New Mexico


Petroleum, natural gas, and coal production make New Mexico the seventh-largest net supplier of energy to the nation.

New Mexico contains a wealth of fossil fuel, mineral, and renewable energy resources. It is home to the forested peaks and valleys of the southern Rocky Mountains, high plateaus of the Great Plains, and spectacular desert canyons and mesas. In addition to its dramatic vistas, the state has substantial oil and natural gas reserves, abundant sunshine, and nearly one-third of the nation’s known uranium resources. The climate varies widely by location and elevation, from the deserts in the south, where temperatures in the triple digits are common, to snowy peaks in the north, where temperatures have fallen to 50 degrees Fahrenheit below zero. Although New Mexico is the fifth-largest state by area, it is the sixth-least densely populated. More than one in four residents live in the city of Albuquerque, and two-thirds of the state has fewer than 10 people per square mile.

New Mexico is the seventh-largest net supplier of energy to the nation, primarily because of its petroleum, natural gas, natural gas liquids, and coal production. The state’s largest employers are the health care, retail trade, hospitality, and educational service industries. Although not a large employer, the mining sector, especially the oil and gas industry, contributes significantly to the state’s gross domestic product (GDP). More than one-third of New Mexico’s land is federally administered, and the state is second only to Wyoming in the number of producing oil and natural gas leases on federal land.

New Mexico’s energy consumption per dollar of GDP and energy consumption per capita are both above the national average. Among the state’s end-use sectors, the industrial sector is the largest consumer of energy, followed by the transportation sector. Despite the state’s climate extremes, energy consumption per capita by the residential sector is among the lowest in the nation.

Renewable Energy

Quick Facts

  • Excluding federal offshore areas, New Mexico ranked sixth in crude oil production in the nation in 2015.
  • New Mexico’s marketed production of natural gas rose in the past three years to account for 4.3% of U.S. marketed natural gas production in 2015, which was nevertheless a 27% decline from its 2000 peak.
  • New Mexico has 26% of the nation’s coalbed methane proved reserves, second only to Colorado in the United States.
  • In 2015, New Mexico ranked sixth in the nation in utility-scale electricity generation from solar energy.
  • New Mexico reservations have abundant renewable energy potential, including solar, wind, geothermal, and biomass resources.

New Mexico possesses substantial renewable resources. The greatest wind potential is on the high plains in the eastern half of the state. In 2015, wind energy contributed 6% of New Mexico’s electricity generation from more than 700 operating wind turbines. The state has more than 1,100 megawatts of installed electricity generating capacity from wind.

In 2015, wind energy contributed 6% of New Mexico’s electricity generation from more than 700 operating wind turbines.

New Mexico’s climate is typified by abundant sunshine, giving the state some of the nation’s best solar energy potential. The number of utility-scale solar photovoltaic (PV) facilities in New Mexico is increasing, and so is the use of distributed (customer-sited, small-scale) solar generation, including larger corporate PV installations. State regulatory policies and incentives encourage the use of distributed solar technologies. In 2015, New Mexico ranked 13th in the nation in installed solar capacity with 406 megawatts. On a per-capita basis, New Mexico was among the top 10 states nationally in solar electric capacity in 2015.

New Mexico has the sixth-largest geothermal resource in the nation. Most of those resources are located in the southwestern and north-central parts of the state. Geothermal energy has been used for greenhouse agriculture in New Mexico, much of it for the state’s famed green chilies, as well as for aquaculture. Geothermal energy has also been used for space heating, district heating, and heating soaking tubs and swimming pools at several spas in the state. In December 2013, New Mexico’s first utility-scale geothermal power plant came online, making New Mexico one of seven states with utility-scale geothermal generation. The power plant, located in the Animas Valley in southwestern New Mexico, had an initial electricity generating capacity of up to 4 megawatts. A planned expansion of the facility is in development and will provide another 6 megawatts of geothermal generating capacity. New Mexico also has small amounts of utility-scale electricity generation from hydropower and biomass.

With a relatively small state population and low electricity demand, New Mexico’s solar, wind, and geothermal projects need more transmission capacity to take the electricity that renewable projects generate to power markets in the Southwest. Transmission projects are under development that are designed to allow delivery of renewably generated electricity within New Mexico and to other western states. All of these projects will enable the development of renewable energy resources in New Mexico by providing them with access to the nation’s interstate power grids.

The New Mexico renewable portfolio standard requires investor-owned electric utilities to acquire 20% of electricity sold in-state from renewable energy sources by 2020. Of that 20%, at least half must come from solar and wind energy, and the balance must include shares from several other renewable sources, including distributed generation. Rural electric cooperatives are required to obtain 10% of their sales from renewable sources by 2020. New Mexico has regulatory policies.


New Mexico has the second-largest known uranium reserves in the nation.

Coal-fired power plants supply more than three-fifths of New Mexico’s net electricity generation. Natural gas supplies most of the remaining generation, with renewable resources, primarily wind, providing almost all the rest. Although the state has no nuclear power plants, it has the second-largest known uranium reserves in the nation. Coal-fired generation in New Mexico is declining as federal air quality regulations have tightened and as California has decided to stop purchasing electricity generated from coal. Shutdown of two of the four coal-fired generating units at New Mexico’s largest power plant is scheduled to occur by the end of 2017, and three of the five coal-fired electricity generating units at the state’s second-largest coal-fired power plant were retired in 2013.

Plans are under way to connect all three U.S. grids in New Mexico.

All of New Mexico’s planned new electricity generating capacity will use renewable energy or natural gas. The state has recognized an economic interest in selling more electricity to other states, particularly electricity generated from renewable resources. New transmission projects are under way that take advantage of the state’s location at the edge of the three U.S. electrical grids-the Eastern, Western, and Texas Interties-and of the Four Corners power trading hub, located at the Four Corners coal complex in northwestern New Mexico.

New Mexico uses less electricity per capita than about two-thirds of the states and less than it produces, meaning that the state is a net supplier of electricity to neighboring states. New Mexico’s residential, commercial, and industrial end-use sectors use roughly equal amounts of electricity, with the commercial sector consuming a slightly larger share than either the residential sector or the industrial sector. About one in six New Mexico households use electricity as the primary source for home heating.

Natural Gas

The San Juan Basin in northwestern New Mexico contains one of the largest proved natural gas reserves in the United States.  Although New Mexico’s total proved natural gas reserves are less than they were a decade ago, the state’s proved shale gas reserves have risen dramatically over the same period.  Shale gas reserves are a small portion of the state’s total proved natural gas reserves, but several New Mexico basins have shale gas potential. In addition, New Mexico is second only to Colorado in proved coalbed methane reserves.

New Mexico is among the top 10 natural gas-producing states, accounting for about 4% of the nation’s total. In 2015, the largest share of New Mexico’s natural gas production came from natural gas wells. Natural gas from oil wells, shale gas wells, and coalbed methane wells also contributed to the state’s total natural gas production. New Mexico’s output from coalbed methane wells increased sharply from 2000 to 2007 but then declined. Although shale gas production has increased during the past decade, the state’s total natural gas production has decreased.

New Mexico produces more natural gas than it uses and sends natural gas through interstate pipelines primarily to Arizona and to markets on the West Coast. The Blanco Hub, located in the San Juan Basin, is a major connection and trading point for interstate pipelines carrying Rocky Mountain natural gas. New Mexico has only two underground storage fields with a combined storage capacity of 89 billion cubic feet of natural gas, about 1% of the nation’s total.

About one-fifth of the natural gas produced in New Mexico is consumed in the state. The electric power sector is the largest natural gas consumer in New Mexico, followed by the residential sector. Two-thirds of the state’s households use natural gas as their primary energy source for home heating. New Mexico is among the top 10 states in the nation in per capita natural gas consumption.

Source: U.S. Energy Information Administration (Jan 2017)

Energy Options

Electric Supply


Electric Utilities

Public Service Company of New Mexico

El Paso Electric Company

Southwestern Public Service Company

Texas-New Mexico Power Company

Public Utilities Commission

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Gas Supply


Gas Supply

Xcel Energy

Transwestern Pipeline

PNM Gas Services

Raton Natural Gas Co

Zia Natural Fas Company

Natural Gas

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