Partners for New Mexico power grid project lining up 

“With the technology that we have today, the communications we have and the environmental issues we need solved … you’ve got to have a way to trade on all the derivatives and all of the other environmental constraints. There’s definitely a huge need for us to find a worldwide platform,” he said.

First announced in 2009, the Tres Amigas project includes building a hub across 22 square miles of rangeland near Clovis. It would serve as the meeting point for interconnections that serve the eastern and western halves of the U.S. and a separate grid that supplies Texas.

Such a hub would provide more opportunities for buying and selling electricity across the three grids. The transmission infrastructure around the project, if developed and expanded, could allow large-scale wind and solar projects in the Southwest and the Great Plains to access large power markets.

While developers see Tres Amigas as a step toward making the nation’s power system more reliable, experts say avoiding massive power outages like the one that hit Southern California and parts of Arizona and Mexico last year will require a combination of modernization and more smart-grid technology throughout each of the three interconnections, especially given the scale of the grids involved. The western grid, for example, depends on more than 150,000 megawatts of generation to meet its load. Tres Amigas will initially be capable of transferring 750 megawatts between the eastern and western grids.

“In the grand scheme of things, even a project like this is dwarfed by the need of each of these interconnections to continue to pursue modernization and expansion of their grids,” said Abraham Ellis, a Sandia National Laboratories scientist who works on renewable energy grid integration.

In addition to infrastructure, Tres Amigas is planning for its own power exchange that would allow for the buying, selling and trading of power across all three U.S. interconnections and potentially beyond, Harris said.

Mitsui has agreed to invest $12 million in exchange for an equity interest in the project. The European exchange plans to share the expertise it has gained while coupling power markets in France, Germany, Austria and Switzerland. That exchange operates spot markets that account for more than one-third of Europe’s electricity consumption.

With construction only months away, Tres Amigas is grappling a location for its trading operations.

“Ultimately what it’s boiling down to is taxes,” Harris said. “It looks like it’s going to be a pretty heavy tax penalty to locate in New Mexico and that very well could be a deal-killer for the state.”

Tres Amigas officials said they would pay 4 to 6 percent higher taxes in New Mexico than if they were to locate in neighboring Texas, which has a number of power exchanges already in operation.

Former Gov. Toney Anaya is working with Tres Amigas to develop legislation that would offer an abatement of the gross receipts taxes related to the trading.

Supporters of the project are facing a time crunch. The Legislature begins its 30-day budget session on Tuesday and Tres Amigas plans on making a decision on where to locate its headquarters and trading floor by March.

Original Print Headline: Power project lining up