Mexico’s power sector has been undergoing major reforms under the new administration. It aims to expand renewable energy to 45 per cent of the installed generation capacity by 2030, signalling a shift towards a more diversified energy mix, as part of the “Plan Mexico” initiative. On the one hand, the government is on a nationalisation drive to wield greater control over the energy companies. On the other hand, the reforms reopen the sector to private sector investment after six years of regulatory restrictions and a halt on such opportunities.
The latest reform process began in October 2024 when Mexico approved a constitutional reform to strengthen the role of state-owned energy companies, particularly Comisión Federal de Electricidad (CFE) – Mexico’s largest state-owned integrated power utility and Petróleos Mexicanos (Pemex) (a state-owned oil company). This reform also resulted in a transfer of control from independent energy regulators – the Comisión Reguladora de Energía (CRE) (the Energy Regulatory Commission), and the Comisión Nacional de Hidrocarburos (CNH) (the National Hydrocarbons Commission), which were dissolved – to the Secretaría de Energía (SENER) (the Ministry of Energy).
To seal the new structure into a legal framework, in January 2025, the government presented a set of secondary laws. Subsequently, on March 18, 2025, the country enacted the landmark reform package, which includes eight new laws (and an amendment to three existing laws) – Energy Planning and Transition Law; Law of the State Public Enterprise, CFE; Electricity Sector Law; Law of the State Public Enterprise, Petróleos Mexicanos; Hydrocarbons Sector Law; and National Energy Commission Law; Biofuels Law; and Geothermal Law. This essentially reverses the 2013 energy reforms enacted through the Electricity Industry Law (August 2014), which allowed the restructuring of CFE into separate subsidiaries for transmission, distribution, supply and generation.
Broadly, under the new laws, SENER has resumed its leadership role in planning, regulating and operating the electricity and hydrocarbon sectors. In the electricity sector, the state retains exclusivity in the planning and control of the Sistema Eléctrico Nacional (SEN) (the National Electric System), as well as in the public service of transmission and distribution of electricity. The country’s system operator, Centro Nacional de Control de Energía (CENACE) (the National Electricity Control Centre), will continue to operate the national grid and manage the Mercado Eléctrico Mayorista (MEM) (the wholesale electric market), as well as determine the network upgrades required for the interconnection of power plants and connection of load centres to the grid.
The law prioritises the state over private parties in the generation and commercialisation of electricity. CFE will generate at least 54 per cent of the annual average of energy injection into the Red Nacional de Transmisión (RNT) (the National Transmission Network), in addition to guaranteeing the continuity, accessibility, security and reliability of the electric sector. There will be six schemes for private participation – three each for personal consumption and power generation. The latter allows long-term production contracts with power delivery to CFE with the possibility of asset transfer to CFE in the end; generation through mixed investment with CFE maintaining 54 per cent participation; and maintaining the figure of an electric generator for sale in the wholesale electricity market. In line with the law, the nine subsidiaries that were private companies within CFE have been dissolved.
In line with the National Energy Commission Law, on May 21, 2025, the Mexican government operationalised the new Comisión Nacional de Energía (CNE) as an administrative body of SENER to reduce bureaucracy, speed up procedures and avoid duplication of regulatory functions in the energy sector. CNE will absorb the key functions of CNH and CRE for regulating the hydrocarbon and electricity sectors. In the electricity sector, the CNE will grant permits for the generation and marketing of electricity, define transmission and distribution rates, monitor the MEM and monitor prices and subsidies, among other things. The new CNE includes a technical committee, comprising senior officials from SENER, CNE executives and three energy experts, which will play a key role in decision making, particularly regarding permits, tariffs and clean energy certificates. The energy minister will chair the committee and have the casting vote. Further, the country’s president will appoint CNE’s director general, who would lead and manage CNE, after being confirmed by the senate. The president has the authority to remove the director general at will.
Post CNE’s establishment, SENER asked power sector companies to inform CNE, by June 19, 2025, of their interest in continuing the pending process with the now-defunct CRE (submitted before March 18, 2025). All permits and contracts granted under the previous laws will remain valid until their termination date. Meanwhile, the new CNE is expected to publish additional secondary regulations regarding the social impact assessments to be conducted by power generators; amendments to MEM´s dispatch and operative rules (to ensure CFE’s priority and compliance with new system reliability requirements); and new methodologies to calculate tariffs.
As already mentioned, the country has opened the door to private investment in electricity generation and transmission. In June 2025, SENER announced that private developers are expected to fund between 6,400 MW and 9,550 MW of generation capacity by 2030 to meet the growing national electricity demand. This would translate into an investment opportunity of USD6 billion-USD9 billion up to 2030, depending on the planning scenario finalised by the government. However, concerns remain about CFE’s creditworthiness, and CFE’s ownership of the assets at the end of the contract. This obligation will need to be included in the financing formula, which will result in an increase in the electricity price. Another factor that may drive up prices is that CFE’s older and less-efficient thermal plants will be dispatched before cheaper, cleaner, privately owned power plants. Resultantly, private plants may face curtailments, possibly reducing their market share. Further, renewable projects may need to install batteries to meet new reliability requirements. Clean energy certificates, which were previously granted only to projects developed post-2014, will now be extended to all clean plants, including CFE’s older nuclear and hydro power plants.
Notwithstanding these drawbacks, the industry has expressed mixed reactions and is closely watching the developments as they unfold. While some have expressed concern about the impact the recent restructuring will have on investments, particularly the lack of an independent energy regulator and the prevalence of state in generation and supply, others are hopeful that a more pragmatic approach to future private sector involvement will be followed.
