Dive Brief:

• The Public Service Company of New Mexico (PNM) has issued two all-source Requests For Proposals (RFPs) to support expected economic growth in the state, and to replace the planned Rockmont solar-plus-storage project, which is not on track for completion by 2022 as originally planned.
• Tom Fallgren, PNM vice president of generation, said PNM had issued two extensions on the Rockmont project, which had run into siting difficulties, before submitting a notice of default to the New Mexico Public Regulation Commission on Monday.
• Completing the Rockmont project at a later date is not off the table, Fallgren said. However, he said PNM will seek replacement resources for the near-term to ensure service remains reliable when the coal-fired San Juan Generating Station closes in 2022.

Dive Insight:

With market supplies a little too tight for comfort, New Mexico's PNM is looking to explore its options in light of delays at one of the solar-plus-storage projects intended to replace the San Juan Generating Station.

The New Mexico utility announced on Monday that it is seeking proposals for projects to meet two unexpected needs they've anticipated in recent months. One RFP seeks projects capable of providing up to 200 MW of new generating capacity, ready to go online on or before June 1, 2022. This will replace the Rockmont project, which was to provide 100 MW of new solar and 30 MW of battery storage, but no longer appears likely to open before 2022 due to siting delays, Fallgren said.

A second RFP solicits up to 500 MW of generating capacity, to begin service by June 1 2023. This new RFP, Fallgren said, will help PNM identify options in case potential economic growth materializes.

"What we've seen in New Mexico, since we announced we're going 100% carbon free, is a significant uptick in companies that want to come to New Mexico, or are already here and want to expand," Fallgren said, noting that Intel and Facebook have already announced expansion, and that the state is currently exploring several other opportunities he could not yet disclose. "We've also seen that as COVID-19 does some redistribution of the population, we see a lot of people moving to New Mexico," he said.

While it's still uncertain whether all these projects will ultimately come to fruition, Fallgren said PNM wanted to be prepared to increase its generating capacity after the recent lessons from Texas and California.

Last summer's heat crisis in California, for example, was caused in part by a faulty assumption that New Mexico would always have about 300 MW of extra generation capacity to lean on in a pinch, Fallgren said. But during a time of exceptional energy demand, that wasn't the case.

"My analogy is the Elmo doll," he said. "You could find lots of Elmo dolls in September, but if you try to buy one on Christmas Eve, you aren't even going to find one. ... Everyone's looking for that last Elmo doll, and nobody's going to get it and that's just what you're left with."

This pair of RFPs, Fallgren said, is a recognition that New Mexico may not be able to buy short-term energy resources to make up for shortages caused by unexpected growth in demand or by delays in projects intended to replace the San Juan Generating Station.

"We can solicit in the market," Fallgren said, "but we want to make sure we've looked at all our options."

PNM has asked for all-resource proposals for that same reason, Fallgren said—they don't want to exclude a potentially viable solution, whether it may consist of solar, batteries, combustion turbines, or even emerging options such as hydrogen. But Fallgren said PNM remains committed to its goal of achieving 100% by 2040.