Solar supply squeeze frustrates New Mexico's move away from coal

Nichola Groom
Thu, September 30, 2021

Sept 30 (Reuters) - A global solar panel supply bottleneck is frustrating plans to abandon an aging coal-fired power plant in New Mexico next year and raising concerns the state may be unable to keep the lights on as it weans its electricity sector from fossil fuels.

New Mexico's biggest utility warned state regulators this week that a large planned solar project will not be fully operational until a year after expected retirement of the coal-fired San Juan Generating Station. Earlier this year, the utility flagged other solar capacity delays.

This has prompted questions from state officials about whether the coal plant might need to keep operating beyond its scheduled retirement date of June 2022.

Public Service Company of New Mexico plans to close the 847-megawatt San Juan plant, the state's second-biggest source of pollution and greenhouse gases. It has pledged to source electricity from only carbon-free sources by 2040, while New Mexico has a state mandate to phase out fossil fuels in power production by 2045.

But this year, PNM officials began warning the New Mexico Public Regulation Commission of delays faced by three solar projects meant to help replace the coal plant. It cited supply constraints stemming from the pandemic.

On Wednesday, PNM said the developer of the 200 MW San Juan Solar project had notified it on Sept. 24 of further delays. The project will not be fully online until April of 2023, the utility said in a regulatory filing.

Photosol US Renewable Energy, which is developing the project with Clearway Energy, would not comment.

Two other solar projects, with a combined capacity of 400 MW, are also held up.

In April, 8minute Solar Energy told PNM its planned 100 megawatt Rockmont project could not meet the June 2022 timeline promised in its contract with the utility. PNM said it planned for a 12-month delay.

The 300 MW Arroyo Solar facility, which developer D.E. Shaw acquired from Centaurus Renewable Energy in August, will be fully operating by the end of 2022.

The delays mean the utility would be operating with a 5% reserve margin during peak summer demand season, it told regulators in July. The reserve margin is the difference between total generation available and forecast peak demand. One PRC commissioner said at a Wednesday meeting that the margin ideally should be around 18%.

When asked by the PRC in July about the possibility of extending the life of the San Juan coal plant, PNM said the utility would not rule out any options.

PNM did not respond to a question from Reuters about whether it was considering extending the life of the coal plant. (Reporting by Nichola Groom; Editing by David Gregorio)