Mexico's electric power sector has undergone a significant transformation in recent decades, marked by regulatory reforms, market structure changes, the rise of nearshoring and growing attention to sustainability and energy transition. As a key pillar of the country’s economic and social development, the sector has faced ongoing challenges—from the 2013–2014 reforms that opened the market to private investment to the more recent changes of 2024–2025, which aim to balance public and private participation while ensuring energy security and a transition to cleaner sources.
Within this evolving landscape, the Federal Electricity Commission (CFE) has remained central, both as the historical operator of the electricity system and in its current form as a State-Owned Public Company.
Prodensa created this overview with the most recent updates of the energy sector to provide valuable insights for executives interested in Doing Business in Mexico.
Key Energy Reforms in Mexico: What Businesses Need to Know
The 2024 Constitutional Reform
In October 2024, a constitutional reform was approved modifying Articles 25, 27, and 28 of the Mexican Constitution, with the aim of strengthening the role of the State in the electric sector. This reform established electricity as a human right and a non-delegable responsibility of the State, granting CFE a predominant role in the generation, transmission, and distribution of energy.
What were the main changes?
Mexico’s energy framework is evolving. Here’s a quick look at the most relevant reforms shaping the country’s electricity sector and their impact on business.
Secondary Legislation and the Creation of the National Energy Commission (CNE)
In March 2025, five new secondary laws were published defining the regulatory framework for the electric sector. Among them is the creation of the National Energy Commission (CNE), which absorbs the functions of the now-defunct Energy Regulatory Commission (CRE). The CNE will be responsible for issuing generation and commercialization permits, setting tariffs, and overseeing the Wholesale Electricity Market.
President Claudia Sheinbaum announces the creation of Mexico's new National Energy Commission (CNE), a key reform to consolidate energy regulation under a single body by merging CRE and CNH. The new commission aims to streamline oversight of hydrocarbons and electricity markets, enhancing transparency and efficiency in the sector.
Changes to CFE’s Board of Directors:
- Composition: The number of independent board members was reduced from four to two, and the origin of three federal government representatives was specified.
- Functions: The board remains the highest management body, responsible for defining CFE’s policies and strategic vision.
Mexico’s Electric Sector Overview: Generation, Supply, and Market Participation
Generation Capacity and Energy Matrix
Mexico has an installed generation capacity of 94,781 MW, distributed as follows:
While combined-cycle power still dominates the energy matrix, renewable energy has gained ground in recent years, driven by international commitments like the Paris Agreement.
Electricity Generation and Supply
As of 2024, total electricity generation reached 334 TWh, with the following distribution:
This scenario reflects significant private sector participation in power generation, although CFE remains the main player.
Mexico’s National Energy Strategy and Path to Energy Transition
The 2024–2030 National Energy Plan represents a comprehensive strategy to modernize and expand Mexico’s energy infrastructure to ensure reliable, secure, and accessible electricity for all sectors of society. This effort also supports broader goals for Doing Business in Mexico, particularly for companies that depend on stable infrastructure and predictable energy costs. The plan includes a projected investment of 22,574 MW between 2025 and 2030, with participation from both public and private sectors.
The plan is structured around four core pillars:
CFE Infrastructure Investment Plans: Powering Mexico’s Public Grid
CFE will play a central role in executing the plan, with a total investment of $23.4 billion USD during 2025–2030, this also aligns with Turnkey Operation models designed to streamline infrastructure development for incoming manufacturers:
Generation: $12.3B for installing 13,024 MW of new generation capacity. Transmission: $7.5B to strengthen and expand the transmission network. Distribution: $3.6B to improve infrastructure and ensure efficient, reliable supply.
Private Energy Generation: Opportunities and Partnerships
The plan also foresees private sector participation in energy generation, with projections between 6,400 and 9,550 MW of new capacity by 2030, requiring $6B to $9B USD in investment. Requirements for private participants include:
- Long-term contracts with CFE: Private producers may generate energy and sell it to CFE under long-term contracts.
- Mixed producers with 54% state ownership: Promoting joint ventures with the State holding a 54% stake in generation projects.
- Participation in the electricity market: Private players may continue competing directly in the electricity market.
Decentralized Energy Supply: Options for Private Sector Users
Under the National Energy Plan, the following private supply modes are defined:
- Distributed Generation: The distributed generation limit increases from 0.5 MW to 0.7 MW, allowing users to produce their own energy.
- Self-consumption without selling excess: The self-consumption threshold without selling surplus to the grid expands from 0.7 MW to 20 MW.
- Transmission infrastructure fees: Grid-connected companies must pay to use the transmission infrastructure, promoting efficiency and responsible use.
Mexico’s Path to Clean Energy: Scenarios and Forecasts
The plan addresses the energy transition goal of reducing fossil fuel dependence and increasing renewables in the energy mix. CFE presented four planning scenarios for 2025–2030, projecting peak demand of 64,000 MW by 2030 (compared to 55,600 MW in 2024):
Focused on system reliability with moderate generation expansion.
Limited growth in cogeneration with Pemex.
Greater Pemex cogeneration participation, reducing costs and improving efficiency.
Accelerated growth in generation capacity with more clean tech investment.
Electricity Demand Trends in Mexico: What to Expect in the Coming Years
Mexico’s economic growth in recent decades has been accompanied by sustained increases in electricity demand, driven by industrial expansion and urban development.
Electricity Demand by Sector:
- Industrial Sector (59.9% of total consumption): Led by automotive, manufacturing, and maquiladora operations—particularly since the USMCA (formerly NAFTA) strengthened Mexico’s role as an export platform.
- Residential Sector (27.2%): Although more energy-efficient technologies have been adopted, consumption has remained stable thanks to energy-saving measures.
- Commercial and Services Sector (12.9%): Rapid growth driven by shopping centers, hotel chains, and digital services—though energy efficiency regulations remain limited.
Key Takeaways
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Recent constitutional reforms have redefined electricity as a human right and reaffirmed the central role of the Federal Electricity Commission (CFE).
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The National Energy Commission (CNE) replaced the former Energy Regulatory Commission (CRE), assuming key responsibilities in regulation and oversight.
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Mexico's electricity mix is led by combined-cycle plants, with growing contributions from renewables like solar and wind.
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The 2024–2030 National Energy Plan outlines $23.4B in public investments and encourages private sector participation under clearer rules.
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Opportunities exist for private companies through long-term contracts, joint ventures, and distributed generation models.
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Electricity demand continues to grow, particularly in the industrial and residential sectors, reinforcing the need for sustainable expansion.
Are YOU Ready for These Changes?
For businesses Doing Business in Mexico, staying informed and prepared for regulatory shifts is essential for strategic planning and decision-making.
In a global context, trade relations and international commitments play a crucial role. That’s why it’s important to approach these topics from a neutral and objective standpoint, focusing on the implications and opportunities for both industry and country.
With this vision, Prodensa is a key player in the development and growth of Mexico’s energy sector, actively contributing to dialogue and collaboration between the private sector and government authorities.
