New Mexico is naturally endowed with several clean energy sources including wind and solar, as well as geothermal resources, which makes it highly attractive for renewable energy projects. The state ranks second in the U.S. for potential solar energy production and tenth in wind energy potential. The government of New Mexico hopes to advance the region’s role in clean energy and expects renewable energy leasing to be significant in the coming years.
This month, President Joe Biden visited the site of a former Solo cup factory that was recently repurposed into a wind tower plant in Belen, New Mexico. Upon the visit, Biden outlined his green energy economic plan, stating, “For the longest time we’ve been told to give up on American manufacturing — that it can’t happen again… I’ve never believed that. As I’ve said: America used to lead the world in manufacturing. We’re going to do it again.”
The Arcosa plant is expected to provide 250 new jobs in a region that is high in poverty. Biden explained, “What Arcosa is doing here is part of a much broader clean energy manufacturing boom, it’s going to happen in big cities and rural communities as well.” Arcosa, an infrastructure-related products provider, received $1.1 billion in new wind tower orders following the passing of the Inflation Reduction Act (IRA) last summer, which allowed for the construction of a new plant.
The repurposing of the plant demonstrates the potential for the transformation of disused or failing facilities into new clean energy hubs, supported by financing from the Bipartisan Infrastructure Law and the IRA. The CEO of Arcosa, Antonio Carrillo, said that the company and the wind power industry were both struggling before new funds became available thanks to these new laws, which provided a financial boost for the green energy and manufacturing industries.
New Mexico has long been known as an oil and gas producing state, sitting on the highly lucrative Permian Basin. It was hit hard during the Covid pandemic, with restrictions on energy operations limiting revenue, leading many oil and gas firms to declare bankruptcy, and leaving thousands unemployed. Although the post-pandemic outlook appeared bleak in the face of rising unemployment, the growth of the renewable energy industry in the state offers hope. There is significant potential to retrain and hire workers from the fossil fuel sector for clean energy jobs, benefiting from their existing knowledge and skills.
Despite the difficulties faced during the pandemic, New Mexico’s oil and gas industry has rebounded, with the state’s crude oil production growing more than any other U.S. state in 2022. Its output increased by 300,000 bpd last year, to 1.6 million bpd, according to the U.S. Energy Information Administration. This marks the third consecutive year that New Mexico’s production growth has outpaced other states. Despite the continuing success of its oil and gas industry, President Biden and the state government hope to promote New Mexico’s potential in green energy, to attract greater public and private investment.
Although it stood in just 16th place for green energy production in 2022, this could soon change thanks to its significant renewable energy potential and plans for new developments. At present, 20 percent of New Mexico’s total electric utility generation comes from renewable energy sources. And several private companies are investing in the expansion of the sector.
Applied Energy Services (AES) has almost 1,000 MW of planned clean energy development in New Mexico. Its projects include the Rancho Viejo Solar farm, the Community Solar portfolio, and the Storage portfolio. Thanks to the passing of the Community Solar Act in 2021, electric utility customers can now purchase shares in renewable energy facilities, one of which AES is developing. This is expected to enhance community participation in New Mexico’s green energy sector as well as boost the state’s solar capacity.
Meanwhile, in May, SunZia received approval from the U.S. Bureau of Land Management to develop the largest combined renewable energy project in the country. The SunZia Transmission and Wind Project is expected to generate 3,500 megawatts of wind power for use in the state, enough to power 3 million homes, as well as to create more than 2,000 jobs. The company believes it could bring $20.5 billion in economic benefits to New Mexico and Arizona.
New Mexico passed the Energy Transition Act in 2019, which established a state-wide renewable energy standard of 50 percent by 2030 and zero-carbon standards for utilities by 2050. Through greater investment in green energy projects, the state government believes it can achieve these targets. New Mexico has the potential to generate nearly 210 times the annual state energy demand through utility-, community-scale, and rooftop solar combined, demonstrating just how much green energy can be produced if the state can attract greater investment in the sector. While the IRA has strongly improved New Mexico’s green energy outlook, further private financing could help make the state one of the U.S.’s biggest clean energy producers.
By Felicity Bradstock for Oilprice.com
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