When El Paso Electric Co. goes to the market looking for more power, it considers everything, but increasingly the choice has been coming down to natural gas or renewables, particularly photovoltaic sources, COO Hector Puente told NGI.

The capital cost for solar has come down a lot in recent years, thanks to advances in technology, and the fuel cost for gas-fired power had declined a lot, too, as every producer knows. “…[C]oal-fired facilities are pretty much on hold, and nuclear is pretty difficult to build still, and so most everything that we’re adding is either renewable, mostly photovoltaic, and/or gas,” Puente said.

Puente said what’s happening with generation choices at El Paso Electric reflects the industry at large. In the Southwest, however, solar is the favored renewable, while wind might be the favorite elsewhere, he said. Biomass-fueled power is also attractive because it can be readily dispatched.

“I would have to say that those are probably the two main competitors of gas: biomass and photovoltaic. Ten years ago photovoltaic was very, very expensive and it was still pretty much in its infancy. Now it’s a slightly more mature industry, more options, more suppliers.”

El Paso Electric’s generation breakdown is about 45% nuclear, 30% gas, 6% coal and 19% purchased power. Renewables are a small sliver. Going forward, natural gas will win the most capacity, Puente said. El Paso Electric is growing its portfolio along with demand in its service territory in West Texas and southern New Mexico. The utility also is planning to retire a number of gas-fired plants in the years ahead, he said.

“There’s a good chance that we may end up getting out of our coal-fired facility by 2016 when our coal contract expires,” Puente said. “We have some [gas-fired] retirements that we need to take care of and some growth and of course the bulk of that is going to be replaced by gas.”

El Paso Electric recently signed up for an incremental 90,000 Dth/d of hourly firm gas transportation capacity on El Paso Natural Gas Co. under a 20-year term to serve both new and existing generation (see Daily GPI, Jan. 11). Some of the capacity will serve two new gas-fired peaking units for which El Paso Electric is currently seeking permits.

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