A microgrid is a local energy system that can produce its own electricity without depending on the main power grid. Although microgrids can operate on their own, they often rely on natural gas or fuel cells. Experts point out that these sources emit large amounts of greenhouse gases.
Project Jupiter is a large data center campus for Oracle and OpenAI that is being built in Doña Ana County. At first, the developers asked for permits to build two natural gas plants to power the site. Later, they changed their plan and decided to use fuel cells, which make electricity by converting natural gas, biogas, or hydrogen.
Will switching to fuel cells help protect the environment?
State environmental reports show that the fuel cell system would create less pollution than the original natural gas plants, but its emissions would still be very high. Western Resource Advocates, a conservation group, testified that Project Jupiter alone would emit more greenhouse gases than all current power plants in New Mexico combined. This would push the state’s electric sector CO2 emissions back to their 2005 level.
David Baake, an attorney and energy policy consultant for Western Resource Advocates, told the interim Water and Natural Resources Committee that data centers building microgrids — power sources separate from the existing grid — often use natural gas or fuel cell technology that emits significant greenhouse gases.
A 2025 New Mexico law exempts off-grid microgrids. A New Mexico law taking effect in 2025 lets off-grid microgrids avoid the strict rules of the Energy Transition Act (ETA). The ETA says public utilities must get 50% of their energy from renewables by 2030 and 80 percent by 2040.
When the ETA was written in 2019, huge data centers like these didn’t really exist, so the law didn’t cover big, off-grid industrial power users. Under current law, if a private microgrid does not interconnect with the main electrical grid, it remains outside the commission’s regulatory jurisdiction.
What are lawmakers doing to try to solve this problem?
Lawmakers from both parties are debating how to balance data center growth with New Mexico’s climate goals. Some have suggested that developers should build these facilities in the Permian Basin to use local natural gas. On the other hand, some lawmakers are working together to propose a temporary pause on the construction of large data centers in the next legislative session.
Environmental groups also want officials to bring back the Microgrid Oversight Act, a bill that did not pass earlier this year. This law would require microgrids to comply with all renewable energy rules in the ETA.
