renewable energy, efficiency, and conservation · new conventional power plants (e.g., large...

RENEWABLE ENERGY,EFFICIENCY, ANDCONSERVATION

D E C I S I O N - M A K E R SF I E L D C O N F E R E N C E 2 0 0 2

S a n J u a n B a s i n

C H A P T E R F O U R

NEW MEXICO’S ENERGY,PRESENT AND

FUTURE

Policy, Production, Economics,and the Environment

D E C I S I O N - M A K E R S F I E L D C O N F E R E N C E 2 0 0 2

New Mexico Bureau of Geology and Mineral ResourcesA Division of New Mexico Institute of Mining and Technology

2002

Brian S. Brister and L. Greer Price, Editors

This electronic document is part of a larger work that can be obtained from The New Mexico Bureau of Geology

http://geoinfo.nmt.edu/publications/decisionmakers

or call: [505] 835-5410


DECISION-MAKERS FIELD GUIDE 2002

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Wind turbines at Altamont Pass, California

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R E N E W A B L E E N E R G Y , E F F I C I E N C Y , & C O N S E R V A T I O N

Renewable energy is energy produced from naturallyoccurring, renewable resources that are virtually

inexhaustible. These resources include solar, wind,hydroelectric, biomass, and geothermal. Renewableresources share a number of common attributes thatmake them attractive for the production of power:reduced environmental impacts, no or low fuel costs,and sustainability of supply. Moreover, renewableenergy technologies have improved significantly overthe past few decades—some to the point where theyare already cost-competitive in certain markets withnew conventional power plants (e.g., large commercialwind farms vs. coal-fired generation). Despite thesetechnological advances and inherent environmentalbenefits, the development and use of renewable ener-gy resources in New Mexico has been minimal. Thispaper will look at New Mexico’s renewable resourcebase, end-use applications for these resources, theirpotential as a driver for economic development, andwhat barriers may be impeding more widespread use.

BACKGROUND

According to the 2000 census, New Mexico currentlyhas a population over 1.8 million. New Mexico’s totalelectric generating capacity now stands at approxi-mately 5,700 megawatts (MW). Of that total capacity,about 88% is from coal-fired power plants; most ofthe remainder (10%) is natural gas-fired electrical gen-eration. New Mexico is a net exporter of electricity,consuming only slightly more than half of the electricpower it produces. The remaining electricity (43-48%per year on average) is sold out-of-state on the whole-sale power market.

The U.S. Department of Energy’s NationalRenewable Energy Laboratory estimates that renew-ables presently account for 81 MW of our total com-mercial generating capacity—less than one-quarter ofone percent of all electricity produced within the state.This total renewable electric capacity in New Mexico(81 MW) consists predominantly of hydropower (80MW, 99% of total renewable production), with wind(0.66 MW) and solar photovoltaics (0.08 MW) pro-viding the balance.

RENEWABLE ENERGY RESOURCES IN NEWMEXICO

New Mexico has a very large and diverse renewableenergy resource base. This resource base, whichincludes solar, wind, hydroelectric, biomass, and geo-thermal, extends throughout the state and to everycounty. Much of the following information on ourrenewable resources was compiled from nationallyrecognized sources and adopted by consensus amongparticipants in the New Mexico Sustainable EnergyCollaborative, a recently formed (2001) renewable-energy advocacy group of diverse organizations andindividuals representing private industry, government,electric utilities, national laboratories, trade associa-tions, environmental/public interest groups, and uni-versities.

• Solar New Mexico experiences more than3,200 hours of sunshine per year—substantiallymore than most other states in the Southwest.Nationally, we rank among the top three states insolar resource potential. As an example of thispotential, a photovoltaic (PV) array with a collec-tor area equal to the size of a football field, strate-gically situated, would be sufficient to power over122 average homes. Thus, energy from the sunrepresents a potentially enormous energy resourcereadily available for both thermal and electricalgeneration applications within the state.• Wind According to the U.S. Department ofEnergy, New Mexico ranks 12th in the nation—the upper echelon—in wind energy resources.Ongoing wind monitoring studies by theEnergy, Minerals and Natural ResourcesDepartment confirm that a number of sites ineastern New Mexico have very good windspeeds (15-20 miles per hour) capable of utili-ty-scale electricity production. Significantly, ifNew Mexico’s total wind potential were devel-oped with large, state-of-the-art wind turbines,the power produced each year would equalapproximately 25 times the entire state’s elec-tricity consumption. Other states, such asTexas, with comparable potential are currently

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Renewable Energy in New Mexico: CurrentStatus and Future Outlook

Chris J. Wentz, Energy Conservation and Management DivisionNew Mexico Energy, Minerals and Natural Resources Department



adding hundreds of megawatts of wind electricgenerating capacity. At present, however, totalinstalled commercial wind capacity in NewMexico amounts to less than 1 megawatt froma single wind turbine near Clovis operated bySouthwestern Public Service Company/XcelEnergy.• Hydroelectric Hydropower facilities takeadvantage of the kinetic energy of flowing orfalling water to generate electricity. At present,nine commercial hydroelectric plants are inoperation in New Mexico, including NavajoDam on the San Juan River near Aztec (30MW), Elephant Butte Dam on the Rio Grandenear Truth or Consequences (24.3 MW),Abiquiu Dam on the Rio Chama near LosAlamos (15 MW), El Vado Dam on the RioChama near Tierra Amarilla (8 MW), and othersmaller facilities less than 1 megawatt in size.Although no new large hydropower plants arescheduled for construction in New Mexico,past studies by the U.S. Bureau of Reclamationand the U.S. Army Corps of Engineers con-cluded that 18 of the largest undeveloped sitesin the state have the potential to generate over3.5 billion kilowatt-hours of electricity peryear. However, numerous constraints limit NewMexico from realizing its full hydropowerpotential. These constraints include financing,multi-use issues, regulatory barriers, environ-mental considerations, and economic factors.• Geothermal Geothermal resources exist in atleast 20 of New Mexico’s 33 counties, with morethan 300 thermal springs and wells identified todate. According to the U.S. Geological Survey, ourgeothermal resource base contains the thermalenergy equivalent of more than 100 billion barrelsof oil. These geothermal resources have to datenot been used for commercial electrical generationbut have been tapped for direct-use applications.At present, approximately 50 acres of greenhousespace and an aquaculture facility in southern NewMexico are heated with geothermal energy, as ispart of the New Mexico State University (NMSU)campus in Las Cruces; however, no commercialgeothermal electric generation is under develop-ment or in operation.• Biomass/Biofuels This renewable energyresource is derived from plants or animal waste.New Mexico also has an abundant diversity ofbiomass resources, including wood or wood

waste, agricultural residues, livestock/dairymanure, sewage sludges, and municipal solidwastes (e.g., in landfills). Energy is derived fromthese sources by direct combustion or conversionto methane or alcohol. A 1990 study conductedby the Southwest Technology DevelopmentInstitute at NMSU indicates that the biomasswaste generated in 1988 alone had a potentialenergy content of 35 trillion BTUs—many timesgreater than our state’s total daily energy con-sumption. At present, municipal sewage plants inAlbuquerque, Carlsbad, Las Cruces, Los Alamosand Roswell produce biogas (methane) for gener-ating heat and electricity for their internal con-sumption. With much forest thinning scheduledover the next few years, coupled with the continu-ing rapid expansion of our dairy industry, biomassresources have great potential to supply anincreasing amount of New Mexico’s future energy.

In general, at least one or more of our abundantrenewable resources are available to residents andbusinesses of every county in New Mexico.

RENEWABLE ENERGY TECHNOLOGIES AND END-USE APPLICATIONS

Renewable resources in New Mexico can be used togenerate electricity, thermal energy (heat), or both.

• Solar Passive solar systems take advantage ofbuilding design and natural physical properties tostore and transfer heat. Most new home and officeconstruction in New Mexico could use passivesolar energy to some extent to reduce heating andlighting costs. Solar photovoltaic (PV) technolo-gies, which convert sunlight directly into electrici-ty, are commercially available and in use nation-wide for such applications as powering residentialand commercial buildings, running irrigationpumps, and lighting billboards and mobile high-way construction signs. International demand andnew building-integrated PV systems hold muchpromise in the near term for increasing the marketpenetration of solar photovoltaics. PV power gen-eration costs have decreased substantially tobetween 15 and 30 cents per kilowatt-hour (kWh)over a typical 25-year system life, but this is stillmore expensive than the price of electricity paidby most New Mexicans. Solar thermal technolo-gies—specifically solar air and water heaters, arewell-established, reliable technologies whose usecould be much more widespread. Solar thermalelectric systems, which use parabolic troughs,

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central receiver stations (“power towers”) or para-bolic dish/stirling engines to concentrate sunlightto produce heat that is then converted into elec-tricity, are in the early stages of commercialization;yet these technologies are particularly suitable fordeployment in New Mexico due to our manycloudless days of sunshine.• Wind Wind energy technologies are cur-rently available for generating electricity forhomeowners and businesses or at a utility scale(capacities in excess of 225 kilowatts). Unlikeour solar resources, wind is very site-specificand therefore not available in every NewMexico locale. It also is an “intermittent”resource capable of generating electricity onlywhen the wind blows. Wind turbines haveimproved significantly over the past twodecades. Increased turbine size, research anddevelopment advances, and manufacturingenhancements have all contributed to drivingdown the installed (wholesale) cost of windpower generation to around 3–4 cents per kWhtoday for large wind farms. This cost is now onpar with electricity produced from new coal-fired generating plants.• Geothermal Geothermal energy can be usedto generate baseload electricity and for directapplication in space and water heating or otherthermal processes. Like wind energy, geother-mal is a site-specific resource that must gener-ally be transformed into electricity or useddirectly where it is found. Geothermal tech-nologies for electric power generation haveimproved considerably to the point where costspresently average 5–8 cents per kWh for exist-ing geothermal plants. Southern New Mexicocurrently supports a thriving greenhouse andfish farming industry on geothermal resources,and these direct-use applications of geothermalenergy are already cost-competitive with con-ventional resources.• Biomass Biomass technologies are manyand varied and have the capability of produc-ing electricity and/or thermal energy. Theyinclude direct-combustion steam turbine tech-nology, which is the principal process in usetoday for converting biomass into electricity.Biomass-generated methane can also be co-fired with conventional resources such as coalto extend fossil fuel supplies and reduce airpollution emissions.

RENEWABLES: A DRIVER FOR FUTURE ECONOMICDEVELOPMENT

As indicated in the preceding sections, New Mexicohas been blessed with significant renewable energyresources. It also has a considerable government pres-ence at the federal, state, and local levels, which col-lectively represent a sizable load of electrical and ther-mal energy demand. Facilities in New Mexico,including our two national laboratories (Sandia andLos Alamos), Kirtland Air Force Base, and the stategovernment’s capitol complex in Santa Fe, each havesizable utility bills ultimately paid by New Mexico tax-payers on a recurring basis. In many instances, theseutility costs could be lowered over the long termthrough the targeted, more effective use of renewables.This, in turn, would free up limited government rev-enues for other pressing needs—including job cre-ation.

New Mexico also has the necessary human resourcesto develop and support a more vibrant renewableenergy industry within its borders. Staff at both LosAlamos National Laboratory and Sandia NationalLaboratories-Albuquerque are already involved inmany renewable research, development, and demon-stration projects—activities likely to continue wellinto the future given the events of September 11,2001, and the renewed focus they have placed on allforms of domestic energy production. Similarly, exist-ing organizations such as the Southwest TechnologyDevelopment Institute at NMSU (which has operatedthe SW Regional Solar Experiment Station in LasCruces for over 20 years), our colleges and universi-ties, and existing renewable energy businesses togeth-er possess a vast reservoir of expertise and experiencethat could be used to greatly expand the renewablesindustry in New Mexico.

RENEWABLE ENERGY BARRIERS AND INCENTIVES

Barriers. A number of barriers are usually cited byinformed observers as impeding the development anduse of New Mexico’s renewable energy resources.Cost-competitiveness persists as one of the primarybarriers to the increased market penetration of renew-ables. Transmission availability and access is anothersubstantive impediment for bringing additionalrenewable electric generation capacity on-line.Embodied in the transmission issue are applicablestandards and corresponding costs for connection ofrenewable technologies to the existing power grid.The state’s tax structure is another factor identified bycommercial developers in recent years as holding back

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The solar carport goes beyondmeeting the need for shaded park-ing for the 400,000 visitors thecenter receives each year. It inte-grates solar cells that use visiblelight and other natural electromag-netic radiation from the sun togenerate voltage. The carport not

only supplies power tothe IPCC building, it isalso tied to the com-mercial grid throughthe process of netmetering (see articleby Pat Scharff, thisvolume). It produces25.5 megawatts ofpower annually andprovides more than

three thousand dollars in savingsto the IPCC. This renewable energygenerator saves an estimated 44tons of coal and 1 million gallonsof water, and it eliminates air emis-sions that would otherwise be pro-duced in generating that energythrough conventional powersources.

The Native American Pueblotribes of the Southwest have

long realized the power of the sun.Respect for that power was clearlyevident in the design and execu-tion of the solar carport located onthe premises of the Indian PuebloCultural Center (IPCC) in

Albuquerque, New Mexico. One ofthe important purposes of the solarproject was to inform the public ofthe benefits of renewable energy:economic development, costreduction of the IPCC energy bill,conservation of natural resourcesincluding coal and water, andgreenhouse gas reduction.

Diversified Systems Manufactur-ing, a Native American-owned andoperated firm located at the IPCC,formulated the concept of the solarcarport and completed the projectusing a number of local contrac-tors. Laguna Industries, Inc.,owned and operated by the Puebloof Laguna, manufactured the steeland aluminum components. ThePueblo of Zia granted permissionto incorporate the traditional Ziasun symbol in the decoration ofthe solar carport. The color andtexture of the structure comple-ments that of the IPCC.

The project was made feasible bya grant from the New MexicoDepartment of Energy, Mineralsand Natural Resources. Successfuldemonstration of the technologyhas stimulated similar projects atNative American facilities at thePueblo of Laguna and theSouthwest Indian PolytechnicInstitute (SIPI).

Solar Photovoltaic PowerA Native American Success Story

David S. MeltonDiversified Systems Manufacturing

the growth of renewables here. Finally, and perhapsmost importantly, the lack of public information, edu-cation, and outreach on renewable energy, its applica-tions, costs, and benefits is a formidable barrier in evi-dence throughout New Mexico and the nation.

Incentives In comparison to other states, NewMexico offers virtually no incentives to encouragedevelopment of a vibrant renewable energy industrywithin the state. [Note: When this paper went topress, the New Mexico Legislature had under consid-eration a number of bills that would provide incen-tives for renewable energy development.] There is asolar access law on the books (Solar Rights Act); andthe New Mexico Public Regulation Commission has anet metering rule (NMPRC Rule 571) in effect that

benefits small (<10 kilowatts) residential and commer-cial renewable electric systems. In addition, theElectric Utility Industry Restructuring Act establishes aSystem Benefits Charge/Fund in 2007; it will provideconsiderable funding ($4-6 million annually) forrenewables projects here. Other proposed incentivesthat should be reviewed in New Mexico include:

• Renewable portfolio standards, which requireutilities to build or procure renewable energy sothat it constitutes a certain minimum percentageof their total electric generating capacity.• Green pricing programs, whereby electric utili-ties offer an optional service through which theircustomers can support a greater level of utility

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investment in renewable energy technologies.• Tax credits for renewable energy productionand equipment, which help reduce the cost ofrenewable projects by credits against taxes owed.• Tax rebates for purchase and installation ofrenewable energy technologies, which also assistin lowering the investment cost of renewables.• Demonstration project funding, particularly forrenewable projects at state facilities and in highvisibility locations.• Funding for public information, education, andoutreach on renewable energy.

CONCLUSIONS AND RECOMMENDATIONS

New Mexico has the appropriate mix of natural,physical, and human resources to become a nationalleader in the renewable energy arena. Stimulatinggrowth of the renewable energy industry here willgenerate both jobs and revenues within our borders,particularly in rural areas. Moreover, increased devel-opment and use of renewables will diversify thestate’s energy supply mix, improve air quality, reducewater consumption from prospective power genera-tion, and enhance our energy security through greaterreliance on domestic resources. Given the potentialbenefits to New Mexico from renewable energy devel-opment, one goal is clear: overcoming the barriersthat stand in the way of development and implement-ing industry incentives. Doing so is in the best inter-ests of New Mexico and its citizens.

REFERENCES AND ADDITIONAL INFORMATION

New Mexico Energy, Minerals and Natural Resources Department, NewMexico’s Natural Resources 2001; this and previous annual reports areavailable from the Department at 1220 S. St. Francis Drive, P.O. Box6429, Santa Fe, NM 87505 505/476-3200).

New Mexico Energy, Minerals and Natural Resources Department home-page: http://www.emnrd.state.nm.us

Database of State Incentives for Renewable Energy: http://www.dsireusa.orgLarsen, C., and Rogers, H., 2000, National Summary Report on State

Financial and Regulatory Incentives for Renewable Energy, NorthCarolina Solar Center (NCSC), Industrial Extension Service, NorthCarolina State University, December 2000; this report is available fromthe NCSC at Box 7401, Raleigh, NC 27695 (919/515-3480).

National Renewable Energy Laboratory, 1999, Choices for a BrighterFuture: Perspectives on Renewable Energy, DOE/GO-10099-878,September 1999.

National Renewable Energy Laboratory homepage: http://www.nrel.govNew Mexico Solar Energy Association homepage: http://www.nmsea.orgPorter, K., Trickett, D, and Bird, L., 2000, REPiS: The Renewable Electric

Plant Information System, National Renewable Energy Laboratory(NREL), NREL/TP-620-28674, August 2000; this report is availablefrom NREL at 1617 Cole Boulevard, Golden, CO 80401.

U.S. Department of Energy, Energy Information Administration, RenewableEnergy Annual 2000, DOE/EIA-0603(2000), March 2001.http://www.eia.doe.gov/fuelrenewable.html

U.S. Department of Energy, Energy Information Administration, RenewableEnergy 2000: Issues and Trends, DOE/EIA-0628(2000), February 2001.http://www.eia.doe.gov/cneaf/solar.renewables/rea_issues/rea_issues_sum.html

U.S. Department of Energy/Energy Efficiency and Renewable Energyhomepage: http://www.eren.doe.gov

U.S. Department of Energy/Energy Information Administration homepage:http://www.eia.doe.gov

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Geothermal energy is rarely mentioned by policymakers and the media as a viable renewable ener-

gy source or a cost-competitive alternative to fossilfuels. As a result, this survey of geothermal use and itseconomic impact in New Mexico may surprise many.Geothermal energy is a prominent (perhaps the lead-ing) renewable resource in New Mexico in terms ofeconomic impact. Given the large geothermal resourcebase in the state, the potential for future economicbenefits is enormous.

GEOTHERMAL RESOURCES

An accessible geothermal resource base is defined asheat that is stored in the conventionally drillable partof the earth’s crust. This heat is continually augmentedby radioactive decay of naturally occurring uranium,thorium, and potassium in the earth’s crust, and byheat that is conducted into the crust from the evenhotter core and mantle below. In other words, thecrust acts as a low grade nuclear reactor, with addi-tional heat provided from deeper within the earth. Inregions with young and active volcanoes, locallyintense heat may be introduced into the crust bymagma that rises upward through weaknesses in thecrust from partially melted regions of the mantle.

Geothermal resources result from geologic processesthat provide a ground-water flow path to concentratedeep-seated heat at economically drillable depths.Elements involved are: 1) a recharge source for thewater; 2) a heat source; 3) an upflow zone; and some-times, 4) a discharge zone. The most porous and per-meable upper portions of the upflow zone and theshallow lateral-flow discharge zone are where geother-mal resources are most easily exploited.

The shape of a typical geothermal reservoir may resem-ble a small isolated summer thunder cloud or thunder-head. The anvil or sheared-off top of the thunderhead isanalogous to a lateral-flow discharge zone or outflowplume of a geothermal resource, and the rising cauli-flower-like bulk of the thunderhead resembles the upflowzone. All currently proven reserves in New Mexico are theresult of circulation of ground water that sweeps up heatfrom deep-seated bedrock. Fault and fracture zones mayconcentrate and redirect the hot water flow upward.Where these systems intersect the surface, hot springs are

found. Heat from active or young volcanoes is notrequired for this type of geothermal resource.

CLASSIFICATION OF USES AND RESOURCES

We classify geothermal resources as high temperature,intermediate, or low temperature. High-temperatureresources are those that are greater than 350° F; theyare suitable for electrical power generation in excess of20 megawatts. Intermediate temperature resources arethose between 190° and 350° F; they are suitable forsmall-scale electrical power generation at rates of 3–10megawatts. Low-temperature resources are those lessthan 190° F and at least 15°–30° F above the localmean annual surface temperature. Low-temperatureresources are the most common and can be used in avariety of “direct-use” geothermal heating applications,including greenhousing, aquaculture, space and dis-trict heating, ground-coupled heat pumps, and manyindustrial uses (such as cooking, curing, or drying)that require large amounts of low-grade heat. High-and intermediate-temperature geothermal resourcesmay also be used in direct-use applications by “cas-cading” residual heat from power production to lower-temperature applications, enhancing the overall effi-ciency and economics of use.

CURRENT GEOTHERMAL USE

Electric Power Geothermal-generated electricity iscurrently being produced at the 32-acre BurgettGeothermal Greenhouse in the Animas Valley nearCotton City (Fig. 1). The Burgett power plant is amodel for how geothermal electricity may best be pro-duced in New Mexico. The facility extracts energy in acascaded system, whereby 230° F water from geother-mal wells is first fed into the power plant heatexchangers at a rate of 1,200 gallons per minute; the185o F outflow from the power plant is used for spaceheating of the greenhouses. The Burgett power plant iscalled binary because heat from the geothermal waterboils isopentane, whose pressurized vapor drives aturbine. This so-called working fluid powers threemodular 0.3-megawatt units, and the electricity isused on location at the greenhouse.

Geothermal Aquaculture Geothermal energy offersseveral advantages for fish culture. Many species have

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New Mexico’s Geothermal Energy Resources

James C. Witcher, Southwest Technology Development Institute, New Mexico State University

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accelerated growth rates in warm water. Geothermalwater can be used as a growth medium, adding to theagriculture receipts in the state without consumptiveuse of valuable fresh water supply. The AmeriCultureFish Farm at Cotton City (Fig. 1) raises tilapia, a fishincreasingly popular for its taste, from eggs producedon site. AmeriCulture is heated at much lower coststhan fossil fuels with a downhole heat exchangerinstalled in a 400-foot-deep well. AmeriCulture mar-kets tilapia fry to growers and researchers nationwide.

Geothermal Space and District Heating The aridityand high elevation of parts of New Mexico creates sig-nificant heating loads on cold winter nights. Whereshallow geothermal resources co-exist with large heat-ing demands, geothermal space and district heatingcan compete favorably with fossil fuel. Many of thesesites are also suitable for spas.

A district geothermal heating system on the NewMexico State University campus in Las Cruces, in

operation since 1982 uses as much as 260 gallons perminute of 143° F water that is produced from a depthof 980 feet. Geothermal water is passed through a heatexchanger to heat fresh water that is fed into spaceand domestic hot water loops on campus as needed.The cooled geothermal water is then returned to thereservoir, injected into the reservoir margin beneaththe NMSU golf course. Geothermal heat is used toheat dorms, academic buildings, and athletic facilitieson the eastern third of the campus. Geothermal heatalso provides domestic hot water for showers in thedorms and athletic facilities.

At Gila Hot Springs, a 300-foot-deep flowing wellprovides 165° F water for geothermal space and dis-trict heating of a trailer court, rental cabins, store, andseveral homes.

Geothermal Greenhousing The most important useof geothermal energy in New Mexico is for greenhous-es (Fig. 2). Geothermal greenhousing accounts formore than half of the greenhouse acreage in the state.In fact, New Mexico leads the nation in geothermalgreenhouse acreage. The success and growth in thegeothermal greenhouse industry in New Mexico canbe attributed to several factors, including a good cli-mate with abundant sunshine and low humidity, inex-pensive land, co-existence of geothermal resourceswith a supply of fresh water, a good agricultural laborforce, and the availability of favorable shallow geot-hermal resources. Current geothermal greenhousesdraw water from wells less than 1,000 feet deep, withresource temperatures ranging from 143° to 240° F.

ECONOMIC IMPACT

Figure 2 illustrates the importance of geothermal green-housing in New Mexico. A total of 52 acres are heatedusing geothermal energy, representing a capital investmentof over $18 million, a payroll of more than $6 million,and gross receipts exceeding $22 million. This placesgeothermal greenhouse sales among the top ten agricul-ture sectors in the state. The Burgett GeothermalGreenhouse near Cotton City is the largest employer (andlargest business) in Hidalgo County. The Masson RadiumSprings Farm geothermal greenhouse is the largestemployer in northern Doña Ana County.

ATTRIBUTES AND POLICY

Geothermal development resembles oil and gas in leasing,royalties, and drilling. Exploration and evaluation of geot-hermal resources borrow methodologies used in oil andgas, ground water, and mineral exploration.

Geothermal energy is environmentally friendly.Geothermal operations, including electrical power

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FIGURE 1 Geothermal resources and uses in New Mexico.



production, have a small land-use footprint.Greenhouse gas emissions are typically zero for binarysystems. In most cases, spent geothermal fluids areinjected back into the reservoir, resulting in minimalimpact to fresh-water supplies. With the use of heatexchangers, harmful scaling and corrosion can be con-trolled, and fluids can be isolated from both the natu-ral environment and surface geothermal equipment.

One impediment to geothermal growth is the initialcapital costs associated with resource exploration, testing,and well drilling. However, geothermal energy has theadvantage of low operations and maintenance costs, with-out the volatility associated with fuel costs. Most of thesurface equipment used by geothermal operations is “offthe shelf ” and has well-known engineering characteristicsand costs. This is especially true with direct-use installa-tions, such as those outlined above.

Geothermal policy at the federal level and in most ofthe geothermal industry focuses on electrical powergeneration. However, in New Mexico more than 5,000megawatts of electric power is produced by traditional

fossil fuels, and only about 40-45% of this electricpower is used in state. The Valles Caldera in the JemezMountains is the only resource with proven reservesthat exceed 20 megawatts. This is the only resource inthe state with magma as a probable heat source.Development of this site by industry is unlikely, as thearea has been transferred to the U.S. Department ofAgriculture under the Valle Grande/Valles CalderaPreservation Act.

Inferred reserves at other sites in New Mexico are allprobably less than 5 megawatts. Small-scale geothermalelectric power generation at these sites only makes goodsense if it is done in conjunction with cascaded direct use,and the generated power is used on site to assist or aug-ment a direct-use operation. For comparison, the grossreceipts or cash flow of an acre of greenhouse that growpotted plants is equivalent to 1 to 2 megawatts of electricpower generation with wholesale energy sales of $0.10per kilowatt-hour. Federal and state geothermal policyshould emphasize direct-use geothermal endeavors inNew Mexico over stand-alone electric power generation.Federal royalty rules for direct-use and regulatory require-ments for low- and intermediate-temperature drilling onfederal lands are impeding geothermal development inthe state. These should be modified to provide a realisticframework for future development.

CONCLUSIONS AND FUTURE POTENTIAL

Geothermal energy is a potentially powerful vehiclefor rural economic development in New Mexico. Thefuture of direct-use geothermal energy may includechile and onion drying, cheese and milk processing,additional aquaculture, greenhouses, and district heat-ing. Small-scale electrical power generation is verylikely to occur in a cascaded mode with direct-usedevelopment. The accessible geothermal resource baseis vast, and the options for economic use are many.

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FIGURE 2 List of current commercial geothermal greenhouses in New Mexico with acerage, estimated cost attributes, and energy use.

Cost and energy assumptions used to construct the above table.

S i te Location P roduct S i ze Emp loyees/Jobs Payroll C apita l Sa les Energy Use Energy(acres) (persons) $/yr i nvestment ($) $/yr (MMbtu/yr) s avings ($/yr)

Burgett Animas/ Cut roses 32 256 3,741,696 11,200,000 13,920,000 134,400 403,200Geothermal Cotton CityGreenhouse

Masson Radium Radium Potted plants 17 136 1,987,776 5,950,000 7,395,000 71,400 214,200Springs Springs and flowers

J & K Growers Las Cruces Potted plants 2 16 233,856 700,000 870,000 8,400 25,200and flowers

Sorenson Cactus Las Cruces Decorative 1 8 116,928 350,000 435,000 4,200 12,600cactus

TOTALS 52 416 6,080,256 18,200,000 22,620,000 655,200 218,400

Assumption Category Amount Units

1 Employees per acre 8 persons

2 Average hourly wage $7.00 $/hrw/benefits

3 Annual work hours 2088 hrs/yr

4 Capital investmentper acre $350,000.00 $~$8 per sq ft

5 Value of sales per acre $435,000.00 $/yr~$10 per sq ft

6 Energy use per acre 4,200 MMbtu/yrper year southern NM

7 Energy cost MMbtugeothermal $1.50 $/MMbtunatural gas with $4.50 $/MMbtuboiler losses

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In recent years, many electricity consumers haveinstalled small renewable-resource electric genera-

tors to offset their consumption of commercial electricpower. Often these generators produce power inexcess of customer demand. In 1978 the federal PublicUtility Regulatory Act (PURPA), in an effort to pro-mote energy efficiency through the use of cogenerationand renewable-resource generators, made provisionsfor consumers with qualifying generators to sell excesspower back to the utilities. Under the provisions ofPURPA, and the subsequent implementation of rulesby the Federal Energy Regulatory Commission (FERC)and state regulatory agencies, utilities are required toconnect with “qualifying facilities” (QFs) and to pur-chase power generated by them, generally at a whole-sale rate. Before the enactment of PURPA, utilitiesdealt with customer-owned generation on a case-by-case basis. New Mexico implemented the PURPA QFrequirements in New Mexico Public Regulation(NMPRC) Rule 570 in 1988.

The purchase and sale agreement between a PURPAqualifying facility and an electric utility requires theuse of two meters: one to measure the flow of energyfrom the utility to the customer and one to measurethe flow of energy from the customer to the utility.Any energy that is not consumed by the customer atthe time it is produced flows back into the utility gridthrough the second meter. Under PURPA QF rules, thecustomer pays full retail price for the energy that flowsinto the customer’s premises from the grid, and theutility purchases energy flowing out into the grid atthe utility’s “avoided cost.” (Avoided cost refers to theutility’s avoided cost of production, although in somestates, like New Mexico, a proxy for the wholesale costof energy is used.) The difference between avoidedcost and retail rates can be substantial.

Today consumers who generate their own powerthrough the use of qualifying generators have new andbetter options available to them. New Mexico is one of34 states with a “net metering rule” for small renew-able-resource electric generating facilities. Net meter-ing rules in effect allow these customers to sell excesselectricity back to the utility at retail value, offsettingtheir consumption over the billing period. Meters lit-erally turn backward when the generators are produc-ing excess energy. Net metering rules are exclusively

state initiatives that are the result of consumers’ desireto resolve the difference between retail and avoidedcost rates, and an interest in wider use of renewableresources. A few states implemented single-meter netmetering when enacting the provisions of PURPA.Others, like New Mexico, implemented single-meternet metering several years later. Of the 34 states thathave net metering, 32 have implemented their rulessince 1995.

New Mexico’s net metering rule, NMPRC Rule 571,was implemented by the Public RegulationCommission’s September 1999 order in Docket 2847.PRC Rule 571 is applicable to all renewable-resourcegenerators rated at 10 kilowatts or less. However, as apractical matter, net metering rules in all states areapplied almost exclusively to solar electric systems,because of their reliability and consistent performance.One of Public Service Company of New Mexico’s(PNM) net metering customers, however, does have a400-watt wind generator connected to the grid. NewMexico’s net metering rule allows utilities to choosebetween paying avoided cost (1 to 3 cents per kilo-watt-hour for PNM) or giving kilowatt-hour credits forexcess energy at the end of each billing period.

Like other states, New Mexico’s net metering rule isintended to foster and encourage the use of renewableenergy resources. However, New Mexico’s net meter-ing rule is different from the rules of other states (andmore favorable to the use of renewable resources) intwo very important aspects. First, other states have alimit on the total amount of net metering capacity thatcan be connected to the grid. New Mexico’s rule hasno such limit. Second, most other states do not allowkilowatt-hour credits to be carried forward frommonth-to-month. The few states that do allow kilo-watt-hours to be carried forward month-to-monthrequire all credits to be reset to zero at the end of theyear with no payment for any remaining balance. NewMexico’s net metering rule allows excess energy creditsto accumulate from month-to-month and year-to-year.

The Public Service Company of New Mexico (PNM)provides kilowatt-hour credits for any excess energy atthe end of each billing period. These kilowatt-hourcredits are applied to future bills when the total ener-gy produced is less than the kilowatt-hours consumedduring the billing period. When the kilowatt-hour

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Net Metering in New Mexico

Patrick K. Scharff, Public Service Company of New Mexico



106

Sta te Utilities El ig ible fuels E l ig ible customers Limit on system size Limit on overal lenrol lment1

Arizona IOUs and Renewables & All customer classes ≤ 100 kW NoneRECs cogeneration

Arkansas All utilities Solar, wind, hydro, All customer classes ≤ 25 kW (residential); None geothermal, and ≤ 100 kW (commercialbiomass2 or agricultural)

California3 All utilities Solar and wind All customer classes ≤ 1000 kW None

Colorado Individual All resources All customer classes ≤ 10 kW Noneutilities

Hawaii All utilities Solar, wind, hydro, Residential or small ≤ 10 kW 0. 5% of each utility’s and biomass commercial peak demand

Idaho IOUs Renewables & Idaho Power only; 100 kW None cogeneration residential and small

commercial

Iowa IOUs only Renewables All customer classes No limit None

Minnesota All utilities Renewables & All customer classes < 40 kW None cogeneration

Montana IOUs Solar, wind or hydro All customer classes ≤ 50 kW None

Nevada All utilities Solar and wind All customer classes ≤ 10 kW 100 customers for eachutility

New Mexico All utilities Renewables & All customer classes ≤ 10 kW Nonecogeneration

North Dakota IOUs only Renewables & All customer classes ≤ 100 kW None cogeneration

Oklahoma All utilities Renewables & All customer classes ≤ 100 kW and annual None cogeneration output ≤ 25,000 kWh

Oregon All utilities Solar, wind, fuel cell All customer classes ≤ 25 kW No less than 0.5% and hydro of utility’s historic single-

hour peak load; beyond 0.5% eligibility can be limited by regulatorauthority

Texas IOUs and RECs Renewables only All customer classes ≤ 50 kW None

Washington All utilities Solar, wind, hydro All customer classes ≤ 25 kW 0.1% of 1996 peak,and fuel cells with no less than half for

renewables

Wyoming IOUs and RECs, Solar, wind, and All customer classes ≤ 25 kW NoneMunis exempt hydropower

1In all cases, energy generation is netted against energy consumption on an equal basis, down to zero net energy use during the designatedperiod. Treatment of “net excess generation” is relevant only when total generation exceeds total consumption over the entire billing period,i.e. the customer has more than offset his/ her total electricity use and has a negative meter reading.2The Arkansas law also extends eligibility to fuel cells or microturbines if the fuel is derived entirely from renewable resources.

FIGURE 1 Summary of “net metering” programs in states west ofthe Mississippi River. Portions of this table are reprinted by permis-

sion of the Interstate Renewable Energy Council (IREC) andThomas J. Starrs, Kelso Starrs & Associates, LLC.

SAN JUAN BASIN

R E N E W A B L E E N E R G Y , E F F I C I E N C Y , & C O N S E R V A T I O N 107

Treatment of net excess Enacted Citation/re fe rencegeneration (NEG)

Monthly NEG purchased at avoided cost 1981 Ariz. Corp. Comm. Decision No. 52345

Not specified 2001 HB 2325 (enacted April 2001, effective October 2001)

Customers are billed annually; excess generation is granted to 1995 Cal. Pub. Util. Code § 2827 (as amended 1998, 2000, and the utility. Also allows bi-directional time-of-use metering 2001).

NEG carried over month-to-month 1994 Public Service Co. of CO, Advice Letter 1265; DecisionC96-901; and various RECs

Monthly NEG is granted to utility 2001 House Bill 173

Monthly NEG purchased at avoided cost 1980 ID PUC Orders No. 16025 (1980); 26750 (1997)

Monthly NEG purchased at avoided cost 1983 IA Legislature & IA Utilities Board, Utilities DivisionRules § 15.11(5)

Monthly NEG purchased at “average retail utility energy rate” 1983 Minn. Stat. § 261B. 164( 3)

NEG credited to following month; at end of annual period any 1999 S.B. 409unused credits are granted to utility without compensation

Annualization allowed; no compensation required for NEG 1997 Nev. Rev. S. Ch. 704

At utility’s option, customer is credited on the next bill for 1999 17 N. M. Admin. Code 10.571(1) purchase of NEG at utility’s avoided cost; or (2) kilowatt-hour credit for NEG that carries over from month to month.

Monthly NEG purchased at avoided cost 1991 N. D. Admin. Code § 69-09-07-09

Monthly NEG is granted to utility 1990 Okla. Corp. Comm. Schedule QF-2

NEG purchased at avoided cost or credited to following 1999 Or. Rev. Stat. 757.300month; at end of annual period unused credits shall be granted to low-income assistance programs, credited to customer, or “dedicated to other use” as determined by regulatory authority

Monthly NEG purchased at avoided cost 1986 Tex. PUC, Substantive Rules, § 25.242(h)(4)

NEG credited to following month; at end of annual period any 1998 Wash. Rev. Code § 80.60 (amended 2000)unused credits are granted to utility without compensation

NEG credited to following month; at end of annual period 2001 WY Legislature, House Bill 195, signed into law Februaryany unused credits are purchased by utility at avoided cost 2001, effective July 2001

3The 2001 amendments, which (A) extended eligibility to all customer classes; (B) extended the system size limit to 1,000 kW (1 MW); and (C)eliminated the overall “cap” of 0.1% of each utility's peak demand applies through the end of 2002 only. Absent further amendment these provi-sions would revert to the pre- 2001 requirements.



credits are applied to a current bill, PNM’s net meter-ing customers receive full retail value for the excessenergy they have produced in prior months. When aPNM customer discontinues net metering service allremaining kilowatt-hour credits are purchased at theavoided cost rate.

In terms of tangible capital costs, renewable-resource energy systems are generally quite expensive.They are much more expensive to purchase and installthan traditional electricity generating alternatives.However, there are significant advantages. By allowingthe meter to turn backward during periods of excessenergy production, the net metering customer is effec-tively using the utility grid as a means of storing ener-gy for use during periods of low or no production.This use of the grid to effectively store energy allowslower-cost grid-connected systems to be constructedwithout the additional expense of physical batteries tostore excess production. A typical one-kilowatt photo-voltaic system without batteries costs about $10,000and will produce approximately 2,100 kilowatt-hoursof electricity per year. Battery energy storage can add10–20% or more to the installed cost of a photovoltaicsystem, depending upon the amount of storage need-ed. With a typical useful life expectancy of only fiveyears, batteries add significantly to the lifetime cost ofownership for a solar electric system. There are obvi-ous environmental advantages to this, as well.

The average PNM residential customer usage isabout 6,400 kilowatt-hours of electricity per year.Although net metering helps to offset the 20–35 centsper kilowatt-hour cost of solar electric energy, the highinitial cost of photovoltaic systems prohibits their pur-chase by most consumers. At the end of 2001, PNMhad only 14 net metering customers, with a total of30.4 kilowatts of solar panel capacity and 400 watts ofwind power capacity. These systems are installed inAlbuquerque, Corrales, and Santa Fe. One of the con-sequences of single-meter net metering is that the totalenergy produced by PNM’s net metering customerscannot be tracked. However, using the NationalRenewable Energy Laboratory’s PVWatts software, weestimate that a reasonable approximation of the annu-al energy production of PNM’s net metering customersis about 64,000 kilowatt-hours.

To encourage consumer use of renewable energy,several states, most notably California, have imple-mented financial incentives in addition to net meter-ing. These additional financial inducements includerebates or buy downs for new renewable energy sys-tems and tax incentives. Additional information on

net metering, the specifics of individual state netmetering rules, current state financial incentives, andrenewable energy technology can be found at theinternet Web sites below.

WHERE CAN I GET MORE INFORMATION?

1 Energy Efficiency and Renewable EnergyNetwork (EREN) sponsored by the U.S.Department of Energy at www.eren.doe.gov2 National Renewable Energy Laboratory(NREL) at www.nrel.gov3 Interstate Renewable Energy Council (IREC)at www.irecusa.org4 Database of State Incentives for RenewableEnergy (DSIRE) at www.dsireusa.org5 Solar Electric Power Association (SEPA) atwww.solarelectricpower.org6 A Performance Calculator for Grid-ConnectedPV Systems (PVWatts) athttp://rredc.nrel.gov/solar/codes_algs/PVWATTS

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Renewable energy technology now offers a numberof proven and cost-effective options that could

greatly benefit New Mexico, both in economic devel-opment and in diminishing the environmental impactsof power generation. These include utility-scale windpower and photovoltaics. Utility-scale wind farms(one megawatt and up) can generate bulk power at acost of 3–5 cents per kilowatt hour (kWh), whichmakes wind power competitive with other more tradi-tional methods of power generation. Photovoltaics aremore appropriate for those highly motivated con-sumers who are willing to invest in the equipmentnecessary to contribute through “net-metering,” or forremote applications.

New Mexico is surrounded by states (with theexception of Oklahoma) that currently have aggressivepolicies and incentives for both utility- and residen-tial-scale renewable energy development. Some ofthese incentives, mostly financial, have been in placesince the late 1980s or early 1990s. More recently,other types of incentives, including mandatoryrequirements for renewable energy called “portfoliostandards,” have been introduced. These standardsrequire public utilities to incorporate renewablesources of power in their energy mix. Such standardshave already led to the installation of hundreds ofmegawatts of renewable electricity generation and arelikely to lead to thousands of new megawatts ofrenewables by the end of the decade. A singlemegawatt is enough to power roughly 1,000 homes.

The incentives responsible for most of the existingutility-scale generation in neighboring states are:

•Renewable portfolio standards (RPS) adopted byTexas and Nevada, which mandate the addition ofrenewables to the mix in significant percentages•Voluntary green pricing programs in Coloradoand Texas. These programs allow consumers tochoose to buy power generated by alternativemeans, usually at a higher rate. Such programsrely on consumer demand.

In addition to policy-based incentives, a wholerange of financial incentives, including rebates and tax

incentives, are also in place in states bordering NewMexico. These are extremely important for the suc-cessful development of residential-scale renewableenergy businesses, as well as utility-scale generation.At the time of this writing, the New Mexico PublicRegulatory Commission (PRC) is considering intro-ducing a renewable portfolio standard, and severalNew Mexico state legislators are drafting bills thatwould create tax incentives for renewable energy.

New Mexico lags significantly in providing theseincentives. New Mexico’s deregulation legislation didmandate a systems benefit fund (see below), andmade a recommendation that the PRC investigate thepossibility of renewable portfolio standards. On thisbasis, the PRC proposed a portfolio standard rule thatmandated 5% renewable energy, which would applyto the “standard offer” option (the default option forcustomers who opt not to choose). Unfortunately, thisstandard would be subject to a cap of $.001/kWhincrease on the average utility bill, which couldseverely limit its impact. Moreover, following thederegulation debacle in California, the legislature hasdelayed the implementation time for electricity dereg-ulation by five years, and this delay applies to boththe systems benefit fund and the portfolio standard aswell.

As of this writing, financial incentives for renewableenergy generation in New Mexico are simply nonexist-ent. New Mexico needs, and deserves, aggressive andeffective policy incentives to promote renewable ener-gy development now. The New Mexico renewableenergy industry will be hopelessly out-paced by out-of-state competitors if effective incentives are notintroduced soon.

Figure 1 summarizes incentives in neighboringstates and New Mexico. Note that New Mexico is con-spicuously lacking in both conventional financialincentives such as tax incentives, and policy incentivessuch as renewable portfolio standards and systemsbenefit funds. Figure 2 compares the renewable port-folio standards of states bordering New Mexico inmore detail.

Note that, although Arizona’s program has roughly aten times smaller target figure than the other stan-

109

Renewable Energy Incentives in NewMexico and Bordering States

Benjamin Luce, New Mexico Solar Energy Association



dards, in terms of total number of megawatts ofrenewable energy required, more than half of Arizona’srenewable energy must be solar, which is about tentimes as expensive as wind, geothermal, and otherforms of renewable energy. Therefore, Arizona’s rela-tively low standard is quite comparable in cost to theother higher standards.

Green pricing programs, which allow consumers tochoose to buy power generated by renewable sourcesof energy, even if it’s at a higher rate, are one of thegreat successes of the 1990s for renewable energy.Many such programs now exist in the United States.Roughly one in five Americans can now choose tohave some or all of their electricity supplied by renew-able energy sources. Public support for these pro-grams was established through many surveys of public

opinion. Public Service Company of New Mexico(PNM) has even conducted a small focus group studyin Albuquerque, which indicated strong support,comparable to that found in other states. Coloradopresently has over 18,000 customers, including manylarge businesses, participating in green power pro-grams. These programs have been oversubscribedfrom the start. The DSIRE Web site (listed at the endof this article) has extensive information on many ofthese programs.

NEW MEXICO’S WIND RESOURCE

New Mexico is in the big leagues with respect to windpower, having the twelfth largest resource potential inthe U.S. (much greater than California’s resource; seeFig. 3). The developable resource is estimated to be

110

FIGURE 1 Summary of incentives in place in neighboring statesand New Mexico. S = state, L = local, U = utility. Numbers indi-

cate number of incentives.

Incentive Ar izona Nevada Colorado Oklahoma Texas New Mexico

System benefit fund 1–S (delayed)

Disclosure of generation source and 1–S 1–S 1–S 1–S (delayed)related emissions

Renewable portfolio standard 1–S 1–S 1–S 1–S (delayed)

Net–metering 1–S 1–S 1–S, 2–L 1–S 1–S, 1–L 1–S

Line extension analysis 1–S 1–S 1–S 1–S

Solar contractor licensing 1–S 1–S 1–L

Renewable energy equipment 1–S 2–L 1–S 1–Scertification

Solar & wind access laws 1–S 1–S 1–S, 1–L 1–S

Construction and design policies 1–S, 2–L 1–S, 3–L 1–S, 1–L

Green power programs

Green pricing 4–U 1–U 3–U, 6–L 3–U, 3–L 1–U

Green power purchasing/aggregating 1–L 3–L

Public education/assistance 2–L 3–L 2–L 1–L, 1–S

Demonstration projects 2–L 2–L 2–L 2–L, 2–S

Research and outreach

Personal tax 2–S

Corporate tax 1–S

Sales tax 1–S

Property tax 1–S 1–S

Rebates 1–L 1–L 1–S 1–L

Grants

Loans 1–S 1–L

Industry recruiting 1–S 1–S

Leasing programs 1–U 1–U

Equipment sales 1–U

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capable of providing roughly 435 billion kWh annual-ly, enough to power 40 million households.Comparing this to New Mexico’s total electricity use ofabout 17 billion kWh/yr, we find that New Mexico’swind resource potential is about 25 times larger thanits current consumption of electric power.

Note that New Mexico has approximately one-thirdthe wind resource of North Dakota, the state with thelargest resource. Also note that there is a dramaticdecrease in wind power resource after New Mexico;Idaho, the next state after New Mexico, has less thanone-quarter of New Mexico’s resource. That is not tosay that wind power cannot be a significant contribu-tor in these states; California is also ranked lower than

New Mexico and is currently producing utility-scalewind power.

NEW MEXICO’S SOLAR RESOURCE POTENTIAL

New Mexico’s solar resource potential is enormous.Assuming 15% efficient solar (photovoltaic or solarthermal electric) collectors, and factoring in the factthat the sun shines strongly roughly eight hours a day,one square kilometer of solar collectors could produceelectricity equivalent to a continuous 50 megawattgenerator. (The peak power of the sunlight intersect-ing one square kilometer on a clear day is actuallyequivalent to 1 gigawatt; we can only capture about5% because of collector efficiency, spacing considera-

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FIGURE 2 Renewable portfolio standards of states borderingNew Mexico.

P rovisions Ar izona Nevada Texas

Total amount of 1.1% 15% (about 3.3%)renewable energyelectricity productionmandated (by percent)

Total amount of (about 180 MW) 2000 MWrenewable energyelectricity productionmandated (in megawatts)

Effective date 3/30/01 1/1/03 1/1/02

Target date for achieving 2009 2013 2009total amount

Trading credits program Yes Yes Yes: administered by state

Eligible technologies Solar thermal electricity, Solar thermal electricity, Solar thermal electricity, photovoltaics, wind, biomass, photovoltaics, wind, biomass, photovoltaics, wind, hydro, geothermal electric, geothermal electric biomass, hydro, waste geothermal electric, wave,

tidal, landfill gas

Applicable sectors Utility, investor-owned utility, Utility, investor-owned utility, Utilitypublicly owned utility, publicly owned utilityrural cooperative

Initial minimum 0.2% 400 MW

Year enacted 2000 2001 1999

Existing renewables 880 MW

Penalties Yes Yes-administrative fines lesser of $50 per MWh or 200% of the average cost of credits traded during the year

Minimum required amount Solar must make up 50% Solar must be 0.5% of total electricity Solar must make up at least of solar (as a percentage in 2001, increasing to 60% delivered, to be achieved beginning 5% of the renewable of the renewable contribution) for 2004 through 2012 2004 by adding at least .01% annually energy generated

Funding for building of Funding from existing system Cost of doing business Cost of doing businessnew generation benefits charges and a new

surcharge to be collected by thestate’s regulated utilities.



112

In summary, we should note that many Europeancountries implemented incentives and standards simi-lar to those described above in the 1990s, slightlybefore today’s low-cost wind-power technology wasperfected. This directly enabled the development ofthe now multi-billion dollar European wind-powerindustry, which currently dominates the market. Dueto the solid base of U. S. government-funded researchand development on various solar power technologies,New Mexico and other western states presently have ashort window of opportunity to develop a similar leadin utility-scale solar power, an option that was simplynot available to most European countries because oftheir weather. Western states stand to benefit enor-mously from their vast wind-power resources, as well.Together, the potential benefits of developing theserenewable energy resources includes significant eco-nomic development, job creation, and a more secureenergy infrastructure, in addition to a cleaner environ-ment. Adoption of incentives by New Mexico likethose described above would greatly help our state tomake these potential benefits a reality.

FOOTNOTES1The RDI Study was conducted by Dr. Arnold Leitner, Senior Consultant

with RDI Consulting, 720-548-5415, [email protected]. It wascommissioned by the Western Governor’s Association and Congress andextensively critiqued by representatives of fossil fuel industries.

FIGURE 3 The top twenty states for wind energy potentialas measured by annual energy potential in the billions ofkWh, factoring in environmental and land use exclusionsfor wind class of 3 and higher.

tions, and the diurnal cycle.) The fact remains, withour current technology, solar energy could provide forall of New Mexico’s electricity needs.

Many studies have confirmed that, with existingtechnology, an area roughly 100 miles by 100 miles(an area less than one-third of 1% of U.S. land area)could in principle supply all of the current electricitydemand of the United States. Preliminary results of astudy by RDI Consulting1 confirms that an arearoughly ten times this size exists in western statesalone with suitable solar resources, taking intoaccount well-buffered land exclusions for militarybases, national forests, parks, and Wilderness, crop-land, highways, waterways, urban areas, lakes, andaltitudes greater than 9,000 feet. This clearly estab-lishes the sunbelt of the U.S. as a potential “solarSaudi Arabia.”

Rank Sta te B kWh

1 North Dakota 1,210

2 Texas 1,190

3 Kansas 1,070

4 South Dakota 1,030

5 Montana 1,020

6 Nebraska 868

7 Wyoming 747

8 Oklahoma 725

9 Minnesota 657

10 Iowa 551

11 Colorado 481

12 New Mexico 435

13 Idaho 73

14 Michigan 65

15 New York 62

16 Illinois 61

17 California 59

18 Wisconsin 58

19 Maine 56

20 Missouri 52

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New Mexico Solar EnergyAssociation (www.nmsea.org):

Educationally oriented. TheNMSEA SunChaser2 Educationprogram takes renewable energytechnology and concepts to schoolsand events, reaching 7,000 stu-dents and 3,000 adults each year).Home design competition, solarhome tours, workshops, LargeSolar Fiesta Event (exhibits andworkshops), Taos Solar Village(exhibits). Makes various equip-ment available upon request (giantSunOven, courtesy of Sandia Labs,etc.).

Coalition for Clean Affordable Energy(www.cfcae.org): A coalition of eightenvironmental groups:

• New Mexico Solar EnergyAssociation (www.nmsea.org) • Rio Grande Chapter of theSierra Club (www.sierra.nm.org/)• Conservation Voters Alliance(www.earthwaves.net/nmcva/)• NM Citizens for Clean Airand Water(http://members.aol.com/nmcit/)• Southwest Research andInformation Center (www.sric.org/)• National Parks Association(www.npca.org/home.html)• Land and Water Fund ofthe Rockies (www.lawfund.org)• New Mexico PublicInterest Research Group(www.nmpirg.org)

Many of these groups are directlyinvolved in renewable energy poli-cy work, outside of the coalition.CCAE lobbies the legislature, filescomments at the PRC, participateson press releases on energy issues.Broad scope: concerned with allconsumer and environmentalissues related to energy. CCAEplayed a role in crafting NewMexico’s deregulation legislation,and in several of the rules promul-gated by the PRC based on thatlegislation.

Energy Conservation andManagement Division of the NewMexico Energy, Minerals and NaturalResources Department(http://www.emnrd.state.nm.us/ecmd/):Provides testimony, public educa-tion and information, conductsresearch related to energy conser-vation, efficiency, and renewableenergy. The current Director, ChrisWentz, chairs the New MexicoSustainable Energy Collaborative(see below). The division alsofunds many projects by groupssuch as NMSEA, Rebuild NewMexico, and others.

New Mexico Sustainable EnergyCollaborative (e-mail Chris Wentz:[email protected]): A large, infor-mal collaboration between utilities,advocacy groups, solar businesses,and others, which formed follow-ing the Alternative Energy

Symposium initiated by PNM inDecember 2000. The collaborativeincludes many of the organizationslisted here, including NMSEA andCCAE. The general purpose of thecollaborative is to promote renew-able energy in New Mexico by for-mulating comments, draft regula-tions, and draft legislation thatenjoys a broad consensus amongstakeholders. The first official actof the collaborative was to filecomments on renewable energy inresponse to the recent Notice ofInquiry from the NM PRC.

New Mexico Solar IndustriesAssociation (contact Chuck Marken at505-243-4900): A collection of NewMexico solar companies that occa-sionally pursues policy work.

Note: An excellent source of infor-mation on renewable energy incen-tives is the Database of StateIncentives for Renewable Energy(DSIRE), which can be accessedonline at http://www.dsireusa.org.

Some Renewable Energy Policy Organizationsin New Mexico

113



What follows is a modified excerpt from “Reliable,Affordable, and Environmentally Sound Energy forAmerica’s Future, the National Energy Policy, May 2001.”The full report is available athttp://www.whitehouse.gov/energy/.

Energy efficiency is the ability to use less energy toproduce the same amount of lighting, heating,

transportation, and other energy services. For a familyor business, conserving energy means lower energybills. For the country as a whole, greater energy effi-ciency helps us make the most of U.S. energyresources, reduces energy shortages, lowers our re-liance on energy imports, mitigates the impact of highenergy prices, and reduces pollution. Improvements inefficiency can be particularly effective in reducingenergy demand when energy is most expensive.

Conservation and energy efficiency are importantelements of a sound energy policy. Improved energyefficiency is the result of many decisions, includingthose of individual consumers; manufacturers of carsand appliances; home builders; and state, federal, andlocal government officials. The federal government canpromote energy efficiency and conservation by includ-ing the dissemination of timely and accurate informa-tion regarding the energy use of consumers’ purchases,setting standards for more energy efficient products,encouraging industry to develop more efficient prod-ucts, and searching for more innovative technologiesthat improve efficiency and conservation throughresearch and development.

Since 1973 the U.S. economy has grown nearly fivetimes faster than energy use (126% versus 26%). HadAmericans continued to use energy as intensively as in1970, the U.S. would have consumed about 177quadrillion Btus of energy last year, compared to about99 quadrillion Btus actually consumed. [A Btu (Britishthermal unit) is the amount of heat required to raisethe temperature of one pound of water (about onepint) one degree Fahrenheit at sea level. Put anotherway, it is approximately the same amount of energycontained in a wooden match head.]

Gains in energy efficiency over the last three decades

were built on a combination of technological improve-ments, better management practices, and learning toput these technologies and practices to their best usein automobiles, homes, offices, factories, and farms. Inmany areas the results have been quite impressive.New home refrigerators use about one-third of theelectricity they used in 1972. Compact fluorescentlights use about 25% of the electricity of the in-candescent bulbs they replace. Automobiles useroughly 60% of the gasoline they did in 1972 per miledriven.

CONSUMER CHOICES

The two most important factors in consumers’ deci-sions about purchasing an energy efficient product areprice and the life of the product. When energy pricesare high, consumers tend to weigh energy efficiencymore heavily. Unless consumers are informed aboutthe price of energy, they may not have the incentive toselect the most energy efficient product. As an exam-ple, consumers do not receive timely signals about ris-ing electricity costs in order to make adjustments totheir energy use and efficiency. When consumers’ peakcosts are averaged with off-peak costs, the higher costof peak electricity supplies is masked. As a result, con-sumers may not recognize the benefits of investing intechnologies that best target peak consumption.Some energy efficiency improvements are easiest andmost cost effective to undertake when first buildingnew factories, cars, equipment, appliances, and build-ings. Some energy-using equipment, like computers,are used for only a few years before being replaced.Other equipment is used from five to twenty years,such as home appliances, home electronics, and light-ing systems. Buildings can last a half a century ormore.

In a typical U.S. home, appliances are responsiblefor about 20% of the energy bills. Refrigerators, freez-ers, clothes washers, dryers, dishwashers, and rangesand ovens are the primary energy-using appliances inmost households. Taking steps to save energy whileusing these appliances, and replacing old inefficientappliances with modern ones can save money.

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Using Energy Wisely:Increasing Energy Conservation and Efficiency for the Consumer

A Report of the National Energy Policy Development Group

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The federal government established a mandatoryprogram in the 1970s requiring that certain types ofnew appliances bear a label to help consumers com-pare the energy efficiency of various products. Underthis program, all refrigerators, freezers, clothes wash-ers, and dishwashers are sold with yellow EnergyGuide labels to indicate their energy efficiency. Theselabels provide an estimated annual operating cost ofthe appliance, and also indicate the cost of operatingthe models with the highest annual operating cost andthe lowest annual operating cost. By comparing amodel’s annual operating cost with the operating costof the most efficient model, you can compare theirefficiencies. This labeling program ensures that con-sumers have the information they need to make theright decisions when they purchase major home appli-ances. However, Energy Guide labels are not currentlyrequired for some products, such as kitchen ranges,microwave ovens, clothes dryers, on-demand waterheaters, portable space heaters, and lights.

The federal government not only ensures that con-sumers have information on the energy efficiency ofmajor home appliances, it also promotes the most ener-gy efficient products through the Energy Star program,a joint program run by the Department of Energy andthe Environmental Protection Agency. Energy Star isonly awarded to appliances that significantly exceedminimum energy efficiency standards. The Energy Starprogram does not extend to all products. Energy effi-ciency would be further promoted if the Energy Starprogram were expanded to a broader range of products.

Energy efficiency can also be improved by the estab-lishment of minimum energy efficiency standards.Congress enacted legislation in 1987 and 1988 toestablish minimum energy efficiency standards formany major appliances. These standards apply tomanufacturers, not consumers. Appliance manufactur-ers must produce products that meet the minimumlevel of energy efficiency. These rules do not affect themarketing of products manufactured before the stan-dards went into effect, and any products made before-hand can be sold. The new standards will stimulateenergy savings that benefit the consumer, and reducefossil fuel consumption, thus reducing air emissions.

These laws established minimum energy efficiencystandards for many appliances, including refrigerators,refrigerator freezers, freezers, room air conditioners,fluorescent lamp ballasts, and incandescent reflectorlamps, clothes dryers, clothes washers, dishwashers,kitchen ranges, and ovens, pool heaters, and waterheaters. The Energy Policy Act of 1992 added stan-

dards for fluorescent and incandescent reflector lamps,plumbing products, electric motors, and commercialwater heaters, and heating, ventilation, and air condi-tioning systems. Under current law, the Department ofEnergy can raise the minimum energy efficiency stan-dards for these appliances if certain criteria are met,such as cost, technological feasibility, and the impacton competition among appliance manufacturers. Inaddition, the Department can set energy efficiencystandards for appliances not covered by these laws.

RESIDENTIAL BUILDINGS

There are significant opportunities to improve the ener-gy efficiency of buildings and homes through technolo-gies and better practices. For existing homes, immedi-ate options for improving efficiency include reducingair infiltration with caulking and weather stripping,installing modern thermostats, sealing ductwork, andadding insulation. These steps can reduce the 40%share of residential energy bills that go toward heatingand cooling. Additional savings are possible when effi-cient appliances are purchased or major home renova-tions are undertaken. Installing a new, more efficientgas furnace can save up to 20% annually on naturalgas. New buildings offer the greatest energy efficiencyopportunities and can be designed to be both morecomfortable and more efficient, cutting heating andcooling costs by close to 50%.

TRANSPORTATION

Transportation plays a key role in a growing U.S. econo-my, comprising 16% of GDP in 1998, 10.5% of totalemployment, and 27% of total U.S. energy consumption.Trucks and automobiles account for over three-fourths ofthe sector’s petroleum use, with the remainder attributa-ble to rail, ship, air, and pipeline systems. Mass transitridership has increased by 21% since 1996. Automobilestoday use roughly 60% of the gasoline they did in 1972per mile driven, due in part to new technology, such asbetter engine and design controls, improved transmis-sion, weight reduction, and improved aerodynamics.Despite the adoption of more efficient transportationtechnologies, average fuel economy for passenger vehi-cles has remained relatively flat for ten years and is, infact, at a twenty-year low, in large part due to the growthand popularity of low-fuel-economy pickup trucks, vans,and sport utility vehicles.

Opportunities for reducing oil demand in the trans-portation sector include increasing conservation, vehi-cle efficiency, and alternative fuels. Conservation canbe improved by car pooling, telecommuting, and

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increasing transit choices. For example, an increase inthe average fuel economy of the on-road vehicle fleetby three miles per gallon would save one million bar-rels of oil a day, or about half of the global shortfallbetween supply and demand that triggered the oilprice increases since 1998. In addition, fuel conserva-tion can be further improved by technologies toreduce congestion.

A recent analysis indicates that the fuel economy ofa typical automobile could be enhanced by 60% byincreasing engine and transmission efficiency andreducing vehicle mass by about 15%. Several promis-ing efficiency technologies are being presented to theU.S. market. For example, some automobile manufac-turers have already introduced hybrid vehicles, andothers have announced that they will introduce hybridvehicles within the next several years. Advanced light-weight materials offer up to 6% improvement inmileage for each 10% reduction in body weight.Although promising, it may be many years beforehybrids become a substantial part of the automotivefleet.

The average car now lasts fourteen years, and newercars have even more longevity. Vehicle efficiencyimprovements require significant technologicalchanges. Development of new-car production modelsrequires at least three to four years, which limits therate at which new technologies can enter the market.Making fundamental changes, such as switching to theuse of a fuel cell, would take even longer. Once thosenew vehicles are in the showroom, it then takes sever-al more years before they constitute any sizable per-centage of total vehicles.

Because of the large economies of scale in automobilemanufacturing, new technologies with limited earlyproduction runs often enter the market at higher initialcosts. In this highly competitive international market,higher initial production costs can be a significantimpediment to the introduction of new technologies.Unless U.S. automakers can remain competitive withtheir overseas counterparts, it is unlikely they willinvest in new, more efficient technologies. Vehicle effi-ciency technologies, such as advanced engines, fuelcells, and cutting-edge electronic drive-train technolo-gies, will become widely available only when compo-nent costs are reduced or demand is increased.

CONSUMER CHALLENGES

Consumers face certain challenges that could be addressedby Decision Makers in government and industry:

• Insufficient Information Monthly energy bills

generally report only total electricity or natural gasused, leaving families and businesses unsure aboutwhich energy services are most responsible fortheir energy use, and which investments couldbest help them reduce their costs. In addition,consumers may be unsure about the credibility ofthe energy saving claims of individual manufac-turers, salesmen, and designers. This incompleteinformation causes imperfections in the market-place that hinder purchases of efficient technolo-gies that would actually save families and busi-nesses money.• Lack of Availability Frequently, the most ener-gy efficient products cost more and are not widelyavailable, especially in smaller communities.Builders who would like to construct more effi-cient homes and businesses face the same problemat the wholesale level. For example, to keep costsdown, builders are less likely to install top-of-the-line, highly efficient products. The less expensiveand generally less efficient products are heavilystocked and deeply discounted due to volumeordering. The decisions made about the energyefficiency of buildings and homes are not usuallymade by the consumer who will ultimately paythe energy bills. The incentive is for the buildersto choose the material that poses the least cost tothe builder, which is not necessarily the mostenergy efficient choice. • Lack of Automation People often walk out oftheir offices and homes with the lights on and theair conditioner running. Turning off unused appli-ances, electronics, and lights is not always easy.Lack of automation (e.g., daylight sensors) meansthat conservation mostly depends on people turn-ing off switches. Some appliances and electronics,such as stereos, video tape players, and televi-sions, continue to use electricity even after theyare turned off. • Higher Initial Costs Efficient products oftencost more than less efficient versions, especiallywhen they are first introduced to the market.Unless consumers can verify the resulting savings,they may be reluctant to pay the additional costs.Businesses that adopt labeling programs that spellout energy savings may be more successful in sell-ing a more efficient, yet initially more expensiveproduct. Higher initial costs can be particularlydifficult for the purchaser or builder of a newhome or office building.

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Energy efficiency technologies improve the way weuse energy, and they have the potential to extend

our energy resources to accommodate future genera-tions and the inevitable growth of New Mexico’s econ-omy. Effective technologies are designed to reliablysave energy over the life of the product. The word“conservation” applied to energy use typicallydescribes a conscious effort or behavioral habit adopt-ed to reduce consumption. Examples are turning offelectric lights and lowering thermostats. Conservationrequires a continual application of effort in order to beeffective. However, energy efficiency programs achievethe same goals without the required diligence on thepart of individuals. Both energy efficiency and conser-vation are important methods for improving humancomfort, preserving the environment, and increasingNew Mexicans’ disposable income, and they should bepart of New Mexico’s energy portfolio.

The Energy Conservation and Management Division(ECMD) of the New Mexico’s Energy, Minerals andNatural Resources Department is responsible for plan-ning and administering energy efficiency and renew-able energy technology programs, including develop-ment and use of solar, wind, geothermal, and biomassresources, as well as alternative fuels transportation. Inaddition, ECMD provides technical assistance andinformation in these areas to government agencies,Indian tribes and pueblos, educational institutions,and the general public.

The U.S. Department of Energy (DOE) also imple-ments a number of energy efficiency programs in NewMexico. These include the Federal EnergyManagement Program (FEMP), targeted at achievingenergy savings in federal buildings; and the BuildingAmerica Program, which works directly with contrac-tors to improve residential construction techniques tosave energy. Some DOE programs, such as RebuildAmerica, are administered by ECMD and other NewMexico state agencies.

The state energy program, funded by DOE, is amajor collaboration between DOE and the State ofNew Mexico. The Energy Conservation andManagement Division of EMNRD is charged with theresponsibility of administering the program in New

Mexico. It is the umbrella program that is used to helpall economic sectors in New Mexico. The state legisla-ture provides funds for salaries and benefits. All fundsused to implement projects throughout the state areprovided by DOE through a basic grant and then sup-plemented with competitive DOE grants. Each yearwe compete with 13 other states to get about a halfmillion dollars of DOE funds for special projects.Those special projects include DOE efforts such asRebuild America, Codes and Standards, AlternativeFuels, Clean Cities, Pollution Prevention, DistributedGeneration, Renewable Energy Assessment, MillionSolar Roofs, Energy Smart Schools, and now BuildingAmerica. We can also participate in FEMP projects. Allthe work done by New Mexico relating to energy con-servation is based on the comprehensive plan we puttogether for DOE.

RESIDENTIAL SECTOR PROGRAMS

The adoption of new energy codes improves the ener-gy efficiency of all new construction over the life ofthe building. Between 1977 and 1984, improved ener-gy codes for residential buildings reduced energy con-sumption from 81,700 Btu/ft2 (British thermal unitsper square foot) down to 75,000 Btu/ft2. ECMD iscurrently working with the New Mexico ConstructionIndustries Commission to update the codes to the2000 International Energy Conservation Code. ECMDprovides technical assistance to contractors and home-owners. Several grants have been obtained from DOEto assist with training, and the development of com-pliance materials. In addition to ECMD programs, theNew Mexico Mortgage Finance Authority administersthe Weatherization Assistance Program (WAP). WAP,formerly administered by ECMD, helps low-incomeNew Mexicans improve the energy efficiency of theirdwellings, saving both energy and money.

COMMERCIAL SECTOR PROGRAMS

• Public Facility Energy Efficiency and WaterConservation Act of 1993 This act has made it pos-sible, since its inception, to implement over $25million worth of projects, with annual savings ofover $3.9 million, 77.5 million kilowatt-hours of

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Energy Efficiency Programs in New Mexico

Harold Trujillo and Louise Martinez, Energy Conservation and ManagementDivision, New Mexico Energy Division, New Mexico Energy, Minerals and NaturalResources



electricity and 4.7 million therms of natural gas.Part of the energy savings is used to recoup thecost of the project. The advantage of the act is thatan energy service company provides the energyaudit, design, installation, and up-front financing,including the guaranteed performance bond. Since1993, 29 public schools, Torrance County, citiesof Portales and Tucumcari, New MexicoHighlands University, and Eastern New MexicoUniversity have implemented energy performancecontracts. ECMD has statutory responsibility toreview all proposals to ensure that the savings arereasonable and accurately estimated.• State Government Energy Management ProgramUnder Executive Order 99-40 (November 1999),Cabinet-level state agencies were directed toreduce their energy consumption by 4% by June30, 2002. Preliminary results show that as of June2001 energy consumption was reduced by 17%over the 1998 fiscal year base. These savings rep-resent enough electricity to operate over 1,000 NewMexico homes for one year and enough natural gasto annually heat over 1,800 New Mexico homes. Aslead agency, ECMD provides technical and financialassistance in improving the energy performance ofover 1,000 state-owned and -operated buildings,maintaining a state utility bill database that con-tains nearly 1,700 accounts from 30 utilities. Thedatabase provides important feedback for agenciesto evaluate the results of their efforts as shown inFigure 1. The utility bills for 13 cabinet-level

departments during fiscal year 1998 totaled $8.9million. Several agencies have exceeded expecta-tions for reducing energy consumption and costs.For example, the Health Department—NewMexico’s largest state agency—reduced its energyusage by 39.1%.

Southern New Mexico Correctional Facility com-pleted a lighting retrofit project in December 1999that resulted in a savings of $35,410 per year. Theproject cost $89,920 and paid for itself in 2.5 years.The project replaced 3,389 magnetic ballasts withelectronic ballasts, and new energy efficient lampswere installed. The entire project was completed infour months, using inmate work crews.

The New Mexico Highway and TransportationDepartment (HTD) established a comprehensive ener-gy management plan for its headquarters building thatresulted in over $600,000 in savings as of June 1998,compared to the 1992 fiscal year base. The lightingsystem was renovated with electronic ballasts and 32-watt lamps.

More than 30 patrol buildings in Districts II, III, IV,and V were upgraded with energy efficiency lighting,ceiling and wall insulation, and infrared heating sys-tems. HTD spent $540,143 (of which ECMD provided$388,858). HTD leads all other state agencies in sav-ings over the last five-year period.

• Public School Construction Plans Review ECMDreviews construction plans as required by the

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State Department of Education for minimum ener-gy efficiency requirements. In 2001 ECMDreviewed 94 plans representing $139 million inconstruction expenditures.

• Rebuild America/Rebuild New Mexico This pro-gram provides information,training, and tech nicalassistance to private commercial building ownersand local government participants. Over 59 par-ticipants, with more than 42.4 million square feetof building space, are improving their energy effi-ciency. Energy audits have identified potential sav-ings of more than $750,000 per year. In partner-ship with the Youth Conservation Corps, 31at-risk youth in Albuquerque and Taos Pueblohave been trained to make energy efficiencyimprovements.

TRANSPORTATION SECTOR PROGRAMS

• Energy Policy Act /Alternative Fuels ConversionAct Increasing public concern about the cost ofpollution, environmental impacts, and nationalsecurity issues prompted the federal government toenact the Energy Policy Act of 1992 (EPACT). Itrequires accelerated acquisition of alternative fuelvehicles by federal, state, and fuel-provider fleets.

In 1992 New Mexico enacted legislation known asthe Alternative Fuels Conversion Act [Sections 13-1B-1 to -7, NMSA1978] and developed an energy policygoal to meet EPACT requirements, to meet state man-dates, and to increase use of alternative fuels derivedfrom New Mexico’s own abundant energy resources.There are many types of alternative transportationfuels, including compressed natural gas (CNG), lique-fied petroleum gas (propane), ethanol, and electricity.New Mexico’s Alternative Fuels TransportationProgram is managed by ECMD and funded by theU.S. Department of Energy. DOE established the CleanCities Program, a voluntary program that works todevelop partnerships that promote commitments tousing alternative fuels as a substitute to gasoline anddiesel. This program facilitates the implementation ofEPACT and promotes the use of alternative fuels byproviding special funding under the state energy pro-gram.

New Mexico school districts have been using CNGschool buses since the mid-1990s. The Los Lunas,Belen, and West Las Vegas School Districts continue tooperate CNG buses. ECMD provides funding for thepurchase of these alternatively fueled buses, as well as

incremental costs for purchasing CNG buses for theUniversity of New Mexico’s Park-and-Ride shuttle.

To reduce congestion and to help improve air quali-ty, funding is also provided to develop ride-share andpark-and-ride programs that encourage commuters touse carpools, vanpools, and public transportation toget to their destinations. The city of Las Cruces hasreported that in the year 2000 a total of 1.012 milliongallons of gasoline were saved by carpools and van-pools operating in that area.

INDUSTRIAL SECTOR PROGRAMS

• Oil Industry Opportunities exist to save ener-gy in the production of oil and gas. Measures thatreduce operating costs range from simple low-costmaintenance such as proper lubrication to higher-cost items such as replacement of electric motors.Operating costs are critical to producers when oilprices are low. ECMD contracted for the publica-tion, Pollution Prevention Best ManagementPractices Manual, tailored to the New Mexico oiland gas industry to address energy savings.Training was provided to over 80 industry person-nel.• Pollution Prevention Programs ECMD contin-ues to provide technical support to the Green ZiaEnvironmental Excellence Program, which facili-tates and publicly recognizes pollution preventionand energy efficiency efforts; the program isadministered by the Environment Department.ECMD also coordinated with the Waste-Management Education and Research Consortium(WERC), a consortium for environmental educa-tion and technology development based at NewMexico State University, in funding and establish-ing a Pollution Prevention Technical ResourcesCenter in Albuquerque to provide such assistance.

BENEFITS OF ENERGY EFFICIENCY PROGRAMS

• Competitive Edge Energy is an operating cost ofproduction. Any price increase will cascadethrough the nation’s economy. Businesses thatimprove their energy efficiency are in a betterposition to compete in the world market, evenduring high-cost periods. From experience, energyservice companies find conservation opportunitiesthat reduce energy bills by 20–25% on average.Businesses can increase their profit margins, andgovernment entities can reduce costs passed on tothe taxpayer.

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• Imported energy Energy efficiency can reduceour reliance on imported oil and reduce our tradedeficit.• Life Safety Energy efficient buildings are saferand can prevent losses to life and property.According to the Risk and Insurance ManagementSociety Inc., energy-efficient windows are moreresistant to breakage by fires, thieves, or wind-storms. Insulated pipes reduce the potential forfreeze damage.• Economic Development Energy efficiency andconservation efforts generate revenues for NewMexico. For example, energy service companieshave implemented over $21 million of infrastruc-ture improvements that were financed by the pri-vate sector and paid for from energy savings; thetaxpayers did not have to pay for these improve-ments.• Air Quality The United States, with 5% of theworld’s population, produces 23% of the world’sgreenhouse gases. Energy efficiency improvementshelp to reduce emissions of pollutants and green-house gases. • Resource life Through changes in production,design, and technology, energy efficiency canextend natural resources. Energy efficiency helpsto sustain our economy, environment, and com-munity over the long term for future generations. • Demand Stress One way to provide for resourcediversification and a hedge against the pricevolatility of conventional fuels is energy efficiency.Demand/price stress is reduced on our currentresources. Efficiency also allows time to developcost-effective renewable and fuel cell technologies.

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R E N E W A B L E E N E R G Y , E F F I C I E N C Y , & C O N S E R V A T I O N 121

For many years Los Alamos National Laboratory hasbeen engaged in an extensive research and develop-

ment program in low-temperature fuel cells. Fuel cellscan produce electricity and heat from hydrogen, naturalgas, petroleum fuels, and fuel gases derived from coaland biomass. Fuel cells use fuels without combustion.Instead, they work by using chemical reactions, con-verting the chemical energy in a fuel into electric energywith reduced emissions of both greenhouse gases andnoxious pollutants. Fuel cells have the potential to radi-cally change energy use with worldwide impact.

Fuel cells have been around since 1839, but it took20 years of research for NASA to demonstrate poten-tial applications of fuel cells to provide power duringspace flight. Industry soon recognized the commercialpotential of fuel cells but encountered technical barri-ers and high investment costs; fuel cells were not eco-nomically competitive with existing energy technolo-gies. Since 1984 the Office of TransportationTechnologies at the U.S. Department of Energy hasbeen supporting research and development of fuel celltechnology, and as a result hundreds of companiesaround the world are now working toward makingfuel-cell technology pay off.

HOW FUEL CELLS WORK

A fuel cell is an electrochemical energy conversiondevice. It is two to three times more efficient than aninternal combustion engine in converting fuel topower. The fuel cell produces electricity and heat,using fuel (there are several options) and oxygen fromthe air. When the fuel is hydrogen, the only emissionis water. One common low-temperature type of fuelcell is the polymer electrolyte membrane (PEM) fuelcell. In the PEM fuel cell, hydrogen flows into the fuelcell, and a platinum catalyst facilitates the separationof the hydrogen gas into electrons and protons. Thesethen pass through a membrane and, again with thehelp of a platinum catalyst, combine with oxygen andelectrons to produce water. The electrons that cannotpass through the membrane become electric current.The current travels through an external circuit andpowers an electric motor.

TYPES OF FUEL CELLS AND FUELS

There are five types of fuel cells (Fig. 1). For each, it isthe electrolyte that defines the type. Polymer elec-trolyte membrane (PEM) fuel cells (described above)are low-temperature, direct hydrogen fuel cells thathold much promise for portable fuel cells. Knowndrawbacks are (1) that they must run on hydrogenfuel, and (2) they can operate only within a narrowtemperature range, because they contain and producewater, which cannot be allowed to freeze or boil. Thecost of polymer membranes is high ($100 per squarefoot), which inhibits their widespread use today.

In addition to the direct hydrogen fuel cell, researchis currently underway to develop a fuel cell systemthat can operate on various types of common hydro-carbon fuels such as gasoline or natural gas. In such afuel-flexible system, called a reformate/air system, aPEM fuel cell is fueled with hydrogen generated by anonboard reformer that converts hydrocarbon fuels intohydrogen-rich mixtures. Technical challenges lie in thereforming process, which requires high temperatures(700°C to 1,000°C). The reforming process also gen-erates sulfur and carbon monoxide that can poisonthe fuel cell catalyst. Such a system lacks the zeroemission characteristics of pure hydrogen systems, butit is still an improvement over the internal combustionengine (whose emissions are higher still), and the ne-cessary fuels are readily available.

Direct methanol fuel cells use liquid methanolrather than hydrogen as a fuel. The advantage withthese is that the fuel is liquid and can be distributedin a way that is familiar to consumers. In addition, thesystem does not require a reforming subsystem or ahydrogen storage subsystem. This technology is stillrelatively new, and several challenges remain. In par-ticular, a great deal more platinum is required than fordirect hydrogen fuel cells, and some methanol fuelcrosses through the membrane, decreasing and wast-ing fuel.

APPLICATION OF LOW-TEMPERATURE FUEL CELLS

The low-temperature technologies being developedat Los Alamos are particularly attractive for applica-

Low-Temperature Fuel Cells:Revolutionizing Energy Use

Kenneth R. Stroh, Sharon Thomas, and Marcia Zalbowitz,Los Alamos National Laboratory, LALP-02-6



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tions with multiple start-stop cycles, such as batteryreplacement, portable power, vehicular propulsion,and residential energy systems. Every major automo-bile manufacturer in the world is currently developingfuel-cell vehicles. The modular nature of fuel-cellpower systems enables the generation of heat andpower for small-scale residential applications. PEMfuel cells offer the advantage of minimal maintenance,because there are no moving parts in the system. Thepotential for utility-scale systems is currently beingstudied (see paper by Berger et al., this volume).

RELATED RESEARCH AT LOS ALAMOS NATIONALLABORATORY

Los Alamos National Laboratory has worked withindustry on fuel-cell and related technology since themid-1970s, through both the government-funded coreresearch program and through cooperative research anddevelopment agreements with private industry. The LosAlamos research program ranges from fundamentalinvestigation of ion transport and electrochemistrythrough materials development and component opti-

mization. In addition to fuel cells, current research anddevelopment includes supporting technologies such ashydrocarbon fuel reforming to generate a hydrogen-richgas stream on demand, gas-cleanup technologies tomake such streams compatible with PEM systems, andadvanced sensors and controls. Theory and modeldevelopment will further enable knowledge-based inno-vation; current research goals include cost reduction,durability, and performance improvement.

FIGURE 1 Types of fuel cells.

Fuel cell Electroly te Operating Applications Advantages Disadvantagest emp. (°C)

Polymer electrolyte/ Solid organic 60–100 Electric utility Solid electrolyte reduces Low temperature requiresmembrane (PEM) polymer Portable power corrosion and expensive catalysts

Poly-perfluoro- Transportation management High sensitivity to fuel sulfonic acid problems impurities

Low temperatureQuick startup

Alkaline (AFC) Aqueous solution of 90–100 Military Cathode reaction faster Expensive removal of potassium hydroxide Space in alkaline electrolyte CO2 from fuel and airsoaked in a matrix —so high performance streams required

Phosphoric Liquid phosphoric 175–200 Electric utility Up to 85% efficiency in Platinum catalystacid (PAFC) acid soaked in a Transportation in co-generation of Low current and power

matrix electricity and heat Large size/weightImpure H2 as fuel

Molten carbonate Liquid solution of 600–1000 Electric utility High temperature High temperature(MCFC) lithium, sodium advantages* enhances corrosion and

and/or potassium breakdown of cellcarbonates, soaked componentsin a matrix

Solid oxide Solid zirconium 600–1000 Electric utility High temperature High temperature(SOFC) oxide to which a advantages enhances breakdown

small amount of of cell componentsyttria as added

* High temperature advantages include higher efficiency andthe flexibility to use more types of fuels and inexpensivecatlysts as the reactions involving breaking of carbon-to-carbonbonds in larger hydrocarbon fuels occur much faster as thetemperature is increased.

renewable energy, efficiency, and conservation · new conventional power plants (e.g., large...

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