Geothermal advancements, incentives could help NM meet renewable energy goals

Mar. 25—About 75 years ago in Animas, irrigators were drilling wells when they stumbled upon extremely hot water naturally bubbling up out of the ground. Little did they know, they had tapped into geothermal energy resources. The spot would later become the location of the Lightning Dock geothermal power plant — New Mexico's first utility-scale geothermal power plant.

Some energy experts are now labeling geothermal energy as a solution to fulfilling New Mexico's rapidly approaching renewable energy transition.

And with new financial incentives elected officials passed through the 2024 Legislature, they believe the state is building up momentum to generate large-scale electricity from the Earth's natural heat before the end of the decade.

How geothermal works

The concept of geothermal energy is basically taking advantage of natural heat coming out of the ground, geophysicist Shari Kelley explained.

Kelley is a geophysicist and field geologist at the New Mexico Bureau of Geology and Mineral Resources and the New Mexico Institute of Mining and Technology. She's also part of the state's geothermal working group.

Natural location helps with accessing the renewable energy resource, Kelley said, like areas that are tectonically active, meaning the Earth's heat comes closer to the surface. She said New Mexico has the Rio Grande rift, which runs along the Rio Grande Valley.

New Mexico is one of the top states in the nation poised to utilize geothermal energy, according to the geothermal working group.

The hotter the underground temperatures are, the more kinds of uses people can get from geothermal energy. In general, ground source heat pumps can require digging down to 300 feet or so, hot springs and direct usage like greenhouses can require depths around 1,000 feet and electricity can require digging more than 6,000 feet deep, according to the geothermal working group.

Tom Solomon, facilitator of the group and co-coordinator with the environmental organization 350 New Mexico, said the deeper one drills, the more expensive it typically gets. So the less deep and fewer wells you have to drill, the better, he said.

"The cost of geothermal development is very front-end loaded by just the upfront investment in drilling that far down to reach those hot rock resources," he said.

Lightning Dock near Lordsburg is New Mexico's only geothermal power plant and has a 15 megawatt generating capacity. It's one of the smaller plants the Public Service Company of New Mexico uses, and larger facilities have MW capacity in the hundreds.

New Mexico also has greenhouses powered by geothermal energy, hot springs and ground source heat pumps.

Technology to access geothermal is rapidly advancing, and Kelley said people are beginning to want to use geothermal for all kinds of things, from the low temperatures that can heat and cool buildings to the high temperatures that can produce electricity.

"I've been doing geothermal research for about 45 years, and for the first time, I'm getting the sense that the geothermal community is trying to embrace the entire spectrum of heat," she said.

The final 10%

The Energy Transition Act requires New Mexico's public utilities to generate electricity with at least 40% renewables by 2025, at least 50% renewables by 2030, at least 80% renewables by 2040 and 100% renewables by 2045.

Solomon said most of the clean energy generation will come from wind and solar, the cheapest forms of electricity. He estimated that'll get about 90% of the job done.

And the final 10%, he said, is where geothermal energy comes in.

"The sun doesn't only shine. The wind doesn't always blow. But the Earth is always hot," he said. "And so you can develop geothermal energy as that clean, firm, fully dispatchable 24/7 resource that can be that last 10% of the clean energy transition."

Sen. Gerald Ortiz y Pino, D-Albuquerque, sponsored geothermal legislation that passed the 2024 session. He told the Journal geothermal is an ideal solution for utilities to meet renewable energy standards.

"There's no reason, for example, that PNM shouldn't be jumping on this," he said.

Michael Barrio is the senior principal at Advanced Energy, a national trade organization focused on energy technology. He said New Mexico needs to look at all of the options that'll help diversify its energy portfolio.

The oil and gas industry currently provides a bulk of the state's general fund revenue, and Gov. Michelle Lujan Grisham's administration has announced intentions to move away from the heavy dependence on fossil fuels.

"If we want to think about what a successful energy transition looks like, it means taking a really good look at all of the available technology that we have and how we can best put that to use in our state," Barrio said.

Legislative progress

New Mexico's geothermal experts have repeatedly introduced geothermal-incentive legislation over the past few years to lawmakers. After Gov. Michelle Lujan Grisham didn't let the measures pass last year, she signed the bills this year.

Ortiz y Pino said the House Appropriations Committee allocated money in the budget for this year's geothermal measures, which made a big difference in passing the efforts.

"It's going to be an enormous incentive to get this resource going in the state," he said, "and we've started falling behind other nearby states that don't have some of the advantageous geology that we do."

House Bill 91 essentially created two pots of geothermal money. The New Mexico Energy, Minerals and Natural Resources Department got $5 million total to create a geothermal projects development fund and geothermal projects revolving loan fund — $2.5 million for each fund.

The budget allocated less than a quarter of the $25 million originally requested in HB91. Ortiz y Pino said the $2.5 million per fund is just a starting point, and lawmakers need to build that to three or four times as big to really make it attractive.

Tax credits also passed. This year's tax package included the geothermal electricity tax credit, which allows for a tax credit equal to $0.015 per kilowatt-hour of electricity generated in a year, and the heat pump tax credit, which allows up to 30% of the purchase and installation costs to be deducted.

Additionally, the budget set aside $500,000 per year over the next three years for New Mexico Tech to use for geothermal resource development. That's on top of $400,000 from the past year, which Kelley said the university has used to enhance its geothermal database and connect geothermal experts around the state.

Kelley said the last time there was a comprehensive geothermal energy report was 1976, which was focused on the state's hot springs.

There's also a data collection effort on an international level called Project InterSpace. The goal is to publish an interactive global geothermal resources map, which is expected to be available this year, then build unique geothermal pilots to accelerate the industry and decarbonization.

Solomon said Project InnerSpace will incorporate Kelley's data on New Mexico.

"What you'd really like to provide to geothermal developers is a very good comprehensive geographical listing of where are the best geothermal resources located, so that they know where to most cost-effectively drill for that resource and to develop it," he said.

New Mexico's senior U.S. senator is also seeking to advance geothermal energy usage. Sen. Martin Heinrich, a Democrat, said in a statement provided to the Journal that as New Mexico leads the nation in working to unlock geothermal power and potential, he's leading efforts in the Senate to capitalize on the advancements.

Earlier this month, Heinrich joined senators from Nevada, Utah and Idaho to introduce the bipartisan Geothermal Energy Optimization Act to set new targets for geothermal leases on federal land, address permitting challenges and create a geothermal assistance team.

Heinrich said the legislation would make it easier for companies to tap into resources that already exist in New Mexico, including for the state's energy workforce.

"Building on this progress is key to rapidly accelerate our clean energy future, lower costs for working Americans and create more high-quality jobs that New Mexicans can build their families around," Heinrich said.

Barrio, of Advanced Energy, said lowering the initial capital costs for geothermal projects, as the new financial incentives help do, will make New Mexico appealing to investors and catalyze economic growth. On top of that, he said, the state already has an oil and gas workforce that can transfer its skills to the renewable energy sector.

"The state's commitment to renewable energy development ... signals to investors and entrepreneurs that the state is really a prime location for renewable energy projects," he said. "And that always can attract more investment, drive economic growth and innovation in the state's renewable energy sector."

Evolving technology

One issue to overcome in geothermal relates to drilling technology. Drilling deeper in the Earth to access hotter temperatures means drills need to be able to withstand the extreme temperatures and corrosive environment.

Kelley said there's already work getting done to address the challenge, such as that at a facility called FORGE in Utah launched by the U.S. Department of Energy where experts have put together engineered geothermal systems.

Solomon mentioned, too, how FORGE has technology that keeps drilling bits from getting too hot, through the use of cooling fluid. He also brought up Tetra Energy, which uses lasers to pulverize rocks ahead of the drilling.

The oil and gas industry has helped find some of these solutions, Solomon said, since those producers also want more advanced drilling technology. Solomon said month by month, experts are solving problems to advance geothermal energy.

"As opposed to most things in geology that work over eons, this is at lightning speed," he said.

Solomon said while the work is happening rapidly, New Mexico is probably a few years off from having geothermal energy at-scale, such as something that could replace the gas- or coal-fired utility plants that generate electricity for New Mexicans.

Kelley said she'd like to see more utilities, tribal officials and oil and gas industry experts at this year's geothermal energy conference. It will be April 18 at New Mexico Tech, coinciding with the annual spring meeting of the New Mexico Geological Society.

Barrio said using renewable energies like geothermal is kind of like the new frontier. He said it's clear that clean energy is the future. Finite resources like fossil fuels won't last forever, he said, and some have described geothermal as virtually unlimited.

"So how do we plan for the future that we want to see? How do we plan for the economy that we want to see?" Barrio said. "And that's by being part of this energy revolution. Now is the time."