Farmington, N.M. • Farmington city officials on Friday signed an agreement with a company that proposes outfitting the coal-fired San Juan Generating Station with carbon-capture technology in an effort to extend the power plant’s life beyond its planned closure in 2022.
Under the agreement, the city would keep its 5% share in the plant and Enchant Energy Corp. would acquire a 95% ownership interest from other utilities that will be divesting in the plant.
Public Service Co. of New Mexico plans to shut down the facility as it moves toward a 2040 emissions-free goal and the state begins implementing a new energy law aimed at transitioning to more renewable resources. The utility's decommissioning application is pending before state regulators along with proposals for replacing the lost capacity once the plant closes.
Environmentalists oppose keeping the plant open, saying there are now less expensive and cleaner options.
Camilla Feibelman with the Rio Grande Chapter of the Sierra Club said it's unlikely that anyone would want to purchase the electricity generated by the coal-fired plant.
But the pending closure has left elected leaders in northwestern New Mexico looking for ways to ease the socio-economic challenges that will come with the plant's decommissioning.
Farmington officials say outfitting the plant with equipment that could capture carbon emissions could help stave off job losses and provide low-cost power to local residents.
Mayor Nate Duckett said the agreement signed with Enchant Energy is significant for the city, customers of the Farmington Electric Utility and San Juan County, which stands to lose tens of millions of dollars in tax revenues.
"Successfully completing carbon capture retrofitting at SJGS will keep the plant operating, retain hundreds of power plant and mine workers' jobs, maintain the tax base and revenues for local schools and ensure that electric rates remain among the lowest in New Mexico for FEUS customers," he said in a statement.
By operating the power plant another five years, city officials say customers of the Farmington utility would save $27 million.
It would be up to Enchant Energy to pay for installing the new emissions equipment. The company has estimated that it would pay about $1.2 billion for the project but that it could benefit from federal tax credits associated with investments in carbon-capture technology.
As for the carbon dioxide that would be captured, company officials have said the primary customers would be oil and natural gas producers.
"Recent technology improvements, the financing mechanisms and the ability to profitably capture and use CO2 all come together in this project," Enchant Energy CEO Jason Selch said in a statement.
With the plant retrofitted, he said it would be able to meet the strict emission standards set by New Mexico’s Energy Transition Act.