Why I am asking for new RPS rules, including a Solar Target

At the end of May, the Commission supported me in issuing a Notice of Public Rulemaking (NOPR) to update the administrative rules for New Mexico’s Renewable Portfolio Standard (RPS). This rule making will conform our rules to the statutory changes from this past legislative session (SB 418). If the Commission ultimately adopts the rules that were published in the NOPR, we would also for the first time be setting diversification targets for renewable portfolios. Under the existing set of rules, diversification was encouraged by weighting Renewable Energy Certificates (RECs) for wind 1 for 1, biomass at 2 for 1, solar at 3 for 1. Weighting was intended to encourage the deployment of higher cost technologies, but it does not appear to have been particularly effective. In part, this is because of an unexpected, positive development - wind energy was able to be deployed so inexpensively that it didn’t matter that it suffered from a REC disadvantage.

While wind and biomass have a number of economic advantages for utilities and their ratepayers presently, there are limits on how much wind and biomass we can put to use in New Mexico. The intermittent nature of wind energy limits how much we can take on the grid, and here in the desert southwest, we just can’t grow enough biomass to fuel our energy needs. The resource with the greatest long-term potential using known and proven technologies is solar. A study done for the Western Governors’ Association found that New Mexico has enough solar energy potential to supply the entire United States’ electricity demand. Not only is the supply of solar energy roughly coincident with periods of high electricity demand, solar thermal plants that use mirrors to to make steam that is run through a turbine (similar to a fossil fuel plant) can be engineered with thermal storage that will allow for electricity generation into the evening or through several cloudy days. Solar thermal plants, when built to large scale, now cost much less solar photovoltaic panel technology, and could in the future become cost-competitive to fossil-fuel technologies.

Because large scale solar has the potential to become a mainstay of our energy supply over the coming decades, I believe that it is important to take the first steps in this area now. Despite a lot of rhetoric about New Mexico being a solar state, our actual installed solar capacity is probably 200 kw - 300 kw, only enough to fully power about 100 homes. The proposed new RPS rules would set a target of 2% of all electricity sales from solar by 2011 and 3% by 2015. The plants required to achieve these targets would be large enough to generate economies of scale (60 to 100 megawatts), but not so large as to expose ratepayers to excessive cost risks. The Commission is accepting original and response comments from interested parties into the rule making docket over the summer, which will be posted to the official PRC website. We will also hold a public hearing - check the PRC website for more info or call my office.

Jason

7/1/07