The New Mexico State Senate narrowly approved a bill Saturday that would give state regulators oversight of large microgrids and require that the projects meet a renewable portfolio standard.
Approved by a 22-20 vote, the legislation targets microgrids of at least 20 MW.
The bill’s primary sponsor, Sen. Jeff Steinborn, a Democrat, introduced the Microgrid Oversight Act (Senate Bill 235) after learning that three data center microgrids planned for New Mexico would collectively produce two to three times the electricity currently consumed by the entire state.
In debate over the bill, proponents repeatedly raised concerns about Project Jupiter, a $165 billion data center planned in Doña Ana County. A 700-900 MW gas-fired microgrid will power the data center.
Steinborn questioned the use of the descriptor “microgrid” for the data center projects of this size, instead calling them “monster grids.” Rep. William Souse, a Democrat, said it’s like saying, “jumbo shrimp.”
The bill establishes a microgrid renewable portfolio standard, consistent with a similar requirement for utilities in the state. The legislation would require large microgrids to provide 40% of their power from renewable energy, with the figure rising to 50% by 2030, 80% by 2040 and 100% zero carbon energy by 2045.
A microgrid can offset 10% of the requirement by investing in residential solar power or community solar for low-income residents.
Steinborn said the bill also closes a loophole that currently allows utilities to purchase data center microgrid power, potentially shifting the microgrid’s costs from the data center owner to utility ratepayers.
The state public service commission would enforce the new microgrid rules.
In a lengthy debate over the bill, supporters praised its ability to curb emissions and water use and leverage New Mexico’s abundant solar potential. They also noted that the legislation does not apply to smaller microgrids serving hospitals, communities, and other entities in the state.
Critics of the bill said it fails to account for the difficulty data centers face in securing utility power and is likely to discourage economic development. They also described it as largely a way to shut down the Jupiter Project.
Sen. George Munoz, a Democrat, questioned the fairness of a provision that forces the microgrid to cease operation if it fails to comply with the act. He said other industries tend to face more temporary sanctions for permit violations.
In urging senators to support the bill, Steinborn said it offers a way to attract substantial investment in renewable energy as the data center development occurs.
“We can parlay this moment into good. It doesn’t have to be the dirtiest, most polluting path possible. And believe me, all of your constituents want that,” he said.
The bill now goes to the House and if approved there to Gov. MIchelle Lujan Grisham for signature.
