MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
and institutional framework for the electric- ity industry, defining operational, technical and procedural rules governing market participa- tion, permitting and infrastructure development across the sector. Once these regulations are issued, other admin- istrative instruments will need to be enacted and/or amended. These include the WEM mar- ket rules and operating provisions, as well as regulations on storage, distributed generation, inside-the-fence projects, and reinforcement and improvement of the NES. Together, these regulatory developments will shape the evolving landscape of the Mexican power sector and confirm how public and private stakeholders can operate pursuant to the prin- ciples already enacted under the new regime. 1.8 Unique Aspects of the Power Industry Government business plans and public presen- tations have shown that private investment in power infrastructure is critical to meet the coun- try’s increasing demand. This is underscored by the country’s strategic position as a nearshoring investment destination, which drives economic growth but demands incremental energy con- sumption. The government has announced investments to increase generation capacity by approximately 29,074 MW by 2030, with 22,674 MW expected to be installed by CFE and 6,400 MW by pri- vate sector participants. In addition, investments will target a critical expansion of transmission capacity in the order of 15,729 MVA and distribu- tion capacity of 3,045 MVA. The total projected investment in the power sector for the next six years is estimated to be around USD32 billion.
In the current political environment, with Presi- dent Sheinbaum’s political party and allies con- trolling the qualifying majority of the vote of Congress, it is anticipated that the principles introduced by the energy reform of 2024 will remain stable for the foreseeable future. This continuity should provide a measure of legal certainty for private investors operating under the new regulatory and market rules. Note, however, that the procurement of energy and ancillary products by CFE (as the main sup- plier) no longer includes the obligation to per- form long-term auctions. Therefore, long-term Power Purchase Agreements (PPAs) awarded in such tenders (which anchored clean energy generation facilities) are no longer part of CFE’s investment strategy for the time being. 2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market The energy reform of 2013 established the oper- ation of the WEM, designed to promote compe- tition and efficient electricity trading. While the 2024 constitution did not eliminate the WEM, its operation is expected to materially change as a result of CFE participating as the constitutionally authorised monopoly, with priority over private market participants. The WEM, operated by CENACE, considers the following transactions: • electricity (short-term spot markets); • capacity; • associated products, such as Clean Energy Certificates (CELs); and
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