Adjust oven rack to middle position and preheat oven to 350° F.

Grease a 9x13-inch baking dish with coconut oil.

Combine onion, oil, and ½ teaspoon sea salt in a large saucepan, cover, and cook over medium-low heat until softened, 8 to 10 minutes.

Stir in garlic, chili powder, cumin, and sugar and cook until fragrant, about 30 seconds.

Stir in tomato sauce and water, bring to a simmer, and cook until slightly thickened, about 5 minutes.

Add chicken and bring to a simmer.

Reduce heat to low, cover, and cook until chicken registers 160° F, 10 to 15 minutes.

Transfer chicken to a carving board, cool slightly, then shred into small pieces.

Strain sauce through a medium-mesh strainer into a bowl and press to extract as much liquid as possible.

Transfer strained bits to a large bowl and stir in shredded chicken, ½ cup strained sauce, one cup cheese, jalapeños, and cilantro.

Season chicken filling and sauce with sea salt and pepper to taste.

Place chicken in prepared baking dish, sprinkle with remaining cheese, and bake 10 to 15 minutes or until thick and bubbly. Allow to cool slightly before serving.

Shredding Made Easy: The easiest way to shred chicken breast is while it is still warm. If you have a stand mixer, you can place the warm chicken breasts in the bowl with the paddle attachment and run it on low for 15-20 seconds for perfectly shredded chicken.

Melting Dairy-Free Cheese: Coconut milk-based cheeses melt differently than dairy cheese. They soften beautifully but don't always "stretch." Watch the oven closely during the last few minutes; if the cheese isn't bubbling enough, you can switch the oven to 'broil' for 1-2 minutes, but keep an eye on it as non-dairy cheese can burn quickly.

Sauce Consistency: Don't skip the step of straining the sauce! Pressing the solids extracts all the flavor without leaving the sauce chunky, giving you that silky, restaurant-style enchilada sauce texture.