Why developers come here
New Mexico’s pitch is power price and land. Industrial electricity averaged 5.41 cents per kWh in the first half of 2026, the lowest of any state in the Mountain West, and large tracts of flat, sparsely populated land sit along the I-10 and I-25 corridors and around the Permian gas fields in the southeast. Meta operates a campus in Los Lunas, south of Albuquerque, which proved the state could deliver a hyperscale build.
The state’s incentive structure is unusual. There is no data-center-specific sales tax exemption. Instead, counties and cities issue industrial revenue bonds (IRBs) that abate property tax and exempt IRB-financed purchases from gross receipts and compensating tax for the life of the bond. That mechanism produced the largest incentive package in state history in September 2025, when Doña Ana County authorized up to $165 billion in IRBs for Project Jupiter at Santa Teresa, next to the Texas line and the El Paso metro. The same deal has since produced two lawsuits, a pipeline denial, and a wave of county moratoria.
Incentives
- No statewide sales tax exemption. Bills to create a gross receipts tax deduction for data centers died in 2018 (HB 324) and 2021 (SB 26). New Mexico’s gross receipts tax applies to equipment and construction unless another structure removes it.
- Industrial revenue bonds. Under the state’s general IRB Act, a county or city takes nominal title to the project and leases it back, which removes it from the property tax rolls for the bond term and lets the developer buy equipment and construction free of gross receipts and compensating tax. Terms, payments in lieu of taxes (PILOT), and conditions are negotiated locally. Project Jupiter’s package is $165 billion over 30 years, split roughly $15 billion for an on-site microgrid, $25 billion for buildings, and $125 billion for equipment, with a commitment of at least $50 billion of investment within five years, $50 million for county water and wastewater infrastructure, and $6.9 million in community funds.
- LEDA and JTIP. The Local Economic Development Act funds infrastructure through project participation agreements, but by statute LEDA money cannot buy water rights. The Job Training Incentive Program reimburses part of new-hire wages.
- 2026 session. Every data center bill died. SB 235, the Microgrid Oversight Act, passed the Senate 22-20 on February 14, 2026 and then stalled; it would have put private microgrids under Public Regulation Commission oversight with annual energy and water reporting. A committee substitute for HB 27 expressly excluded data centers from an R&D tax credit expansion.
- County conditions and moratoria. Bernalillo County (February 10, 2026) and Lea County (February 26, 2026) adopted resolutions requiring water conservation plans, wage standards, and renewable energy commitments from any project seeking county IRBs. Socorro County adopted a one-year moratorium in June 2026, Santa Fe County an 18-month moratorium covering facilities of 1 MW or more in July 2026, and Sierra County an 18-month moratorium. Democratic legislators have announced a statewide moratorium bill for the 2027 session; it is a proposal, not law.
Power
PNM (now part of TXNM Energy) serves Albuquerque, Santa Fe, and most of the state’s population. El Paso Electric serves Las Cruces and Santa Teresa. Xcel’s Southwestern Public Service serves the eastern plains and the Permian and is the only New Mexico utility inside an organized market (SPP). PNM and El Paso Electric are in the Western Interconnection without an ISO, so interconnection is a bilateral utility process overseen by the Public Regulation Commission (PRC).
No large-load tariff has been approved yet. PNM told legislators in July 2026 that it will file one with the PRC later in 2026, including minimum revenue requirements and exit fees to protect residential customers, and the PRC has said it will convene a working group. Project Jupiter sidestepped the grid entirely with a private gas-fired microgrid reported at nearly 3,000 MW, but the Green Chile pipeline that would feed it was denied a crossing of state trust land by Land Commissioner Stephanie Garcia Richard in March and again in July 2026, and the pipeline’s own timeline has slipped to 2027.
Water is the recurring question. A researcher told legislators in September 2026 that the state’s data centers use just over 500 million gallons a year today, about half a percent of statewide use, but that the full pipeline of proposed projects would push that to roughly 23.6 billion gallons. Project Jupiter committed to closed-loop cooling averaging 20,000 gallons per day.
Where the projects are
Santa Teresa in Doña Ana County (Project Jupiter, developed by BorderPlex Digital Assets with STACK Infrastructure for Oracle and OpenAI) is the dominant site. Los Lunas in Valencia County hosts Meta. Albuquerque, Rio Rancho, and Bernalillo County have several proposals working through IRB conditions. Speculative pitches have surfaced in Grant County, Socorro County (a 10,000-acre proposal), and at Spaceport America.
Local politics
Doña Ana County approved Project Jupiter 4-1 on September 19, 2025 after hours of testimony and a confrontation between opponents and commissioners. Supporters pointed to 750 permanent jobs paying $75,000 to $100,000, 2,500 construction jobs, and PILOT revenue for a poor border county. Opponents cited water, gas plant emissions, and a process they said was rushed. The New Mexico Environmental Law Center sued in October 2025 to void the IRB ordinances; a judge denied the county’s motion to dismiss in March 2026, then dismissed the case in June 2026 with leave to re-file. A second suit filed February 6, 2026 alleges Open Meetings Act violations, and the state Supreme Court temporarily halted the project’s air permit hearing in August 2026.
That fight is why northern counties moved first on moratoria. Santa Fe County lowered its trigger from 100 MW to 1 MW after public comment. Lea County, in the oil patch, chose conditions rather than a ban, and Bernalillo County did the same. Utility executives have told legislators that large customers can pay for grid modernization; several legislators pushed back.
What a landowner should know
Because incentives are negotiated county by county, the county commission is the decision-maker here, not the state. Ask any prospective buyer whether they intend to seek IRBs and which county has been approached. Developers in southern New Mexico look for 500 acres or more with gas pipeline access as well as transmission, because private generation has become the default plan for very large loads. Around Albuquerque, 100 to 300 acres near existing PNM 345 kV lines is more typical.
Water rights are severed from land in New Mexico and must be transferred through the State Engineer, and LEDA money cannot be used to buy them, so a buyer will want to know exactly what rights convey. Option agreements of 12 to 24 months are common while a developer negotiates an IRB ordinance. The state contact is the New Mexico Economic Development Department, which administers LEDA and JTIP; IRB questions go to the county manager’s office.