Read the article in the Santa Fe New Mexican.
By Kylie Garcia kgarcia@sfnewmexican.com Updated
A not-for-profit power supply cooperative that serves communities across New Mexico and three other states was one of 16 entities recently selected to potentially participate in a federal program to help rural areas transition to clean energy.
The U.S. Department of Agriculture's Empowering Rural America Program was established by the Inflation Reduction Act, a climate change and health care law passed in 2022, and will award member-owned rural electrical cooperatives with $9.7 billion in grants and loans to advance clean energy projects and lower energy costs for rural communities.
Round one of the program's selectees were announced Sept. 5. One of them was Tri-State Generation and Transmission Association Inc., which has a presence in New Mexico, Colorado, Nebraska and Wyoming. Tri-State members service large swaths of rural New Mexico; locally, members include the Mora-San Miguel, Northern Rio Arriba and Jemez Mountains electric cooperatives.
"This is a big deal and transformational opportunity for Tri-State and other electric cooperatives across the country," CEO Duane Highley said in a statement.
Tri-State made it through the initial stages of applying for the program but still has a few steps to take before getting any of the $679 million it requested. The selectees are now in the underwriting stage, a risk-evaluation process that comes before final approval of loan applications or awards.
If awarded, Tri-State plans to put the funds toward 18 projects, which they say will eliminate nearly 5.8 million tons of greenhouse gas emissions annually.
From a financial perspective, it's no surprise the company went full steam ahead — or no steam, rather — to pursue the program.
According to Lee Boughey, vice president of communications, the company compared two scenarios: a "business as usual scenario" of continuing to add renewables and accruing the additional costs that come with that, and a scenario in which federal funding could be used to help with the transition. The latter proved to be the path that would protect grid affordability, reducing the revenue required from members through rates by $422 million over 20 years, Boughey said.
"As a cooperative, it's our members and the communities our members serve that will benefit from the program," Boughey said.
For New Mexico, the projects included in Tri-State's program application include supporting the retirement of McKinley County's coal-fired Escalante Station; a solar power purchase agreement for the Escalante Station; a four-hour, lithium-ion storage battery; another solar project power purchase agreement and two hybrid wind-storage project power purchase agreements.
Tri-State plans to put in a request for proposals for these projects this month and expects to receive bids by the end of October, Boughey said. The selected bids will determine where some of these projects would take place in New Mexico, which is home to 11 cooperative members.
Boughey said the lithium-ion battery would provide New Mexico with a 50-megawatt energy storage resource, which "dispatch[es] power when it's needed most, including when loads are high, or renewable output is reduced," for a maximum of four hours.
As for Escalante solar, Boughey said the project is a 200-megawatt resource — the largest solar project the company has purchased power from to date. The plant, built and operated by Florida-based solar energy company Origis Energy, is up and running and will support four to six on-site Origis employees.
Solar isn't the first clean energy project proposed to replace the Escalante station, which closed in 2020, resulting in hundreds of layoffs that impacted McKinley and Cibola counties. Local and state lawmakers and Gov. Michelle Lujan Grisham made several pushes over the years to pass hydrogen hub bills that would have brought hydrogen production to the plant, none of which panned out.
The projects that have panned out, and the ones the company remains optimistic about, seek to address one of the biggest question marks surrounding the transition to clean energy — reliability.
"Reliability is our number one priority in everything that we do," Boughey said. "Tri-State’s resource planning creates a new standard for reliability and resource adequacy as we transition to clean energy, ensuring that we have the resources to serve our members, even in extreme weather events.
"We recognize that sometimes the wind doesn't blow as hard, or … solar energy might be limited, and we make sure that we've got sufficient dispatchable resources that we can turn on or turn up, to make sure that our members' power needs are always met," Boughey continued.
In building this résumé of renewables, Boughey said Tri-State is on track to provide its New Mexico members with a power supply that is made up of 50% clean energy by the end of 2025 and 70% by 2030. Boughey noted this exceeds what is required by the Energy Transition Act, a state law passed in 2019 that set a 50% renewable energy standard for New Mexico to meet by 2030.
"That's what we are focused on in our energy transition, is making sure that power remains reliable, remains affordable and that our New Mexico members are able to meet their goals and the state's goals for power supply," Boughey said.