Geothermal Development Incentives on the Governor’s Table
Legislative initiatives to promote geothermal energy development in New Mexico received overwhelming bipartisan support in this year’s session and now await the governor’s signature to become law.
Both legislatures passed a new Geothermal Resource Development Act (House Bill 365) with virtually no opposition, 37–0 in the Senate and 63–3 in the House.
If signed by Gov. Michele Lujan Grisham, the act would expand the duties of the Department of Energy, Minerals and Natural Resources to promote industry in New Mexico through newly established accounts that EMNRD would provide to the surrounding public and private sector. Will manage to offer grants and loans for projects of Rs. State.
It also establishes a new state-funded geothermal “center of excellence” at the Institute of Mining and Technology in Socorro, with $400,000 for the first year of operation included in the Legislature’s proposed budget for fiscal year 2024. which is now pending approval by Lujan Grisham.
Albuquerque Democrat Sen. Jerry Ortiz y Pino helped usher the act through both chambers in early 2022 after forming a working group that spent a year developing the proposal and building bipartisan support for it.
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“It was a bipartisan effort with strong support from the legislative leadership,” Ortiz y Pino told the Journal. “People recognize the tremendous opportunity that geothermal development represents for the state.”
Standing from left are Tom Solomon, Sen. Jerry Ortiz y Pino, and Shari Kelly of the Bureau of Geology and Mineral Resources in the House Energy and Natural Resources Chambers on Feb. 14 after that committee voted to approve the Geothermal Resource Development Act. Rep. Patricia Roybal Caballero, co-sponsor of the bill, is seated in the foreground. (courtesy of Tom Solomon)
Geothermal generation is experiencing a major renaissance, thanks to new deep-drilling techniques to tap into hot rock beds traditional developers previously couldn’t reach. Industry investment is now increasing to build power facilities that pump fluids deep underground to heat them with geothermal energy and create steam to turn turbine generators.
Industry also seeks to exploit underground hot rocks for residential, commercial and industrial heating and cooling systems.
In addition to the Growth Act, legislators also approved new tax incentives, including:
• An electricity generation tax credit that provides a 1.5-percent offset on individual and corporate income taxes up to an aggregate annual limit of $5 million for each kilowatt-hour of electricity generated by new geothermal facilities built before January 2028.
• Reduction in gross receipts tax for geothermal power facility construction cost incurred before January 2028.
• A 30% tax credit of up to $9,000 for the purchase and installation of ground-based geothermal pumps installed before the end of 2028 to heat and cool homes and buildings, with an annual aggregate limit of $4 million.
Ortiz y Pino’s working group wanted the Legislature to set aside $25 million in EMNRD grants and loans for geothermal projects. But the legislative finance committee didn’t include it among its budget priorities when it met over the summer, because the proposed geothermal act was still under development, said environmentalist and working group facilitator Tom Solomon.
“We were too late to get that funding into the LFC budget, but we will work hard this summer to include it next season in 2024,” Solomon told the Journal. “We have approved the basic legislation through the Development Act to set up these funds, so we don’t need to do that again. Now, it is just getting appropriations to put in those funds.”
For now, EMNRD is expected to apply for federal money to help finance projects in New Mexico, as the working group lists more than $600 million in federal aid currently available for geothermal development nationwide. Identified, Solomon said.
In the meantime, the new Center of Excellence in NM Tech will work to identify potential projects for funding once approved, such as new geothermal technology to heat and cool buildings on the New Mexico State University campus Modernize and start again. said Shari Kelly, a senior geophysicist with the State Bureau of Geology and Mineral Resources at NM Tech, in Las Cruces. It will also install new software to make the bureau’s database on New Mexico’s geothermal resources accessible to the public, and bring together geothermal experts and academia, national laboratories and industry to create a statewide consortium for geothermal development. I will create a platform for the enthusiasts.
Lujan Grisham is expected to sign the new legislation into law.
Ortiz y Pino said, “The governor hasn’t spoken on the issue, but his staff and the EMNRD secretary tell me he’s all on board.”