Ask representatives from New Mexico’s three public utility companies if they’re poised to comply with a state mandate to sell 20 percent renewable energy by 2020, and the answer is likely to be a resounding yes.
A deeper dive paints a more complex picture.
According to data from the state Public Regulation Commission, which signs off on companies’ renewable plans, all three utilities will come up anywhere between four and eight percentage points short of the oft-publicized milestone.
That’s thanks to exemptions and cost caps built into the state Renewable Energy Act, the law that set the 20 percent standard. It partially exempts companies’ largest customers from inclusion in the count, and allows the PRC to waive compliance in the event that procuring renewable energy would result in too high a rate increase for customers.
In other words, utility companies can be in compliance with the law in 2020 without renewable energy actually comprising 20 percent of total sales.
As Democratic Gov. Michelle Lujan Grisham pushes a series of climate-friendly initiatives, a newly introduced Senate bill looks to eliminate those exemptions, simplify and decrease the price cap, and update the renewable-energy standard for decades to come.
“We know that we cannot rely on the federal government right now to lead on climate action,” Lujan Grisham said Jan. 15 in her State of the State address. “It is our responsibility and indeed our moral obligation to ensure our planet and our state are preserved for our children and their children.”
Lujan Grisham has proposed increasing the renewable-energy standard to require 50 percent renewables by 2030 and 80 percent by 2040 — milestones the bill, Senate Bill 275, sets forth.
Taking all three companies’ total projected sales into account, New Mexico’s renewable portfolio in 2020 will hover just below 15 percent.
Renewable sources next year will make up 16.1 percent of energy sales for PNM, the state’s largest public energy utility, said John Reynolds, the PRC’s economics bureau chief.
El Paso Electric, a public utility company serving Southern New Mexico, will be at 12.6 percent while Minnesota-based Xcel Energy, which serves customers in Eastern and Southeastern New Mexico, will supply 13.4 percent.
Still, a spokesman for Xcel says his company and others often generate additional renewable energy that doesn’t count toward the 20 percent standard.
Xcel spokesman Wes Reeves said utilities can sell renewable energy without submitting it for compliance. That’s because so-called renewable energy certificates — the tradeable commodities that represent proof of energy generation — cost more if they count toward compliance.
Selling renewable energy without submitting it for compliance, he said, allows the company to pass savings on to the customer.
PNM’s 16.1 percent figure for 2020 is a 27 percent increase from 2019, when it projects to sell 12.7 percent renewables.
The uptick is in large part due to the company’s construction of five new solar facilities near Albuquerque, each generating 10 megawatts of power.
Pat O’Connell, PNM’s director of renewable resources, said the new sites are made possible by steadily decreasing production costs.
“Definitely, renewable energy is cheaper,” he said. “It has plummeted in the past 10 years. … PNM was saying, ‘Hey, let’s wait on solar because we expect it to get cheaper.’ And then that happened.”
Those decreasing costs are on the mind of New Mexico legislators as well.
As the 2020 deadline looms and climate change poses an ever-intensifying threat, Democratic lawmakers are eager to look ahead.
“[The standard] that we have on file right now was passed at a time when renewable energy was not cheaper than other resources,” said Ben Shelton, the legislative and political director for Conservation Voters New Mexico, an environmental advocacy group. “Obviously, that’s not the case anymore.”
In 2018, the cost of generating solar and wind power continued to decline nationwide, matching or even besting the cost of conventional energy, according to an industry report by the financial advisory firm Lazard.
Though Senate Bill 275 wouldn’t completely eliminate cost caps, Shelton said, it would update them based on recent price trends while requiring companies that receive waivers in any given year to “catch up and catch up quickly” the next year.
Shelton said the measure will be Conservation Voters of New Mexico’s No. 1 priority this legislative session — in part because despite its shortcomings, the standard has been “really, really effective in driving the cost down and driving the market.”
A PNM plan proposes eliminating reliance on coal and increasing renewable-energy sources to one-third of total sales by 2025, so achieving 50 percent by 2030, O’Connell said, “certainly is doable.”
It becomes more difficult, he said, when legislators set their sights on 100 percent.
“For me, I organize the goal around how do we reduce carbon emissions to the lowest number possible,” he said. “There have been a lot of studies done in the West where pursuing 100 percent renewable energy doesn’t get you the lowest carbon footprint because you’re having to back up” renewables with conventional energy.
Without an efficient storage and transmission system, eliminating conventional energy from the portfolio will be a tough ask, O’Connell said.