Jason Marks Commissioner, District 1

April 3, 2009

New Mexico’s Path to a Sustainable Energy Future

                                         

                                   

                                         

Outline

• Environmental & Economic Challenges of the Status Quo

• Energy Efficiency• Renewable Energy Technologies• Policy Tools

OVERPECK QUOTE

"The western United States, in particular the southwestern United States from Southern California to Texas, will probably be one of the hardest-hit and soonest-hit parts of the United States”

Jonathan Overpeck, Univ. of Arizona Scientist and a lead author of the Intergovernmental Panel on Climate Change report, as quoted in the Albuquerque Journal, February 3, 2007.

Challenging and Evolving Environment:Getting Serious about Climate Change

Challenging and Evolving Environment:Getting Serious about Climate Change

Challenging and Evolving Environment – Fuel Price Volatility

New Mexico Confronts Supply Challenges: Energy Efficiency

Pub Svc N.M. - Energy Efficiency Savingsas a % of Total Retail Sales

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Pub Svc Co. NM - EE Savings

8,0008,5009,0009,500

10,00010,50011,00011,50012,00012,500

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

An

n. G

WH

s

2% load growth

Cost recovery for DSM

• Removing barriers to utility “investment” in DSM

• 2007: NMPRC Rejects PNM gas decoupling proposal as too broad

• 2008: EUE Act Amendments

• 2009: PRC Incentive Docket – Marks proposes electric decoupling

New Mexico Confronts Supply Challenges: Natural Gas/Renewables

Delta-Person – PPA 132 MW CT 2000

Afton – RB 235 MW CC Nov 2007

Valencia – PPA 148 MW CT Summer 2008

Lea Power Prtnrs – PPA

500 MW CC July 2008

Newman Five 288 MW CC May ’09 (CT)

May ’10 (CC)

Lordsburg

Luna

80 MW CT

190 MW CC

RB pending

EPE/eSolar PPA 64 MW Solar Thermal

2011

Wind Energy – Prime Mover in R.E.

• Approx 17,000 MW installed capacity (2008)• 5000 MW added in 2007• Utility ownership has begun

• Cost $23 - $60/mwh after PTC• PTC = $18/mwh• Prices increasing due to materials, demand, Exchange Rate

Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2007. Wiser, R., and M. Bolinger. May 2008

Wind projects in NM or serving NM

Project Utility*Date

Online MWClovis Xcel 1999 0.66N.M. Wind Energy CtrPNM 2003 204White Deer - TX Xcel 2004 80Caprock Xcel 2004 60Caprock II Xcel 2005 20San Jon Xcel 2005 120Wildorado - TX Xcel 2007 160Aragonne Mesa APS 2007 90

*All projects are via PPAs.

Wind with Gas Backup: Good for Utilities, Good for Ratepayers.

Model of Revenue StreamsGas CC Alone vs. Wind w/ Gas Bkup

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

Gas Only Wind/Gas Gas Only Wind/Gas

To

tal C

os

t to

Ra

tes

Depreciation

ROE (Profit)

Interest

Fuel Cost

200 MW Gas CC, 70% Cap, $7 gas + 4%/yr

200 MW Wind, 32% Cap. + Gas Backup

2010 (year 1) 2015 (year 5)

Wind with Gas Backup – Capacity + Reduced exposure to Gas Pricing Pressure

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180Y

ear

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

Co

st p

er M

wH

GasWind+Gas

Wind Typically Distant from Load

Potential Multi-stateTransmission Projects

ARIZONA

EnergyResource

Zones

Tucson

Phoenix

HolcombNEW MEXICO

COLORADO

WYOMING

DaveJohnston

LRS

Albuquerque

Limon

ComancheLamar

Pawnee/Story

Socorro

Gladstone

Midway

SunZia

HIGH PLAINS EXPRESS

15

Western Renewable Energy Zoneswww.westgov.org/wga/initiatives/wrez

Solar Technologies

Concentrated Solar Power (CSP)

• 10-15¢/kwh for 100MW+ projects• Thermal Storage/Backup Possible• Kramer Junction (1980s) 350 MW,

Nevada Solar One (2007) 64 MW, Spain

Photovoltaic (PV) Panels: •1 – 3 kw home systems common (~$18,000 installed home system = 25¢/kwh)

• Commercial (10 – 100 kw)

• Major projects - TriState/FirstSolar 30MW Colfax County

• El Paso Electric – 64 MW solar thermal PPA w/ eSolar. Approved by PRC

• PNM-led consortium - ~100 MW solar thermal trough plant. Bids currently being evaluated. Possible load-side (Abq) site.

• TriState/FirstSolar 30 MW PV in Colfax Cty

Potential Utility Scale Solar Projects in New Mexico

• Dairy & Feedlot Waste

•Wood Waste

•Landfill Gas

Geothermal Plant in Valles Caldera

Biomass & Geothermal

State Renewable Portfolio Standards

State Goal

☼ PA: 18%¹ by 2020

☼ NJ: 22.5% by 2021

CT: 23% by 2020

MA: 4% by 2009 + 1% annual increase

WI: requirement varies by utility; 10% by 2015 goal

IA: 105 MW

MN: 25% by 2025(Xcel: 30% by 2020)

TX: 5,880 MW by 2015

☼ AZ: 15% by 2025

CA: 20% by 2010

☼ *NV: 20% by 2015

ME: 30% by 200010% by 2017 - new RE

State RPSHI: 20% by 2020

RI: 16% by 2020

☼ CO: 20% by 2020 (IOUs)

*10% by 2020 (co-ops & large munis)

☼ DC: 11% by 2022

☼ NY: 24% by 2013

MT: 15% by 2015

IL: 25% by 2025

VT: RE meets load growth by 2012

Solar water heating eligible

*WA: 15% by 2020

☼ MD: 9.5% in 2022

☼ NH: 23.8% in 2025

OR: 25% by 2025 (large utilities)5% - 10% by 2025 (smaller utilities)

*VA: 12% by 2022

MO: 11% by 2020

☼ *DE: 20% by 2019

☼ NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops)

☼ NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops & munis)

ND: 10% by 2015

Source: dsireusa.org/Sept 2007

New Mexico Renewable Energy Act: NMSA § 62-16-1A Renewable Portfolio Standard (RPS) Law

• R.E.: solar, wind, biomass, geothermal• Scope: IOUs, Co-ops (lower reqmts) • RPS 5% of retail sales in 2006

10% of retail sales in 201115% in 2015, 20% in 2020

• Reasonable Cost Thresholds• Annual Procurement Plans• PRC’s Diversity Rules – 20% Solar Target

NM: Aggressive Targets / Small State

2007 2011 2015 2020

RPS 6% 10% 15% 20%Total IOU MWh 15,000,000 15,900,000 17,000,000 18,300,000

R.E. MWh Req'd 898,000 1,586,000 2,557,000 3,665,000

Solar Target 2% 3% 4%Solar MWh 317,000 511,000 733,000Solar Need 100 170 240

Biomass Need 40 70 100

Wind as Fill-In 6% 9% 12%Wind Mwh 898,000 951,000 1,534,000 2,199,000Wind Need 320 340 550 780

Net Metering

NMPRC Orders:

PNM Incentive Program: 13¢/kwh for resid RECs 15¢/kwh for comm’l RECs

SPS/EPE Incentive Pgms

NMPRC Rule: Utilities must interconnect customer-owned generation via net-metering up to 80 MW

PV Incentive Programs

Utility Program

Incentive payment per kwh

Duration of

payments

PNM Residential (<=10kw) $0.13 12 yearsCommercial (10kw - 1 MW $0.15 20 years

EPE Residential (<10kw) $0.13 12 years

SPS Small (<=10 kw) $0.20 14 yearsMedium (10 kw - 100 kw) $0.20 10 yearsLarge (100kw - 2MW)

            Small Biomass (10 – 50kw) $0.08 14 years

            Med Biomass (50kw – 1MW) $0.08 10 years

By bid

Voluntary Programs

Dec 2009:

PRC effectively exempts Sky Blue use from fuel surcharge

New Mexico R.E. Tax Incentives

• Renewable Energy Production Tax Credit – Reduces consumer cost by 1¢ to 4¢ per kwh

– One of the best in nation.

• Advanced Energy Tax Credit – “Clean coal” bill, also applies to solar!

– 6% of eligible plant costs

• Other Tax Credits– Homeowner Solar Tax Credit – 30%, $9,000– Gross Receipts (Sales) Tax exemptions– Bio-diesel PTC

Integrated Resource Planning (IRP)

• All utilities required to submit

• Public process required

• PNM IRP prioritizes energy efficiency

Next Steps: PRC Regulatory Dockets

• Spring ’09: Net-Metered/Customer Owned Systems– Annual True-Up rulemaking– Permissibility of Third-Party Ownership

• Fall ’09: Submission/Review of 2010 Renewable Procurement Plans

Resources

• PRC Website on Energy Efficiency & Renewable Energy in New Mexico – www.nmprc.state.nm.us

• www.cleanenergynm.org - ENMRD website• www.jasonmarks.com