New Mexico is as good as gold in the energy market today. We’ve got it all: wind, solar, geothermal, oil and natural gas. Now that climate change is mainstream, the state has become an investor’s dream as solar and wind are ready to take their place on the state’s hot, sunny, windy and arid mesas. According to a new report by the International Renewable Energy Agency (IRENA), unsubsidized renewable energy is now, most of the time, the cheapest source of energy generation. With wind and solar energy now cheaper and cleaner to produce than nuclear energy, oil and natural gas, companies are willing to spend billions to invest in the Land of Enchantment’s majestic miles and miles of high empty mesas for electricity production.
Solar and wind are finally thriving because they’re now the most profitable part of energy production in the majority of the world. The average cost to develop a new power plant based on solar photovoltaic, geothermal energy or onshore wind is below $0.10/kW. Predictions are that there will be a lot of excess power to sell to other states.
The main suppliers of electricity to New Mexico, the Public Service Company of New Mexico (PNM) and the EL Paso Electric (EPE), have been sold or are in the process of being sold. In late 2019 El Paso Electric, now a private equity firm, ceased to be a publicly-traded company when it was sold to the JPMorgan Chase-tied Infrastructure Investments Fund (IIF) for $4.3 billion. An infrastructure investment group within J.P. Morgan Investment Management, Inc. advises IIF, a $12.5 billion private investment firm that invests and grows retirement funds for more than 40 million families.
As part of the negotiations of the EPE sale, IIF has to provide a $21 million credit on customer electric bills for 36 months, establish a Community Economic Sustainability Fund that invests $100 million over 20 years to boost economic development in the EPE area, and continue giving $1.2 million charitable contributions annually. A recently established EPE $20 million Economic Development Fund provides $1 million in grants per year for the next 20 years to southern New Mexico communities. The grants are designed to focus on local growth and economic strength.
EPE is not a part of Texas’s Electric Reliability Council (ERCOT), the major grid operator that controls about 90 percent of Texas’s electricity supply. According to EPE, about 3,000 customers had power outages lasting five minutes or less when the winter storm moved in on Sunday, and just 12 customers were impacted as of Monday afternoon.
New Mexico recently locked horns with EPE over a proposed gas plant to replace 60-year-old generating units. The Public Regulation Commission voted 5-0 to deny EPE’s application for the new plant. The proposed gas plant would lock New Mexico into climate pollution for decades and did not comply with state laws. Texas regulators have approved the gas plant, and EPE has stated that they will move forward with construction.
In Oct. 2020 PNM’s parent firm (PNM Resources) and Avangrid Renewables (wind and solar development firm with $35 billion in assets) reached an agreement for Avangrid to acquire PNM Resources for $4.3 billion in an all-cash offer. PNM’s shareholders approved the merger in early February. If state regulators approve the utility’s merger, as part of the agreement Avangrid would retain the current workforce for a two-year minimum, hire an additional 100 employees, maintain charitable contributions and programs and put $2.5 million into local economic development. In addition to all that, New Mexico customers could collectively receive a $25 million credit on their electric bills over three years.
Avangrid has already built and operated a small-scale wind farm in New Mexico and would bring experience, expertise and the needed capital to transition the state from fossil fuels to carbon-free generation over the next two decades. New Mexico has enough potential wind and solar energy that, if fully developed, extra energy could be exported throughout the Southwest. According to Moody’s Investors Service, if the merger is approved, PNM would have access to lower financing costs, allowing the company to comply with state clean energy requirements and have an easier transition from the San Juan and Four Corners coal plants.
Avangrid is owned by the Spanish energy conglomerate Iberdrola Group, which leads the globe in installed onshore wind power and is the top renewable energy producer in Europe. PNM currently operates 15 solar centers in communities across New Mexico, and their wind, solar and geothermal resources generate the power used by more than 152,000 residential customers. Solar incentives from PNM have helped 13,044 customers install 86.2mW of solar on the rooftops of homes and businesses.
If the Avangrid purchase of PNM is approved, it will be one of the major clean energy companies in the U.S. with 10 regulated utilities in six states—making it the third-largest renewables company operations in 24 states total. Many, including environmentalists, see the plus side of the sale of PNM to an industry leader in renewable energy. On the other hand, several, including the Sierra Club, feel the public benefits should be much greater than what’s been offered so far and will argue this at upcoming public hearings.
According to a recent analysis by the energy research firm Wood Mackenzie, it would cost an estimated $4.5 trillion to convert the entire U.S. power grid to 100 percent renewable. It is now strategically and technologically attainable that renewable energy could power the world by 2050. The renewable energy transition could prevent 4 to 7 million deaths from air pollution annually worldwide. Having just explored New Mexico’s two major suppliers of electrical power, there is always a third option—generating electricity at home with new or retrofitted residential solar panels and passive solar hot water heating. Hence, the rays of sunshine that hit your roof offer free electricity. And you can sell what you don’t use, creating an even bigger win for the state’s green energy transition.