New Mexico Embraces Clean Energy Amid Federal Pullback

Kit Carson Electric Cooperative Stunned by Funding Cancellation

In October 2023, Kit Carson Electric Cooperative was delighted to discover that their microgrid project aimed at supporting rural areas with high wildfire risks, had been chosen by the U.S. Department of Energy to receive a $15 million federal grant. However, two years later, their joy turned to disappointment when the DOE decided to revoke the award. The utility, which provides electricity to approximately 30,000 inhabitants of northern New Mexico, was among 321 energy projects nationwide that were hit by grant terminations.

Alleged Political Bias in Grant Cancellations

In a surprising twist, a federal judge in January sided with plaintiffs who had filed a lawsuit against the DOE. The plaintiffs charged the agency with bias, alleging that decisions about which grants to cancel were influenced by the political orientations of the states where the projects were located. They claimed that states which voted for President Donald Trump were favored.

According to Luis Reyes, the CEO and general manager of Kit Carson, the incident was a valuable lesson about the unpredictability of energy policy in Trump’s Washington, D.C. He suggested that turning to New Mexico might be a more reliable strategy. Fortunately, the New Mexico Energy, Mineral and Natural Resources Department’s community benefits fund stepped in to cover a significant portion of the withdrawn federal funding.

New Mexico’s Renewable Energy Sector Thrives Against the Odds

Even as President Trump’s administration appeared to undermine the renewable energy industry, New Mexico was able to maintain impressive progress. In 2019, the state enforced a mandate requiring utilities to phase out fossil fuel power plants by 2045. This strategy appears to have been successful, with renewable energy accounting for 50% of the state’s electricity generation in 2024, six years ahead of the state’s target. Utility-scale solar installations surged in 2024 and 2025, as power companies endeavored to replace retiring coal plants with solar farms supported by battery storage systems. In 2025, New Mexico also surpassed Wyoming to become the leader in land-based wind energy farms under construction, with 3.7 GW worth of projects in the works.

“We’re going to get to a clean grid,” promised U.S. Sen. Martin Heinrich during a tour of battery storage companies in Albuquerque. However, he expressed disappointment with the Trump administration, accusing it of unfairly hindering projects which would keep retail prices low for consumers.

Trump’s Legislation Impacts Renewable Energy

In July, Trump’s “One Big Beautiful Bill” was enacted, which rolled back significant incentives under the Inflation Reduction Act (IRA). The latter was touted by former President Joe Biden as the most consequential climate bill ever passed in the U.S. after he enacted the law in August 2022. Trump’s legislation imposed a Dec. 31, 2027, deadline for wind and solar energy projects to qualify for a federal investment tax credit — provided for investing in wind and solar farms — and a production tax credit paid when such farms sell power. Under Biden’s law, the tax credits were not due to phase out until the next decade.

According to Reyes, this change compressed the timeline for a solar project in Questa. “Now you really have to compress the construction cycle,” he said. “Projects that have taken three years — you compress to 18 months.”

Another significant change introduced by Trump’s bill was the overhaul of the Department of Energy’s Loan Programs Office. Rather than focusing on reducing carbon emissions, Trump’s new rules incentivize energy projects that provide stability and reliability to the grid, including fossil fuel power plants. This is a significant shift from the office’s original goal to reduce emissions and help the U.S. meet climate targets.

New Mexico’s Advanced Energy Equipment Tax Credit provides a 20% corporate income tax credit — up to $25 million per project — for equipment that produces components for renewable energy projects, including solar, wind, and battery-based power. Companies can take advantage of the credit until 2032 by applying with EMNRD. Gov. Michelle Lujan Grisham signed the bill into law in March 2024.

Foreign Influence and Delays in Renewable Energy Projects

Maxeon Solar Technologies, a Singapore-based solar panel and solar cell manufacturer, proposed a $1.9-billion factory in Albuquerque’s Mesa Del Sol development. Maxeon sought a $1.2 billion loan guarantee from the DOE for the project. However, the project faced several obstacles, including tariffs, liquidity problems, and a controversial majority acquisition by a Chinese company.

Trump’s bill imposes restrictions on how companies that qualify for certain tax credits can collaborate with so-called prohibited foreign entities, which includes U.S.’s competitors like China. Because of this, Maxeon backed out of the project, a decision a spokesperson said was based on a “strategic restructuring of our business.” Despite this setback, city and state officials awarded Maxeon for its promise to create approximately 1,200 new jobs with millions in Local Economic Development Act funds and industrial revenue bonds.

Another company, Ebon Solar, also proposed a solar cell manufacturing facility in Mesa Del Sol. This project too, has been delayed, and representatives of Ebon Solar and its parent company have not responded to inquiries about the project’s status.

Not All Companies Depend on Government Subsidies

Desert Mountain Energy Corp., a Canadian-headquartered helium and natural gas producer, has proposed to build a sodium-nickel-chloride battery manufacturing factory in Roswell. The proposed project is estimated to cost between $115 million to $120 million and could create up to 180 jobs.

Unlike many other companies, Desert Mountain Energy is not depending on government subsidies to build the project. “We feel this is cost-effective to do even without a lot of government input,” said Desert Mountain Energy CEO and Chairman Robert Rohlfing. “This is something that’s needed. It can be done the good old-fashioned way — you don’t have to necessarily have a lot of tax dollars to do it.”