El Paso Electric’s controversial Newman 6 natural gas power plant that’s set to start running in December is unlikely to be the last fossil fuel-based plant that El Paso Electric develops, as the utility plans to add four more gas-fired power plant units by 2040, according to regulatory filings.
Adding natural gas turbines more than a decade in the future will likely make it difficult for El Paso Electric to achieve its own goal of generating 100% carbon-free power by 2050, said researchers with the Rocky Mountain Institute, a nonprofit organization that advocates for carbon-free energy.
“Adding new natural gas generators today is a losing bet from a climate perspective, let alone 15 years from now,” Aaron Shwartz and Caitlin Odom, electricity sector experts with RMI, said in an email.
El Paso Electric officials, however, said natural gas turbines are the cheapest way to meet increasing power demand across the region in the future.
In a statement, El Paso Electric said that the climate-related goals to cut carbon emissions set by organizations such as the Intergovernmental Panel on Climate Change and the International Energy Agency are “bold and require advancements in technologies for utilities to provide reliable and economic electric service to their customers.”
EPE’s plan to add new gas plants over the next decade is a placeholder that will be refined over time based on customer needs and “updated generation technology costs,” the utility said.
El Paso Electric’s overarching strategy is to add different energy sources – mostly solar farms, batteries and gas-fired combustion turbines – in the coming years to replace a handful of 50- and 60-year old power plant units that the utility still relies on.
The Newman 6 plant has a capacity of 228 megawatts and its construction will end up costing around $200 million when it’s complete. One megawatt is roughly enough to power 200 homes on a hot summer day.
El Paso Electric has said it plans to generate 80% carbon-free power by 2035, with a goal to reach 100% carbon-free by 2050. Last year, just over 47% of the power El Paso Electric sold to customers came from zero-carbon sources: 45% came from the Palo Verde nuclear plant in Arizona, and a little less than 3% was produced by solar panels.
Over the summer, EPE started receiving power from a new 120-megawatt solar farm near Chaparral, which is by far the region’s biggest collection of solar panels. By next summer, El Paso Electric is expecting a 150-megawatt solar farm in Santa Teresa to start supplying electricity, and EPE recently got approval from regulators to develop two other solar farms in Luna and Doña Ana counties in New Mexico, with a combined 280-megawatts of capacity, by 2025. The utility is also waiting for approval for another big solar project in Fabens.
But EPE and other utilities, particularly in the sunny western United States, are running into a problem with solar.
Electricity generated by solar farms typically isn’t available when it’s most needed: in the evening, after the sun has set but when demand peaks as residents get home and crank up their air conditioning, turn on the television or use appliances.
As El Paso Electric adds more solar farms, the utility says it will increasingly have an excess of power available during the day – and EPE only needs so much electricity from solar farms to meet demand during the daytime hours. But as the sun sets, EPE must fire up quick-start natural gas turbines to generate electricity as demand rises in the evening and solar power falls off.
El Paso Electric argues it can only add so many solar farms before their overall contribution to meeting each day’s peak power demand is too slim to justify investing in more solar farms.
“Once EPE integrates the maximum amount of solar into its system, gas turbines would be a more cost-effective way of meeting its capacity needs,” El Paso Electric said.
To solve the mismatch between when power from solar farms is available and when it’s most needed, utilities are developing big battery arrays that can soak up power generated by solar panels during the day, and then discharge that electricity onto the grid later on, whenever it’s most needed.
The solar farm near Chaparral has 50 megawatts of battery storage capacity, and EPE is planning to develop another 140 megawatts of batteries by 2025. However, storing energy in batteries to be discharged later is still more expensive than running gas-fired power plants, according to El Paso Electric.
El Paso Electric expects electricity generated by the Newman 6 gas plant to cost roughly $76 per megawatt hour. And while the costs of the utility’s more recent battery systems are not clear, Texas utility regulators in 2018 denied EPE’s application to develop a 50-megawatt battery in Canutillo because it was too expensive: $167 per megawatt hour produced, in 2018 dollars.
But the federal Inflation Reduction Act “has significantly altered the math for utilities’ planned investments” with tax incentives that will lower the cost of batteries and other carbon-free resources in the years ahead, the RMI researchers said.
And volatile natural gas prices can make buying fuel for a gas power plant costly, like when natural gas prices shot up exponentially during a winter storm that blanketed Texas in February 2021.
“The Inflation Reduction Act’s tax incentive provisions will accelerate the deployment of cleaner, cheaper resources – making gas an even less competitive choice,” the RMI researchers wrote. “And we’re just beginning to get a glimpse of what post-IRA utility plans might look like.”
El Paso Electric’s clean energy goals hinge in part on how its plan to use hydrogen pans out. When it’s combusted, hydrogen produces water vapor instead of the heat-trapping carbon dioxide that natural gas combustion produces.
The energy industry broadly views hydrogen as a new technology with different potential uses in a zero-carbon world. It may be used as a fuel for power plant turbines, and trucking companies have also developed hydrogen-powered fuel cell semi-trucks. Using excess electricity to create hydrogen may also become an alternative to batteries for storing power.
When EPE was seeking approval from regulators to build the Newman 6 plant, part of the argument in favor of the facility was that El Paso Electric would look to convert the plant to someday run on hydrogen fuel instead of natural gas.
However, since EPE said it would look at converting Newman 6 to hydrogen in the future, the utility has also said it has “not performed any of the formal analyses or engineering to estimate” a potential timeline or cost of converting the plant to hydrogen. It’s not clear that the gas-fired turbines EPE plans to add in the 2030s will be able to run on hydrogen.
“Currently, there are no firm plans on fueling these generators with hydrogen or gas and hydrogen blend,” EPE said. “EPE is however working with Mitsubishi and other industry partners to evaluate the possibility of running some of their gas fired fleet with hydrogen and other low carbon fuels in the future.”
In addition to hydrogen, El Paso Electric said natural gas-fired power plants “can be part of the solution to reduce carbon emissions with advancements in carbon capture technologies, continued improvement in generator efficiencies and alternative fuels,” EPE said.
The RMI researchers declined to comment on the viability of converting gas plants to hydrogen. But they said utilities such as EPE should “take advantage of the IRA’s massive incentives and adopt bold renewable energy planning in order to drive equitable grid decarbonization at the pace needed to reach climate targets.”