Straddling the renewable energy-rich nexus of three North American electric transmission grids, New Mexico is positioned to play a critical role in keeping the lights on as utilities commit to a sweeping decarbonization of power supply in the coming decades.

"It's one of the best wind resources in the Americas, and so that's a good starting place," Pattern Energy Group LP CEO Mike Garland said in an interview following the company's July 18 purchase of the SunZia Transmission project. "California, Arizona, places like that have really wonderful, natural solar resources ... so you're providing a complement to the western solar resource in a way that's very unique."

Purchased from MMR Group Inc.'s SouthWestern Power Group subsidiary, the SunZia project is one of several long-in-development high-voltage transmission initiatives with the potential to harness the state's world-class wind resources for export to the broader Southwest, Texas and beyond. Combined with Pattern's SunZia Wind complex, a multiphase development of more than 3,000 MW in central New Mexico, it is one of the largest renewable energy infrastructure projects in U.S. history to date.

SunZia could create more than 2,000 construction jobs and 150 permanent positions to deliver power to an estimated 2.5 million people, according to Pattern Energy. With a planned investment in excess of $8 billion for wires and wind farms, the initiative would roughly rival the inflation-adjusted cost of the Grand Coulee dam on the Columbia River in Washington state, the biggest power plant in the U.S. at more than 6,700 MW, not including transmission.

There are a host of reasons why wind-focused transmission projects are proliferating in New Mexico, including a second high-voltage line parallel to SunZia known as El Rio Sol Transmission, that is designed to transport an additional 1,500 MW. Southwestern Power Group is retaining ownership of that development.

The San Francisco-based developer is not new to New Mexico. In December 2021 Pattern Energy completed the 155-mile, 345-kV Western Spirit Transmission line, which it then sold to Public Service Co. of New Mexico, a subsidiary of PNM Resources Inc. Western Spirit carries 1,050 MW of capacity from Pattern's Red Cloud, Duran Mesa, Clines Corners and Tecolote wind farms, which are underpinned by long-term contracts with the Los Angeles Department of Water and Power and Uniper SE.

With SunZia, Pattern is exploring future opportunities to connect to other adjacent markets to the north and east as well, through the Southwest Power Pool and Electric Reliability Council Of Texas Inc., Garland said, adding, "It's going to be a future project for us."

'Lucrative returns'

As a result of such opportunities, New Mexico ranks third among U.S. states in terms of planned onshore wind capacity, with 8,384 MW, according to S&P Global Market Intelligence data.

"New Mexico has just about every conceivable driver in place for large-scale renewable development — low-cost, undeveloped land, favorable solar and wind resources, an aggressive renewable portfolio standard and access to both Eastern and Western interconnects," said Adam Wilson, senior research analyst with S&P Global Commodity Insights. Despite recent inflation affecting all energy sources, these factors combine for "some of the most favorable economic projections in the entire country, with wind and solar both forecast to provide lucrative returns," Wilson added.

But building out the grid "remains one of, if not the key hurdle needing to be addressed in order to allow suitable integration of the massive amount of renewable generation currently in the pipeline," Wilson said.

Garland is hopeful Pattern can start building the 550-mile, 500-kV direct-current SunZia line tying central New Mexico wind farms to south-central Arizona in 2023, enabling wind-generated electricity to come to market, including in California by 2026.

First Pattern must complete an environmental review by the U.S. Department of the Interior's Bureau of Land Management. The agency originally approved the line in 2015, but Pattern adjusted the route to avoid areas of concern to the Department of Defense and White Sands Missile Range, and to parallel a 35-mile segment of the existing Western Spirit line. Pattern has been collaborating with conservation groups, landowners, ranchers and others to further optimize the pathway.

With the company confident SunZia is poised to deliver, after more than a decade of development, "we're now at that stage where we're starting to sign up a bunch of offtake agreements," Garland said.

The CEO declined to name the customers, citing confidentiality.

Western, eastern opportunities

Pattern is codeveloping SunZia with the New Mexico Renewable Energy Transmission Authority, or RETA, created by state lawmakers to promote an export-oriented grid build-out as well as energy storage.

"I think we have a tremendous advantage due to our location, but also our resources that we have available," RETA Executive Director Fernando Martinez said. "We have some of the highest capacity factors in the nation, which means we are able to harvest more power than a lot of other states."

RETA's codevelopment portfolio so far includes Pattern's SunZia and Western Spirit projects, a transmission upgrade for NextEra Energy Inc.'s existing 100-MW High Lonesome Mesa Wind Farm, under contract with Arizona Public Service Co., and the planned Mora Line Project being developed by Lucky Corridor LLC, an affiliate of Ameren Corp.

The latter project includes two segments totaling 114 miles to access Clearway Energy Inc.'s planned 180-MW Gallegos Wind Farm 1 in Union County, in the windy northeastern part of the state. The transmission project is scheduled for completion in 2024, ahead of the wind farm in 2025.

Export-minded renewable energy developers in New Mexico traditionally have sought "to go after the western markets" because of their ability to compete with conventional fossil resources on price and the region's widespread policies to move toward zero-carbon electricity, which align with New Mexico's own Energy Transition Act, Martinez said.

"A lot of people think it's just mandates and policies that are driving all this," the executive director added. "But really, it's not. There's great economics driving it when you [consider] that wind and solar power are cheaper than new gas and new coal right now."

Given New Mexico's policy similarities with many states in the West and its need to integrate vast new volumes of renewable energy, joining a western regional transmission organization "may make a lot of sense," Martinez said. "We want to ultimately get to a regional, upgraded, flexible grid that's got a lot of geographical diversity and meteorological dissimilarities. That's how you can help with the intermittent nature of wind and solar power."

But Martinez also sees "opportunities to go east," pointing to ongoing grid reliability challenges in Texas this summer.

"We all need the lights to stay on. We need to avoid these costly power outages. And the only way to do this is working together to make it happen," Martinez said.

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