Dive Brief:

• Silicon Valley Power (SVP), municipal electric utility for Santa Clara, California, got approval from the Federal Energy Regulatory Commission to divest its 10% ownership of the 1,646 MW, four-unit coal-burning San Juan Generating Station in New Mexico at the end of 2017, leaving its power mix 100% coal-free.
• The 51 MW that SVP gets from San Juan’s unit 4 is about 10% of the muni’s generation but about half its greenhouse gas emissions. SVP will replace that supply with new renewables and more electricity from its 25% ownership of the 280-MW combined cycle natural gas-burning Lodi Energy Center (LEC).
• Despite upgrades to San Juan units 2 and 3 to cut emissions of mercury, NOx, particulate matter, and SO2, the Public Service Company of New Mexico (PNM), which operates the coal plant and owns the majority, will be forced by declining demand for coal generation to retire them in 2017. 

Dive Insight:

SVP's decision to divest its stake in the controversial San Juan coal-generation station comes on the heels of a December 2015 decision by New Mexico's utility regulators to allow PNM to continue burning coal at the coal plant while also shutting down a pair of units. Under the decision, PNM will shut down San Juan’s 375 MW unit 2 and its 544 MW unit 3 by the end of 2017, and retrofit units 1 and 4 in early 2016.  The retrofitted units are supposed to be operated until 2052, and the utility will also add natural gas and solar generation.

For SVP, the decision to divest from its 10% ownership stake at the San Juan generation station will allow the muni to move toward's California’s 50% renewables by 2030 mandate and Santa Clara's 2020 targets of being coal-free and cutting greenhouse gas emissions 50%.​

SVP now gets 36% of its electricity from renewables and its 2012 contract with the LEC anticipated a need for natural gas until adequate battery storage is available — a shift larger utilities in the state are anticipating as well. 

The Southern California Edison (SCE) 2014 Local Capacity Requirement (LCR) procurement — including battery storage along with natural gas generation —proved the cost competitiveness of the storage, AES Energy Storage Southland President Jennifer Didlo recently noted.

“The change will not come tomorrow, but AES firmly believes battery energy storage can replace natural gas in the resource mix," she said. 

In the solicitation, SCE also got competitive offers on natural gas generation and the utility remains “highly dependent” on natural gas, SCE VP Stu Hemphill added. But replacing it with battery storage “is where we are headed. The question is how quickly we can get there.”