Pacific Fusion has chosen Albuquerque, New Mexico as the site for its first major fusion energy research and manufacturing campus, a $1 billion facility slated for the Mesa del Sol area on the city’s south side.
The California-based startup, founded in 2023 and backed by over $900 million in venture capital, chose New Mexico largely because of lower costs and strong government support. Proximity to Sandia National Laboratories was also a key factor, since Pacific Fusion’s technology builds on decades of pulsed-power fusion research at Sandia and Lawrence Livermore.
An Unprecedented Incentive Package
To clinch the project, local and state officials assembled a hefty incentive package focused on reducing the company’s upfront costs and tax burden while protecting taxpayers. On Sept. 15, the Albuquerque City Council unanimously approved Ordinance O-25-97, authorizing the issuance of up to $776.6 million in taxable Industrial Revenue Bonds (IRBs) for the Pacific Fusion project.
Under the IRB deal, the city will issue bonds that Pacific Fusion itself will purchase and repay, meaning the city carries no financial liability or debt burden despite its name on the bonds. In effect, this mechanism lets the city temporarily hold title to the new facility’s assets, which confers significant tax advantages (while the company bears the cost of the bond).
Key features of the IRB incentive include:
Property Tax Abatement: For 20 years, Pacific Fusion will pay only a fraction of the normal property taxes on the new campus, effectively an 80-90% property tax reduction during the bond term.
Gross Receipts Tax Relief: Because the city will technically own purchased equipment and construction materials under the IRB lease structure, the project is largely exempt from gross receipts taxes (New Mexico’s sales tax equivalent) on those expenditures.
No Cost to City Budget: By design, the IRB is not a cash loan or grant from the city, but rather a tax-incentive vehicle. The company buys the bond and repays it to itself, so city taxpayers are not on the hook.
In addition to the IRB, the council approved $10 million in direct economic development funding for Pacific Fusion’s expansion. This includes $9 million from the State of New Mexico’s LEDA fund (Local Economic Development Act grant) and $1 million from the City of Albuquerque.
Combined, the IRB and grants represent a $787 million incentive package over 20 years, one of the largest ever assembled by the city.
Rendering of the new facility, courtesy of Pacific Fusion.
Protecting Public Interests
Given the scale of the incentives and the fact that Pacific Fusion is a young venture-backed company, local leaders built in robust safeguards to protect public interests. The $10 million in direct funding is disbursed only as Pacific Fusion meets job creation and investment milestones, and can be clawed back if the company falls short.
The incentive agreements also secure the city’s interests with collateral – Pacific Fusion’s land, buildings, and equipment will serve as security equal to the value of any public funds or tax abatements provided. In practical terms, that means the city could recover assets if the project were abandoned, adding a layer of protection for taxpayers.
Economic analyses suggest the deal will still yield a net positive return for the community despite the foregone taxes. A state-commissioned analysis projects roughly $30.5 million in net fiscal benefits to Albuquerque over 10 years, factoring in new tax revenues from salaries, spending, and secondary growth.
Fusion Facility Bids Heat Up Across the Country
Pacific Fusion’s siting decision underscores a new wave of competition among regions to host fusion energy projects. As private fusion companies accelerate toward demonstration and pilot plants, state and city governments are keen to capture the jobs and investment that come with being a fusion hub.
Other high-profile fusion projects have already chosen sites based on favorable business environments and partnerships. For example, stellarator startup Type One Energy decided on Oak Ridge, Tennessee for its first pilot-scale fusion plant, thanks in part to generous state incentives.
In this landscape, New Mexico’s aggressive bid for Pacific Fusion signals a broader ambition to anchor a fusion industry cluster in Albuquerque, much as the UK has in Oxfordshire or Massachusetts in Cambridge/Boston. The state is already engaging other fusion companies and suppliers to build a local ecosystem around Pacific Fusion.
This clustering effect is exactly what many policymakers around the country are striving for: having research institutions, startups, and supportive policy in one place creates a virtuous cycle that accelerates the path to new scientific breakthroughs.
Closing Thoughts
Pacific Fusion project’s progress in Albuquerque will be watched closely by industry observers, and offers a case study in how local governments can catalyze advanced energy projects. Instead of waiting for federal programs alone, New Mexico put real skin in the game, combining flexible financing tools, targeted grants, workforce initiatives, and regulatory support.
If Pacific fusion hits its milestones, building a complex pulsed-power machine by 2027 and achieving net energy by 2030, it will validate not just a technology but also a model of public-private partnership. And if technical or financial challenges arise, the project’s fate could influence how boldly other localities are willing to back fusion ventures.