The Dangers of Private Equity and Data Centers in New Mexico (Excutive Summary)
Today’s world is a very different place from even the world of twenty years ago. The meteoric rise of the digital age has swept through every facet of our society and altered the fundamental ways we shop, socialize, work, and communicate. As such, our collective appetite for data has advanced at a similar breakneck speed, but nothing, not the rise of social media, nor the dot.com boom, has seen the same insatiable need for data storage as the modern AI bonanza. To answer this call for boundless digital capacity, the nation has begun building at a scale and speed not seen since the Great Depression. Rather than public works projects we are building data centers. In this report, we will endeavor to unpack some of the mysteries around this data center boom, why it’s happening, who is driving it, and most importantly, what its arrival could mean for communities here in New Mexico.
To start, by 2030, it is predicted that investment in data centers will reach $7 trillion, far surpassing anticipated investments in global oil supply (McKinsey & Company, 2026; Zeitlin, 2025). As modern AI-driven data centers demand vast amounts of energy, their electricity consumption is set to triple by 2035. Currently, the majority of large-scale data centers rely on energy sourced from gas-fired, nuclear, or coal-fired power plants. In 2023, data centers consumed over 4% of the entire nation’s electricity production, and this figure is growing (Leppert 2025). Current projections estimate data centers to exceed 12% of electricity generation by 2028. United States electricity demand could increase by 60-80% between 2025-2050 with data centers accounting for half the increase by 2030 (Clemmer et al., 2026).
To fuel this projected demand, the tech industry has united with private capital. The interest of private equity firms, particularly Blackstone and Bernhard Capital Partners, in New Mexico utilities follows a broader trend where private equity acquires utilities to profit from the energy demands of data centers and AI technologies. A notable example is TXNM Energy (TXNM), which manages Public Service Company of New Mexico (PNM) and Texas-New Mexico Power (TNMP), announcing plans to be acquired by Blackstone. This acquisition involves substantial funding, including a significant contribution from the Saudi Public Investment Fund (Bentley, 2023), and is supported by investors like the New Mexico State Investment Council (Heil, 2026). However, public comment hearings in 2026 revealed widespread opposition to Blackstone’s involvement in New Mexico.
Indeed, this level of opposition follows a growing national trend where it is estimated that 71 percent of Americans oppose data centers being constructed in their community (Wallace-Wells and Meyer, 2026). The reasons for this are multifaceted, but two primary concerns have emerged: water and electrical use. Regarding water, a medium-sized data center can consume water equivalent to that used by over 1,000 households annually (110 million gallons) (Yañez-Barnuevo, 2025). Large data centers can use water equivalent to towns of 10,000 to 50,000 people annually (1.8 billion gallons) (Yañez-Barnuevo, 2025).
New Mexicans in particular are extremely concerned about data centers’ water use. And for good reason: in May, the US Supreme Court reached a settlement in a water management case requiring New Mexico to retire 9,200 acres of irrigated farmland (Burnett, 2026). The development of new water-intense projects at a time when the region is trying to scale back its water use is deeply troubling.
Regarding electricity, data center cumulative energy costs from 2026 to 2050 are estimated to range from $886 billion to $978 billion, representing 18 percent of total US wholesale electricity costs (Clemmer et al., 2026). Across the nation, the buildout of data centers has in general driven up electricity prices for residential consumers. Despite Blackstone’s assurances that upon acquisition of PNM customer prices would go down, private equity firms frequently initially lower costs to only drastically raise them in the future.
Furthermore, New Mexico is in the midst of a critical energy transition. Laws now in place require 100% renewable energy by 2045, rules cutting pollution from the oil and gas industry, and clean transportation standards. The recent influx of data centers poses a new challenge to the state’s climate goals. Data centers must operate 24 hours a day, 7 days a week to keep the information technology they house operational. The combination of rising energy costs and worsening climate impacts makes the buildout of additional data centers in New Mexico a sour prospect for most residents.
On top of these concerns are worries about the burden data centers will place on our natural environment. In 2024, the average size of a data center site was 224 acres, or 450 football fields (Walker and Goldsmith, 2026). These facilities tend to be smaller in scale and require less energy to power. In contrast, large-scale data centers, like Project Jupiter and New Era in New Mexico, require much more land for their operations. New Era, proposed to require 7 GW of power, is estimated to cover 3,500 acres of land, which is equivalent to nearly 5.5 square miles (New Era, n.a.). Project Jupiter is approximately 1,400 acres, equivalent to just over 2 square miles (Burnett, 2026). These mega facilities will have a significant impact on the communities, land and wildlife.
The data center push is often accompanied by industry claims that development will bring thousands of new jobs to the area. It should be noted that data center development creates jobs in two phases: construction and operation. During the construction of data center facilities, hundreds to thousands of temporary, blue-collar jobs are needed. After construction is completed, centers employ anywhere from a few dozen to a few hundred long-term workers (Bahar and Wright, 2026). A November 2025 data center forecast from Hamm Institute estimates that hyperscale facilities often operate with as few as 20 to 30 permanent staff per 1 GW (Ryu and Hiatt, 2025).
If New Mexico moves data center development forward, it is crucial to consider policies that require data centers to hire local labor forces for these roles to ensure New Mexican workers benefit. At the same time, a study published by Carnegie Mellon University found that the environmental damage of data centers cost the economy $25 billion (Bove, 2026). All of these benefits and costs must be considered when examining data center proposals.
As it stands now, it appears that data center buildout is driven in large part by private equity, with AI and crypto currency customers pressing for “reliable” gas-fired power plants, and with private equity now entering the public utility market. In the coming years, the push for data center development is only likely to expand. In 2025, the White House announced “The Genesis Mission” through Executive Order (EO) 14363 (The White House, 2025). The intent of the EO is to “unleash a new age of AI-accelerated innovation and discovery” (Cho, 2026).
Under the Trump Administration, thoughtful and responsible federal AI data center policy is not realistic. As with many other policy and regulatory issues involving federal-state collaboration and checks, it is now up to the states alone to decide how best to advance their needs and protect their economies, residents, and environments. It also cannot be left solely to individual cities and counties to decide these issues; there must be a comprehensive statewide framework that ensures all communities are protected. Data centers must act in ways that enhance a just energy transition, minimize impacts on scarce water supplies, adhere to the state’s greenhouse gas emission targets in both the ETA and the CAP, bolster the electricity grid for all users, and support AI and data center clients who are acting in the public welfare, not against it.
Policy recommendations:
Water:
- Require data centers to operate with the best available technology for water efficiency, including closed loop and geothermal cooling;
- Ensure new development does not harm sensitive streams or habitat by ensuring responsible siting;
- Mandate data center setbacks from vulnerable watersheds or ecosystems;
- Require data centers to include non-water cooling methods like dry-cooling;
- Require a State Engineer/Interstate Stream Commission assessment of impacts to aquifers, depletion of surface waters (especially those under interstate compacts), and impacts to established surface and groundwater users. Where available data is insufficient, provisionally deny the water permit until either the state or the permittee completes an independent science-based assessment capable of providing a sound basis for permission or final denial;
- Require data centers to offset their water use by investing in local water conservation, infrastructure, or reuse programs;
- Mandate regular water reporting and water monitoring;
- Require data center owners to pay for all infrastructure upgrades necessary to safely supply, move, clean up, and dispose of water; and
- Require mapping of current and future water and wastewater needs ensuring local water systems are resilient prior to awarding permits.
Energy Production and Climate Change:
- Require data centers to comply with the state’s Energy Transition Act, and prioritize projects that have on-site or new, deliverable zero-emissions energy, especially solar and battery storage;
- Explore “clean transition tariffs” that enable large-load customers to purchase carbon-free energy or resources to serve their load, providing financial backing for the utility to procure or develop a new renewable energy resource;
- Require or incentivize data centers to use energy efficiency measures when designing and building their infrastructure, which can reduce the water and energy needed for cooling;
- Require data centers to implement demand response programs to shift their electricity consumption away from times of peak electricity demand, thereby reducing costs and strain on the broader grid and utilities’ reliance on polluting resources to supply power during spikes in demand;
- Utility regulators should establish best practices and requirements for utility forecasts of future electricity demands and consider revamping their Integrated Resource Planning processes to ensure that other customers are protected from financial risks if utilities overinvest in resources to serve data centers that are never built;
- Update the state’s air permitting regulations to ensure that GHG emissions are considered when approving or denying permits;
- Require data centers to pay for necessary transmission updates utilizing best available, cost effective technologies; and
- Deeply invest in home and building efficiency, solar, and electrification, which will reduce overall electricity grid demand creating more flexibility for the grid to power new facilities.
Land and Wildlife:
- Require a comprehensive impact analysis for project siting to ensure that projects are not located near wildlife migration corridors, vulnerable ecosystems and wildlife habitat, or near communities;
- Establish setbacks to enforce a buffer to protect wildlife, watersheds, and people from the heat island and noise impacts of data centers;
- Require community benefit agreements so that data center developers and owners invest in local wildlife habitat and land resiliency projects to protect the surrounding ecosystem;
- Require data center facilities to install soundproofing technology or techniques to reduce noise pollution; and
- Strengthen local nuisance laws in municipalities to more properly apply to the scale and impact of data center noise levels.
Utility Rates:
- Establish a large load rate class to minimize cost shifting of utility rates from data centers to other rate classes and users;
- Require data centers to fund any future system improvements required to support a data center operation in full;
- New Mexico must establish strong, comprehensive protections for low-income households. Expanding low-income rate discounts, strengthening bill-payment assistance and creating targeted peak-reduction programs that pay households for lowering energy use at critical times are practical strategies that support economic stability while improving grid reliability; and
- Establish contract provisions. There is uncertainty in the energy demand that data centers are projecting. If a utility expands its transmission or generation system in anticipation of this potential growth and it does not materialize, those investments may increase customers’ other costs. To mitigate this risk, data center contracts should be multiyear with early termination penalties and include financial security assurances and minimum billing provisions.
Accountability:
- Disinformation and misinformation around individual and cumulative data center projects, current and proposed, needs to be addressed thoroughly in public fora including agency or permittee informational meetings and all regulatory processes;
- Require independent audits of utility company load forecasts as well as the associated data center energy demand projections;
- Establish a statewide process for approving new data centers that removes sole authority from highly conflicted local authorities for company selection, site selection and incentives or subsidies; and
- Prohibit the use of nondisclosure agreements and require disclosure of ownership structure for large data center projects to ensure transparen
Citations:
Bahar, Dany and Wright, Greg. 2026, May 4). New evidence on data center employment effects. Brookings Institute. https:// www.brookings.edu/articles/new-evidence-on-data-center-employment-effects/
Bentley, Zak. (2023, October 20). Blackstone hits $40bn target for infra unit six years after launch. Infrastructure Investor. https://www.infrastructureinvestor.com/blackstone-hits-0bn-target-for-infra-unit-six-years-after-launch/
Bove, Tristan. (2026, April 21). Data centers are dealing hidden damage to environmental and public health – costing the economy $25 billion every year. Fortune. https://fortune.com/2026/04/21/data-centers-environmental-health-costs-25-billion/
Burnett, John. (2026, June 14). Worries over water as a giant data center moves into the New Mexico desert. NPR. https://www.npr.org/2026/06/12/nx-s1-5786551/worries-over water-as-a-giant-data-center-moves-into-the-new-mexico-desert
Cho, Adrian. (2026, March 11). Why the Energy Department’s Science Labs will Spearhead the Federal Push into AI. Science. https://www.science.org/content/article/why-energydepartment-s-science-labs-will-spearhead-federal-push-ai
Clemmer, Steve et al. (2026 January). Data Center Power Play. The Union of Concerned Scientists. https://www.ucs.org/sites/default/files/2026-01/Data-Center-Power-Play -report-final.pdf
Heil, Nichole. (2026, January 13). Blackstone plans to acquire multi-utility TXNM, raising concerns about energy affordability. Private Equity Shareholder Project. https://pestakeholder.org/news/blackstone-plans-to-acquire-multi-utility-txnm-raising–concerns-about-energy-affordability/
Leppert, Rebecca. (2025, October 25). What we know about energy use at U.S. data centers amid the AI boom. Pew Research Center. https://www.pewresearch.org/short-reads/2025/10/24/what-we-know-about-energy-use-at-us-data-centers-amid-the-ai-boom/
New Era. (n.a.). Projects. New Era. https://www.newerainfra.ai/projects/new-mexico/
Ryu, Angela and Hiatt, Shon. Data Center Employment Forecast Analysis. University of Southern California. https://hamminstitute.org/site-files/documents/data_center_workforce.pdf
Yañez-Barnuevo, Miguel. (2026, March 23). Communities Are Raising Noise Pollution Concerns About Data Centers. Environmental and Energy Study Institute. https://www.eesi.org/articles/view/communities-are-raising-noise-pollution-concernsabout-data-centers
Walker, Carla and Goldsmith, Ian. (2026, February 17). From Energy Use to Air Quality, the Many Ways Data Centers Affect US Communities. World Resources Institute. https://www.wri.org/insights/us-data-center-growth-impacts
Wallace-Wells, David and Meyer, Robinson. (2026, July 15). Is this the fastest opinion shift in American politics? The Wall Street Journal. https://www.nytimes.com/2026/07/15/opinion/ai-data-center-politics.html
Zeitlin, Matthew. (2025, November 12). Data Centers and Natural Gas are Bending the Climate Transition Cure, IEA Says. HeatMap. https://heatmap.news/energy/iea-world-energy–outlook-2025
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CVNM is a nonpartisan, nonprofit organization connecting the people of New Mexico to their political power to protect our air, land, water, wildlife and communities for a healthy Land of Enchantment. CVNM does this by mobilizing voters, winning elections, holding elected officials accountable, and advancing responsible public policies.