Mexico is undergoing a transformation in its energy sector
In a significant shift for Mexico's energy sector, a new constitutional reform package has been passed, paving the way for greater private investment in clean energy. This move, spearheaded by Claudia Sheinbaum, the Morena party leader, aims to make renewable energy a cornerstone of her administration.
The reforms boost the amount of distributed electricity generation permitted for private producers, with the amount of self-generated power that a project may use on-site raised significantly, from just 0.7 megawatts to 20. This expansion is expected to lead to an increase in solar-power installations, according to María José Treviño, the Mexico country manager for Acclaim Energy.
The new laws also call for the creation of a Universal Energy Service Fund, prioritising electricity for vulnerable rural and urban communities. Around 2-3% of Mexico's population, or millions of people, are still without electricity, and the administration aims to ensure energy justice, particularly for rural, marginalised, and Indigenous communities without electricity.
Sheinbaum's administration intends to add almost 23 gigawatts to Mexico's power generation capacity by 2030 via new projects. The Federal Electricity Commission (CFE) plans to develop hundreds of projects across power generation, transmission, and distribution, potentially open to private collaboration.
Under the reforms, CFE and Pemex may now enter "mixed contracts" with private firms but will remain the leading partners. The new legislation establishes a 46% participation cap on private electricity and renewable investment, guaranteeing the dominance of the state-owned CFE, which will generate at least 54% of the nation's power.
Mexico will seek investment totalling between USD 6 and 9 billion among private energy producers. The Mexican Hydrogen and Energy Transition Association (H2México) supports the government's plans for private participation in renewable-energy generation.
The administration also targets wood-burning cooking stoves to address air pollution, deforestation, and forest fires. Around 50% of the population in Mexico continue to use wood-burning cooking stoves, a practice that contributes to these environmental issues.
However, concerns have been raised about free competition and the prioritisation of the state utility over private parties following the dissolution of the Energy Regulatory Commission (CRE) and the National Hydrocarbons Commission (CNH).
The new laws aim to prioritise electricity for vulnerable communities while encouraging private investment in renewable energy. This approach is expected to drive Mexico's transition towards a cleaner, more sustainable energy future. Specific companies involved in the early phase of Sheinbaum's initiative for new regenerative energy projects in Mexico have not been publicly detailed as of yet.
Mexico will spend more than USD 22 billion in the next five years to finance CFE's electricity generation and distribution enhancements. The country is poised to make significant strides in its energy sector, with a target of having 45% of Mexico's energy powered by renewable sources by 2030.
