Clues as to “New” Energy Policy Fail to Provide Certainty
Susana Ivana Cazorla Espinosa
(Hay una versión en español de este artículo aquí.)
Government signals as to the new rules that will apply to Mexico’s electricity sector have not sufficed to convey certainty to domestic investors, foreign investors, credit rating agencies, trade partners, environmentalists, banks, or independent analysts.
They do include improvements, both in President Sheinbaum’s rhetoric and in the appointment of technical experts to some of the most important positions within energy authorities. But three major changes raise more concerns and uncertainty than they do optimism or confidence:
- A constitutional reform to render Pemex and CFE state-owned enterprises.
- The National Electricity Sector Strategy published on November 6.
- The rollback of CRE and CNH to become decentralized bodies and once again fall under the control of the Ministry of Energy (Sener).
Where Do We Stand?
Between 2013 and 2018, permits were granted to install 34,544.4 MW of electricity generation capacity, equivalent to investments of $54.5 billion USD. From 2019 to 2024, permits were granted for only 11,620.1 MW, equivalent to investments of $13.4 billion USD. In other words, from 2013 to 2018, more than 5,700 MW were installed each year on average, while in the last administration, only about 1,900 MW were installed annually. Some estimates indicate that an additional 25,000 MW of electricity generation capacity will be required to address the generation shortfall and meet the demand driven by nearshoring.
On the side of transmission and distribution networks that connect generated energy to consumption centers, project execution is also delayed significantly. According to Prodesen 2024–2038, Sener instructed CFE to execute 208 projects for the expansion and modernization of the National Transmission Network and 168 projects to expand the General Distribution Networks between 2015 and 2023. To date, only 14 transmission projects (6.7%) and 33 distribution projects (19.6%) have been completed and are operational.
This situation perfectly explains the blackouts during the last administration, particularly especially those that occurred in the summers of 2023 and 2024. The delay in developing power infrastructure, coupled with increased demand due to rising temperatures, have rendered the available generation capacity insufficient to meet peak summer electricity demand. This relationship is known as the reserve margin, which cannot fall below 6% to ensure system reliability.
From Productive Enterprises to Public Companies
The reform to Articles 25, 27, and 28 of the Mexican Constitution transforms Pemex and CFE into public companies, meaning they are no longer obligated to be profitable or generate economic value for the State as their owner. This reform establishes that the goals of planning and controlling the national electricity system will be (1) to preserve energy security and self-sufficiency, and (2) to provide electricity at the lowest possible price, avoiding profit, to ensure national security and sovereignty through the State’s public company.
It will not be clear until the publication of secondary laws how private companies will be allowed to participate, whether “the lowest possible price” will be achieved through continued subsidies, and what is meant by “avoiding profit,” among other uncertainties. As demonstrated by the 2025 Federal Expenditure Budget, public resources do not suffice to make the investments in generation, transmission, and distribution needed to ensure supply security.
National Electricity Sector Strategy
The National Electricity Sector Strategy, published on November 6, does not establish the rules necessary for decision-making and instead seems more like a collection of good intentions constrained by ideological barriers. For example, it states that private generation must never take precedence over CFE generation and that the threshold of 54% for CFE generation and 46% for private generators must be respected. In other words, electricity generation will no longer be governed by the principles of economic competition and free market participation. This will inhibit the introduction of new technologies and the resulting reductions in prices.
Considering the investment in generation during the two administrations mentioned above, the estimated $23.4 billion USD investment for CFE in generation, transmission, and distribution outlined in the strategy for the 2024–2030 period is not a good sign. Nor is the limitation on private investment to $9 billion USD for installing renewable energy generation plants, capped at 9,550 MW by 2030.
There is, however, reason for hope—particularly for industrial parks—as the Strategy mentions an increase in the size of isolated supply generation projects not connected to the grid, from 0.7 MW to 20 MW of generation capacity. Such an increase could provide breathing room for industries seeking to generate their own electricity. This hope will be confirmed (or not) as the operational rules for these projects are released.
Disappearance of CRE and CNH
The transformation of CRE (Comisión Reguladora de Energía, Energy Regulatory Commission) and CNH (Comisión Nacional de Hidrocarburos, National Hydrocarbons Commission) into decentralized bodies under the Ministry of Energy (Sener) represents a step backward in the institutional progress of these two regulators, as it makes them dependent on the sector head, thus increasing the risk of political capture. International best practices indicate that energy regulators should be technically independent and free from political pressures to provide certainty to energy investors, whose projects are long-term and take around 15 to 20 years to amortize. Doubts remain as to whether this will be the case.
Hope Dies Last
We will see whether the secondary laws are more flexible and provide sufficient leeway to ensure that energy supply no longer limits the possibilities for economic growth and for the well-being of the Mexican industry and Mexican families.
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