FARMINGTON – The city of Farmington has signed an agreement for Enchant Energy Corp. to acquire 95% interest of the San Juan Generating Station, a move that could extend the life of the power plant past a scheduled 2022 closure, but one that experts warn could also slow progress toward cheaper and cleaner energies.
The Public Service Co. of New Mexico, a majority owner in the power plant, plans to shut down the 847-megawatt coal-fired station to meet its 2040 emissions-free goal and align with a new state energy law promoting more renewable energies. While the city will maintain its 5% interest, Enchant Energy will gain majority interest in 2022 to conduct a carbon-capture sequestration study through a federal grant.
PNM and the various utility companies with partial interest in the plant all decided to divest, citing the declining economic potential of the coal industry and the age of the facility, which opened in 1973. Farmington, which decided not to increase its ownership in 2015, is now turning to Enchant Energy in hopes of maintaining the life of the plant, which provides jobs in the area.
Environmental critics warn Enchant Energy lacks the experience to conduct a large-scale project and question the feasibility of a carbon-capture initiative.
“I am concerned that Enchant (Energy) is trying to pull the wool over people’s eyes in order to benefit from huge amounts of money in a technical and feasibility study to show what we already know,” said Camilla Feibelman, director of the Sierra Club Rio Grande chapter. “It’s too expensive, it’s too technical, and it’s not where the future lies.”
In earlier statements released publicly, the company laid out plans to buy the plant, invest in carbon-capture technology and sell that carbon to oil and gas companies. Jason Selch, CEO of Enchant Energy, told The Durango Herald on Monday that the company was confident carbon capture was a viable option for the San Juan Generating Station. “I wouldn’t be doing this if I thought there was any risk,” he said. Selch pointed to the Boundary Dam Power Station in Canada and the Petra Nova facility in Texas as examples for Enchant Energy’s carbon capture project.
Retrofitting the plantCarbon capture and sequestration refers to the process of capturing carbon dioxide waste and transporting it to a storage site where it will not enter the atmosphere. According to many energy experts, the technology is largely theoretical and often an expensive alternative to cleaner renewable energies like solar and wind. The San Juan Generating Station is New Mexico’s second-largest source of air pollution and has been blamed in the past for polluting skies across the region, including Southwest Colorado, according to San Juan Citizens Alliance.
Under the agreement, Enchant Energy would be responsible for installing the emissions equipment and retrofitting the plant. While the company estimates it would pay $1.2 billion for the project, it would also benefit from federal tax credits for carbon-capture investments. The customers of the captured carbon dioxide would primarily be oil and natural gas producers, according to company officials. The carbon would be shipped – requiring the building of a 20-mile connecting pipeline and the necessary permitting – to the Permian Basin in southeastern New Mexico and western Texas to enhance oil recovery, Feibelman said.
“They’re using the carbon to release carbon elsewhere,” she said.
Steve Michel, deputy director of clean energy programs with Western Resource Advocates, said the world is at a point where every tool available to fight climate change is crucial, and if Enchant Energy can “genuinely capture carbon and demonstrate that technology is viable, that would be a great thing.”
“But I think it’s unlikely they’ll pull it off,” Michel said, citing a long list of permits that would be required, the infrastructure the company would have to build – spending between $400 million to $800 million to retrofit the plant – and the industry consensus that carbon-capture technology is not the most cost-effective or cleanest alternative.
While the owners of Enchant have publicly said they can “generate an acceptable amount of return” on the carbon-capture plan, PNM paints a different picture. The company has said a push to alternative sources of energy would save ratepayers roughly $7 per month through a combination of battery storage, solar, wind and natural gas.
A source of jobsSupporters of the agreement argue the city and San Juan County could lose millions of dollars in tax revenue and hundreds of jobs with the complete closure of the plant. Farmington Mayor Nate Duckett said in a news release that the carbon-capture plan is a significant development for the city, San Juan County and customers of Farmington Electric Utility System.
Can San Juan Generating Station become model for carbon capture?
“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,” Duckett’s statement read.
The complete closure of the plant would have an especially heavy impact on the Navajo Nation, President Jonathan Nez said in an August speech to the New Mexico Public Regulation Commission. Nez urged the PRC to ensure workers find new jobs in renewable energy fields, arguing the lack of protections for workers would impact Navajo families, which make up a majority of the workforce in the area.
But many are concerned the recent agreement between the city and Enchant Energy is distracting from the work of preparing the community and retraining workers for a future around renewable energy sources.
“I worry it’s providing a sense of false hope to the community,” said Mike Eisenfeld, energy and climate program manager with San Juan Citizens Alliance.
The focus, according to Eisenfeld, should be on diversifying the local economy and providing retraining programs to the workers instead of struggling to keep a dying coal plant alive.
Selch, CEO of Enchant, acknowledged the carbon capture plan may not be easy, he argued it could be a necessary stepping stone to perfecting the process. “Not only are we saving a power plant, but we’re also moving forward the technology,” he said.
An unknown companySelch, who gained minor notoriety in the corporate world after mooning his higher-ups at Bank of America in 2005, said in a statement that the project will benefit northwest New Mexico and meet the carbon emissions standards set by the New Mexico Energy Transition Act.
But skeptics of the agreement have raised concerns about Enchant Energy’s lack of electricity experience and local ties. The company was incorporated with the state of New Mexico in April, four months before signing the agreement with the city of Farmington. It is also tied to a New York parent company called Acme Equities and shares a physical address for a New York hedge fund known for flipping distressed properties, according to a report by the Institute for Energy Economics and Financial Analysis.
Enchant Energy has also applied for a $5.8 million grant through the U.S. Department of Energy to study the feasibility of turning the generating station into a carbon-capture facility, said Karl Cates, a researcher for IEEFA.
“In the short term, I see it as a play by a small, inexperienced company to pocket some federal money,” Cates said.
