Sunnier days for alternative energy in New Mexico

December 31, 2002

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The green energy industry welcomes New Mexico's new requirement that renewables be a part of the electricity supply

By Shea Andersen Albuquerque Tribune Reporter

The recently passed state policy requiring utilities to use some renewable energy could spark a new industry in New Mexico.

The New Mexico Public Regulation Commission passed the rule Dec. 17 but didn't specify what type of renewable energy utilities should use or where it should come from. It does say they should make renewables up to 10 percent of their electricity supply by 2011.

The rule is already turning heads in the green energy industry. Some representatives of alternative power companies were in the audience for the PRC vote, and they say requirements like New Mexico's make them want to do business in the state.

"We do rely on these requirements that states put in," said Lori Glover, director of industry affairs for Stirling Energy Systems Inc., a Phoenix company that specializes in building distinctive utility-scale solar power plants.

Stirling's technology was developed in part by Boeing, and it has agreements with a Swedish company to build engines for the power plants. The company has several major patents and has a test site and training facility at the University of Nevada.

And, Glover said, Stirling is keen on New Mexico, especially after passage of the renewables policy.

"Our technology uses no water," Glover said. "For me personally, New Mexico just seems like a terrific place to be doing business."

Other green industry players watched the PRC rule-making process closely.

Don Duncan of Biomass Transformation Industries, an Arizona company specializing in biomass power, was at the meeting.

Biomass power is a process that "cooks" organic waste products, like tree waste or coal dust remainders, and converts them to fuel.

"We liquify that material into something very much like petroleum," Duncan said. "It is a continuous supply. The waste stream is clean water."

He was at the meeting, he said, because his company is interested in coming to New Mexico.

"This is going to be a pro-economic development opportunity for some of the companies who have been watching the state," PRC Chairwoman Lynda Lovejoy said. "I think we've opened up some opportunities."

Even some venture capital companies are watching.

Robert Preston, president of Craigmillar, a New York fund that is preparing to debut a new venture fund focusing on renewables, said he took notice of the New Mexico policy via e-mail.

"It's a global business opportunity," he said.

When it comes to economies of scale, however, wind energy leads the pack. When it went looking for companies to build a wind power center in the state, Public Service Company of New Mexico had several to choose from before settling on FPL Energy, a subsidiary of Florida Power and Light.

Wind, experts say, is the cheapest of green energy technologies.

Accounts vary, but Glover said wind is closest in cost per kilowatt hour to coal power. Electricity from coal, she said, tends to cost about 3 cents a kilowatt hour.

Federal tax credits are available to wind energy developers. The federal Production Tax Credit gives wind power producers a 1.5 cent tax credit for every kilowatt hour of wind energy produced.

And the state of New Mexico has a tax credit for capital costs associated with wind production. That credit amounts to 1 cent per kilowatt hour, according to the Coalition for Clean Affordable Energy.

PNM officials have said that such tax credits were critical to the company's ability to partner with FPL Energy on the New Mexico Wind Energy Center.

But no such incentives exist for biomass or geothermal power in New Mexico. Efforts are under way, legislators say.

Sen. Sue Wilson-Beffort, an Albuquerque Republican, said a bill creating incentives for geothermal projects is ready for introduction in 2003.

The carrot, she said, is better than the stick.

"If you want to encourage renewable energies to be a big player in the system, then you write a bill that doesn't mandate that they do it," Wilson-Beffort said. "You construct legislation that makes it so they'll look at the state favorably."

But Preston, the investor, disagrees with the incentives notion.

"For renewable energy, we prefer the demand-driven incentives, like New Mexico's requirement for the utility to buy a percentage," Preston said. "This promotes price competition among solar, wind, etcetera, players to secure long-term contracts.

"The supply-side incentive, like tax credits, can often encourage overstated system prices leading to less concern over technology and system design."

Either way, pressure to get more help for green energy is growing in New Mexico.

With his term as a PRC commissioner ending in January, Tony Schaefer said he is going to put his political experience to use, lobbying the Legislature for tax credits for geothermal and biomass energy.

"If we can achieve that, then New Mexico will have a bright future," Schaefer said. "Then our manufacturing economy will be driven by energy. I intend to be a full-time partner in that."

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