MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market
but within a centrally planned framework led by CFE and SENER. In the current political environment, with President Sheinbaum’s political party and allies controlling the qualifying majority of the vote of Congress, the prin- ciples introduced by the energy reform of 2024 are expected to remain stable for the foreseeable future. This continuity should provide a measure of legal cer- tainty for private investors operating under the new regulatory and market rules, although investment decisions are now more closely tied to planning com- pliance and strategic alignment with public policy pri- orities. For holders of legacy self-supply and cogen- eration projects, the recent Migration Guidelines and the accompanying Transmission Methodology have also introduced important economic and regulatory considerations, particularly in light of the new trans- mission tariff applicable to projects electing to remain under the former legal regime. Note, however, that the procurement of energy and ancillary products by CFE (as the main supplier) no longer includes the obligation to perform long-term auctions. Therefore, long-term Power Purchase Agreements (PPAs) awarded in such tenders, which historically anchored large-scale clean energy gen- eration facilities, are no longer part of CFE’s primary investment strategy. Instead, CFE’s current strategy prioritises mixed development schemes, self-con- sumption projects, storage integration and bilateral structures aligned with system reliability and State prevalence objectives. Another unique feature of the current framework is that private participation is no longer assessed solely under market efficiency principles, but also through constitutional concepts such as energy justice, State prevalence and binding planning. As a result, project bankability increasingly depends not only on com- mercial viability, but also on regulatory alignment with SENER’s planning criteria and CFE’s strategic priorities. Notably, however, legacy self-supply and cogeneration projects electing to migrate under the Migration Guidelines are expressly exempt from the binding planning criteria otherwise applicable to new generation projects, thereby facilitating their transition to the current legal framework.
The energy reform of 2013 established the operation of the WEM, designed to promote competition and efficient electricity trading. While the 2024 constitution did not eliminate the WEM, its operation has materially changed as a result of CFE participating as the con- stitutionally authorised State-preferred market partici- pant, with priority over private market participants and a central role in preserving the State’s 54% prevalence in electricity injection to the NES. The WEM, operated by CENACE, considers the fol- lowing transactions: • electricity (short-term spot markets); • capacity; • associated products, such as CELs; and • ancillary services (eg, operating reserves, frequen- cy regulation, emergency start and voltage regula- tion). Electricity prices in the WEM are determined based on local marginal prices, which factor in the cost of energy, technical losses and transmission congestion. For such purpose, the government has implemented a “Load Economic Dispatch” model, which adds opera- tional, safety and reliability considerations to dispatch decisions and alters the criteria for energy injections to the NES and the local marginal price calculations for the short-term spot market. This mechanism replaces the previous dispatch approach based primarily on lowest variable cost generation, and reduces the pref- erential dispatch effect historically enjoyed by inter- mittent renewable sources. The “54%– 46%” electricity injection rule may also influence the determination of energy dispatch and prices, since this requirement operates over energy delivered to the NES during a relevant year. There- fore, dispatch order and generation planning may be adjusted where the Load Economic Dispatch affects the proportion of energy delivered in order to preserve the mandated energy mix balance and ensure compli- ance with the State prevalence principle incorporated into PLADESE. However, projects migrating under the
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