NM contains considerable potential for both FF and RE resources. It holds about 3%, 4%, and 5% of the United States’ total estimated recoverable coal reserves, proved crude oil, and NG respectively and it possesses the second-largest uranium reserves in the nation. Most of the state's NG and crude oil are located in the San Juan and Permian
Basins in the northwestern and southeastern part of NM respectively, while coal reserves are mainly located in the San Juan and Raton Basins in northern NM (EIA, 2018). The vast areas of NM with available geo-physiological landmass that receives high wind and sunlight levels is optimal for increasing RE usage. NM ranks third in both solar21 and wind (NREL, 2018) potential in the U.S.
NM’s economy is ranked 46th in the nation.22 The energy industry, especially oil and NG extraction, is one of the main contributors of NM’s economy. NM obtains $2 billion and $300 million in direct (e.g., severance, property taxes, royalty, and rental income) and indirect (sales and income taxes) revenues respectively per year from oil and gas production. Depending on the state of the economy, revenues from oil and gas can result in 40% of NM’s general fund revenue (NM Legislature, 2018). Thus, fluctuating oil and gas prices affect NM’s economy immensely.23
On one hand, the energy industry is responsible for emitting GHG and ambient pollution as well as increased water usage in NM. GHG contributes to climate change, air pollution causes premature mortality and morbidity, and freshwater has historically been insufficient in NM.24 On the other hand, RE is becoming more and more cost-competitive
21 After Nevada and Arizona, NM has the highest energy potential for solar power in the U.S. Source:
http://www.neo.ne.gov/statshtml/201.htm (accessed 01/13/2019)
22 Source: https://www.usnews.com/news/best-states (accessed 01/13/2019)
23 “A dollar increase in the per barrel price of oil translates into about $9.5 million for the general fund, while a 10 cent increase in the price per thousand cubic feet of natural gas translates into $6.5 million in additional revenue” Source: https://www.nmlegis.gov/Entity/LFC/Natural_Resources. For more information on NM’s legislations including historical NM’s general fund revenue see
https://www.nmlegis.gov/ (accessed 01/13/2019)
24 In 2018, roughly 90% of the state was faced with severe drought conditions that affected the entire population Sources: https://www.env.nm.gov/water/ and https://www.drought.gov/drought/states/new-mexico (accessed 12/25/2018)
relative to FF technologies.25 Thus, it makes logical and economic sense for policymakers to promote policies, such as RPS, to integrate more RE into NM’s energy mix.
At the time of analysis, NM’s RPS required all the large electric utilities to generate 20% of their in-state electricity sales from RE resources by 2020.26 Although it did not pass, a bill (Senate Bill 312) was introduced to increase NM’s RPS previous level to 25% by 2020, 35% by 2025, 50% by 2030, 65% by 2035, and 80% by 2040 in the 53rd legislative session in 2017 (Stewart & Small, 2017).27 A modified version of this bill was reintroduced in January 2019 (House Bill 15) and passed in the 54th legislative session in March 2019 (Senate Bill 489).28 In addition to the requirements set by Senate Bill 312, Senate Bill 489 sets a 100% RPS by 2045 that is sourced from zero carbon resources.
This makes NM the third state in the U.S. after California and Hawaii and before Washington to mandate a 100% RPS.29 Thus, as of March 2019, NM’s current RPS policy requires 20% in-state electricity sales from RE resources by 2020, 40% by 2025, 50% by 2030, 80% by 2040, and 100% by 2045.
Currently, there are three large electric utilities in NM: Public Service Company of New Mexico, El Paso Electric, and Xcel Energy, with the first serving the largest
25 For the latest available prices of wind and solar energy, among others see Wiser and Bolinger (2018), Barbose et al. (2018), and Cole et al. (2018).
26 RPS requires the NM’s rural electric distribution cooperatives to generate 10% of their in-state electricity sale from renewable sources. We do not consider rural cooperatives constraint in our analysis.
27 Further details on Senate Bill 312 can be found at:
https://www.nmlegis.gov/Sessions/17%20Regular/bills/senate/SB0312.pdf (accessed 03.12.2019)
28 Further details on House Bill 15 and Senate Bill 489 can be found at:
https://www.nmlegis.gov/Sessions/19%20Regular/bills/house/HB0015.pdf and
https://www.nmlegis.gov/Sessions/19%20Regular/bills/senate/SB0489.pdf see p. 60 for more information on the updated RPS requirements (accessed 04.05.2019)
29 Washington State joined the 100%-clean-energy movement on April 11, 2019. “It is the policy of the state that nonemitting electric generation and renewable resources supply one hundred percent of all retail sales of electricity to Washington customers by January 1, 2045.” Source:
http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Senate%20Bills/5116.pdf#page=1 (accessed 04/18/2019).
customer pool in the state. Further, as NM has considerable potential in both wind and solar energy, Public Regulation Commission set diversity targets (carve-outs) on different types of RE to create a diversified portfolio. Based on this portfolio, utility companies are to source at least 30%, 20%, and 3% of their in-state electricity sales from wind, utility-scale photovoltaic solar (PV), and residential photovoltaic solar (RPV) respectively by 2020 (see Table 2-1).30
Table 2-1: Carve-Outs regulated by Renewable Portfolio Standard.
Source Minimum amount
Wind 30%
Utility-scale solar (PV) 20%
Residential/Distributed solar (RPV) 3%
The reminder of the paper is organized as follows. Section 2.3 defines the assessed scenarios in this paper. Section 4 contains methodologies and assumptions utilized in estimating: 4.1) electricity demand, 4.2) electricity supply, 4.3) the gap between demand and supply of electricity, 4.4) employment, and 4.5) environmental impact. Section 5 summaries the sources of data, while Section 6 presents economic (economic impacts) and environmental (water usage and air pollution and greenhouse-gas emissions) impacts of different scenarios and provides a summary of overarching results.
30 For more information NM’s RPS, visit: http://programs.dsireusa.org/system/program/detail/720 (accessed 01/13/2019).
The paper concludes with a discussion of results and conclusion in the last section, Section 7.