Public Service Company of New Mexico (PNM) has laid the groundwork for a new 120MWh distribution-connected portfolio of battery energy storage system (BESS) projects.
Despite some utilities in the US shelving plans for additional BESS, such as Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company (KU), PNM is seeking regulatory approval of the new portfolio with the New Mexico Public Regulation Commission (NMPRC). The utility is targeting 100% emissions-free electricity generation by 2040.
BESS retrofits at PNM-owned solar PV facilities
As explained in recent documents filed with the NMPRC, PNM is seeking a certificate of public convenience and necessity (CPCN) to install 6MW/24MWh individual BESS facilities at five of its operational solar plants located in five different counties across the state.
The portfolio is the result of an engineering, procurement and construction (EPC) RFP which the utility issued earlier this year in January for suppliers to deliver the portfolio.
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Details of the five PNM-owned solar sites to be retrofitted with BESS can be found below:
| Name | County | Solar Size (MWac) | Solar Commercial Operations Date (COD) | Location co-ordinates |
| Otero Solar | Alamogordo | 8 | 2013 | 32.980063, -105.970986 |
| Deming Solar | Luna | 9 (1st phase: 5, 2nd phase: 4) | 2011 (1st phase), 2013 (2nd phase) | 32.171972, -107.753895 |
| Meadow Lake Solar | Valencia | 9 | 2015 | 34.809915, -106.527310 |
| San Miguel I Solar | San Miguel | 10 | 2019 | 35.634276, -105.180707 |
| Rio Communities Solar | Valencia | 10 | 2015 | 4.633918, -106.700457 |
After receiving bids from three suppliers, PNM negotiated a deal with Albuquerque, New Mexico-based EPC specialist Gridworks, which will deliver the project as part of a turnkey solution.
As previously reported by Energy-Storage.news, this isn’t the first time Gridworks has been successful in a PNM-administered RFP, after it secured an EPC contract last year to deliver a 30MW/120MWh co-located BESS for the utility.
Recent filings with the NMPRC reveal that the utility included Tesla’s 2XL Megapack in planning documents for the five sites that use lithium iron phosphate (LFP) battery technology. However, this does not necessarily mean Tesla Megapacks will eventually be procured for the project, as planning submissions can indicate an intended design to show regulators and authorities.
As explained by PNM as part of its application, LFP technology is “widely recognised as the safest option for utility scale storage due to its minimal risk of thermal runaway compared to chemistries such as nickel manganese cobalt (NMC).”
BESS over fossil fuels: Reducing costs as well as emissions
As part of its justification for the project, PNM believes the project will reduce its use of fossil fuels to meet peak system demand while also reducing costs for customers.
“By storing excess solar energy for use during peak demand, the BESS reduces curtailment of renewable generation and offsets the historical reliance on fossil-fuelled resources during high-demand periods,” explained Engineering Manager for PNM, Nicholas Pollman, as part of a recent testimony filed with the NMPRC.
If operated to its maximum potential, PNM claims the BESS portfolio will eliminate more than 18,000 tonnes of CO2 emissions per year through the avoidance of equivalent fossil fuel usage.
The estimated cost of the installations is approximately US$78.7 million, which PNM plans to recover as part of a future rate case.
Of the total estimated cost, Gridworks is set to receive US$71.5 million to “fully design, engineer, and install” the systems’ BESS technology, which will be transferred to PNM upon completion.
PNM has requested the NMPRC approve the CPCN no later than May 6 2026 in order to deliver the project by June 2027 in time for the utility’s peak electricity demand which is expected to occur during the summer.
US$28 million benefits from ITCs
With investment tax credits (ITCs) for utility-scale storage having avoided an early phaseout due to last-minute changes to the so-called ‘One, Big, Beautiful Bill Act,’ (‘OBBB’), PNM expects to receive approximately US$28 million in benefits under the Inflation Reduction Act (IRA).
PNM has estimated an ITC benefit of 30% – 40% for each project, with the utility expecting all five projects to receive the base 6% credit along with the 24% credit adder for Prevailing Wages & Apprenticeship. It also expects three out of the five to qualify for the additional 10% ‘Energy Communities’ adder.
As part of its calculations, PNM excluded the additional 10% ‘Domestic Content’ adder, which it said will only be determined “at the time the batteries and equipment are ordered” for the BESS portfolio.
PNM says that any 48E ITC benefit it receives to offset tax liability will be returned to customers.
In May, PNM’s parent company, TXNM Energy, agreed to a takeover deal by global asset manager Blackstone Infrastructure. In early 2024, two-year negotiations over a merger between PNM and Iberdrola subsidiary Avangrid came to an end without a deal following legal delays.
