Mexico - Country Commercial Guide
Electricity Sector

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2020-08-17

Mexico’s National Electric System (Sistema Eléctrico Nacional or SEN) is one of the largest in the Western Hemisphere. It is comprised of nine regions, plus abinational electricity system in Baja Caifornia. Most of the nine regions are interconnected, forming the National Interconnected System (Sistema Interconectado Nacional or SIN). The Baja California system operates in the Western Interconnection of the United States, overseen by the Western Electricity Coordinating Council (WECC).

As of December 2018, the generation capacity in Mexico reached 70,053 MW, a 3.1 percent increase over 2017 figures (67,958 MW). The installed capacity was divided into combined cycle (36.5%), hydro (18.0%), thermal (17.0%), coal (7.7%), wind (6.8%), gas (4.6%), photovoltaic (2.6%), nuclear (2.3%), cogeneration (2.0%), internal combustion (1.0%), geothermal (1.0%), and bioenergy (0.5%).

According to the International Energy Agency, Mexico’s population is expected to grow to over 150 million by 2050, considerably increasing energy demand. The industrial and commercial sectors represent 72 percent of electricity demand, representing the strongest opportunity for U.S. exports given the need to reduce energy costs and improve energy efficiency. However, it is necessary to take into account recent policy developments which will impact the type of projects that are executed. For example, the Mexican administration suspended future power auctions, which had been the primary driver of new generation projects and canceled several large transmission line projects. Given the government’s finite public budget, it is unclear how the government will replace private investment to build the necessary generation projects.

Electricity Market Framework
To understand the electricity market, it is important to take into account the country’s 2013–2014 constitutional energy reform. This reform created a wholesale electricity markets to increase investment and growth, facilitate competition, and reduce costs. The energy reform also aimed to increase electricity coverage and stimulate the use of clean energy. 

This reform implemented institutional changes to ensure transparency and open access for private companies to the national transmission network:
•    The National Center for Energy Control (Centro Nacional de Control de Energía or CENACE) is the independent system operator (ISO) responsible for managing the Wholesale Electricity market, coordinating the operation and ensuring the reliability of the electricity grid.
•    The Federal Electricity Commission (Comisión Federal de Electricidad or CFE), the state-owned monopoly of the electric power sector, became a state enterprise with technical, management, and budgetary autonomy. 
•    The Energy Regulatory Commission (Comisión Reguladora de Energía or CRE) became an autonomous entity focusing on public policy compliance. In terms of the wholesale electricity market, all the participants are required to register or to have a permit with CRE.

Since assuming power in December 2018, the López Obrador Administration has been developing its own set of priorities for the power sector, which include strengthening the role of CFE and reducing the regulatory autonomy of the CRE. The administration’s policy priorities for the electricity sector and openness to rolling back the energy reforms are creating significant uncertainty for private participants in the electricity sector. CFE has also sought to renegotiate contract terms with private pipeline companies, undermining the confidence in CFE respecting contracts.

CFE currently owns five power generation subsidiary companies and several affiliates: one subsidiary to administer independent power producer (IPP) contracts; one transmission subsidiary; one distribution subsidiary; one subsidiary for basic retail service; one affiliate to administer legacy interconnection contracts; one affiliate for natural gas; one international affiliate (located in the United States); and one affiliate for qualified retail (focused on contracts with industrial and commercial users of electricity).

Development Program of the National Electrical System 2019–2033
On May 15, 2020, SENER published an Agreement in Mexico’s Official Gazette (Diario Oficial de la Federación or DOF) regarding the reliability, safety, continuity and quality policy for the national electric system. This planning document addresses electricity generation, transmission, distribution and commercialization of the SEN. The 2019 PRODESEN outlined the process not only to meet electricity demand, but also to maximize power generation, transmission, and distribution for sustainable economic growth.

According to the PRODESEN, there are eleven priorities for the development of the electric power industry over the next 15 years:
1.    Apply the same regulations to CFE as have been applied to private power producers to secure the same conditions of competition, equity and equality.
2.    Rehabilitate transmission and distribution capabilities.
3.    Treat state productive enterprises as public service companies.
4.    Secure the profitability and return on investment of all the companies that participate in the electricity market.
5.    Establish transparency and better industrial practices for all the participants of the SEN.
6.    Increase power generation from clean energy sources and renewables and comply with international sustainability and emissions reduction commitments.
7.    Comply with the efficiency, quality, reliability, continuity, security and sustainability of the electricity system.
8.    Coordinate between SENER and CRE the criteria for new permits and authorizations based on the existing energy policy.
9.    Establish a responsible balance in electricity tariffs in relation to the costs, considering transmission-distribution, back-up power generation, and the cost of fuels.
10.    Guarantee open and non-discriminatory access to the General Distribution Lines (Redes Generales de Distribución or RGD) and consider reinforcements to the RGDs and related costs for any new applicants for power generation plants.
11.    Develop a complementary photovoltaic-distributed power generation system for battery charging of electrical vehicles in the medium and long-term.

The PRODESEN specifically includes provisions concerning the modernization of the electrical system that allows for increased use of electrical vehicles and electrical transportation, energy efficiency, distributed generation, and energy storage.

The modernization process requires executing 13 expansion projects for national transmission lines that CENACE has identified. These projects include capacity increase, power compensation, interconnection, reduction of the electricity network, and limitation of the transmission capacity. To learn more about these potential projects, specific location, and estimated date, please visit the PRODESEN planning document.

Mexico’s New Electricity Market RulesOn April 29, 2020, CENACE announced an Agreement to guarantee the efficiency, quality, reliability, continuity and security of the National Electric System in recognition of the COVID-19 pandemic.

According to this agreement, the intermittency of wind and solar plants affects the reliability, quality and continuity of the National Electric System. Therefore, since May 3, 2020, the pre-operative tests from wind and solar plants were suspended. According to recommendations published by Mexico’s Federal Economic Competition Commission (Comisión Federal de Competencia Económica or COFECE), the actions indicated in CENACE’s agreement could run contrary to free competition and could increase electricity rates. It is unclear how and when these actions will be applicable. In addition, it introduces uncertainty over power generation from wind and solar plants that are currently operating and that typically cost less than conventional power plants.

On May 15, 2020, SENER published an  Agreement in Mexico’s Official Gazette (Diario Oficial de la Federación or DOF) regarding the reliability, safety, continuity and quality policy for the national electric system.This document established as a public service the planning and control of the SEN, as well as the transmission and distribution of electricity. This includes power generation, transmission, distribution, and commercialization of the SEN, as well as the operation of the Wholesale Electric Market. Private sector participants believe that this policy will allow CENACE to dispatch costly CFE-owned plants ahead of more economically efficient private sector renewable and CCGT generation. They have filed legal injunctions against the policy.  

The U.S. Commercial Service is closely following policy developments and their impact on current and future business opportunities in the electricity sector for U.S. exporters.

Industrial and Commercial Sectors
Together the industrial and commercial sectors represent 72 percent of electricity demand. Industrial manufacturing, operations, and commercial activities have been impacted by high electricity rates. 

In the wholesale electricity market, large industrial and commercial users of electricity are known officially as qualified users or usuarios calificados. These are companies that require high electricity consumption for their activities. They are registered with CRE to acquire electricity directly as a participant of the wholesale electricity market, or through an electricity supplier (known as a qualified supplier or suministrador calificado). 

Qualified users of electricity with a minimum demand requirement of 1MW tend to evaluate different criteria before signing a Power Purchase Agreement (PPA) with their preferred qualified supplier. Most competitive alternatives offer a tailored package of power, capacity, cost-effectiveness, energy efficiency, and clean energy certificates, according to the manufacturing or business needs. The industrial sector has expressed high interest in renewable energy projects predating the country’s energy reform. However, there is recognition among the private sector that challenges to successfully developing and participating in these projects remain, including permit delays, transmission constraints, and lack of return on investment. Moreover, on May 28, 2020, the CRE passed two resolutions to increase transmission rates on legacy PPA-generating facilities. This follows a previous attempt by the López Obrador Administration to restrict the rules around forming and modifying contracts for existing and planned PPAs. These measures, and the Administration’s broader energy policy, has introduced greater investment uncertainty into the sector. 

However, if the market and regulatory conditions were favorable, Mexico has the capacity to attract investment for renewable energy projects, which we have already seen through three long-term auctions between 2015 and 2018.
Even with these challenges, the industrial and commercial sectors are an important area of opportunity for U.S. exports as they represent the largest percentage of electricity demand. These companies are continuously looking for technological alternatives to increase energy efficiency and reduce costs. 

Mexico Power Generation Equipment
(Figures in USD Billions, HS Codes 8501, 8502, 8503)





2020 (Estimated)

Total Local Production





Total Exports





Total Imports





Imports from the U.S.





Total Market Size*





Exchange Rates





*Total market size = [(total local production + imports) – exports]
Source: Banco de México, PROMEXICO, INEGI, SENER, U.S. International Trade Administration, World Trade Atlas and interviews with importers, distributors, and end-users of electrical equipment and power generation equipment and services.

The market for power generation equipment in Mexico is estimated to decline by 12.68 percent from 2019–2020, while exports from the United States to Mexico are expected to decrease by 9.76 percent. 

Leading Sub-Sectors
Key sub-sectors relevant for U.S. exporters include energy efficiency, distributed generation, energy storage technologies, and renewables for small scale projects. 

Mexico’s electrical power industry offers opportunities for U.S. products, services, and technologies in all the leading sub-sectors outlined above. The U.S. Commercial Service Mexico is happy to assist you in exploring these opportunities in different states of Mexico.

Web Resources

Mexican Secretariat of Energy (SENER)

National Control Center for Energy (CENACE)

Federal Electricity Commission (CFE)

Energy Regulatory Commission (CRE)

Mexican Electric Research Institute (IIE)

Trust for Electric Energy Saving (FIDE)

National Commission for Energy Efficiency (CONUEE)

Federal Commission for Regulatory Improvement (COFEMER)



For more information on the electricity sector in Mexico, please contact:

Claudia Salgado
Commercial Specialist
U.S. Commercial Service—Mexico City
Tel.: +52 (55) 5080-2000 ext. 5224