Enchant Energy and partners plan to retrofit CCS at the New Mexico plant, combining false promises and major risks
Touted as world’s largest power plant CCS facility, but feasibility is questionable and assumptions ambitious
The business template behind a proposal to turn the San Juan Generating Station into a model carbon-capture project doesn’t hold up under much scrutiny.
On paper, it’s an elegant, almost magical idea. It would retrofit an aging and increasingly uncompetitive coal-fired power plant with whiz-bang technology that would trap its carbon dioxide emissions and sell them to producers in the oil industry. The project, which would cost north of $1 billion, supposedly would be paid for by investors who would recover their capital through federal tax credits.
Under the plan, San Juan would remain open, while longtime and good-paying jobs in San Juan County would be preserved and the tax base it supports would be spared the hit it otherwise will suffer under existing plans to close the plant by 2022.
Enchant Energy, a novice company, appears so far to be enriching only itself
The pitch, however, is built on false assumptions, as we’ve described in research we’ve published over the past several months. The promoter, a novice and untried energy company called Enchant Energy, appears so far to be enriching only itself with federal money it has been given to study the idea. In the meantime, it is creating false hope through a partnership with Farmington Electric Utility System by sustaining the myth that coal-fired power generation can survive in this day and age.
Electricity-generation modernization is sweeping the country as cheap fracked gas and zero-fuel-cost renewables like utility-scale wind and solar continue to gain market share. The trend has gained irreversible momentum and it leaves plants like San Juan in an impossible position.
SAN JUAN ISN’T ALONE. COAL-FIRED PLANTS ALL ACROSS AMERICA ARE CLOSING as utilities shift to more economic forms of power production. Regionally the shift is starkly evident. The only other two coal-fired plants in New Mexico are headed for decommissioning too. Four Corners Power Plant, just across the San Juan River, will close by 2031, seven years ahead of its original retirement date, if not sooner. Escalante Station, near Grants, will close this year, as part of an abrupt reversal in business strategy announced just last month by Tri-State Generation and Transmission Association, which is also accelerating the closure of its coal plants in Colorado.
The same thing is happening across the state line in Arizona, where Navajo Generating Station, once the biggest electricity plant west of the Mississippi, closed in November, and where Arizona’s remaining coal-fired plants—Cholla, Coronado, Springerville, and Apache—are now either scheduled for early retirement or are underperforming at a level that suggests they won’t be able to make a go of it as long as originally envisioned when they were built.
The plan is riddled with so many holes that it is more a work of aspiration than reality
Enchant claims its proposal for San Juan would reverse this tide, but the plan is riddled with so many holes that in truth it is more a work of aspiration than anything resembling reality.
Our most recent report on it highlights three wildly optimistic assumptions made by Enchant that call the entire project into question:
All of this is technically possibly, as researchers at Los Alamos National Laboratory have pointed out. But there is a huge gap between what is technically possible in a paper assessment and what is likely during actual commercial operations. It is technically possible that your lottery ticket will win the jackpot, too. The likelihood of that outcome, however, is, to understate the obvious, unlikely.
It is perfectly understandable for any community going through what Farmington is experiencing to reach for solutions that are within reason. But Enchant’s proposal does not fall into that category. Rather, its plan cobbles together projections that defy common sense and conventional commercial practices.
ENCHANT’S QUIXOTIC ENDEAVOR ALSO RAISES SERIOUS RISKS FOR THE CITIZENS OF FARMINGTON and the surrounding area. There is little tying Enchant’s backers to the region; if the plant founders they can wash their hands and move on—leaving the local community holding the bag.
The people of Farmington and San Juan County would be far better served investing in the new energy economy, which is revolving more and more around proven, clean and increasingly low-cost technologies that are practical and saleable.
The future of power generation is not in coal-fired power of any kind, but in the development of readily available resources like the sun, which northwestern New Mexico has in abundance.
Dennis Wamsted and Karl Cates are analysts at the Institute for Energy Economics and Financial Analysis.
This commentary appeared in the Farmington Daily Times on February 26, 2020 under the title: Retrofitting San Juan Generation Station for carbon capture is an uneconomic pipe dream