MEXICO Trends and Developments Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
streamlined permitting process for power plants with capacity of up to 20 MW, including isolated and inter- connected modalities. Under the regulations pub- lished in 2025, interconnected self-consumption pro- jects between 0.7 MW and 20 MW are subject to a simplified permitting procedure before the CNE, and surplus energy may only be sold to CFE. The WEM allows for participation by public and pri- vate generators, either individually or through public- private mixed structures. The LSE and RLSE recog- nise two main mixed participation modalities: • long-term production structures involving exclusive sales to CFE; and • mixed investment projects in which CFE partici- pates directly or indirectly through equity, asset contributions or strategic control mechanisms. The LSE also recognises cogeneration as a specific generation modality. In April 2026, the CNE issued regulations for cogeneration projects, establishing technical specifications for top-cycle and bottom- cycle cogeneration, and requiring permit holders to have thermal demand associated with the cogenera- tion process, whether their own, from self-consump- tion users or from third parties located at or adjacent to the power plant site. Transmission, distribution and dispatch Transmission and distribution remain strategic activi- ties reserved exclusively to the Mexican State and entrusted to CFE. Operational control of the NES continues to be assigned to the National Centre of Energy Control (CENACE), while ownership of the National Transmission Grid and General Distribution Grids remains with CFE under the vertically integrated State public company model. A central change introduced by the reform is the “economic load dispatch” model, replacing the for- mer economic dispatch model. Unlike the previous model, which prioritised the lowest variable-cost gen- eration, the new dispatch mechanism also considers operational reliability, system security, continuity of service and planning criteria established by SENER. In practice, this model is intended to support compli- ance with the constitutional requirement that at least
54% of electricity delivered to the grid originates from State-controlled generation assets. For new transmission and distribution infrastruc- ture, the Law of CFE allows private participants to co-operate with CFE for the installation, extension and maintenance of the National Transmission Grid and General Distribution Grids. These structures may include contractor structures, financing arrangements and mixed participation projects, provided that own- ership and public utility operation remain under State control. Market operation and supply The LSE upholds the principle of State predomi- nance in electricity marketing activities. Although the law does not provide the same level of detail as for generation, in practice this principle is expected to operate through CFE’s preferential role in basic sup- ply, long-term procurement structures, mixed partici- pation schemes and planning criteria established by SENER under the Electricity Sector Development Plan (PLADESE). CFE is now the sole and exclusive Basic Services Supplier, in a departure from the prior framework, which allowed other authorised entities to partici- pate in basic supply. CFE may enter into power pur- chase agreements with generators through several mechanisms, including competitive tenders, bilateral arrangements, long-term production schemes and mixed investment projects. Long-term auctions are no longer mandatory for CFE procurement, giving CFE greater flexibility in structuring offtake arrangements. Qualified supply for large-scale consumers continues to be available under terms largely consistent with the prior regime. Qualified suppliers must continue to comply with operational, financial and reporting obligations before CENACE and the CNE, including financial guarantees, market representation require- ments and minimum hedging obligations. Large industrial consumers may still participate directly in the WEM, including through Electric Hedging Agree- ments, self-consumption schemes and bilateral sup- ply arrangements, which remain particularly relevant for nearshoring projects, manufacturing hubs and
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