The state that’s beating dirty electricity

Abundant sunshine and smart policy have made New Mexico’s grid far more climate-friendly.

Although it’s part of an industry famous for changing slowly, New Mexico’s largest utility has moved quickly to update its electricity supply to cleaner alternatives. 

The Public Service Company of New Mexico, or PNM, said it delivered 80% carbon-free electricity in 2025 after investing in solar energy, batteries, and wind. During the daytime, the sun powers fans, air conditioners, and more across the state. In the evening, solar energy stored in batteries keeps the lights on, while the wind turns turbines that meet other electricity needs. (For details, see part one of this story.) 

This remarkable transformation to a climate-friendly system has unfolded in just five years. As recently as 2021, power plants fueled by climate-warming coal and gas generated nearly 80% of PNM’s total electricity.

“We know it’s the right thing,” said Laurie Williams, PNM’s senior vice president of integrated planning and transmission development.

An ambitious policy

Much of this progress stems from a state law passed in 2019 called the Energy Transition Act. It contains a series of renewable energy mandates, beginning with a statewide standard of 50% renewable energy by 2030. Investor-owned utilities like PMN must generate 80% of their electricity from renewable sources by 2040 and achieve 100% zero-carbon electricity by 2045.

PNM is ahead of schedule. The company said that it will meet the zero-carbon requirement by 2040, five years before the deadline.  

Williams explained that the transformation of the company’s energy supply is not solely motivated by complying with state laws. 

“I would say it’s been more driven by the culture,” she said. 

Over her 34 years with the company, “We’ve understood more and more about climate and the impacts on climate of traditional fossil fuels,” she said. “We’ve got to be part of solving the problem,” she added. “So I think there’s been a shift in mindset.” 

PNM formerly owned the majority of a large coal power plant called the San Juan Generating Station. This plant closed in 2022, and PNM opted to replace all of its capacity from the coal power plant with renewables. 

‘A chance to diversify the economy here’

The Energy Transition Act sets aside money to help workers who lost their jobs due to the closure of the coal plant and nearby coal mine as well as for the development of new renewable energy in the same county as the former coal plant.

Advocates criticized the program for a three-year delay in distributing the money, but funding did get allocated and spent. The state government reported that 2,800 workershave been retrained so far, well above the target of 2,000 workers.

“There’s not a lot of opportunity in New Mexico. It’s an area that, you know, we struggle,” Williams said. 

She pointed out that the state’s economy is largely dependent on oil and gas. But New Mexico’s vast renewable energy resources offer new pathways to prosperity. 

“It feels like there is a chance to diversify the economy here in a way that could be really meaningful for the citizens and for the future of the state,” she said. 

Many Native Americans worked at the San Juan coal plant and mine. The Energy Transition Act established a fund specifically to help Native American communities with the energy transition. Every tribe that lives near a fossil fuel power plant that closes gets automatic membership on a committee that helps decide how and where funds should be allocated.

Money has been spent on sustainable agriculture, food sovereignty, irrigation, new solar projects, worker retraining, and direct payments to displaced workers.

Small-scale solar

Utilities aren’t the only ones on a building spree. Small-scale solar installations in New Mexico more than doubled from 2020 through 2025, and PMN reports that over 13,000 of its customers have solar panels.

Those who can’t or don’t want to put solar panels on their homes can purchase small shares of large solar farms. Sixteen community solar projects operate in the state, and 31 more are planned for a total of 200 megawatts of shared solar power coming online.

The Biden-era Inflation Reduction Act granted New Mexico $156 million to help build solar power for low-income communities, but the Trump administration clawed the money back. 

Not just clean, but also cheap

As New Mexico’s grid gets cleaner, the state is also avoiding the price hikes that have become common around the country. 

Nationwide, residential electricity prices have spiked by 32% in the last five years (May 2021 through May 2026). In New Mexico, prices have increased by just 7% during that same time frame.

The state’s electricity prices remain below average, with residential electricity at $0.14 per kilowatt-hour in May 2026 compared to the national average of $0.18 per kWh, and household electricity bills in New Mexico are among the lowest in the country.

One last piece of the puzzle: interconnection

When more renewables are added to a grid, more pieces need to be connected. In many locations, new renewables projects face a multiyear waiting time to be plugged into the grid, which slows the transition to cleaner energy sources. 

“The moral of the renewables story is transmission,” Williams said. “You must have significant levels of interconnection to all of your neighboring entities.”

New Mexico developed policies to bring renewables online quickly, reliably, and cheaply, including quick turnaround times for reviewing and approving applications for new projects, low fees for interconnecting, and transparency in data sharing and reporting to the public. New Mexico was the only state to earn an “A” grade for interconnection policies in a recent report by the Interstate Renewable Energy Council and Vote Solar. 

Williams explained some of the myriad engineering challenges that go into converting a traditional fossil-fueled electricity system into the grid of the future.

“This really is the biggest math problem on the planet to solve, kind of a generational challenge, but really, really fun and really interesting, but not at all straightforward,” she said. 

A lot goes on behind the scenes every time an air conditioner kicks into gear. But at least in some places, the web of decisions, policies, and infrastructure is producing a more climate-friendly way to keep lights, fans, and air conditioners running, even in the heat of summer. And that’s pretty cool.

This article was originally published by Yale Climate Connections.

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