In this document, we analyse the decisions taken by the recent administration and evaluate whether they have been optimal in increasing energy supply to reduce the gap between energy demand and supply in Mexico.
President Claudia Sheinbaum's energy reform marked a significant shift in Mexico’s electricity sector, re-establishing CFE as the dominant entity in electricity generation, transmission, and distribution. While the reform aims to strengthen the country’s energy sovereignty, it has limited competition and restricted private sector participation, thus creating uncertainty around future investments and the growth of renewable energy. With the secondary law initiatives proposed by Claudia Sheinbaum (CS), the aim is to strengthen state control over the energy sector, reinforcing the role of CFE and centralizing decision-making through the creation of the National Energy Commission (CNE). This restructuring creates uncertainty for private investors, who were already facing obstacles due to the lack of permits to generate and commercialize electricity. Without an autonomous entity overseeing energy dispatch, there is no guarantee that the cheapest or cleanest electricity will be prioritized in the system.
The accelerated growth in electricity demand, driven by climate change, population growth, and nearshoring, has placed significant pressure on the existing infrastructure. Despite modernisation efforts, generation and transmission capacity has not kept pace with the increase in demand, reducing operating reserve margins and increasing the risk of blackouts. These conditions underscore the urgent need for strategic investments to expand and modernise the electrical grid, particularly in critical regions where supply is insufficient to meet rising demand. CS announced the National Energy Plan 2024-2030 in 2024, that it includes a substantial investment of USD23.4bn for CFE through 2030, with USD12.3bn allocated to generation, USD7.5bn to transmission, and USD3.6bn to distribution.
On the other hand, Mexico’s heavy reliance on natural gas imports, which account for approximately 70% of consumption, exposes the country to cost and supply risks stemming from fluctuations in international markets. While natural gas remains a key component in complementing energy generation, Mexico faces the challenge of increasing domestic production and investing in storage infrastructure. Without these measures, the country will remain vulnerable to external changes, complicating its energy transition and efforts to strengthen energy security.