Copyright © 2022 Albuquerque Journal
Public Service Company of New Mexico announced the inauguration this month of a new 50-megawatt solar facility in Cibola County to provide clean energy to Facebook’s massive data center in Los Lunas.
It’s the sixth solar farm built by PNM and third-party developers since 2018 to directly provide Facebook with 100% renewable-based electricity to run its operations in Valencia County, where the social media giant is investing $2 billion to build out an enormous data storage and processing complex that will eventually employ 400 permanent workers housed in eight sprawling high-tech buildings.
The solar facilities – combined with two new wind farms in eastern New Mexico – now supply nearly 400 MW of clean power to Facebook. And two more solar plants, plus a 50-MW back-up battery storage system, are under construction and slated to come online next year to add another 290 MW of renewables for Facebook.
All told, that nearly 700-MW renewable network equals about one-third of the 2,000-plus MW of total generating capacity PNM currently manages on its grid to supply electricity to all utility customers in New Mexico.
None of PNM’s 530,000 other customers pay for any costs related to the Facebook-connected facilities, which were specifically built, and are now managed, solely for Facebook under a “special service contract” approved by the state Public Regulation Commission in 2016. That’s a novel, first-of-its-kind arrangement for PNM that helped recruit Facebook to New Mexico, bringing huge economic benefits to the state.
But Facebook may now represent just the tip of the iceberg among rapidly-growing opportunities to lure more companies here with renewable energy. About two dozen other firms are currently looking at locating new facilities in New Mexico, the majority of which emphasize access to clean power as a key factor influencing company decision-making, said Elisha Saavedra-Torres, PNM manager for business development.
“We have 25 economic development projects in the queue now at various stages,” Saavedra-Torres told the Journal. “About 60% of them are asking for renewable options to consider in their selection process.”
If just 75% of companies currently in the queue choose to locate in New Mexico, it could mean doubling the size of PNM’s total grid over the next few years, Saavedra-Torres said.
“Our economic development team is seeing an unprecedented level of interest in our service territory,” she said. “From the economic development perspective, I believe we could consistently grow our total load (electric demand) by 10% or more annually for two to five years in a row. That represents a lot of investment in New Mexico.”
That, however, raises many questions about how to accommodate explosive growth in industrial and commercial demand for renewable energy, something utility experts, economic development professionals and clean-power advocates are only now beginning to address.
It means building a lot more renewable generating capacity in the state. And that, in turn, may require more flexible state regulatory procedures to rapidly approve new solar, wind and battery storage facilities, plus additional electric infrastructure such as transmission and distribution.
“We’re talking about potentially billions of dollars of investment and thousands of jobs,” PNM Vice President of Generation Tom Fallgren told the Journal. “But we can’t just build new electric plants and infrastructure to accommodate load growth on the grid. We need regulatory approval to do it.”
Seizing the moment
Today’s expanding industrial and commercial appetite for renewable generation represents immense economic development potential for New Mexico going forward, said Rob Black, New Mexico Chamber of Commerce president and CEO. But capturing those opportunities will require local and state agencies to work together to respond rapidly to private sector needs, including agile regulatory procedures to approve new clean-energy capacity within the tight time frames required for companies to plan and develop projects.
“Most Fortune 500 companies are now pushing hard to transition to carbon-free fuels,” Black told the Journal. “We have abundant natural resources that make New Mexico well-positioned to provide it, but we also need a flexible regulatory environment to allow new technologies and investment to move forward.”
As New Mexico works to diversify away from dependence on oil and gas, building out more renewable generation is critical, Black added.
“We have to lay the groundwork for companies to grow and expand here,” he said. “Just like roads, broadband and water, we need to be proactive now on investing in renewable electricity.”
The transition from fossil fuels to renewables necessitates a fundamental change in approach to energy development, Fallgren said. Going forward, the grid will no longer rely on massive, centralized “baseload” facilities like coal or gas generating stations, but rather, a growing array of smaller and more-distributed solar, wind and battery-storage plants.
And that means regulators and policymakers must be more open to approving those things as needed.
“In the 1970s and 1980s, we made bold decisions to build big facilities like coal plants to be prepared for growth, but today there’s resistance to building things ahead of time,” Fallgren said. “We need to be ready for expansion to get ahead of the curve with a new, modern outlook on how to build a renewable grid.”
One concern is slow regulatory approval for new electric facilities and infrastructure at the PRC, which can take up to 18 months or more. Companies often can’t wait that long, encouraging them to choose neighboring states like Texas or Arizona where larger grids allow them to accommodate additional demand much faster, Fallgren said.
“Folks who come here are on a timeline,” Fallgren said. “If it takes two years for regulatory approval and two more years to build something, it’s problematic.”
If more companies want new, dedicated facilities built for them like Facebook, the new special service contract arrangement approved by the PRC can facilitate that, Saavedra-Torres said.
But many companies want access to clean energy already on the utility grid, such as Amazon, which negotiated delivery of nearly 10 MW of renewable power from PNM for its new facilities in New Mexico. That includes a huge fulfillment center on Albuquerque’s West Side that now employs about 3,500 people, another fulfillment center under construction in Los Lunas that will support 600 jobs, and a cargo facility at the Albuquerque International Sunport.
PNM can support that expansion with its current renewable capacity, Saavedra-Torres said. But if another firm seeks a lot more clean energy, say 200-300 MW, PNM would have to build it.
“The big challenge now is how to know in advance how much extra capacity to build to be prepared for requests like that using prudent load-growth projections that don’t lead to overbuilding,” Saavedra-Torres said.
That will be a challenge going forward for the PRC, where PNM has yet to formally ask the commission to address those issues, said Pat O’Connell, senior policy analyst with Western Resource Advocates.
“As we transition the grid to renewables, the issues will become more complicated,” O’Connell told the Journal. “We do need to be planning for growth now that’s fueled by renewable energy with a simpler, faster approval process. But to make that happen, we all need to work together.”
Indeed, the PRC represents only one peg in the regulatory process, which also includes siting, water rights and other permitting by local, state and even federal agencies, said Noah Long of the Natural Resources Defense Council.
“The potential areas for regulatory reform are abundant,” Long told the Journal. “I think the first step is for PNM to map out a plan and a process that it can bring to government agencies and the public to collaboratively work on pin-pointing potential hurdles and resources to get things done.”
The state’s Energy Transition Act – which requires PNM and other public utilities to convert their grids to 80% renewables by 2040 and 100% carbon-free generation by 2045 – has caught the interest of many companies that are now focused on achieving carbon neutrality. The challenge now is how to efficiently capitalize on those opportunities, Saavedra-Torres said.
“Companies are paying close attention to their carbon footprint and carbon neutrality, and it’s becoming a big part of the conversations we have with them,” Saavedra-Torres said. “All parties need to come together to creatively build a new model for grid growth that makes sense for the state’s economic development.”