructure that has carried power from the archaic coal plant for years can easily be utilized to carry power from wind and solar. Those workers who face losing their jobs in the next few years have an opportunity to learn new skills and actually make a better living working in the renewable field. These renewable projects can also help replace valuable property and gross receipts taxes for schools and local governments. And of course, the customers there and around the state who rely on the actual power flowing through the lines will all be better off paying less for that energy in the long run.