New Mexico energy gleanings

Companies want to make New Mexico a hub of hydrogen

In New Mexico, there’s lots of talk about hydrogen. The Albuquerque Journal reports at least three hydrogen projects that energy companies are pursuing, mostly in the Four Corners area.

Near Grants, two companies want to convert the former coal-fired Escalante Generating Station into a hydrogen production and generating station. It was closed in 2020 by Tri-State Generation and Transmission Association.

To the north, in San Juan County surrounding Farmington, there are other plans, including a proposal by the Utah-based Big Navajo Energy to capture methane emissions from a refinery run by the Navajo National Oil and Gas Co. and convert it into hydrogen to be used for electrical generation.

The Journal, though, devoted most of its attention to plans by Libertad Power, which believes it can make the county into a “hydrogen hub” to supply clean electricity to Western utilities plus non-carbon fuel for vehicle and industrial processes. Instead of using an existing industrial site, it plans to build an entirely new hydrogen-run generating plant near Farmington.

But here’s the rub. What constitutes “clean.” There are various shades used to describe the source. Green is hydrogen made from renewables. Blue is made from natural gas.

Joseph Merlino, one of three managing partners for Libertad, said his company plans to start with blue hydrogen production and then later transition to green as more renewable generation becomes available for electrolysis, and as hydrogen electrolyzer technology becomes more efficient and less expensive.

“The technology needs to improve more in the electrolyzer process to increase efficiency and reduce costs, so it’s not just a matter of enough renewable power being available,” Merlino said. “In the meantime, we need to develop more options and alternatives now like blue hydrogen, because as decarbonization moves forward, utilities are concerned about just relying on wind, solar and batteries.”

The Journal heard yeas and nays.

“We’re not fans of blue hydrogen. It’s a costly endeavor that can be energy intensive, and you’re still left with carbon dioxide that must be stored underground,” said Dennis Wamsted, energy analyst with the Institute for Energy Economics and Financial Analyst.

This is from Big Pivots 39, published on June 9, 2021.

Doug Howe, a former commissioner at the New Mexico Public Regulation Commission, was more welcoming.

“Blue hydrogen seems to be kind of a bridge, a way in which the hydrogen economy can get started without the enormous expense of electrolysis to produce it,” said Doug Howe, a 35-year industry veteran.

It’s counterproductive, Howe added, to discard emerging technologies like blue or green hydrogen as decarbonization gains momentum.

“I think hydrogen has a place in the energy future,” Howe said. “Wind and solar can’t do it by itself, so we will need other energy technologies, whether that be nuclear energy, battery storage, hydrogen, or some mixture of all of that.”

New Mexico should seize energy transition to help fortify state economy

Dan Arvizu, the former director of the National Renewable Energy Laboratory, has advice for New Mexico regarding the energy transition.

“It’s a watershed moment in history, and we can’t afford to miss the opportunity,” Arvizu told the Albuquerque Journal.

“It’s too important not to pay attention and do something,” added Arvizu, now the chancellor at New Mexico State University in Las Cruces. “We need to put things in place with the objectives, strategies, and means to embrace it.”

The Journal reported that the state’s universities and laboratories, public agencies, private think tanks and business groups have together been identifying the challenges and opportunities.

The Journal says executives from New Mexico’s three research universities, two national laboratories and the University of Texas at El Paso have been analyzing the economic changes underway and trying to figure out ways to benefit from them along the Rio Grande corridor. The state university – where Arvizu is – has also been leading a federally funded initiative to develop new academic and career-training programs at state university and colleges to prepare the workforce for the clean-energy economy, assist existing businesses and startups to develop new programs, and create a clean energy road map for economic development.

Arvizu said the Biden administration’s proposed $2.3 trillion infrastructure investment may benefit New Mexico.

Jim Peach, economics professor emeritus at New Mexico State University, said that New Mexico may be competitive in gaining funding from the $100 billion Biden has proposed for renewable generation and grid modernization.

New Mexico utility wants more generation to avoid Texas & California messes

The power disasters in Texas and California during the last year have the Public Service Co. of New Mexico hedging its bets.

The Albuquerque Journal reports the company has released requests for proposals for up to 700 megawatts of new generating capacity.

This is to replace the power lost when the company abandons the coal-fired San Juan Generating Station near Farmington in June 2022.

There are problems ahead. A 130-megawatt solar project near Farmington has missed critical deadlines. It is also to have storage.

Then there are the issues outside New Mexico. Tom Fallgren, vice president of generation for PNM, told the Journal that in making plans for closing the coal plant, the company assumed that 200 megawatts or more of out-of-state generation would always be available for purchase on the Western wholesale market. The California and Texas events have cast doubt on that assumption.

“California and Texas have demonstrated that during extreme events there may be no market resources available,” Fallgren said. “There may well be regional electricity available during calmer months, say in the fall or spring, but not necessarily during critical summer months when extreme heat taxes regional generating systems, or during a deep winter freeze.”

The Journal points out that PNM did not restrict its RFP to renewables. That could result in proposals for natural gas—or even hydrogen, a still challenging technology being chased in the Farmington area.

Doug Howe, a former state regulator and past chair of the Western Energy Imbalance Market, said utilities throughout the West are now concerned about procuring enough electricity to avoid rolling blackouts such as California experienced in last year’s heat wave.

Howe said how much additional state regulators will evaluate how much additional capacity the utility will need based on evidence it submits.

Newspaper pooh-poohs idea of university divesting from fossil fuel sector

The University of New Mexico Faculty Senate wants the university to divest itself of investments in companies involved in fossil fuel extraction and production.

The Albuquerque Journal, in an editorial, questions whether the university really has the stomach for doing what it proposes for the University Foundation’s Consolidated Fund portfolio.

The university gets $68.7 million or 33.5% of its annual $205 million budget for the main campus from the state’s oil and gas sector, the newspaper points out. And does the Faculty Senate have the stomach for commensurate pay and budget cuts? And what about China. Should the investments in index funds be cut to the world’s largest carbon polluter?

San Juan Citizens Alliance and others want EIS for carbon capture project

The San Juan Citizens Alliance and 8 other environmental groups in New Mexico want to see an environmental impact statement prepared before a carbon-capture project is launched at the San Juan Generating Station near Farmington.

Th coal plant is to be closed in June 2022, but Enchant Energy proposes to retrofit the power plant with carbon-capture technology. If successful, it would be the largest in the world that captures carbon from a coal plant, reports the Farmington Times.

Two such projects have been in operation, one at the Boundary Dam Power Plant in Canada and, until recently, the Petra Nova project in Texas.

Timing matters for the company that hopes for continued operation of the San Juan coal plant and an associated mine continuing to operate. Construction must begin by the end of 2025 for the project to be eligible for the 45Q tax credits. The federal tax credits provide $35 per ton of carbon captured and used in oil and gas production and $450 per ton of carbon for underground permanent storage. Those tax credits, the Farmington Times notes, have been a key part of Enchant Energy’s strategy.

One option for the carbon is to transport the carbon dioxide from the coal plant to the nearby Kinder Morgan pipeline that transports carbon dioxide from the McElmo Field near Cortez to the Permian Basin of Eastern Texas. The CO2 is injected into oil wells in an effort to dislodge oil from the rock.

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