Another NM coal plant CCS project with dim prospects awaits US DOE funding

The US Department of Energy said it is working to award a multi-million-dollar federal grant to study carbon capture at New Mexico's last coal-fired power plant, a project that mirrors an unsuccessful effort to retrofit another coal-fired plant in the state a few years ago.

The Navajo Transitional Energy Company LLC (NTEC), an independent company owned by the Navajo Nation, and project partner Enchant Energy Corp. are seeking to keep the 1,540 MW Four Corners coal-fired power plant open past 2031. That year, the plant's operator and majority owner with a 63% stake, Arizona Public Service Co. (APS), plans to retire the 61-year-old plant.

The DOE in 2023 nonetheless selected NTEC and Enchant Energy to negotiate federal funding for a front-end engineering design (FEED) study at the New Mexico coal plant, in which NTEC holds a 7% stake, under the assumption that the facility could operate past 2031.

The process includes a DOE risk assessment and project budget review as well as a routine environmental review.

The agency remains "in negotiations with NTEC and is working to get this FEED study officially under award," a DOE spokesperson said in an Aug. 8 email. "Once awarded, DOE will release further details."

A National Environmental Policy Act compliance officer with DOE's Office of Clean Energy Demonstrations signed off on the FEED study in early 2024, noting that the office is "proposing to provide funding" to NTEC in support of the Four Corners CCS project.

So far, however, the ambitious plan to retrofit the plant with carbon capture and sequestration does not appear to have gained broad traction.

"APS is planning to remain an owner and the operator of Four Corners until 2031 and has no plans to install CCS at the plant," the power company said in an email. "As far as what would need to occur with respect to plant ownership to facilitate such a retrofit, APS won't speculate as to the intent or plans of its co-owner partners."

Public Service Co. of New Mexico (PNM) holds the second-largest stake in the plant, with 13%. PNM referred questions about the plant's future to APS.

Feasibility questions remain

A similar project involving the San Juan power plant, for which Enchant Energy teamed up with the New Mexico city of Farmington, took years of negotiations and litigation only to be abandoned in 2022. PNM was the plant's main owner and had sought assurances that the two project partners had financial backing and the ability to assume cleanup liabilities for the plant.

In 2022, PNM shut down the plant's turbines as agreed with state regulators, and the plant is now being dismantled. Dozens of workers, many of them Navajo, lost their jobs.

Before that, the DOE had provided $25 million in grants to study the feasibility of using carbon capture at the San Juan plant near Farmington and to explore wells in northwestern New Mexico where the carbon from that plant would have been injected. The city of Farmington spent at least $2 million on legal bills.

Enchant Energy's co-founder Cindy Crane has since been appointed CEO of PacifiCorp but still serves as Enchant's board chair.

The CCS startup developer has removed most information about the San Juan project from its website but it says the FEED study funded by the DOE for the proposed retrofit "provided valuable insight" into how to lower CCS costs. Enchant Energy officials were not available to comment on their plans for the Four Corners power plant or any other facility, a company spokesperson said.

Longtime critics of the abandoned San Juan project now worry more tax dollars may be wasted and that a new round of New Mexico coal plant workers could be set up for disappointment.

"If a company that owns 63% of the coal plant says they have no interest in pursuing carbon capture sequestration it seems to me they don't even have a chance," Mike Eisenfeld, energy and climate program manager for the environmental group San Juan Citizens Alliance, said in an interview.

The nonprofit RMI, which tracks coal-fired plant operations, also estimates that the Four Corners plant cost customers an additional $818 million in power prices since 2015 due to the plant's uneconomic power dispatches, compared to cheaper available sources of generation. APS had no immediate comment on the RMI data.

When asked about the economic feasibility of the Four Corners project, the DOE spokesperson said that the Office of Clean Energy Demonstrations "continues to assess the long-term viability of potential projects before proceeding to award."

For its part, the NTEC is looking to preserve a vital income source for the Navajo Nation. In 2023, about 250 people worked at the power plant and another 350 at the adjacent Navajo Mine that provides the coal that fuels the facility.

"The Navajo Mine and Four Corners Power Plant are crucial to the Navajo Nation's economy, contributing more than one-third of the Navajo Nation's annual revenue and an additional $110 million each year in wages and other direct contributions to the Navajo economy," NTEC spokesperson Lauren Burgess said in an email. "NTEC is committed to preserving and growing this revenue for the Navajo Nation by identifying alternatives to keep Four Corners power plant open after 2031."

Burgess did not specifically comment on APS' lack of interest in the project.

The FEED study will help NTEC evaluate whether the project is economical, Burgess added.