This bill establishes new regulations regarding the generation and distribution of self-sourced power in New Mexico, specifically through the creation of qualified microgrids. It allows individuals and entities within the state to utilize electricity from a qualified microgrid, which can also supply power to public utilities or distribution cooperatives under an electric service agreement. The bill clarifies that energy generated from self-source generation resources for qualified microgrids will not be classified as retail sales, and those who solely provide self-source generation sales will not be deemed public utilities or distribution cooperatives.

Additionally, the bill introduces a Qualified Microgrid Income Tax Credit for taxpayers who construct and install qualified microgrids in underserved communities before January 1, 2031. The credit can cover costs up to $100,000 per microgrid and is subject to specific application and certification processes through the energy, minerals, and natural resources department. The legislation also outlines provisions for transferring the credit, carrying it forward if it exceeds tax liability, and includes definitions for key terms such as "qualified microgrid" and "underserved community." The provisions related to the tax credit will apply to taxable years starting on or after January 1, 2025.