Aug 3 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Rosalie Rayburn Albuquerque Journal, N.M.

Construction on New Mexico's first commercial-size biomass power plant, to be built near Estancia, could start as early as January.

Public Service Company of New Mexico signed a 20-year deal with Western Water and Power Production in mid-July to buy power from the $74 million plant, which would burn forest thinnings to generate up to 35 megawatts of electricity. A megawatt is enough to supply about 800 average homes.

Western vice president Jack Maddox said wood will come from small-diameter trees and brush cleared from a 63,000-acre site south of Mountainair that Maddox has leased from the state Land Office. Maddox also hopes to obtain fuel from parts of the Cibola National Forest in the Sandia and Manzano Mountains.

The plan needs to be approved by the state Public Regulation Commission. PNM hopes for approval by the end of August so construction can begin in January.

Construction will take about two years and provide 100 to 150 jobs. Once complete, the plant will require about 20 permanent staff.

In addition, 50 to 100 workers will be needed to cut and chip wood and transport fuel to the plant.

The plant will be built on a 50-acre site about six miles south of Estancia near Tagawa Greenhouses, which sells to big-box retailers such as Home Depot, Maddox said.

Western has an agreement with Tagawa to circulate hot water from the plant to heat the greenhouse and an outdoor growing area from October through April. This arrangement allows the plant to use less water and helps Tagawa reduce its heating costs. Currently, Tagawa heats with natural gas.

Biomass, the technology of producing electricity by burning organic matter, is an alternative energy source that is becoming popular across the nation. At least 10 states, including California, Washington and Florida, have biomass plants that produce electricity on a commercial scale.

Biomass plants are designed to consume 99 percent of the wood or other organic fuel.

They produce about half the carbon dioxide, one-sixth the sulfur dioxide and one-tenth the nitrogen oxide of coalfueled plants, Maddox said.

Most of the financing is already in place, Maddox said. He is confident the deal with PNM will attract more investors.

PNM said the deal will help it comply with a state law that requires utilities to derive 5 percent of their power from a mix of renewable sources such as wind, solar or biomass. That threshold will increase to 10 percent by 2011.

Though New Mexico already has a handful of small biomass plants that produce electricity for businesses or schools, this is the first time a utility has picked biomass. The new plant will join PNM's non-fossil fuel arsenal, which includes solar and wind resources.

Hugh Smith of PNM Resources, the holding company that owns PNM, said PNM picked Western's biomass proposal because it offered a reliable source of power at a relatively low cost.

PNM will sell biomass power as part of its regular mix. It will not be offered through the Sky Blue program, where customers pay a premium to buy wind-generated energy.

Biomass will come with higher costs than power from fossil-fuel plants, Smith said.

Western offered to sell biomass power to PNM at 5.59 cents per kilowatt-hour, rising to 6.25 cents over several years, Maddox said.

The average cost to generate a kilowatt-hour of power at a coal plant is 4.1 cents; gas, 6.7 cents; nuclear, 4.1 to 4.7 cents; wind, 4.6 to 6.4 cents; and solar, 18 cents, according to the Palo Alto, Calif.-based Electric Power Research Institute, an independent research organization.

 

BIOMASS PLANT FACTS

PNM has signed a deal to buy all the power from a biomass plant to be built south of Estancia, which will be the first commercial-scale plant of its kind in the state. According to Western Water and Power Production, the facility will:

--Burn wood chips from small trees and brush thinned from land south of Mountainair and possibly from the Cibola National Forest;

--Be capable of generating 35 megawatts of power, or enough to supply about 28,000 average homes;

--Be ready to operate by early 2009, if regulators approve the deal;

--Provide 100 to 150 jobs during construction and 20 permanent jobs;

--Emit a fraction of the harmful pollutants that a comparable coal-fueled plant would produce.