IEEFA report: Proposed carbon capture retrofit of San Juan Generating Station does not add up

‘Rational investors or regulators’ are unlikely to back Enchant Energy

Feb. 12, 2020 (IEEFA) — A proposal to turn the San Juan Generating Station in northwestern New Mexico into a carbon-capture project is doomed by core flaws in the business model put forth by its promoter, concludes a report published today by the Institute for Energy Economics and Financial Analysis.

Capacity Factors at San Juan Units 1 and 4The report, Enchant’s Proposed CCS Project at the San Juan Generating Station: False Promises and Major Risks, details how a newly formed company called Enchant Energy is making its case for the retrofit based on hollow assumptions and quixotic projections.

“Rational investors and regulators will dismiss all these assumptions and projections out of hand because the simple reality is that the proposed carbon capture retrofit at the San Juan Generating Station is not financially viable,” said Dennis Wamsted, an IEEFA analyst and co‑author of the report.

The plan being touted by Enchant has drawn attention globally for its promise that San Juan will become the largest carbon capture and sequestration (CCS) project in the world and, as such, serve as a template for struggling coal-fired power plants everywhere.

THE REPORT DETAILS FAULTY CALCULATIONS FROM ENCHANT ON A NUMBER OF POINTS. It concludes, for instance, that little more than unfounded conjecture is behind Enchant’s assertion that it can expand and improve on the questionable performance of the much smaller Petra Nova carbon capture project in Texas.

“The scale-up relative to Petra Nova in and of itself presents an enormous risk to the project’s feasibility,” said David Schlissel, report co-author and IEEFA director of resource planning analysis. “But even greater risks are evident in three assumptions made by Enchant, assumptions that all must hold true for the project to have even the slightest chance of being commercially viable.”

The three assumptions posit that:

  • The retrofitted units will operate at an average capacity factor of at least 85% for the first 12 years of the project’s operation;
  • The retrofitted plant will capture 90% of the CO2 produced at San Juan, and will do so for at least 85% of the plant’s operating hours every year for 12 years; and
  • The plant will be able, as a result, to sell six million metric tons of CO2 every year for use in enhanced oil recovery (EOR) activities in the Permian Basin in order to pay for the project.

The report explains why none of these assumption are likely to materialize, and how, as a result, investors that support the project will do so at their own peril and further, that regulators will be acting in the public’s best interest by examining the proposed retrofit with the skepticism it warrants.

“ENCHANT IS SELLING A FANTASY, ONE THAT REQUIRES BELIEVERS TO IGNORE THE SERIOUS RISKS associated with the proposal. This may work for Enchant, which can, in the end, always opt to walk away from the project (after pocketing federal grant money),” the report concludes. “Regulators, the City of Farmington, citizens, the state of New Mexico and investors won’t have that option.”

The report builds on research published last summer by IEEFA (see Novice Company’s Carbon Capture Pitch Offers False Hope, Fiscal Risk to Farmington, N.M. July 2019 and High-Risk Carbon-Capture Deal Is Not in New Mexico City’s Best Interest August 2019) that raised initial questions about Enchant, which is run by three little-known out-of-state owners and was incorporated in New Mexico in 2019.

Full report: Enchant’s Proposed CCS Project at the San Juan Generating Station: False Promises and Major Risks

PowerPoint from Webinar, February 12, 2020: False Promises and Major Risks from Enchant’s Proposed CCS Project at San Juan

Audio of webinar: False Promises: Enchant Energy’s San Juan, NM Carbon Capture Proposal


Dennis Wamsted [email protected] +1 (703) 862-9324

David Schlissel [email protected]  +1 (617) 947-9507


Media contact

Vivienne Heston [email protected] +1 (914) 439-8921


The Institute for Energy Economics and Financial Analysis (IEEFA) conducts global research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

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