New Mexico boasts stark landscapes unlike anywhere else, a clearly defined regional cuisine built around fiery Hatch chiles, and cultural centers that predate the United States by several centuries. It’s unusual in another way, too: As many states struggle to advance on their path to a 100% clean electricity system, New Mexico is running well ahead of schedule.
The Southwestern state’s 2019 Energy Transition Act stipulates that its investor-owned utilities must reach 50% renewable portfolios by 2030, rising to 80% in 2040 and be 100% carbon-free by 2045. That’s a sweeping shift, but New Mexico hit 50% renewable in 2024 and kept on growing. And the state’s largest utility, Public Service Company of New Mexico, or PNM, produced 80% carbon-free electricity last year.
“We wanted to set very ambitious, important targets, because we knew that this was going to help create economic opportunities and protect our environment,” said Rep. Nathan Small, who sponsored the legislation. “We’re ahead of that [2030 goal]. That’s showing us that we can actually move more quickly.”
PNM’s record peak demand is 2.3 gigawatts, and it has 5 GW of nameplate capacity installed today. To keep pushing further, the utility asked regulators in May to approve a nearly 1.7-GW mix of new wind, solar, and batteries, backed up by a diminutive 40-megawatt gas peaker plant. This roster of projects could equip the utility for a July 2031 exit from its 200-MW stake in the Four Corners coal plant, which sits in the northwest corner of the state but is operated by Arizona Public Service.
While other states struggle to meet current energy demand with cleaner sources, New Mexico is building more clean energy to keep pace with an expected 40% growth in consumption by 2032.
“New Mexico is unique in that it has set these ambitious targets, like some of its neighbor states, but that’s only half the job,” said Dan West, who covers Western state policy for the climate nonprofit Clean Air Task Force. “They’ve also built the institutions, the infrastructure, … and the investment environment to deliver on them.”
Even with its momentum, the state still faces hurdles in the energy transition: The latest proposal from PNM is drawing opposition from some environmental groups that are concerned building a new gas plant would violate the legal commitment to phase out fossil fuels. Meanwhile, customers are worried about the utility’s pending takeover by Blackstone, the world’s largest private equity firm, which could alter the company’s trajectory on clean energy. And New Mexico’s experience so far has shown that bringing fossil fuel workers along in the transition can be harder than building the clean energy itself.
Pushing to the next level of clean power
In the early stages of decarbonization, utilities can build a ton of wind and solar, offsetting fuel-burning power generation with cheaper kilowatt-hours. New Mexico is especially well suited for this, as an arid, windy state with a lot of wide open terrain to host wind, solar, and batteries. At a certain point, though, that strategy hits a limit, because the solar and wind cannot deliver power on demand.
“We still have thermal resources in the fleet, and we have to have that,” said Laurie Williams, PNM’s senior vice president for integrated planning and transmission development. (Thermal in this case refers to traditional fossil fuel–burning plants.)
The utility has a small allotment of nuclear power, which is both carbon-free and available around the clock, from Arizona. But the state lacks other firm, clean sources, like long-duration storage, advanced geothermal, green hydrogen, or nuclear fusion. Such potential solutions, however lauded by the venture capital sector, are not bidding into PNM’s competitive procurements; they are “not economic,” Williams noted. And some are years away from commercial availability.
Williams’ team periodically runs a highly detailed statistical analysis of what mix of power plants could cover demand for every hour of every day over the next 20 years. They have to account for the occasional “extra cloudy, totally still day,” when wind and solar production plummets but Albuquerque and Santa Fe still need energy.
The number-crunching produced the latest proposed portfolio: an 800-megawatt wind plant in eastern New Mexico, 240 megawatts of solar, and 610 megawatts of battery storage, roughly split between four-hour duration and eight-hour duration, to ensure more on-demand power. But the linchpin that holds it all together, in the utility’s view, is the 40-MW peaker plant known as La Luz II.
“The whole thing is interdependent, and I can only meet the reliability and resource adequacy metrics with the whole package,” Williams said.