FAQs

Frequently Asked Questions

About Enchant Energy Corporation (“Enchant”) and the San Juan Generating Station (“SJGS”)

Who is Enchant Energy Corporation?

Enchant Energy Corporation is a New Mexico-based carbon capture and storage (CCS) developer and energy provider in the Western United States. We bring CCS as a service in order to mitigate climate change, produce reliable energy, preserve and create jobs, and catalyze sustainable development in the communities we serve. Through crucial R&D and world-class partnerships, we are providing a roadmap for the safe decarbonization of our environment.

What is the San Juan Generating Station (“SJGS”)?
The San Juan Generating Station (“SJGS”) is an 847 MW coal-fired plant near Farmington, New Mexico. Enchant is in the process of acquiring a 95% interest in the SJGS, and plans to retrofit it with carbon capture utilization and storage technology (CCUS). This technology will allow 95% of CO2 emissions to be captured at this already environmentally compliant large generating station. Captured CO2 will be sold for use in enhanced oil recovery (“EOR”) and the plant’s electricity will be sold into the wholesale power market. The City of Farmington will retain its current 5% ownership in SJGS.
How does SJGS differ from other carbon capture projects?
Enchant is scaling proven technology, not creating new technology. In contrast to other, failed carbon capture projects, SJGS will operate an amine-based, post-combustion, carbon capture system, similar to the technology successfully utilized in both the Boundary Dam (Canada) and Petra Nova (Texas) carbon capture projects. Many of the earlier Carbon Capture projects such as the Kemper Project developed by the Southern Company and the Edwardsport Project developed by Duke utilized pre-combustion coal-gasification processes, which were unsuccessful.
What technical, operational and financial expertise does Enchant Energy Corporation bring to the project?

Enchant’s executive team has decades of operational excellence in energy and alternatives. The team is partnering with world-class energy investors and innovators, including: Derivee Power; Navajo Transitional Energy Corp (NTEC); the City of Farmington, New Mexico; Mitsubishi; Sargent & Lundy; Kiewit Power; Cohn Reznik; Los Alamos National Lab; Sandia National Laboratories; New Mexico Institute of Mining and Technology; the New Mexico Bureau of Geology; University of New Mexico; University of Utah; and University of Wyoming.

Regulatory and Legislative Considerations for the SJGS Project

Does the State of New Mexico have specific requirements governing CO2 emissions from power generation facilities?

Yes. On March 22, 2019, Governor Michelle Lujan Grisham signed Senate Bill 489 into law. The new legislation is officially known as the New Mexico Energy Transition Act (ETA). The ETA establishes two new significant statewide energy policy standards: 1.) a renewable energy standard of 50 percent by 2030 and 80 percent by 2040 for investor-owned utilities and rural electric cooperatives; and, 2.) a requirement that all coal-fired power plants with original installed capacity exceeding 300 MW must comply with a maximum carbon emissions of 1,100 lbs per megawatt-hour effective January 1, 2023, subject to regulations promulgated by the New Mexico Environmental Improvement Board. As SJGS currently produces electricity with a CO2 of 2,201 lbs. per megawatt-hour, implementation of the ETA will require SJGS to cease electricity generation by January 1, 2023, unless carbon capture is installed and is in operation.  Sargent & Lundy estimates that this technology will reduce CO2 emissions from 2,201 to below 250 lbs. per megawatt-hour at which rate SJGS will be compliant with the ETA.

What is the California Environmental Performance Standard (EPS)? How might it affect Enchant Energy’s plans for retrofitting SJGS with carbon capture technology?
Passed in California in 2009, the California EPS strictly limits the importation of out-of-state, fossil-fuel powered electricity with CO2 emissions in excess of 1,100 pounds per megawatt-hour. The law triggered the 2015 exit of several California utilities from ownership participation in SJGS.

With a projected post-retrofit CO2 emission level of below 250 pounds per megawatt-hour, SGJS will become “environmentally qualified” to export wholesale electricity to California — the largest power market in the West.

What are Section 45Q tax credits? How do they affect Enchant Energy’s plans for retrofitting SJGS with carbon capture technology?

Section 45Q tax credits were originally enacted in 2008 as part of the Internal Revenue Code (Title 26 of the U.S. Code). The FUTURE Act, passed in February 2018 as part of the Bipartisan Budget Act of 2018, substantially revamped and increased the 45Q tax credit program to support investment in productive carbon capture and sequestration investments. The revamped 45Q tax credit boosts the financial incentives to companies willing to invest in CCS/CCUS. Below is a table of the revised 45Q tax credits per metric ton of CO2 captured. Based on 6 million metric tons a year capture and the 45Q tax credit amounts in the table, the SJGS project has the potential to generate $2.5 billion of 45Q tax credits over the first 12 years of its operation. This quantity of 45Q tax credits should be sufficient to fund the $1.3 billion capital cost.

The reformed 45Q tax credit is arguably the most robust and comprehensive carbon capture and utilization deployment incentive in the world today and provides a foundational policy on which to build. The FUTURE Act significantly increases the value of the tax credit and restructures it to enhance monetization to finance projects. Applicable to all man-made or anthropogenic sources of CO2, the credit also accommodates the capture and use of both CO2 and CO, extends eligibility to include direct air capture and other forms of carbon utilization beyond EOR, and expands the opportunity for carbon capture deployment to a wider array of industrial facilities.

The expanded 45Q tax credit program is similar to proven wind and solar power production tax credits. Both of those tax credits continue to play a crucial support role in the rapid deployment of wind and solar power generating facilities.

Cost

We hear that carbon capture is prohibitively expensive. What has changed that makes it work now?

To address this concern, Enchant hired Sargent & Lundy to review the current costs associated with a carbon capture retrofit at this particular location. Sargent & Lundy conducted a similar study for PNM in 2010. In the study that Enchant Energy commissioned in 2019, Sargent & Lundy found that costs have decreased 32 percent to an estimated $1.3 billion since their 2010 study. They suggest this decrease is due to the impact of increased environmental controls installed in 2017 and the utilization of the excess infrastructure due to the closure of Units 2 and 3 in 2017. The Sargent & Lundy report suggests that the capital costs could be further reduced by competitive bidding, by choosing the most effective of the three proven amine-based technologies, and by incorporating technological developments improved since the Petra Nova plant.

Environmental Impact

Are there any environmental risks associated with implementing CCS and CCUS technology?

CCS and CCUS are proven technologies. Environmental impacts are expected to be minimal. Our project will be constructed within the perimeter of the existing San Juan Generating Station. Emissions from SJGS are expected to be at or below the current levels for NOx, Sox, Mercury, and particulate. In addition, SGJS is fully compliant with all U.S. and New Mexico standards for air and water protection.

What level of CO2 will be emitted under the proposed retrofit of the plant?

Per the Sargent & Lundy report, SGJS will emit below 250 pounds per megawatt-hour, which is 77 percent less than the 1,100 pounds per megawatt-hour limit mandated by the Energy Transition Act — and a 95% reduction from the current estimated rate of 6.6 million metric tons per year.

Community Impact

How does Enchant partner with the communities it serves?

Enchant works with the City of Farmington and key partners to create high-quality jobs; fuel a tax base that funds education and services for the communities Enchant serves; advance principles of environmental justice; and provide reliable, competitively priced energy to New Mexico and the Western states.

How will the SJGS carbon capture project affect costs for Farmington Electric Utility System (FEUS) customers?

The SJGS project should help reduce costs for FEUS customers. The FEUS will continue to own a 5 percent in SJGS and will continue to pay its 5% share of the costs of SJGS, including fuel cost, O&M cost, and capital costs. However, FEUS will not be required to pay any of the capital or operating costs of the CCUS unless it elects to become a participant in this portion of the project.

How will this project impact jobs at the San Juan Generating Station?

We anticipate that construction and operation at the SJGS will create 2 million new worker hours at union-approved terms. Further, Enchant Energy is committed to maintaining existing employment at the San Juan Generating Station.

Will Enchant work with unions?

Enchant Energy is committed to continuing to work with unions currently represented at SJGS, and to remaining a union shop.

Will the CCS project at SJGS have a diverse workforce?

Yes. Approximately 40% of current employees at Enchant-controlled operations come from multiple native tribes, and taxes paid by Enchant benefit native communities that  live in the region. We plan to continue to build this relationship as the project moves forward.

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