Wealth Fund Bets It Can Turn New Mexico Desert Into a Tech Hub

If all goes according to plan for the nation’s second-largest sovereign wealth fund, a barren stretch of desert in Albuquerque’s plains will soon become a research center where scientists replicate nuclear fusion — the process that powers the sun and stars.

The $1 billion project from startup Pacific Fusion seeks to unlock a new energy source, a bold goal for experimental technology that’s years away from practical breakthroughs. That didn’t stop the New Mexico State Investment Council, the sovereign wealth fund investing the state’s oil and gas revenues, from telling the firm to build big.

When Pacific Fusion worried whether private capital in the state would support ...