Geothermal energy would be incentivized using state money by a New Mexico House bill that passed the full chamber this week, and moved on to the Senate for further consideration in the final week of the 2024 Legislative Session.

House Bill 91 would send $25 million from the State’s General Fund to two newly-created funds to finance geothermal projects.

Geothermal energy uses heat pulled from underground to the surface, generating electricity and viewed as a renewable energy and alternative to fossil fuels.

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The first fund created by the bill would be a non-reverting Geothermal Projects Development Fund that would be administered by the Energy, Minerals and Natural Resources Department, appropriated by the Legislature.

It would be able to offer up to $250,000 grants for studies of proposed geothermal projects, and grants for financing such projects.

Recipients must be political subdivisions of the state, like municipalities or counties, along with state universities, indigenous tribes or pueblos.

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The other fund created by the will would be the Geothermal Projects Revolving Loan Fund, also administered by EMNRD to provide loans to the same groups as the grant fund for financing the projects.

Another $600,000 would be appropriated for added staff and operating expenses at EMNRD to aid in carrying out the bill’s provisions. Any funds left from that provision would revert back to the General Fund in Fiscal Year 2025.

The bill passed the House on a bipartisan 60-5 vote and was sent to the Senate Finance Committee for further discussion and action. The bill must pass both chambers before they can be signed into law by Gov. Michelle Lujan Grisham.

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Before the full House vote, HB 91 passed unanimously from the House Energy and Natural Resources and House Administration and Finance committees.

The session ends Feb. 16, about 10 days after HB 91 passed on the House Floor.

In its analysis of the bill EMNRD, the agency argued the “non-recurring” appropriation to pay for staff for carrying out the bill was inadequate to create a long-term regulatory environment for the growing geothermal industry in New Mexico.

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The agency said it would aim to hire three full-time employees with a total annual salary of $325,000, if the $600,000 was added to its recurring base budget.

Language in the bill also called on EMNRD’s Energy Conservation and Management Division (ECMD) to apply for federal grants for geothermal projects, but the department’s analysis contended those grants usually go to universities, not state agencies.

“While the division may be able to assist those institutions and organizations with grant proposals, the chance that the division would be eligible for federal funding under existing programs could be limited,” read the report.

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EMRND also voiced concerns about the $250,000 grant cap, offering a $10 million cap would be more helpful to projects exploring for geothermal resources underground, developments EMNRD argued could exceed “seven figures.”

“The grant cap amount is a very low incentive for high temperature geothermal projects where one exploration or temperature gradient well can exceed seven figures,” read the report. “Only actual exploration will provide the data needed to measure future development.”

What is geothermal energy? Where does it come from in New Mexico?

A geothermal project, as defined in HB 91 is one that used the heat of the earth more than 100 degrees farenheit to generate electricity for industrial, commercial or residential purposes.

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Sponsor Rep. Patricia Roybal Caballero (D-13) of Albuquerque said geothermal energy is already produced in New Mexico, and the bill would help the state bolster what she called “clean energy” from this source.

“Geothermal is now a reliable renewable energy option for many homes and businesses in New Mexico,” Roybal Caballero said. “This bill would allow us to take advantage of our unique geology to help make geothermal energy more available statewide, while supporting our clean energy and climate goals.”

Last year’s version of the legislation House Bill 365 passed both the House and Senate during the 2023 Legislative Session, but was pocket vetoed after Gov. Michelle Lujan Grisham took no action to sign it into law ahead of the deadline.

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During the Jan. 23 meeting of the House Energy and Natural Resources Committee, which ultimately granted the bill a “do pass” recommendation, Roybal Caballero who also sponsored last year’s geothermal bill said it enjoyed support from both sides of the aisle.

She said she expected such support this year.

“We’re attempting to open opportunity and access as much as we can in the renewable energy world,” Roybal Caballero said.  

Thomas Solomon, a retired electrical engineer and member of the New Mexico Geothermal Working Group, served as an expert during the meeting, explaining New Mexico’s strong geothermal resources were around the Rio Grande Rift.

He said the rift gradually pulled the earth apart over time, bringing more the subsurface to the surface.

“Meaning the drilling cost to access those geothermal resources is lower here in New Mexico because you don’t have to drill so deep,” Soloman said. “That’s what makes geothermal resource potential in this state so attractive.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on the social media platform X.