Oct. 2—The Department of Energy is terminating 10 energy project grants in New Mexico, cutting off about $135 million in federal funding and raising concerns the decision could have severe consequences for the state’s economy.
The agency announced it terminated 321 awards for 223 projects in 16 states, a funding total of $7.56 billion, because they did not “adequately advance the nation’s energy needs, were not economically viable and would not provide a positive return on investment of taxpayer dollars.”
Energy Secretary Chris Wright said many financial awards were rushed through in the final months of the Biden administration with “inadequate documentation by any reasonable business standard.”
The projects were already approved and funded by Congress. The 16 states where projects were cut all voted for Democrat Kamala Harris in the presidential election last year.
Ten of those awards totaling $135 million were for New Mexico-based projects, according to a detailed list provided by Democratic Sens. Ben Ray Luján and Martin Heinrich of New Mexico.
Pulling so much federal funding directly out of New Mexico’s economy will have huge impacts on construction, research, manufacturing and energy engineering jobs, according to Reilly White, associate professor of finance at the University of New Mexico. Some of the projects are meant to lower long-term energy costs for consumers, so the funding hit could also mean higher future energy costs.
“I think this creates a competitive disadvantage for our state,” White said. “It creates ripple effects across the economy, and I think it adds to an environment that a lot of firms are in right now, which is this political risk and business uncertainty that we’re experiencing.”
There are other potential funding sources for the energy projects, but given how many projects lost funds nationwide, there will be stiff competition for money from foundations or donors, according to White.
Public Service Company of New Mexico, the state’s largest electricity provider serving more than 550,000 customers, was among those affected. According to Heinrich, the utility had $35.6 million cut from a project that would enable a “virtual power plant” to improve grid stability and reduce customer bills. Overall costs of the project totaled $72.6 million.
PNM spokesperson Eric Chavez said the utility is currently evaluating the energy project cuts, adding that it will continue to focus on providing safe and reliable power to its communities.
“While these cuts could impact some technical enhancement projects, the company wants to (assure) customers that the overall Grid Modernization Project that was approved by state regulators last year is still moving forward,” Chavez said.
The New Mexico Institute of Mining and Technology in Socorro saw the most cuts, according to Heinrich, with four projects losing a combined $56.2 million. Overall project costs totaled $70 million.
As of Thursday, New Mexico Tech had “not received any official communication from the federal government regarding changes or cuts to our current grant awards,” a university spokesperson said.
Rep. Gabe Vasquez, D-N.M., criticized the Trump administration for cutting money for the university’s oil and gas modernization projects.
The institute’s largest cut of $42.7 million took funding from its CarbonSAFE Phase III development, which aims to build a commercial-scale storage hub in the San Juan Basin. The project involved dozens of collaborators, including UNM, Sandia National Laboratories, Los Alamos National Laboratory and out-of-state entities.
According to the National Energy Technology Laboratory, run by the DOE, the CarbonSAFE initiative began in 2016 to address gaps in carbon capture and storage. It promises to “reduce technical risk, uncertainty and costs” of commercial-scale storage projects. As of March, the lab listed 21 total phase III projects being conducted around the country, including developments in New Mexico, Colorado, Texas, Louisiana and others.
The terminated awards also include a $15.4 million grant for the Kit Carson Electric Cooperative meant to fund a $29.3 million distributed battery energy storage system for grid resiliency in northern New Mexico, according to Heinrich.
The co-op has not yet received an official termination letter and plans to appeal the decision once it does, said Kit Carson CEO Luis Reyes. The utility has already spent $4 million on the project.
Reyes was surprised to hear the grant was terminated, because the project was focused on fire mitigation and public safety. It was intended to support microgrids that can help localize outages during wildfires and other events.
“This was really our attempt to first, let’s not start a fire. Second, let’s make sure that people who need electricity in these areas for quality of life and life-saving measures have electricity for about six hours,” Reyes said.
That time could give co-op members a chance to decide if and how they should leave the area. The communities in north-central New Mexico that the co-op serves are aging, and depend on electricity to power medical devices like oxygen tanks or CPAP machines, Reyes said.
State Rep. Kristina Ortez, D-Taos, was excited that the local workforce was building out the project.
“I’m still reeling from this,” she said. “What I think is such a tragedy is that we were starting to do the work of getting local high school students enrolled in these classes so that they could then work at Kit Carson, so that they could build these renewable energy microgrids.”
Ortez plans to look for state funding to keep the project going.
In May, Wright issued a memo authorizing program offices to ask for more information from grant awardees and requiring a review of awards on a case-by-case basis.
“President Trump promised to protect taxpayer dollars and expand America’s supply of affordable, reliable, and secure energy. Today’s cancellations deliver on that commitment,” Wright said in a statement.
The Energy Department will continue reviewing awards, he said.
But Luján framed the cancellations as a blatant political stunt.
“Let me be clear: President Trump is using his own shutdown as a tool for political retribution — targeting energy projects that create good-paying jobs and help lower costs for families,” Luján said in a statement.
Heinrich, ranking member on the Senate Energy and Natural Resources Committee, described the grant cancellations as “nakedly political, unhinged and unlawful.”
“Minutes before the news of these cancelled projects broke, I had just left lunch with Secretary Wright and he had neither the courtesy nor the care to mention that this was coming, and that it included 10 projects in my state — projects that affect real jobs and real families,” Heinrich said in a statement. “That tells you everything you need to know about how this Administration operates: in the dark and with no respect for the people hurt by their decisions.”
The DOE did not respond to a request for comment.
Other terminated grants
—Albuquerque-based Pajarito Powder lost two grant awards — a $10 million award for a $13.2 million project to domestically produce oxygen evolution reaction catalysts to furnish the growing electrolyzer industry, and an $8.5 million award for an $11 million project meant to accelerate domestic manufacturing of durable engineered catalyst support materials, according to Heinrich. The company did not immediately respond to a request for comment.
—Solar Dynamics, a technology company focused on solar energy and based in Denver, Colorado, had a $3 million grant award terminated, according to Heinrich. It was for a $35.6 million project to turn solar thermal heated biosolids into fertilizer. The company did not immediately respond to a request for comment.
—Navajo Transitional Energy Co., which owns the Navajo Mine and holds a 7% interest in the Four Corners Power Plant, lost $6.6 million. The funding was to be put toward a full-scale carbon dioxide capture project, totaling $13.1 million, which would have been located at the plant near Farmington. Officials did not respond to comment requests.
