New Mexico Needs a New Strong Renewable Energy Standard

Research and analysis for this blog was conducted with the help of Amanda Levin and Patricia Valderrama.

The New Mexico Wind Energy Center, located 170 miles southeast of Albuquerque and 20 miles northeast of Fort Sumner.

Credit: Oak Ridge National Laboratory.

After years of stagnation in energy policy in New Mexico, the time is right for a boost to New Mexico’s clean energy economy. Getting to 50 percent renewables by 2030 is an obvious first step towards a clean energy future. A 50 percent renewable energy standard in New Mexico, in combination with increased energy efficiency investments, would drive new growth in local solar and wind power, reduce harmful air pollution across the state, and provide New Mexico with cheaper energy. These clean energy standards would lower customers’ monthly electric bills, create thousands of new jobs, and drive billions of dollars of investment in the state’s economy by 2030.

New Mexico hasn’t increased its renewable energy standard in over a decade. When passed, the state’s 20 percent by 2020 renewable portfolio standard (RPS) was among the leading standards in the country. Today, it is in the bottom half of standards; renewable energy prices have fallen so dramatically that they are now often the cheapest source of energy, and many states have increased their renewable energy standards to keep pace. New Mexico may be next: the state legislature is expected to consider new and stronger clean energy policies in 2019. This will allow the state to keep pace with its neighbors. In the west, Colorado, California, and Oregon already have higher standards and Nevada voters just passed a 50 percent standard through a ballot initiative.

What Would a Stronger Renewable Energy Standard Mean for New Mexico?

New Mexico’s current renewable energy standard requires investor-owned utilities meet approximately 20 percent of their sales with renewable energy and requires co-ops to meet a 10 percent standard by 2020. New Mexico also still has a 2009 energy conservation building code (the latest code, from 2018, saves another 25 percent or more) and utility energy efficiency programs in the state are well behind neighboring states. After 2020, New Mexico’s energy course is yet to be set. Our work shows that stronger clean energy standards that significantly boost renewable energy and cut energy waste in New Mexico over the next decade are the smartest path forward for the state.

The Natural Resources Defense Council (NRDC), NextGen Policy Center, and GridLab commissioned a study conducted by renowned energy analysis firm ICF to examine the effects of strengthening renewable energy standards across the Southwest. For New Mexico, we modeled three cases:

  1. Clean Energy Case, in which the state’s investor-owned utilities would need to supply 50 percent of their customers’ electricity demand with renewable sources like solar and wind by 2030. Electric cooperatives and municipal utilities would be required to meet a 40 percent by 2030 RPS. At the same time, all energy efficiency savings would ramp from 0.6 percent annual savings to 1.8 percent annual savings by 2025;
  2. Utility Plans Case, with the high levels of natural gas generation that were included in the investor-owned utilities’ resource plans; and
  3. Reference Case, where the model selected the lowest cost resources without any new policy requirements. For more on our methodology, click here.  

Our modeling found that, by 2030, a 50 percent renewable energy standard and higher energy efficiency savings targets in New Mexico could:

  • Support as many as 8,830 clean energy jobs and drive over $4.6 billion in investment in the local clean energy economy by 2030.
  • Build 3.96 gigawatts of new solar and wind capacity in the state by 2030, which would provide enough electricity to power over 1.5 million homes.
  • Lower monthly energy bills through increased energy efficiency. Ramping up energy efficiency as part of New Mexico’s clean energy future would lower utility bills, compared to the other cases modeled. Our modeling found that monthly electricity bills were lowest in the Clean Energy Case: households would save approximately $60 on their electric bills in 2030 ($5 per month) when compared to the Utility Plans Case.
  • Reduce harmful air pollution from the state’s power plants. Compared to 2017, power-plant-related emissions of nitrogen oxides (NOX) would fall by 90 percent, and sulfur dioxide (SO2) emissions would fall by 76 percent. Less air pollution from these gases leads to less soot and smog, which in turn results in fewer asthma attacks, ER visits, hospitalizations, and premature deaths. These reductions in harmful air pollution would lead to an estimated $80.9 to $183 million of annual health benefits for New Mexico in 2030.
  • Reduce New Mexico’s carbon footprint. Annual power plant carbon dioxide (CO2) emissions would be 40 percent lower in 2030 compared to 2017, even as the economy and population continue to grow.
  • Avoid the construction of expensive and unnecessary new gas plants. Energy efficiency and renewable energy standards drive investment in clean power and reduce the state’s dependence on fossil-fired gas plants to meet electricity demand.

A Stronger RPS Means More Local Clean Energy

In the Clean Energy Case, New Mexico sees major growth in renewables, adding 1.8 gigawatts (GW) of new wind capacity and 2.1 GW of new solar capacity by 2030. These new wind and solar plants could generate enough energy to power over 1.5 million homes in New Mexico. That’s almost three times the amount of renewable power the state has today. The model forecasts that New Mexico utilities could also economically add 390 megawatts (MW) of battery storage by 2035, which could help balance this clean energy grid.

The modeling also show that these clean energy policies are the most cost-effective future for New Mexicans. The analysis included a Reference Case, which forecasted the most cost-effective energy mix that would develop by 2030 with existing policies in place; this scenario excludes the utilities’ long-term resource plans, which diverge from the least-cost pathway. The results of the Reference Case and the Clean Energy Case are very similar, indicating that the most cost-effective way to meet New Mexico’s future energy demands is through a combination of lots of new solar and wind generation and energy efficiency measures. Even if the model identifies clean energy as the most cost-effective pathway, however, it won’t come without new state policy. Without new clean energy policies, New Mexicans will instead rely on utility plans that, so far, include less clean energy and could mean higher bills.

The “Utility Plans Case” is based on the latest long-term resource plans of the state’s investor-owned utilities: El Paso Electric, PNM, and SPS. Investor-owned utilities are required to file these plans, known as IRPs, with the New Mexico Public Regulation Commission and to make them available to the public. They are not binding, though, and new policy from the state legislature could require higher levels of renewables and energy efficiency. Our modeling of the Utility Plans Case still shows significant development of wind capacity and generation, but the utilities’ plans also include significant amounts of unnecessary new gas.  

The model forecasts that New Mexico remains an energy exporter. In this clean energy future, the state could export an annual average of over 9,600 gigawatt hours (GWh) between 2020 and 2035, or about 25 percent of 2030 generation. In the Utility Plans Case, New Mexico would export thousands of gigawatt hours less per year, largely due to less investment in energy efficiency, as well as less investment in low-cost solar power. In the Clean Energy Case, statewide electricity demand is 2,280 GWh lower in 2030 compared to the other cases, thanks to new efficiency investments. This saved electricity is equal to almost 6 percent of the state’s generation in 2030.

Cleaner, Smarter Energy Means Lower Household Bills

The combination of new renewable energy and energy efficiency standards in New Mexico means bill savings from the start, with customers saving more and more on their monthly bills each year. In 2030, the average household would save $60 a year on their electricity bills under the Clean Energy Case compared to the Utility Plans Case.

Note: Amounts are in 2018 dollars.

Savings could be even greater if gas prices rise faster than expected. Relying on natural gas for a majority of electricity generation, as would happen under current utility plans, puts New Mexicans at the mercy of volatile gas prices. If gas prices rise more than expected during this period, utilities would likely pass the higher cost of this fuel onto customers, driving monthly electric bills even higher.

Conclusion

The benefits of stronger clean energy policies for New Mexico are clear. Renewables and energy efficiency are the cheapest, healthiest resources for the state and will avert unnecessary and costly spending on new polluting gas plants. These standards would save New Mexican households money, reduce harmful air pollution across the state, and generate significant new capital investment and jobs in the state. We will be posting more on the health and economic benefits analysis soon.

About the Authors

Noah Long

Director, Interior West and Northwest, Climate & Clean Energy Program

Amanda Levin

Policy Analyst, Climate & Clean Energy Program

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